ECONOMIC SYSTEMS

TRADITIONAL• Families, clans, or tribes make economic

decisions based on customs and beliefsEx.) Kavango people of Namibia in southern Africa

Ex.) Amish people living in America

COMMAND• A system where society’s leaders, usually central

government make all economic decisions; called a CENTRALLY PLANNED ECONOMY

Ex.) North Korea

Kim Jong II

Ex.) Cuba

Fidel Castro; Raul Castro

MARKET• Based on individual choice not government directives;

consumers vote with their dollars and producers make decisions based on what can make them the most money;

• In a market economy, people make decisions based on their own self-interest

Ex.) UK

Ex.) US

What economic system does the US have? How do you know?

• We have a Market-Command system

• The government controls certain aspects of our society known as the public sector; things like schools, postal service, etc.

• For the most part, producers decide what they’ll produce and consumers are allowed to spend their money how they would like

What are the advantages and disadvantages of a traditional

economic system?ADVANTAGES:

•The three economic questions are clearly answered by custom and tradition•There is little disagreement over economic goals

DISADVANTAGES:

•They resist change•They are less productive because of this•Everything is based on tradition so people aren’t always using their strengths•They have a lower standard of living

Why are traditional economies being forced to change?

• Modern telecommunications have bombarded these societies with images of what the rest of the world is like; the young people see these things and want them

• Many are leaving their societies to find a different life for themselves

COMMUNISM SOCIALISM MARKET SYSTEM

WHO OWNS RESOURCES?

HOW ARE RESOURCES ALLOCATED?

WHAT ROLE DOES

GOVERNMENT PLAY?

Government

Government planners decide how resources

are used

Government makes all economic decisions

Government owns basic resources;

the rest are privately owned

All resources are privately

owned

Government planners allocate basic

resources; market forces allocate privately-owned

resources

Government makes

decisions in the basic industries

Market forces allocate

resources

Government’s role limited-mostly to ensure market

forces are free to work

What effect do command economies have on people?

ADVANTAGES DISADVANTAGES

They try to provide for everyone: sick, elderly Central planners usually have very

little understanding of local conditions

Workers have very little incentive to improve their productivity

They face shortages

Individual rights are subordinate to the needs of the state

Leaders can choose to produce items that do not make money

Ex.) medicines

Why are consumer goods often in short supply in a command

economy?Because they often set prices well below

that of a market economy.

Why do these economies often fail?

Because of the human suffering that often goes hand in hand with command

economies.

Karl Marx

MAJOR WORKS:

Das Kapital

The Communist Manifesto

Karl Marx

FAMOUS QUOTE:“Workers of the world unite; you have nothing to lose but

your chains.”

The whole industrial system relied on the exploitation of workers. He was telling them to unionize and fight back.

Karl Marx

BELIEF ABOUT WORKERS & BOSSES:He believed that once the wealth was so concentrated in so

few hands, that workers would revolt and create a new society without economic class.

Karl Marx

HIS INFLUENCE:Russian Revolution – 1917

Chinese Revolution – 1949

Karl Marx Video

• http://www.disclose.tv/action/viewvideo/60913/Karl_Marx_Documentary/

BIBLIOGRAPHY:• http://www.venturepublications.com.na/images/preview/303_kavangopeople.jpg• http://desktopd.com/wp-content/uploads/2010/08/Raul-Castro.jpg• www.thenewblackmagazine.com/Photofiles/castro.jpg • http://missiledefense.files.wordpress.com/2010/03/kim-jong-il.jpg• http://www.publicaffairslinks.co.uk/images/uk-flag.png• http://ec.europa.eu/education/img/flags/usa.gif• http://www.corbisimages.com/images/67/7936FED6-2F84-4E43-ADFC-5F1D3F3555

FE/TL020010.jpg• http://farm1.static.flickr.com/103/267236537_fd1aaf901f_o.jpg• http://libcom.org/files/images/history/marx.jpg• http://www.inkblotmazes.com/images/Karl-Marx-Maze-1250.png• http://www.scenicreflections.com/ithumbs/Workers_Revolt_Wallpaper_x5zrw.jpg• http://media.web.britannica.com/eb-media/33/91633-004-5B366CAF.jpg