Spectrum of Economic System

Means of production are privately owned Means of production are privately owned. Supply and demand determine prices, and businesses are free to direct resources into activities that promise the greatest profits. Capitalism

Capitalism Advantages Efficiency Freedom Decentralized- consumers and producers work together High degree of consumer satisfaction Flexibility to accommodate change Capitalism

Capitalism Disadvantages Does not satisfy everyone’s needs Ignores public goods Produces only for demand…so it ignores the poor Capitalism

Government owns and runs some of the basic productive resources in order to distribute output in ways deemed to be in the best interest of society Most are democracies Socialism

Advantages Those who are not fortunate or productive enough to earn it through competition still share in the benefits of society. People use electoral power to influence decisions Socialism

Socialism Disadvantages Less efficient More workers are hired than needed Taxes are generally higher Workers are reluctant to work in these countries Socialism

Political and economic framework where all property is collectively owned, labor is organized for the common advantage of the community, and everyone consumes according to their needs. So far no one has achieved pure communism Communism

Communism Characteristics Disadvantages Central planning authority rather than supply and demand Government controls labor…no choice Central planning authority makes all decisions and the state owns most of the major factors of production Individual risk taking is forbidden State decides what, how and for whom to produce Communism

Communism Disadvantages Individual freedom is lost Lacks incentives that encourage people to work hard Fails to meet the needs and wants of consumers Inefficiency of centralized planning Inability to change and be flexible Communism