1. Economic Systems Historical to Current

2. Objectives Categorize economic systems based on their method of production Identify influential economic systems C1 PO3, C4 PO 1ab

3. Traditional Economic Systems Purpose of production is group survival via hunting, gathering and/or sustenance farming. – Nomadic husbandry and/or “kitchen” farming – Little accumulation of personal wealth – Reliant on readily available natural resources Close family ties (tribe) provide “social security” Before 1800, 97% of the world’s people lived in traditional economic systems

5. Colonial Economic Systems Purpose of production is wealth of the individual colonial conquering power, through exploitation of colony’s FOP’s – Factories produce low cost goods for colonizer – Farms produce according to colonial demands – Natives are slaves/renters in their own land or transported Predominant economic system 1500-1950’s In the 1800’s 91 % of the world worked for the benefit of six European countries – UK, France, Spain, Portugal, Belgium and Netherlands

7. Free Market/Capitalist System Purpose of production is individual accumulation of capital (objects of value), via mechanized farming, industrial production and/or retailing of goods and services Competitions = Advantages of Efficiency, Variety and Ease of Regulation – Investors expect to make money on their investment – Based on use of technology to leverage productivity – Maximize Profit while minimizing Costs – “CAVEAT EMPTOR” (let the buyer beware) Workers responsible to accumulate enough capital to provide for “social security”

9. Command/Socialist Purpose of Production is the ensure the products and profits of production are fairly distributed throughout the society – Government commands (sets) production priorities and monitors distribution of products and profits – Industry and technology benefit the people – Every healthy adult must have a job – “From each, according to their needs, To each, according to their needs” Government responsible to provide “social security”

11. Free Market Vs. Command Free Market (Netherlands) 500 year tradition of independent entrepreneurship Extremely well educated, tolerant culture – Private drug use legal – Prostitution legal Very little government involvement in economic matters – Records and dispute resolution Command (Cuba) Abusive colonial experience Well educated but generally very poor people – Free health care – Free university and/or vocational training After Cuban Revolution, Fidel Castro’s government took complete control over economy – No private ownership of FOP’s

12. Globalization and Economic Systems Since the 1950’s, European countries (EU) have been slowly merging their economies into a supra-national system based on free markets mixed with some aspects of the command system North America (NAFTA), East Asia (ASEAN) and South America (Mercosur) have followed with various versions of “Mixed” Economies

13. Countries by Economic Type Traditional Bhutan Central African Republic Paraguay Free Market/Capitalist Netherlands Somalia Command/Socialist Cuba North Korea Mixed Economy United States of America France China Brazil