Work and Economy
November 14, 2007
The system by which goods and services are produced, distributed, and consumed.
A system for producing, distributing, and consuming goods and services will depend
on both its level of development and its political ideology.
Three Major Economic Systems
An economic system based on the principles of market competition,
private property, and the pursuit of profit.
Under capitalism, owners keep a surplus of what is generated by the
economy; this is their
, which may be in the form of money, other
financial assets, and other commodities.
An economic system in which the means of production are held largely in
private hands, and the main incentive for economic activity is the
accumulation of profits (Schaefer 2008).
In practice, capitalist systems vary in the degree to which the
government regulates private ownership and economic activity.
: form of capitalism proposed by Adam Smith where
businesses compete freely, with minimal government intervention.
such a system the market regulates itself.
While private ownership and maximization of profits still remain the most
significant characteristics of capitalist economic systems.
today’s form of capitalism features extensive government regulation or
An economic institution characterized by state ownership and
management of the basic industries; that is, the means of production are
the property of the state.
Marx argued that due to the inherent inconsistencies in capitalism, it
would eventually give way to egalitarian, state-dominated socialism,
followed by a transition to stateless, classless communism.
In fact, most countries have a capitalist and socialist mix (ex: social
Under socialism, the means of production and distribution in a society are
collectively rather than privately owned (Schaeffer 2008). The basic
objective of the economic system is to meet people’s needs rather than to
They reject the idea that laissez-faire economic relations benefit the
general public. They believe that a democratic controlled central
government, acting on behalf of the people, should make basic economic