Economic Systems

11 Key excerpts on "Economic Systems"

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  Dollars and Change

  • H. Clark Johnson(Author)
  • 2001(Publication Date)
  • Yale University Press

    (Publisher)

  Although centrally planned economies have now all but disappeared from the world's stage, the capitalist world itself continues to be marked, as it has always been, by considerable variety. Some countries, such as France and Germany, have had substantial government ownership of enterprises while others, like Sweden and the United States, have had little. Some countries, like those of Scandinavia, the Netherlands, and Germany, have large welfare states that redistribute substantial portions of their national product, while others, like the United States and Japan, have undertaken less redistribution of income, although the U.S. govern-ment's involvement in welfare and other programs is still great by the standards of the nineteenth century. In the developing world, millions of rural people have lived until recently under semifeudal conditions, and massive protectionism and regulation has marked most economies in Asia, Africa, and Latin America until the present decade. Economic sys-tems thus retain considerable variation. IOO [ E C O N O M I C S Y S T E M S ] Economic Systems DEFINED AND ILLUSTRATED The term economic system refers to a set of institutions, routines, or social arrangements under which resources are managed and goods and services are produced and distributed. System connotes a set of ele-ments that interact with one another to form a unified whole. Insti-tutions, such as the laws that specify the rights of persons over things (property rights), organizations, such as business firms, labor unions, cooperatives, and governments, and procedures, such as contracting, auc-tions, and voting, are all elements of an economic system. In an economic system, people, resources, and goods might also be viewed as participat-ing or constitutive elements. The system is economic to the extent that through it people attempt to meet their material needs and wants, and in it the basic economic functions of production and distribution take place.

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  A Theory of Economic Systems

  • Manuel Gottlieb, Charles Tilly, Edward Shorter(Authors)
  • 2013(Publication Date)
  • Academic Press

    (Publisher)

  And for all these societies, both large and small, historic changes in modes of production, technologies, states of consciousness, political organi-zation, and culture were constantly altering one or more of the components that make up an economic system. Each distinct society will thus have a more or less unique economic system at any one time. At varying rates that system will change over time. The reality of this innumerable variety of Economic Systems found in history has been diminished by the tendency to group con-crete systems into broad classes or family types. Some form of grouping is indispensable to cope with the fact that though systems are all unique they are simultaneously similar in some respects. Where these respects are suffi-2 0 See the authoritative presentation in Shmelv, Private Household Plot, 1975, pages 79 ff. P R E I N D U S T R I A L S Y S T E M S 397 ciently important and critical, it becomes helpful to group systems sharing a given number of features into a broad class. But the class itself is not the historic reality; only real are the concrete systems—all different in significant respects. It would be best to work out schemes of classifying Economic Systems after a sufficient number of them have been precisely identified or catalogued in terms of carefully defined criteria. One could then contrive different sets or models of system characteristics, yielding different groups of systems. The most specified sets of criteria would, of course, yield the largest number of family types; and, conversely, use of only a few defining criteria would permit a few broad classes to emerge with many essential features of systems omitted from view. Such a scheme of classification was provided in its simplest pos-sible form by the first major theorist of comparative Economic Systems. Karl Marx selected only one system criteria for system classification—the predom-inant mode of production.

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  21st Century Sociology: A Reference Handbook

  • Clifton D. Bryant, Dennis L. Peck, Clifton D. Bryant, Dennis L. Peck(Authors)
  • 2006(Publication Date)
  • SAGE Publications, Inc

    (Publisher)

  Three established dynamic system theoretic approaches can be identified that develop a socioeconomic approach to analyzing capitalist systems and their evolution: the Marxian systems approach, the world systems approach, and the actor-oriented dynamic systems approach (inspired by Walter Buckley’s work but also incorporating Marxian and Weberian elements). These three systems approaches are methodologically holistic (Gindoff and Ritzer 1994) but with varying degrees of attention to human agency and microprocesses.

  Historical, Political Economic Systems Theory

  The historical approach of Marx ([1867] 1967, 1973a, 1973b; see Mandel 1993) and van Parijs (1993), among others, conceives of all societies as evolving in a series of stages. Each stage is characterized by a particular structure, a certain mode of production, as well as other structures, the “superstructure” of politics, ideology, and culture derived from and dependent on the economic base or structure of production. Human beings generate these structures through their own actions but not always under the conditions of their own choosing or in the ways they intend. Marx and Marxists focused their theoretical and empirical research on capitalist systems and their emergence and transformation.

  Because of contradictions between structures—between, for instance, the “forces of production” (among other things, new knowledge, techniques, and scientific developments that contribute to generating such forces) and the “relations of production” (e.g., the private ownership of the means of production or systems of management and control)—the capitalist system undergoes crises, leading eventually to transformation. Also, modern capitalism accomplishes the production of larger and larger quantities of goods, but such effective abundance is threatened by insufficient demand from consumers (wage earners). Producers are faced with declining profits, some or many going bankrupt. This leads to consolidation and sets the stage for future, often more encompassing, crises.

  According to Marx, advances in technology and knowledge, increasing the size of production units, contribute to changes in the mode of production and hence redistribute power among classes over time. And the changing power distributions cause changes in political and cultural institutions3

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  Comparative Economics

  • A. Ben-Ner, J. Montias, E. Neuberger(Authors)
  • 2013(Publication Date)
  • Routledge

    (Publisher)

  2. INITIAL CONCEPTS AND BUILDING BLOCKS

  2.1 Primitive term

  Participants in different systems frequently disagree on the precise meaning of such words as ‘planning’, ‘welfare’, ‘market’ and other socially conditioned concepts. To avoid this ambiguity, one would ideally wish to construct precise definitions of such concepts from simpler ones, starting with undefined ‘primitives’ such as ‘economic’ ‘individual,’ ‘time,’ ‘action,’ and so forth that would be unlikely to elicit disagreement among individuals participating in different systems. In this limited space, we will not be able to do this systematically. We only supply approximate definitions, which would require further refinement for any theoretical or statistical application, and suggest some examples to illustrate the significance of the concepts we introduce for comparative economic analysis. In building up definitions in this chapter, we will treat production, activity and distribution as primitives. The terms that we attempt to define more precisely are written in italics. Those that are somewhat imprecise and difficult to define are placed in quotes (e.g. ‘capitalism,’ ‘socialism’).

  An economy consists of three sets: (i) a set of individuals (the economy’s participants); (ii) a set of rules, customs and regular procedures constraining their decisions with respect to the economic activities in which they engage (the economy’s system ); and (iii) a set of the states of the environment in which the economy is embedded in a given period of time and in a given geographic area (the economy’s environment

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  Economics

  Theory and Practice

  • Patrick J. Welch, Gerry F. Welch(Authors)
  • 2016(Publication Date)
  • Wiley

    (Publisher)

  Input or Resource Markets Output or Product Markets Businesses Households The U.S. Economic System 41 the other end are pure planned economies. The world’s economies lie between these extremes and combine elements of market, or individual, decision making and planned, or collective, decision making. Where an economy falls on the continuum depends on its core philosophy about decision making and the degree to which it devi- ates from this core. For example, the United States lies closer to the market end of the continuum because of its reliance on markets, and Cuba lies closer to the planned end of the continuum because of its reliance on planning. Test Your Understanding, “Economic Decision Making and the Circular Flow,” allows you to practice distinguishing among the different Economic Systems and to review the key relationships in a market economy. Changing Economic Systems Over the past few decades, dramatic changes have occurred in many of the world’s planned economies. The former Soviet Union, Poland, China, and other nations have been moving toward greater use of free markets and individual decision mak- ing. Described in terms of Figure 2.3, these and other planned economies have been shifting to the left along the continuum of economic decision making. In several of these countries, economic reform has been accompanied by greater political freedom. An essential element for planned economies to move toward market economies is privatization. Individuals are granted property rights to factors of production that were once collectively owned or owned by the state. Without the protection of private ownership and the right to profit that it secures, individuals have few incentives to carry out the entrepreneurial functions that drive a market economy. Successful pri- vatization is key to the actual transformation of a planned to a market economy.

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  International Business, International Adaptation

  • Shad Morris, James Oldroyd(Authors)
  • 2023(Publication Date)
  • Wiley

    (Publisher)

  We will discuss all these topics and more in this chapter. 5.1 UNDERSTANDING Economic Systems LEARNING OBJECTIVE Describe how Economic Systems differ. An important consideration for international businesses is the type of economic system of a country. Market-based economy, for instance, encourages individuals and businesses to determine how much they privately consume and invest in the economy. Capitalism is an economic system in which factors of trade and production are controlled by private owners rather than by the state. Capital generally refers to a resource that can serve to generate wealth, such as factories, equipment, investment accounts, software, land, and education. In a capitalist economic system, individuals have property rights, meaning they can own capital, make decisions about how to use it, and reap the returns or losses of their business activities. A significant by-product of property rights and capital ownership is that individuals can generate personal wealth from their capital. During the 1800s, many countries industrialized or began building businesses and manufacturing on a large scale. As a result of industrializa- tion, individuals who owned and had control over valuable capital resources became extremely wealthy. One of the most famous capitalists in history is John D. Rockefeller, who founded Standard Oil in 1870. As a partner in Standard Oil Company, Rockefeller owned land, rights to petroleum, and the equipment needed to refine oil into its profitable by-products. By the late 1800s, Rockefeller controlled 91 percent of all oil production in the United States, and, as a result, he became the first billionaire in history. Adjusted for inflation, Rockefeller’s personal fortune is estimated to have been somewhere between $300 billion and $600 billion in today’s dollars.

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  FTCE Social Science 6-12 (037) Book + Online

  • Cynthia Metcalf, Rhonda Atkinson(Authors)
  • 2017(Publication Date)
  • Research & Education Association

    (Publisher)

  Economic growth will make more combinations of goods and services feasible but will not end the problem of scarcity. Figure 2.3 Production Possibilities Curve (Economic Growth) COMPETENCY 2.2 Identify how Economic Systems (e.g., market, command, traditional) answer the three basic economic questions. An economic system of a country manages goods and services. All Economic Systems must answer the same basic economic questions: What to produce? How to produce it? For whom to produce? Different Economic Systems answer these questions in different ways. Traditional Economies— Traditional systems usually rely on custom/tradition to determine production and distribution questions. While not static, traditional systems tend to be slow to change and ill-equipped to propel a society into sustained growth. Today many of the poorer third-world countries depend on traditional economies. Command —Command economies rely on a central authority, be it a dictator or democratically constituted government, to make all decisions about the economy. Market —In a pure market system, there is no central authority, and custom plays very little role in this rather competitive market. Buyers and sellers decide what goods and services will be produced. Every consumer makes buying decisions based on his or her own needs, desires, and income. Individual self-interest rules over the good of others. Every producer decides for himself or herself what goods or services to produce, what the prices will be, which resources are used, and what production methods to use. Producers tend to be solely motivated by a desire for profit. Mixed —A mixed economy contains elements from traditional, command, and market economies. Most countries have a form of mixed economy, although the mixture of tradition, command, and market sectors differs greatly. The U.S. economy has traditionally placed great emphasis on the market, although there is a large and active government (command) sector

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  Escape from Overshoot

  Economics for a Planet in Peril

  • Peter A. Victor(Author)
  • 2023(Publication Date)
  • New Society Publishers

    (Publisher)

  The Economic System: How Does it Work?

  The story is told of an Englishman in a Welsh pub asking directions and being told, “If you want to get there I wouldn’t start from here.” One thing of which we can be certain is that whatever the future turns out to be, it must start from the present. In terms of the futures cone, the present is the point from which the cone is projected forward. What projections we make, and which ones we consider probable, plausible, possible, or preposterous depends on the forces that are propelling us into the future. Of primary interest in this book are the economic forces. In Chapter One we placed the economic cycle at the centre of the image of the Earth, with material and energy flows connecting the economy to the natural environment. Now it is time to describe the economic system most of us live under in a little more detail. How we understand the economic system is critical to how we think about the future.

  To make this task manageable, we will confine ourselves to capitalism as represented by the member countries of the Organization for Economic Cooperation and Development (OECD), with only passing reference to other Economic Systems and non-member countries. Even with this limitation, there are major differences of opinion among economists about the nature of capitalism and how it functions, or even whether to name this economic system capitalism at all, preferring instead terms like “market” or “market-based” economies. The point is, different conceptions of the dominant economic system and how it works today lead to different ideas about tomorrow, where some forms of capitalism may still prevail, or may be displaced by forms of socialism, or by some other, unnamed economic system emerging from the escape from overshoot and other pressures.

  The future of capitalism, the dominant economic system of the first decades of the twenty-first century, is highly uncertain. But we do know that capitalism, in its various forms, is where most countries are starting from today. How we think about the future of capitalism is greatly influenced by how we conceive it, and there are many ways of doing that. Three conceptions of capitalism that have long intellectual histories and many adherents are: (1) neoclassical economics with a strong emphasis on markets; (2) Keynesian and post-Keynesian economics, also supporting markets, but with an emphasis on aggregate demand and finance; and (3) Marxian and post-Marxian economics with an emphasis on capital accumulation and social class. Each conception represents a way of understanding capitalism that differs in the aspects and inter-relationships it emphasizes, and each has something to offer when we think about the likelihood of different futures. For our purposes, it is sufficient to focus on what differentiates these three conceptions of capitalism, rather than their similarities. Even then, we will only consider a few features of each, but enough to see there is something of value from them all in understanding different forms of capitalism.

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  Systems Modeling and Computer Simulation

  • Naim Kheir(Author)
  • 2018(Publication Date)
  • Routledge

    (Publisher)

  17Economic Systems

  Lawrence W. Taylor Jr. †   Investment Analysis Company, Williamsburg, Virginia

  17.1 Introduction

  National economies are dynamic in that economic conditions change with time and are affected by unexpected shocks and governmental controls. Although the economic principles that govern their dynamics are not as precise as for physical systems, it is nevertheless possible to model and simulate national economies with reasonable accuracy. As with the physical systems discussed in Chaps. 1 and 2 , a set of ordinary differential equations is used to depict the complex interactions of the economic variables.

  Although it is possible to simulate almost any aspect of the national economy, some difficulties must be overcome. First, the bulk of economics literature concentrates on illustrative notions that address the effects of changes in individual variables. Seldom are there quantitative relationships, and rarer still are there dynamic relationships suitable for simulation. To make matters worse, economic views are often inconsistent and controversial. Second, the economic database is vast and diverse, but limited in significant ways. The data are periodic, usually monthly or quarterly, noisy, and often biased. Because of the tendency of economic conditions to fluctuate periodically, as in the 4 year business cycle, the frequency content of economic variables is concentrated at 1.57 rad/ year. This causes a strong correlation among economic variables, which presents an obstacle in differentiating between cause and effect. The complexity of a complete economic system is truly awesome. It is the task of the econometrician to model the particular aspect of the economy of interest with minimum complexity.

  The objective of this chapter is to develop macroeconometric models of the United States and employ them for forecasting and for studying policies for regulating inflation and unemployment. To achieve this objective, (1) it is necessary to model the pertinent economic variables, including those affected directly by governmental control; (2) it is also necessary to estimate the model parameters from historical data; (3) finally, it is possible to simulate monetary policy in controlling inflation and to simulate future economic conditions.

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  International Business

  • Shad Morris, James Oldroyd(Authors)
  • 2020(Publication Date)
  • Wiley

    (Publisher)

  An important consideration for international businesses is the type of economic system a country has. Market-based economy for instance, encourage individuals and businesses to determine how much they privately consume and invest in the economy. Capitalism is an AFPTV/Getty Images Economic Systems capitalism an economic system in which factors of trade and pro- duction are controlled by private owners rather than by the state market-based economy an economic system in which factors of trade and production are con- trolled by private owners rather than by thestate; also known as capitalism Understanding Economic Systems 75 economic system in which factors of trade and production are controlled by private owners rather than by the state. Capital generally refers to a resource that can serve to generate wealth, such as factories, equipment, investment accounts, software, land, and education. In a capitalist economic system, individuals have property rights, meaning they can own capital, make decisions about how to use it, and reap the returns or losses of their business activities. A significant by-product of property rights and capital ownership is that individuals can gen- erate personal wealth from their capital. During the 1800s, many countries industrialized, or began building businesses and manufacturing on a large scale. As a result of industrialization, individuals who owned and had control over valuable capital resources became extremely wealthy. One of the most famous capitalists in history is John D. Rockefeller, who founded Standard Oil in 1870. As a partner in Standard Oil Company, Rockefeller owned land, rights to petroleum, and the equip- ment needed to refine oil into its profitable by-products. By the late 1800s Rockefeller controlled 91 percent of all oil production in the United States, and, as a result, he became the first billionaire in history.

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  The Economy as a System of Power

  Corporate Powers

  • Warren Samuels(Author)
  • 2017(Publication Date)
  • Routledge

    (Publisher)

  Consideration of the public sector, therefore, suggests the magnitude of the problem. The public sector represents a sizable part of the total allocation of human and nonhuman resources in all market-orientated economies. We have noted that although the resources so allocated have prices attached to them, they are not fundamentally allocated by prices, but by fiat. The fiat comes from the political economy in the form of decisions to tax and to spend which are made by various officials selected in various ways (most through election, although by appointment in many critical areas, such as the Office of Management and Budget), and by consumers and producers organized into political units. What I am suggesting is that the manner and degree to which the economy develops, conveys, reacts to, and acts on societal values is as crucial to understanding and evaluating the political economy as the psychological basis of demand theory is to considering the behavior of individual consumers. Whereas economics may worry at least on occasion about its psychological assumptions, both in demand theory and the theory of the firm (the units involved in conventional economic “value” theory), little concern is expressed for the assumptions or characteristics of the political system through which individual and societal values are intermingled in myriad complex but crucial ways. Here dollar votes often are weighted by power considerations and in any case must be combined with man votes to represent the total allocational machinery—the political economy. Economics traditionally views “the market” as the only such individual-social conduit with which it need concern itself. But while it has concerned itself with its view of the individual, it has been relatively oblivious to the character of the other end of the conduit.

  Such analysis is a necessary prerequisite to a meaningful evaluation of the performance of the economy in coping with its value problem. This emphasis is what distinguishes the position taken here from that taken by radicals, liberals, or conservatives, all of whom ultimately would seem to advocate the substitution of their own values for those they perceive in the system. The radical dissent involves, it is true, much that customarily is considered out of the bailiwick of conventional economic theory (the total distribution of power, for example). To the extent that the argument here is that the political economist must focus on the total allocation system, on how the political economy both shapes and responds to emergent societal values if it is to comprehend the meaning of the economy, our view, like that of the radicals, is broader than that customarily taken. To the extent that the radical critique is based on their dislike of the results they perceive emerging from the system, judgments with which we may agree or disagree, the argument here is different from the radical dissent.28

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