Economic Systems



The government owns most of the factors of production and decides how to distribute the resources and what services and products that will be provided. Communism is also known as command system, is a economics system where the upper level of government makes all the decisions. The state owns the land, natural resources, industry, banks, and transportation facilities. In communism, competition is not a problem because the government owns all basic means of production. Therefore, government gets most profit. Countries that are under a communist rule include China, North Korea, and Cuba.

"Economic Systems: Capitalism, Communism, and Socialism." Economic Systems: Capitalism, Communism, and Socialism. Web. 14 Jan. 2016.

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In Capitalism normal citizens own the means of production. Individuals have a free choice to make any economic decision that seems the best according to their lifestyle. In Capitalism, there is incentive for workers, investors, consumers, and business enterprises because there are no limits on success. Workers are rewarded for the quality of labor they provide. Overall, to enjoy pure capitalism there are five main factors: the private ownership or control of property/economic resources, free enterprise, competition among businesses, freedom of choice, and the possibility of profit. Capitalist countries that exist today consist of New Zealand, Australia, and the United States. They are capitalist countries because they all operate on the free-market principle. This means that buyers and sellers make free choices in the marketplace. These three countries also have mixed economies, which means that there is some government control on the economy but the people still have the freedom of choice.

Ferguson, John Henry, and Dean Eugene McHenry. The American System of Government. 12th ed. New York: McGraw-Hill, 1973. Print.

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is the gateway between capitalism and communism. Socialism is an economic system where the means of production, such as money and other forms of capital, are owned by the state or public. A socialist economic system operates on the premise that what is good for one is good for all. Everyone works for their own good and the good of everyone else. The government decides how wealth is distributed among the people. Socialism breaks the capitalist monopolies means of production this restores the individual tools of labor. One of three nations that fit into this economy is Cuba is one of the most prominent socialist nations, by having a mostly state-run economy. Cuba has no stock exchange which is a good way to tell if there is a capital-free economy. 80% of Cuba’s working class are in some state-owned facility. A second nation that fits under the socialist economy is China; A large amount of the Chinese economy is still government-controlled, although the number of government programs has declined significantly. Universal health care, for example, is being discontinued. North Korea is a mostly state-controlled economy and has many social programs similar to that of Cuba’s social programs.

Shobhit, Seth. "Socialist Economies: How China, Cuba And North Korea Work | Investopedia." Investopedia. 15 Aug. 2014. Web. 14 Jan. 2016. <>.

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