Economic Systems

Paper Summary:

This paper discusses how economic systems are extremely complex structures that are often characterized by perpetual change. It attempts to define and characterize the economic systems of pure capitalism, communism, socialism and mixed economy. It examines some of the concepts of pure capitalism and shows how a communist economy is a system in which the majority of the resources and means of production are owned by the entire society instead of individuals. It also describes how a socialist economy demands state ownership and control of the all of the fundamental means of production and distribution of wealth and how a mixed economy incorporates the principles of both capitalism and socialism.

From the Paper:

"There are several characteristics of capitalism. In a capitalistic economy the machines, buildings and equipment used to produce goods are privately owned. ("Capitalism") In addition, the buyers and sellers within the market dictate the manner in which the goods and services are bought and sold. Capitalism also employs the concept known as consumer sovereignty. Consumer sovereignty mandates that consumers have the right to spend the money that they earn in any way that they see fit. Consumer sovereignty also creates competition among producers. Competition ensures that consumers will get the types of products that they desire. Price is determined by supply and demand. When the demand for a product is greater than the supply of that product the price increases. Likewise if the supply of a product is greater than the demand the price decreases."

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