ECONOMICSANALYSIS OF CAPITALISTIC , SOCIALISTIC AND MIXED ECOMNOMY

Presented By:-

(NR 16069)Milan Kagarana

(NR 16118)Rujal Patel

(NR 16180)Pooja Thakkar

(NR 16015)Dipak Bhavsar

(NR 16015)Harsh Shah

(BETA CLASS)

Economic System Economics - Economics is the social science that analyzes the production,

distribution and consumption of goods & services.

Economic System is the system of production, distribution and consumption

An economic system is a mechanism (also defined as system or social institution) which deals with the production, distribution and consumption of goods and services in a particular society.

The economic system is composed of people, institutions and their relationships. It addresses the problems of economics like the allocation of the resources.

Economic System : An organized way in which a state or nation allocates its resources and distributes goods and services in the national community.

Types: Capitalism (Market Economy)

Socialism (Planned economy)

Mixed (Capitalism + Socialism) Economics - Economics is the social science that analyzes the production, distribution and consumption of goods & services.

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Economic System is the system of production, distribution and consumption

An economic system is a mechanism (also defined as system or social institution) which deals with the production, distribution and consumption of goods and services in a particular society.

The economic system is composed of people, institutions and their relationships. It addresses the problems of economics like the allocation of the resources.

Economic System : An organized way in which a state or nation allocates its resources and distributes goods and services in the national community.

There are three types of Economy Capitalism (Market Economy)

Socialism (Planned economy)

Mixed (Capitalism + Socialism

CAPITALISM Capitalism is an economic system in which the means of production are

privately owned and operated for profit, usually in competitive markets.

In other words An economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations.

Adam Smith (Father of Economics) (Book: Wealth of Nations).

Subject to certain restrictions, individuals (alone or with others) are free to decide where to invest, what to produce or sell, and what prices to charge. There is no natural limit to the range of their efforts in terms of assets, sales, and profits; or the number of customers, employees, and investors; or whether they operate in local, regional, national, or international markets.

Capitalist System Centralized to Decentralized system

Authoritarianism to representative democracy

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Free flow of resources

People strive for self interest in free market

Beneficial for society

Based on Demand & Supply Forces

Monopoly to Competitiveness

Self sufficiency to International interdependence

Producer interest to customer power

Examples United States

Canada

United Kingdom

Australia

Japan

Austria

Ireland

Sweden

Switzerland

Israel

United States Americans are known to be risk takers and capital makers. In the US it is

possible to begin a business of humble means and expand it to grow into a conglomerate business model for people wanting to start a new business.

Capitalism allows private ownership to spur production of goods and allows the private owner to keep and track profits for what sells.

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Benefits of Capitalism In years 1000–1820 world economy grew six-fold, in years 1820–1998

world economy grew 50-fold

Provides Choice to customers

Provides valuable goods and services

Capitalism actively rewards positive traits like hard work

Similarly, it punishes negative traits such as laziness and theft

Narrows the gap between common person and wealthy

Provides opportunity to realize dreams and desires

Capitalist societies usually do not have large black markets

Build on democracy

Social Good

Major limitations/ Criticism: Downfall of work ethics

Free Market + Self Interest

Accumulation of wealth

Encourages inequality in a society

Business lobbying with government

Monopolistic tendency

Human resource exploitation

Results in great disparities between income of people owning the capital resources and others

SOCIALISM

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Collective ownership and democratic control of the material means of production by the workers and the people

Socialism is a term applied to an economic system in which property is held in common and not individually, and relationships are governed by a political hierarchy. Common ownership doesn't mean decisions are made collectively, however. Instead, individuals in positions of authority make decisions in the name of the collective group.

Socialists argue that socialism would allow for wealth to be distributed based on how much one contributes to society, as opposed to how much capital one holds.

A primary goal of socialism is social equality and a distribution of Wealth based on one’s contribution to society and an economic arrangement that would serve the interests of society as a whole.

Socialism as we know it today, most commonly refers to "market socialism," which involves individual market exchanges organized by collective planning.

Difference between socialism and communism is that communists directly oppose the concept of capitalism, an economic system in which production is controlled by private interests. Socialists, on the other hand, believe socialism can exist within a capitalist society.

Examples China

Denmark

Finland

Netherlands

Canada

Sweden

Norway

Ireland

China In China the government manages and controls the economy. Many of

the domestic companies are owned and run by the government.

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Recently, the Chinese economy has become more geared towards capitalism, but is still officially socialist. Life in China remains relatively less stressful and more relaxed than life in capitalist countries like America.

Features of Socialism Social Ownership of means of production

Existence of public sector

Decisive role of Economic Planning

Production guided by Social Benefits

Abolition of exploitation of labor

Benefits of Socialism Better salaries

Stable Environment

Eliminates poverty

Better Products

Fulfills survival need

Opportunity for citizens to explore non-economically-productive pursuits

Limits of Socialism Distorted price signals

Suppression of economic democracy

Slow Technological advancements

Minimize self management

Reduced incentives

MIXED ECONOMY Any economy in which private corporate enterprises and public sector

enterprises exist side-by-side, and decisions taken through market

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mechanism are supplemented by some form of partial planning, is to be described as a mixed economy.

This system overcomes the disadvantages of both the market and planned economic systems.

Provides a clear demarcation of the boundaries of public sector and private sector so that the core sector and strategic sectors are invariably in the public sector.

The government intervenes to prevent undue concentration of economic power, and monopolistic and restrictive trade practices

The rights of the individual are respected and protected subject only to the requirements of public law and order and morality

Examples India

Iceland

France

Cuba

Russia

Germany

South Korea

Hong Kong

India In a mixed economy, private and public sectors go side by side. The

government directs economic activity in some socially important areas of the economy, the rest being left to the price mechanism to operate.

Before Independence, Indian economy was a ‘laissez faire’ economy. But post-independence, she adopted the mixed economy system.

Thus, it is clear from the following arguments that our economy is a mixed economy.

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Features Resources are owned both by the government as well as private

individuals. i.e. co-existence of both public sector and private sector.

Market forces prevail but are closely monitored by the government.

Monopolies may be existing but under close supervision of the government.

Advantages Producers and consumer have sovereignty to choose what to produce

and what to consume but production and consumption of harmful goods and services may be stopped by the government.

As compared to Market economy, a mixed economy may have less income inequality due to the role played by the government.

A mixed economy represents an achievable balance between individual initiative and social goals.

Limitations One disadvantage of mixed economies is that they tend to lean more

toward government control and less toward individual freedoms.

While most modern forms of government are consistent with some form of mixed economy, the mixed economy is most commonly associated with social democratic parties or nations run by social democratic governments.

Some critics of contemporary social democracy argue that when social democracy abandoned Marxism it also abandoned socialism and has become, in effect, a liberal capitalist movement.

Marxian socialists argue that because social democratic programs retain the capitalist mode of production they also retain the fundamental issues of capitalism, including cyclical fluctuations, exploitation and alienation.

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