Economic Systems : Economic System, Laissez Faire, And The Market System

2455 Words Nov 28th, 2016 10 Pages
Today I will focus on economic systems, which are a particular set of institutional arrangements and a coordinating mechanism to respond the economizing problem. The economic system focuses on five things what goods are produced, how are they produced, who gets them, how to accommodate change, and how to promote technological progress. Economic systems differ in two ways as who owns the factors of production and the method used to motivate, coordinate, and direct economic activity. Economic systems can be classified as at one extreme you have laissez-faire capitalism, in which government intervention is at a very minimum and markets and prices are allowed to direct nearly all-economic activity. We also have the command system, in which governments have total control over all economic activity. The vast majority of national economies lie somewhere in the middle, utilizing some mixture of centralized government regulation and decentralized markets and prices. I will focus on three primary systems that include the command system, laissez-faire, and the market system. I will describe each one function, pros and cons of each one and the characteristics of each one.

First and foremost we have the laissez-faire capitalism or pure capitalism in which the government’s role would be limited to protecting private property from theft and aggression and establishing a legal environment in which contracts would be enforced and people could interact in markets to buy and sell goods,…

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