Economic Systems

• national governance is related to:

  • political freedom
  • economic freedom
• authoritarianism is associated with command econoomies
• democracy is associated with market economies
• socialism is associated with mixed economies
• command economy is also known as a centrally planned economy
• command economy: makes state a dominant force in production and distribution of goods/services
• China and Russia continue to exhibit some characteristics of command economies
• good shortages have been so common in Venezuela that people often wait in line for hours to buy basic necessities
• market economy: government intervention in marketplace is limited and economic decisions are left to individuals and firms
• market economies are closely associated with capitalism
• market economy participants typically exhibit an entrepreneurial spirit
• mixed economy: exhibits features of both a market and command economy
• in a mixed economy, the government controls:

  • pension programs
  • labor regulation
  • minimum wage levels
  • environmental regulation
• in a mixed economy, state owned enterprises operate in key sectors:

  • transportation
  • telecommunications
  • energy
• the past century saw a large increase in the number of mixed economies
• in US, combined government spending increased from 27% in 1960 to 40% today and expected to attain 50% by 2038
• in Belgium, Denmark, France, and Greece annual government spending now exceeds 50% of GDP