Economic Systems Essay

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Toni Oniel 5/2/14 Macro-Economics Mr. McCoy Economic Systems In the world today, there are several different economic systems. Usually, the majority of countries will implement either a Capitalistic, Socialistic, Communistic, Traditional, or Mixed economy. Over the course of history, economists have studied several nations and the way they function. Certain systems are newer than others, and some are more successful than others. Capitalism, for example, appears to be one of the most successful economic systems. Capitalism is heavily based on who decides the answers to three questions: What is produced? How is it produced? Who receives the product? For Capitalism, the answers are the people. The people decide what is produced, how it is produced as well as who receives the product. It is a free-market economy that focuses on private ownership rights, free trade, and a non-government regulated economy. This system dates back as early as the Middle Ages when Europeans practiced merchant capitalism. Now, Capitalism is the dominant economic system in the world’s established nations. The United States, Germany, India, and Japan are all examples of Capitalistic countries. The U.S., Japan, and Germany are all in the top four biggest economies with the world’s largest GDPs. This demonstrates Capitalism’s great success. We owe a great deal of its success to Adam Smith. Smith was one of the biggest founders of Capitalism. Smith’s ideas and theories can be found in his book, An Inquiry into the Nature and Causes of the Wealth of Nations. In his book, Smith emphasizes that a country’s wealth is based on its productive ability. He also says that the government should have a very little impact on the economy. He believed that economies always h... ... middle of paper ... ...imitive will most definitely develop slower than those that implement current technology. Other examples of traditional economies would be clans, tribes, or nomadic groups. This is perhaps the oldest economic system since this could be applied before real civilizations came into existence. The world has seen a number of economic systems, and some will last longer than others. Either way, there is no perfect economic system because economics are constantly changing and morphing to meet their nations’ needs. Economists will continue to study these systems, as well as others, for years to come in hopes of discovering a new system that works even just a little bit better than what they currently use. As for now, there are no true Capitalist countries, true Socialistic, true Communistic or even true traditional economies. All nations seem to be approaching a compromise.

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