Economic Theories

Corrin Nemeckay


Capitalism is an economic system which provides free choice and individual incentive for workers, investors, consumers and business enterprises. In this form of economy, the people own and control their property, resources and means of production. The people also make their own economic decisions based on what would fit their needs best. There is competition in capitalism and people do earn profit, resulting in economic growth. A country that has a capitalist economy is, for example, is the United States.


Socialism is an economic system in which the government owns the basic means of production, distributes products and wages, and provides social services such as healthcare and welfare. The society of people own and make the decisions regarding production and economic decisions through their government. A socialist government strives for the equal distribution of wealth and economic opportunity among people. A country that demonstrates a socialist government is Tanzania.


Communism is an economic system in which the central government directs all economic decisions. The government owns all means of production and makes all economic decisions, giving little room for competition between the producers of products and the buyers of those products. An example of a country that operates under a communist government is China.