UCSP Lesson 8: Economic Institutions

• Economic institutions

  The system that society develops to satisfy the needs and wants, every society develops a system of roles and norms that governs the production, distribution and consumption of goods and services
• Concepts of economic institutions

  • Reciprocity
  • Transfers
  • Redistribution
  • Market transactions
• Reciprocity

  A non-marketable exchange of products and labour from immediate exchange to delayed exchange, a process of receiving, paying and repaying of services and goods. The amount sent by the first-mover depicts a measure of "trust" and returned by the second-mover is a measure of "trustworthiness" or "Reciprocity"
• Transfers

  Also called as transfer payment, a redistribution of income or wealth in the market system without anything in return, a non-exhaustive due to the directly absorb resources
• Redistribution

  A system of economic exchange that involves the centralized collection of goods from the members
• Market transactions

  There's an interaction between the buyers and sellers, including purchases (exchange of goods for money), loans (money advances with interest to be fulfilled in the future), and mortgage (a loan for purchasers that give them homeownership in more attainable way)
• Market and state

  Refers to the relationship among economic units in the market structure whereby intervention/regulations that are imposed by the government affect the system
• Market structure

  • Perfect competition
  • Monopoly
  • Oligopoly
  • Monopolistic competition
• State

  An institution consisting of set of rules for governance, an organization for monopolizing its coercive power, coordinates people's activities according to its own fixed set of rules and regulations, enforces consumption of resources through such measures as taxation and military power, irrespective of an individual's will, while taking the responsibility for providing such public goods as national defence, police and roads which cannot be supplied by the market
• Economic systems

  A method of organizing and distributing available resources, services, and products throughout a geographic country or region
• Economic systems

  • Capitalism
  • Socialism
  • Welfare state
• Perfect Competition

  is a market system Characterized by many different buyers and sellers.
• Monopoly

  is the exact opposite form of a market system as perfect competition. There is only one producer of a particular good or service, and generally no reasonable substitute
• Oligopoly

  is similar in many ways to a monopoly. The primary difference is that rather than having only one producer of a good and service, there are a handful of producers, or at least a handful of producers that make up a dominant majority of market system
• Monopolistic Competition

  is a type of market system combining elements of a monopoly and a perfect competition
• Capitalism

  Private ownership means of production

  Individuals are free to invest their money (capital) to any business endeavor they wish, to purchase goods and hire labor in order to develop their private enterprises, and to re-invest profits for business expansion or in those other citizens.

  Examples of capitalist economies are Japan, South Korea, United States, and the Philippines.
• Socialism

  The State controls all or most of the means of production.

  Revisionist or democratic socialism is a moderate type of socialism; ex: Russian-Chinese interpretation of Marxism

  Socialists believe that modern society is based on class struggle and ideal society is one in which proletariat (workers) control the state.
• Welfare State

  General welfare of the citizens is a basic duty and ultimate end of a well ran politics and governance state.

  A welfare state could emerge from the socialist and the capitalists systems.

  According to Adler (1963), economic welfare for all can be promoted in a society in two ways.

  1. Through the widest possible diffusion of the ownership of income producing company; and
  2. Through the widest possible diffusion of the economic equivalents of income-producing property