Economic Systems

How people and societies conduct the exchange of goods and services around the world.

Number 1-4 in your notes. Next to each number write the economic system that you think goes with each phrase -

using Free Enterprise, Socialism, Communism, and Traditional.

1. From each according to his ability, to each according to his deeds.

2. From each according to his ability, to each according to his needs.

3. Production is privately owned & operated for profit, usually in competitive markets.

4. Production is primarily for survival, but can be traded for other necessary goods.

Answers…1. Socialism (From each according to his ability to

each according to his deeds.)

2. Communism (From each according to his ability to each according to his needs.)

3. Free Enterprise (Production is privately owned and operated for profit, usually in competitive

markets.)

4. Traditional (Production is primarily for survival, but can be traded for other necessary goods.)

Characteristics of Economic SystemsFundamental Questions: 1. How involved is the government?2. What is the principle that guides decisions

about: What should be produced? How should it be produced? Who gets what is produced?

Free EnterpriseHow involved is the government?

Free Enterprise is based on supply and demand, where products are produced by privately owned businesses with very little government involvement;

What is the guiding principle?Supply and demand determines what is produced and the means by which it is produced. Individuals with the means to purchase the goods receives the product.

SocialismHow involved is the government?

There is a greater level of government involvement – as the

government determines and provides what is in the interests of the

entire group.What is the guiding principle?

Socialism is based on what is needed for the greater good instead of what the consumer desires. In pure socialism, products are made through collective labor, and those whom contributed to the labor receive the finished product.

CommunismHow involved is the government?

The government or a small elite group typically owns factories,

businesses, and resource hubs. The government or elite group

make all the decisions.What is the guiding principle?

Communism is like socialism in that it is based on what is needed for the greater good and not the individual. Products are the result of collective labor, and those with the biggest need receive the finished product.

TraditionalTraditional economies:

exist in less developed societies usually consist of subsistence farming, or hunting/fishing and gathering typically lack modern tools and production methods operate a barter system for other necessary goods and services are guided by traditions, customs and beliefs that pass from generation to generation

Free Enterprise Socialism Communism Now, take what you have learned about these three

economic systems and use what you know about other countries to classify each country into one of these economic systems using a chart similar to the one below.

USA CubaJapan China England LaosSwedenCanada N. Korea MexicoVietnam Norway

Capitalism/Free Enterprise

Socialism

Command/Communism

* - It’s important to understand that these countries have Communist governments, yet claim to practice Socialist economic systems. However, based on their economic practices, we know they use a Command, or Communist economy system, although most are moving more to the left.

Capitalism/Free Enterprise

Socialism Command/Communism

USA Norway China*

Sweden Sweden Vietnam*

Canada Canada Cuba*

Japan North Korea*

England Laos*

Mexico

Production of Goods & ServicesSubsistence Agriculture v. Commercial Agriculture Based on their names, what do you think the

differences are between these two types of agriculture? How would you imagine that these differences manifest themselves?

Cottage Industries v. Commercial Industries Based on their names, what do you think the

differences are between these two types of industry? How would you imagine that these differences manifest themselves?

Number your paper from 1-10. For each of the photos we are going to look at, tell me what type of production you see (Commercial or Subsistence).

Attachment #2