The Failure Of An Economic System

Throughout history, the world has seen the emergence of different economic systems, evolving in response to different ideologies and adapting to the needs of many societies. However, not all economic systems functioned as depicted by their creators, and ended up failing. In this paper, every economic system will be analyzed in order to show if they succeeded or failed to become a realistic and positive way of distributing resources and trading goods and services for the countries in which they were established. To do this, the definition of an economic system will be presented, and it will also be established what makes a system a failure or a successful one. Each economic system will be described as well as their main characteristics as conceived …show more content…
These factors can determine if a country has the possibility of succeeding, as they directly affect how the economy of a nation will respond and evolve to different situations. The following elements stand out as more important in determining any economic system. A nation’s economic system is shaped by its geography, which affects its access to natural resources, being more benefited those who have the more quantity and variety of resources. Besides, its location with regards to other countries (landlocked, double landlocked, island, etc.) or access or not to the ocean can directly affect its trade, and consequently, its economy. Economies are also highly influenced by history and the conjunction of past events involving the society analyzed. These events have varied forms, such as war, plague, economic depression, hyperinflation, colonialism, immigration, and political revolution which tends to initiate fundamental changes in many different economic systems. Another important determinant of economic systems is the technological capability of the nation state considered. As economic systems evolve, new opportunities for technological innovation appear, and innovation, in turn, fosters the further evolution of the system and maximizes an economy’s possibility to succeed. It is worth mentioning …show more content…
As Nielsen (2013) explains, a dictatorship is usually not capable of surviving for too long due to the costs it needs in order to operate. In a dictatorship, new ideas are not encouraged and they are seen as dangerous because they might challenge the power. A sensation and general feeling of fear tends to rise in the population, as they realize that the best choice is to avoid being noticed, so they don’t feel the need to do any extraordinary events, as doing so could be dangerous. As thinking independently and having new ideas is punished, communist countries usually suffer the lack of innovators that can make the society progress in many