Defining Capitalism and Command Economies

Defining Capitalism and Command Economies of economics Economics is the train of how wealth is created and distributed which, includes the products produced and sold by crease (Pride, Hughes, & group A Kapoor, 2011, p. 10). When studied, it is the science or the financial considerations of the buying, staging, and the production of goods and services that ar consumed by our world and its people. There ar cardinal different perspectives when studying economics.Microeconomics and macroeconomics be different in that microeconomics is the study of the individual and business decisions that affect the frugality, whereas macroeconomics is the study of national and global scrimping (Pride et al, 2011, p. 10). Together, micro and macroeconomics examine the decisions of individuals, businesses, the government, and baseball club and how alone of these people deal with making and distributing the money that is derived from the production of services and goods. These decisions have with the prosperity of the nation, determine the prudence.There atomic number 18 two different economic organisations in todays world. Capitalistic nations and those nations that are run under postulate economies are the two systems that butt end be found across the globe. The two systems differ in two major ways. First, they vary in the will power of the factors of production. These factors are the land and natural resources, labor, capital, and entrepreneurship (Pride et al, 2011, pp. 10-11). Second, the way that particular nations system answers quartet questions listed by Pride, Hughes, and Kapoor (2011), determines a nations economy (p. 11).Those four questions listed are concerning what products, how the products, for whom the products are produced and who owns and controls the major factors of production as aforementioned. One major judgment on the impact a nations economic system has on all the economic activities of its citizens is when there is a consideration th at a countrys system determines how the factors of production are used to put together the needs of the society it supports (Pride et al, 2011, p. 11). An eighteenth century Scottish economist, Adam smith published a book in 1776, called Wealth of Nations.Smith argued that a societys interests are outperform served when the individuals within that society are allowed to track their own self-interest (Pride et al, 2011, p. 11). Smith came up with a term called the unseeable hand which describes how people work hard when they know they can upbeat financially from the goods or services they can provide and as a result, these personal financial gains benefit others and that nations economy. Pride et al (2011), discusses how the success of people in the community and therefore the success of the nation, can be tied indirectly to the success of the individual small business owners (p. 1).Smiths ideas promote individuals should have the ability to succeed and create wealth by owning property and resources. The government should not be involved in the food market and should be limited to government duties owed to the nation. This system Smith describes, is cognise as laissez faire, declares the government should have no interference in the economy and solely provide defense against enemies, ensure internal order, and furnish frequent works and education (Pride et al, 2011, p. 2). Smith also believes in the concept of market economy, where the producers and buyers of good and services determine the amount produced and the selling price. As declared earlier, resources should be own by individuals and they should be entitled to use and sell their goods as they choose, in addition to enjoying the benefits from ownership of these resources (Pride et al, 2011, p. 12). Very different from that of a capitalistic nation, is the economic system, called a mold economy.Whereas capitalism suggests individuals own and act the majority of businesses that provide goods and services the government decides what goods and services, how they are produced, for whom will they be available to, and who owns and controls those four major factors of production discussed earlier in command economies (Pride et al, 2011, p. 14). In essence, the government is the controlling and deciding entity of how the resources are used and produced and by whom they are controlled by.Today, most countries that fall within a command economy are considered to be a socialistic economy. Key industries such as transportation, communications, utilities, banking, and important industries that produce material such as steel are owned by the government (Pride et al, 2011, p. 14-15). Although small private businesses may be allowed to certain degrees, many citizens work in state-owned industries. Communism is another caseful of a command economy.This is a classless society whose citizens together owned all economic resources (Pride et al, 2011, p. 15). These citizens would then contrib ute to the economy as they could and would watch benefits that were needed back from the distributions by the government. Different than a socialist economy, workers do not have much of any choice when given a job, but those who had special skills or talents were often viewed as being remunerated more than that of an average citizen.Often citizens of command economies go without the essential needs or the wants of society because the supply of good and services is determined by the government and not the consumers themselves. Today, many traditional countries that were though of socialist nations are transitioning to a free-market economy. According to Pride et al (2011), this is also considered a market economy where businesses and individuals decide what to produce and buy, and the market determines prices and quantities sold. Communism is fading out and these economies are now similar to what was considered socialist.Northern Korea and Cuba are probably two countries that are t he best examples of todays communist economies whereas those that once were thought of communist countries are now considered socialist or even capitalist nations. The United States falls under what is considered a mixed economy, where there is both capitalism and socialism. allay market economies, which fall under capitalism, are those nations currently transitioning such as France, Sweden, and India (Pride et al, 2011, pp. 10-15).References Pride, W. M. , Hughes, R. J. , & Kapoor, J. R. (2011). Foundations of business (2nd ed. ). Mason, OH South-Western.