Economic Systems Essay

Economic Systems: Socialism and Capitalism Essay
I have observed that when Americans discuss the relative merits of socialism vs. capitalism, the
chief debates that come up are
What would happen if we remove the stimulus for innovation and productivity that a free market
generates? This implies having a free market including individual ownership and control, and to
varying degrees a laissez–faire government.
Would it be possible to have a thriving society in which we would not have 20% of the population
living in poverty and without adequate healthcare, housing or economic security?
Fundamentally, we characterize and differentiatecapitalism from socialism by the way they handle
production (industry), distribution, and exchange (trade) of wealth and goods. In capitalism, capital
...show more content...
It was also at this time that monopolization became widespread. Eventually, incorporated entities
became able to perform many of the actions of individuals such as being able buy and sell property,
hold patents, sue and be sued, etc. (Peavler).
The philosophy, such as proposed by Adam Smith, came to be that an economy has a natural design.
Left to its own devices –– and removed from politics, religion and all other pursuits –– it will
regulate itself as long as no one throws a spoke in the wheel and everyone benefits. The
government's only real role in capitalism became to maintain peace and order so the economy can
work without interruption (Newman).
In its purest sense, a socialist economy communally controls the production, distribution and
exchange of resources. This community control is implemented by the state through a central
government acting on behalf of the citizens. The roots of socialism lie in Thomas Moore's idea of a
utopian society. During the 18th and 19th centuries the industrial revolution and concomitant
urbanization, resulted in increasing concentration of wealth and power (Hoyt).
Many feared that the freedom to engage in capital mercantilism had the natural consequence of
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Economic System And Economic Systems
For this essay I will be focusing in on the three different economic system,which are known as
centrally planned economy, mixed economy, and market economy. I will also be explaining why
internationalizing firms should be aware of the differences between all three economic systems and
what roles should the government be taking in the free market systems. Before I begin defining the
different economic systems I would like to first explain what an economic system is. Every country
differs in what economic system is being used. An economic system is a system of producing
goods and the exchange of goods and services. An economic systems also includes a process
which is used to allocate its assets. Culture can have a big impact because of a country 's
economy. Just as a country 's economy state differs from country to country so does its culture.
Why does it have an effect on a country 's culture we ask? The difference between having an
individualist or a collectivist culture is where we see it. In an individualist culture we see more
people being rewarded then we see in a collectivist culture. Being rewarded with things such as low
tax rates which inspires them to continue with their activities of their culture.
As mentioned in Chapter 7 no nation is either considered to be fully individualist or fully
collectivist. National economies are arranged on a scale in which we see the three different
economic systems. The scale is setup in a way in which centrally planned economy is

Economic Systems: Capitalism Essay
Capitalism
Capitalism is an economic system characterized by the private ownership of the means of
production, and where production is guided and income distributed largely through the operation of
markets. The objective of a capitalist society is to gain profit.
Some of its strengths of living inside a Capitalistic economy are the incentive for innovation,
efficiency, and economic growth. Unlike socialism, there are opportunities to invent new products
for areas of demand, to raise quality, and to gain assets.
One of the most recognized Capitalist economists after the Great Depression was John Maynard
Keynes who advocated for the government intervention on behalf of Capitalism to provide an
economic stimulus. He opposed the...show more content...
Mainly in those who control the means of production. Therefore, if one of these, let alone both,
cause a big enough gap in society then people figure Capitalism has failed them and it's time to seek
socialist medicine.
However, one economist was convinced that Socialism was not the medicine, it was the disease. The
great depression gave birth to the biggest opponent to Socialism, Nobel Prize–winning Austrian
economist Friedrich Hayek, who believed in free–market capitalism without intervention from the
Government. In his book, "Road to Serfdom" Hayek rejects socialism and central planning by
arguing that "the economy is too complicated for politicians to avert recessions and unemployment
without unintended consequences that may well be worse" (2011. Keith, Tamara), like the
unintended creation of totalitarian regimes such as the one that existed in Nazi Germany. Although
Hayek was a proclaimed Capitalist and contemporary to John M. Keynes, his views on the absolute
separation between markets and government is what set them apart in their economic theories of
Capitalism.
PART III– CASE STUDY
The Beginning of the Financial Crisis
The financial crisis of 2008 was sparked by the bankruptcy of the US investment bank Lehman
Brothers and the collapse of insurance giant AIG. According to authors Thomas Friedman and
Michael Mandelbaum in their book, That Used To Be Us, the 2008 crisis was

Economic Systems: How do they succeed or fail? I – Introduction Throughout history, the world has
seen the emergence of different economic systems, inspired by some of the brightest minds in
the economic field. However, not all economic systems functioned as depicted by their creators,
and ended up failing. In this paper, I am going to analyze how every economic system failed or
succeeded in a particular set of countries, according to the criterion used and explained in the
previous paper. To do this, I am going to explain the history of the countries involved and how
each system got implemented. I am also going to take into consideration the different measures of
the criteria for assessing economic systems to collect data of the countries analyzed in order to
determine if those countries had successful economic systems. I am going to look for cases in
which certain parts of the system failed and others in which it can be agreed that it succeeded, and I
will explain why, using the information I collected. It is my objective to discover what particular
characteristics made each country have a successful economic system, and what differences they
have compared to other not so successful nation–states. It is worth mentioning that there is no
perfect system, and that the purpose of this paper is to show cases of countries in which a specific
ideology caused an either positive or negative result in the economy, polity or society. II– Economic
systems A– Capitalism As it

Capitalism And The Economic System Essay
In a Capitalistic economic system, a country's industry and trade are controlled by private owners
instead of the state. It allows consumer's choice in which goods and services are produced based
on demand. A Capitalist system gives all its members a chance to become great business owners.
No matter where you start in life or what your gender, race, and political views are; Capitalism gives
everyone an opportunity to make it big. The United State's economy became predominately
capitalist by the 19th century after the death of Feudalism. The second half of the 19th century
marks the fastest economic growth in American history. There was a rapid rise of production,
wages, and personal health. By the 20th century America became a thriving superpower whose
industrial and manufacturing economy even rivaled those of the European great powers. America's
economic growth and innovation was facilitated by capitalism, which allows you to keep the fruits
of your hard labor. In contrast, a socialistic economic system seeks to redistribute the wealth more
equitably by social ownership of industries and natural resources. Socialist believe in nationalizing
monopolies; however, small, nonessential businesses would remain privately owned. The direct
control and management of the industries and social services will be by the workers through a
democratic government. In a socialist system everyone equally shares the workload, everyone is
given the same benefits and prospers equally. Therefore,

Economic System
Microeconomics Paper: Economic systems
Yang Cong
Professor Memmos
Aug 1st, 2012
Table of Contents
1, Introduction of economic systems
2, the analysis of capitalism
3, Example of capitalism: the U.S.
4, the analysis of socialism
5, Example of socialism: China
6, the analysis of communism
7, Example of communism: North Korea
8, my favorite one is socialism
9, Conclusion
There are three main economic systems in the world which are capitalism, socialism and
communism. Nowadays, most developed countries are capitalism and they have certified that
capitalism is better; the greatest developing country which owns the second high GDP in the world,
China, is socialism, it seems that socialism is not bad; only a few countries are...show more content...
American government always complies with Keynesian for a long time, and believes that the reason
that total social supply is not the same to total social demand is the lack of effective demand (the
analysis of American economy)." So most of the successive governments implement the
expansionary deficit policies, in order to deal with cyclical fluctuations, and stimulate effective
demand artificially. Deficit policies are easy to make economic bubble to stimulate the excessive
consumption and promote market false prosperity, especially in the financial markets, it also has
contributed to raise inflation rates. Once the bubble bursts, the economic crisis would be coming.
"Socialism is an economic system characterized by social ownership and cooperative management of
the means of production, and a political philosophy advocating such a system (Wikipedia)." In
socialism, the government needs to control the whole market in order to promote the productive
power according to the current market situation. The main economic strategies are based on the
market and include more government control than socialism. This is the best advantages of
socialism because when the economic crisis was coming, the government could adjust the
macro–control policies and introduced a series of initiatives to expand domestic demand and
promote economic development. It achieved success quickly and efficiency. But, socialism is easy
to establish monopoly enterprise. These

Economic Systems
Introduction
Economic systems are organized way in which a state or nation allocates its resources and
apportions goods and services in the national community. An economic system is slackly defined as
country's plan for its services, goods produced, and the exact way in which its economic plan is
carried out. There are three types of economic systems exist, they are command economy, market
economy, and mixed economy. Command economy is also sometimes calledplanned economy. The
expectations of this type of economy is that all major decisions that related to the construction or
production, distribution, commodity and service prices are all made by the government. However,
in market economy, national and state governments play a...show more content...
Prices also have the function to allocate and distribute a country's resources. Market leads to
complete effectiveness bringing about the best possible distribution of a country's resources in a
perfect world. This would only happen in a state of equilibrium and there is a unique price for
every commodity. But in a realistic world which is imperfect by nature, prices are never at
equilibrium and very unstable depending upon the vagaries of the market forces. This generally
harms people living below the poverty line. It is impossible for them to pay high prices in cases
of demand shortage. Thus, the free market model is not a viable option in developing countries
which has a large number of poor. Besides, producers are aim to minimize profit and maximize rent
of production. Examples of countries that are using this economy system are Hong Kong, USA, and
UK. Many developing countries like India and China are moving towards totally free–market
economy. The command economy is government directed. The market forces have very little say in
such an economy. There is no private property. On the other hand, a command economy aims at
using all available resources for developing either in advertising or marketing. In order to ensure that
the required inputs are available, the state would probably conduct some form of input–output
analysis. All industries act as the input from other industries and the producers act as the

The Economic System of South Africa
What type of economic system does this country have? Explain some of the benefits of this system
to the country and some of the drawbacks.
South Africa's economic is mainly based on free market principles. However, as in most developed
economies, competition is controlled by government intervention. Therefore, South Africa has a
mixed economy in which there is a variety of private freedom, combined with centralized economic
planning and government regulation.
ADVANTAGES:
Various restrictions on businesses are made for the greater good. For instance, the Competition Act
of 1998; along the lines of the best international practices; provides for various prohibitions on
anti–competitive conduct and restrictive practices such as price fixing & even predatory pricing.
Both private and public sectors work side by side. The combined efforts lead to rapid economic
development. The private sector's goal is to make profit. For every dollar in revenue it earns, there
is a tax that goes directly to some level of government. The public sector can then afford to continue
providing its services to the people. Additionally citizens also pay taxes through either goods or
services from the private sector or public sector.
With international allegiances and international trade; imports and exports; it increases or expands
opportunities for South African participation in world markets, while recognizing the role of foreign
competition within South Africa.
Mixed economies have a high

Essay about Comparative Economic Systems
Comparative Economic Systems
Governments have built up and founded on many different ideas, systems, and "what's right and
wrong." Each country directs certain ideas on what's right, and what works for them, some can be
very successful, but at the same time all have flaws. In this comparative paper the differences and
similarities of capitalism, socialism, and communism are going to be addressed. In the end I will
form my personal opinion of which I prefer.In a communist world everyone would have food,
shelter, and no one would be above another. In this perfect utopia society all would have a fair
chance. This was the belief of a man named Vladimir Lenin.
In 1917 Lenin over threw the government of Russia, in it's place...show more content...
Most socialist societies are democracies in which elected officials direct the allocation of resources
in key industries. Some similarities between the three are that socialism and communism are
supposed to apply by all power being shared by everyone ideally getting out what they put in
proportionally, but communism and capitalism are the exact opposites. Some differences between
the three would be that capitalism is the ownership and control of the means of production. Also
have freedom which gives consumers the opportunity to purchase the goods and services that best
satisfy their preferences; while in a communism society all individual freedom is lost, making
socialism less efficient than communism.Something that drew up project, embraced trade, industry,
agriculture, education, and public health was the
Gosplan. Gosplan is the official planning organization. Something capitalism used was state farm;
which provides coverage for automobiles, homes, businesses, and individuals. An economic policy
that adapted in the former Soviet Union was perestroika, is what communist called it; it's the
fundamental restructuring of the economy and government. Under the restructuring, five–year plans
were retained, but the various ministries of production were to be converted to efficient, state owned
enterprises that would complete in a market economy.A well know communist was Karl Heinich

Economic System Advantages And Disadvantages
Economic System
There are many economic system in the study of economy .Economy system is the structure of
production, distribution of economic input and output and consumption of goods and services in an
economy. There are 3 types of economic system which are planned economy system (command
economy), mixed economy system and free market system (market economy). Therefore , different
countries have different economy system.
The Mixed Economy System Of Malaysia
Mixed economy system is the centrally planned economy system combining free market economy
system. In simple words, mixed economy includes free enterprise and government control or some
form of direct intervention by government....show more content...
This is another disadvantage as can be noticed in the international firms that maintain presence in the
country. This is because there is a need for competitiveness to be on a level ground if these firms are
to be profitable, but the note from all indication is that the chances of these firms to successes are
limited as a result of the limitation in their competitive capacity because the government has already
given the local firms a higher competitive advantage by imposing higher task on international brand,
and limiting the chances of these international brand to adopt price–based competitive

Economic Systems And Economic System
Economic system
"Economic system is that it consists of those situations which a given people or nation has nations
has chosen or accepted as the means through which resources are utilized for the satisfaction of
human wants." (studylecturenotes.com, 2016)
Economic system allows countries to follow procedure to produce goods using resources available
in the countries. It allows the countries to know how much and for whom to produce. There are
different types of economic systems in different countries and they all have their different
regulations according to their planned economic system. There are two different types of market:
Free Market and Planned market.
Free market
"An economic system in which prices are determined by unrestricted competition between privately
owned businesses" (oxforddictionaries.com, 2016)
The free market is the economic system where the government has no or few restrictions on buying
and selling goods from different countries. There are no tariffs or regulation processes being
determined for trades. This is a very good economy to start a business has it has no interest rate,
exchange rate or any force to stop them exchange their commodities in order to trade with different
countries. The free market allows the individual or group of people running the business to make
decision by themselves and allow that ease to trade with different countries at fair exchange schemes.
UK as Free Market:
"The UK is the 9th Largest export economy in the

Assignment on Economic System
An economic system is the combination of the various agencies, entities (or even sectors as
described by some authors) that provide the economic structure that defines the social community.
These agencies are joined by lines of trade and exchange along which goods, money etc. are
continuously flowing. An example of such a system for a closed economy is shown in the
flow–diagram. The economics system involves production, allocation of economic inputs,
distribution of economic outputs, landlords and land availability, households (earnings and
expenditure consumption of goods and services in an economy), capitalists, banks (finance
institutions) and government. It is a set of institutions and their various social relations.
The Four main...show more content...
Disadvantages of Market Economic System:
i) Since market does not exist for some resources, only some environmental resources might be
used and exchanged in the society. ii) The long cycle of production of some crops (e.g. timber and
tree crops) does not allow for rapid adjustment of demand and supply so gluts and shortages often
follow in

What Is Economic System
Table of Content
Table of Content1
TASK 12
a)Explanation on economics system attempt to allocate resources effectively.2
b)Assessment on the impact of fiscal and monetary policy on business organisation and their
activities.9
c)Explain Malaysian competition policy and other regulation that may impact company.15
TASK 217
a)Explanation on how market structures determine pricing and output decision of business.17
b)Illustration on the way in which market forces shape organisational responses.20
c)Judgement on how business and cultural environments shape the behaviour of your organisation.21
Conclusion22
REFERENCES23
TASK 1
a) Explanation on economics system attempt to allocate resources effectively.
What is economic...show more content...
(Economy Watch)
Every economy has their own characteristic. For free market is there are many economic freedoms,
there is competition among businesses, competition determines price which increase the quality of
the product, economic decisions are made by the basic principles of supply and demand, and profit
is the motive for increasing work rather than quotas.
Mixed economy
Mixed economy is combination from planned and free market economy. This economy system
allows the private company use their capital. This economy system allows the government to
interfere to the market. The resources are allocated from both the government and the private sector.
In this system the freedom in the economic activities are influenced by the Government 's regulation
and licensing policies.
The example of the country that implemented this economy system is Iceland, Sweden, France, and
United Kingdom.
There are several advantages and disadvantages of the mixed economy system. The advantages are
most business and industry can be left to private firms. This is because private firms tend to be more
efficient than government controlled firms because they have a profit incentive to cut costs and be
innovative. Second is government can pursue policies to provide macro–economic stability.
The

Essay about Comparative Economic Systems
Comparative Economic Systems Capitalism is the economic system found in the United States,
Japan, and Germany that are based on private ownership of productive property. Items are known
as productive since their use can produce other objects of economic value, income, or money.
Things such as a worker's tools, a farmer's fields, or a factory's machine can be considered as
productive property.
The basic four factors of production that are important for any nation's economy is land, human
resource labor, management, and capital. Land sums up to a variety of economic uses for
agriculture, mining, and forestry. Men and women who work in mines, factories, offices, hospitals,
and other places all provide labor that's essential...show more content...
According to laws of supply and demand when supplies become more plentiful, prices tend to
drop. Being that a firm is the only source of a product or service, it's known as a monopoly.
Monopolies can be very powerful due to the fact that they can charge as much as they want without
any competition. Consumers can choose from a variety of products and services, entrepreneurs can
switch from one business to another, and workers can quit their jobs and take new ones all has to do
with freedom of choice.
Adam Smith claimed in a classic expression that when all individuals are free to pursue their own
private interests, an "invisible hand" works to promote the general welfare. On the other hand, the
Laissez–Faire Theory confines that governmental activity should be confined to: (1) foreign relations
and national defense, (2) the maintenance of police and courts to protect private property and health,
safety, and morals of the people, (3) those few other functions that cannot be performed by private
enterprise at a profit.
Many aspects of American economic life are regulated by government at every level, like the
prohibition of trust, and protecting the environment. While American economic life is also promoted
by government, as well. For example, the government construct public roads and highways, and
provides such services as the postal system, the census, and weather reports.
Taking risks and making investments are an essential part of the

The Basics Of Canada's Mixed Economic System
Most countries around the world, including Canada, rely on a mixed market economy system in
which the allocation of most resources, goods and services is determined by supply and demand
through markets and prices. This system has many flaws, including environmental damage, high
income inequality both within and between countries, resource depletion and so on.
When I think of alternative economic system, I have to go back to the basics of mixed economic
system, what actually is and what it does. In every kind of society we have to consider two things;
how it produces goods and services and how these goods and services are distributed.one of the flaws
of is that it tends to learn more on the governmental control than the freedom of individuals.
Sometimes, government regulations may cost company so much that it put it out of market hence
paralyzing production features (Tsuruta, 1997). This encourages social democratic programs which
retain capitalist's mode of production. The program also retain fundamental issues of capitalism such
as cynical fluctuations, exploitation and alienation.
Another government negative is that it decides the amount of tax on products which may lead to
hike of the prices of such products hence people unwillingness to buy. Lack of price control
management can cause deficiencies in goods hence bringing market imbalance.
Social democracy is mostly flawed for maintaining a property–owning capitalist class which actively
reverse social democratic

Command Economic System
There are different types of economies, but the most common economic systems today are market
and command economy. Command economy is where there is a central authority that is basically
in charge of the what, how, and for whom decisions. All of the economic decisions are made by the
government. If the people make any type of decision in the economy then there is barely any
influence over how the basic economic questions are answered. In the market economic system, the
people and firms act in their own best interests to answer the what, how, and for who questions.
The system is arranged that allow buyers and sellers to come together in order to exchange goods
and services. The people are basically the center of the decision making; they are what...show more
content...
Now, someone who lives in honk Kong can start a business up in a few hours. This allows the
people of the country to make a lot of money because they won't have to work for someone, they
will be in charge of what they produce and what they sell to be successful in their companies. The
way the government of Hong Kong never goes bankrupt is they charge 15% on taxes. For most of
the people that's a lot of money being taken away but for people who take risks and chase their
dreams, this won't be a problem. The same goes for the Unites States, they are risk takes.
America is not even the biggest country in the world but it produces the most goods and services.
This is because the U.S government is not care takers, they will let the people do what they want
and be successful in their businesses. America is always open for new ideas. That is why America
will remain number one. Both socialism and capitalism can be debated which one is the best or
which system operates better. The point is that one lets you take risk and another will always have
the answers there for you. Both can benefit you but one will pay off more in the end if you take risk
and

Major Economic System Analysis
James Madison, one of the founders of our country, said, "A good government implies two things:
first, fidelity to the object of government, which is the happiness of the people; secondly, a
knowledge of the means by which that object can be best attained (Federalist no.62)." All economic
systems are controlled by a government, therefore the goals are chiefly the same. Most economic
systems have the prosperity of their population as their ultimate goal, but they utilize different
methods to accomplish it.
With the risk of generalizing, I will give a brief overview of the major economic systems. Capitalism
applies a method based on selfishness; it operates under the assumption that if there is no incentive
than nothing will be done. Communism's basis is equality;...show more content...
For example, Scandinavian countries have higher income tax rates than the U.S. and the U.K.
according to the _______ Their tax rates generally favor the poor, and income inequality is criticized.
Communist countries don't have the kind of taxes capitalist countries have; they take everything and
redistribute it amongst the people. In theory it is redistributed evenly, but generally only certain
people can buy more valuable things.
Taxes, as can be seen, display how a government runs and what it's philosophy is. How the taxes or
other income is utilized is another means by which we can know how and why an economic system
runs how it does. Most government expenditures can be classified as government programs, thus
those are what I am going to examine.
Capitalism views government programs as a necessary evil, inasmuch as capitalism is based on
letting the economy run without much interference. Capitalist countries normally have a police
force, and other basic government programs, but they don't normally have very extensive welfare
systems or government run health

Socialism
Today, more than ever, there is great debate over politics and which economic system works the
best. How needs and wants should be allocated, and who should do the allocating, is one of the most
highly debated topics in our current society. Be it communist dictators defending a command
economy, free market conservatives defending a market economy, or European liberals defending
socialism, everyone has an opinion. While all systems have flaws and merits, it must be decided
which system is the best for all citizens. When looking at both the financial well being of all
citizens, it is clear that market economies fall short on ensuring that the basic needs of all citizens
are met. If one looks at liberty and individual freedom, it is evident...show more content...
"The population of unemployed and underemployed explodes. There is a vicious circle here.
Because so many seek work, wages are very low. Because one wage cannot support even a small
family, more and more family members must seek employment. This move adds to the pool of
labor and further depresses wages." (Syracuse U. Press) Further, if wages begin to rise in one
country, other countries seize the opportunity and lower their wages even further. With this cycle of
falling wages and more and more people needing jobs, poverty increases drastically. With wages so
low, the owners of these large companies get richer and richer–the vast majority of wealth in a
country becomes concentrated in one small group of people. While this is good for those few, the
vast majority of citizens are shorthanded. Capitalism is an excellent system for the elite and for
increasing efficiency, but as far as providing for the needs of all of its citizens, it falls short. Thus,
capitalism is a system that causes and perpetuates poverty, and exploits its lower class. Capitalism,
or market economies in general, are systems of greed, and therefore support and commend
corruption. In a capitalistic society, everything is based off of greed and self interest. People are
forced to provide their own means, because no one else is going to do it for them.

Economic Systems Essay
Introduction
Economic systems are organized way in which a state or nation allocates its resources and
apportions goods and services in the national community. An economic system is slackly defined as
country's plan for its services, goods produced, and the exact way in which its economic plan is
carried out. There are three types of economic systems exist, they are command economy, market
economy, and mixed economy. Command economy is also sometimes calledplanned economy. The
expectations of this type of economy is that all major decisions that related to the construction or
production, distribution, commodity and service prices are all made by the government. However,
in market economy, national and state governments play a...show more content...
Businesses can decide which goods to produce and in what quantity and consumers can decide
what they want to purchase and at what price. The role of the state is limited to ensure right
precision in the prices charged by the sellers. Prices also have the function to allocate and
distribute a country's resources. Market leads to complete effectiveness bringing about the best
possible distribution of a country's resources in a perfect world. This would only happen in a
state of equilibrium and there is a unique price for every commodity. But in a realistic world
which is imperfect by nature, prices are never at equilibrium and very unstable depending upon
the vagaries of the market forces. This generally harms people living below the poverty line. It is
impossible for them to pay high prices in cases of demand shortage. Thus, the free market model
is not a viable option in developing countries which has a large number of poor. Besides, producers
are aim to minimize profit and maximize rent of production. Examples of countries that are using
this economy system are Hong Kong, USA, and UK. Many developing countries like India and
China are moving towards totally free–market economy. The command economy is government
directed. The market forces have very little say in such an economy. There is no private property.
On the other hand, a command economy aims at using all available resources for developing either

Advantages And Disadvantages Of Economic Systems
An economic system defines how the various sectors of the economy interact. In modern times,
people have defined economic systems to include government policies. In the olden days,
economic systems were pretty simple, as people used the trade by barter system which was very
straight forward. There were few treaties and almost no real rules of engagement. In this type of
trade, you only exchanged goods that you had for what you needed, or wanted. However, in modern
monetary economies, the setting is quite intricate. Huge established companies have a lot of
influence in the way business is done. Treaties and agreements are made every day, and governments
have made numerous laws to define trade, thus warranting the need for a more comprehensive...show
more content...
They do not have to produce what the government tells them to produce. This freedom, creates
competition which forces companies to create new products and features. A good example of
this is the cell phone market, as new phones are released each year, as individuals create new
ideas and new features for their consumers, another advantage is that due to consumer driving
decisions, it forces the producer to meet the requirements or features required by the consumer as
it influences the price of the product (Educator, 2015). However, from the advantages, a series of
disadvantages occur. Businesses driven by a profit motive may create a sense of danger for the
business. This could be as a result of poor working environment and unethical decisions may be
taken by business owners to try and gain some profit (Educator, 2015) . The market economy may
also cause the markets to crash as it happened to the United States during the great depression,
thereby creating a huge number of unemployed citizens which could lead to the devastation of
families (Educator, 2015).
Despite the effects of the depression and economic downturn in the early 2000s, the USA continues
to operate as a market economy (Educator,

Economic Systems Essay

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