Communism COMMUNISM is an economic and political system in which the state (the government) makes almost all economic decisions and owns almost all the major factors of production. B. PROBLEMS WITH COMMUNISM The government has no way of knowing what to produce because prices don’t reflect SUPPLY and DEMAND . 2. Shortages of many items may develop. 3. Communism doesn’t inspire businesspeople to work hard, and is slowly disappearing as an alternative economic form. Most communism countries today are suffering severe economic depression , including North Korea and Cuba. 1. Some countries, such as Venezuela, are moving toward communism. 2. The former Soviet Union is moving toward free markets. 3.Russia now has a flat tax of 13%, a much lower tax rate than the U.S. has. Mixed Economies C. MIXED ECONOMIES are economic system in which some allocation of resources is made by the market and some by government.
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