Economic Systems

Topics: Capitalism, Communism, Economics Pages: 5 (1810 words) Published: October 28, 2010
Nick Farris
Research Paper
5th Hour
What is the Best System: The Economic System Research Paper
Our culture, ideas, and beliefs all come from economics. Many people don’t realize it, but the way our society functions depends solely on its economic system. One may ask, what is an economic system? And how could it possibly dictate most, if not all, aspects of life? Simply put, an economic system is the way in which society produces and distributes goods and services to consumers. In modern times, a nation’s economic system is determined and implemented by its federal government. Hundreds of theories about economics exist, but realistically when implemented they phase into one of two categories. An economic system can’t be right or wrong; however, some systems do make society function more fair and efficiently than others.

Economic systems are classified into two different categories: hands-on and hands- off. A hands-on economic system is one which consists of significant government intervention in order to ensure social justice and a more equal distribution of wealth. Within a hands-on system lies three sub-categories, the first being private oriented. A private oriented hands-on system consists of multiple private organizations joining together as a single governing body which implements and enforces all social, economic, and political policies. In a private hands-on systems, the private businesses and the government are one in the same. This type of system is common in fascist regimes such as Nazi Germany. The second sub-category is known as state - oriented economics. The most common form of state - oriented economics is Communism. Communism aims at creating a classless society where goods and property are publicly owned. The entire economy is centrally planned, meaning the government determines how much of a good is produced, what each good costs, and who receives them. The third and final hands-on system is called communal oriented. Similar to State oriented, communal oriented involves groups or communes allocating resources and determining the costs of goods and services. This usually takes place at a federal level and leads to a more egalitarian society. However, this type of system tends to be highly inefficient and sometimes unfair to certain groups of people.

The second classification of economic systems is known as hands-off. Hands-off systems generally allow the market to determine prices, production, and costs. Hands-off systems tend to be more efficient than hands on systems, however each system has its own flaws. Much like hands-on systems, hands-off systems have three subcategories: private, state, and communal. Hands-off private oriented systems involve no state or government intervention, it is the most basic system, however an actual private hands-off system has never been put to practice. Every aspect of the economy is left to the market, literally everything, which is not always a good thing. The advocates of this type of system believe no government is necessary and that the markets will take care of everything. Capitalism is the most common form of private oriented economics, however, society’s perception of Capitalism today is not what Capitalism was meant to be. State handsRochester Community SchoolsPage 21/8/10-off systems call for government intervention but still allow the market to determine prices and costs of goods and services. The government owns the factors of production such as land, labor, and capitol but all other economic factors such as price, distribution, and output are determined by the private sector. The third and final hands-off system is known as a communal oriented system. This system consists of decentralized co-ops that have a collective ownership on the means of production. That means, that the factors of production are owned publicly, however, the ownership of the factors is distributed equally among all regions of a certain nation. This system is the...
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