different world economies economic geography. two schools of thought power to the people or many...
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Different World Economies
Economic Geography
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TWO SCHOOLS OF THOUGHT
• Power to the People or Many
• Power to the Government or Few
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Adam SmithAdam Smith (1723-1790) is considered the father of modern economic theory
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Wealth of Nations
Smith held that the wealth of a nation, what we today call the income of a nation, depends upon (1) the productivity of labor and (2) the proportion of laborers who are usefully employed. Because he assumed that the economy will automatically achieve full employment of its resources, he examined only those forces that determine the capacity of the nation to produce goods and services.
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Karl Marx
Karl Marx (1818-1883)
Co-author
The Communist Manifesto
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Communist Manifesto
For Marx, an ideal economic system would involve exchanges of equal value for equal value, where value is determined simply by the amount of work put into whatever is being produced.
A bicycle takes 1 hour to makeA car takes 100 hours to make
Therefore a car is worth 100 bikes
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Traditional Economies/
Subsistence Farming¨ Farmers raise just enough crops
for family to survive¨ People make goods for themselves¨ Rural, non-developed countries¨ Some parts of Asia, Africa and SA¨ The Inuit in Canada is a modern
day example. ¨ Little surplus or exchange of goods
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Traditional Economies¨ Farming, hunting and gathering
are done the same way as the generation before
¨ Economic activities are usually centered toward the family or ethnic unit
¨ Men and Women are given different economic roles and tasks
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Subsistence Agriculture self-sufficiency farming in which the farmers focus on growing enough food to feed their families.
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Cottage Industry
Small scale industries based in the home.
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Command Economies¨ The government or other central
authority makes decisions and determines how resources will be used
¨ Change can occur relatively easily¨ There is little individual freedom¨ There is no competition¨ Businesses are not run to create a profit
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Command Economies
¨ Consumers have few chooses in the market place
¨ Factories are concerned with quotas¨ Shortages are common because of
poorly run factories and farms¨ The government dictates the job in
which you work
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Command Economies¨ The government sets the prices of goods
and services
¨ Examples of command economies: Cuba, North Korea and the People’s Republic of China
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Free Market EconomiesCapitalism
Free Enterprise¨ Profit is the motive for increasing work
rather than quotas¨ Resources are owned and controlled by
individuals¨ Economic decisions are made by
individuals competing to earn profits¨ Individual freedom is considered very
important¨ SUPPLY AND DEMAND Wide selection
of consumer goods
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Market Economies
¨ There are many economic freedoms
¨ There is competition among businesses
¨ Competition determines price which increase the quality of the product
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SocialistMixed Economies
¨ Government owns large industries and sets some prices
¨ Government and individuals share the decision making process
¨ Government guides and regulates production of goods and services offered
¨ Individuals own means of production¨ Protects consumers and workers from unfair
policies
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Physical Geography affects on economic activities Saudi Arabia has vast oil reserves So it produces and refines oil
Because of its climate and soil Columbia grows coffee beans
Because Japan consists of islands Many people there engage in fishing
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Four Types of Economics¨ Traditional Economies¨ Command Economies¨ Free Market Economies¨ Socialist Economies
¨ Physical Geography
Review