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The Nature of Economic SystemsLESSON 9 | PP. 84-87
Economic System
A structure of governance that deals with the different economic activities
to answer the basic questions on the needs of the economy.
Traditional Market Command
ECONOMICSYSTEMS
TRADITIONALEconomy
ROLES
INDIVIDUAL
Decide
Society basesEVERYTHING on traditions.
TRADITIONS
Traditional Economy
EXAMPLE: A farmer engaged in
the production of rice did exactly what his father did when he was also planting rice before.
Does not require progress
Using methods used by his ancestors
Traditional Economy
The SOCIETY decides, not the INDIVIDUAL.
MARKET
ECONOMY
FeudalismMercantili
smCapitalism
WHAT?HOW? FOR
WHOM?
MARKETArrangement between the
SELLERS and the BUYERSto make a TRANSACTION.
Market Economy
Indicator:
CONSUMER’S
DEMAND
HIGH PRICE=In demand
=increase production
LOW PRICE= not in demand
=decrease produuction
FEUDALISM1
Fief ManorSerf
Feudal LordVassals
Feudal LordVassals
FIEF
Service
LAND
Manorial System
Manor•Center of agricultural economy
Serf• slaves
Feudalism
The basis of man’s POWER depends on
the ownership of extensive land.
MERCANTILISM
BRITAIN FRANCE
SPAIN NETHERLANDS
Gold & Silver measures power & Supremacy.
CAPITALISM
Capitalism
Ownership forProduct
ion
Land
Capital
Entre-prene
ur
LaborPrivate Property
Profit Motives
Foundations:
Free Enterprise orFree Market System
AKA:
“Property is allowed without limitations”
Ownership of Resources & Wealth1
“Decision-making is DECENTRALIZED”
Decision-Making11
“Pricing depends on the prevailing price in the MARKET”
Pricing111
CommandEconomy
Communism
Socialism
Facism
Command EconomyAll economic activities
are planned by
authority.
Command Economy
Government owns and controls all factors for production.
Individual preferences are not considered
PRINCIPLE: Interests of society
should prevail over that of the individuals.
Communism
Father of CommunismKarl Marx
EQUALITY
CLASSLESS SOCIETY
Communism
Father of CommunismKarl Marx
“From each of us according to
abilities, to each of us according to
needs.”
Communism
Father of CommunismKarl Marx
The STATE owns ALL the
RESOURCES of the country.
PrivateProperty
Socialism
Capitalism CommunismPrivate Property
Private Property
? ? ?Main
industries controlled by
the state
Individuals own small industries
Facism
Capitalism DictatorIndustries are
controlled/owned by the state
under a
Facism
“The people are for the state, not the state for the
people.”
Economic Systems
Traditional Market
Feudalism|Land & Service|
Mercantilism|Gold & Silver|
Capitalism|Private Ownership|
Command
Communism|State Ownership|
Socialism|Private & State|
Facism|Dictator|