The spectrum of economic systems
Throughout most of the 1900s, the world's developed nations fell into three categories of economic systems. These systems were communism, socialism, and capitalism.
Capitalism-Under capitalism, the means of production are privately owned.
Advantages: One of the main advantages is efficiency, freedom, and capitalism is highly decentralized.
Disadvantages: It does not always satisfy everyone's need.
Socialism-Socialism is an economic system in which 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.
Advantages: Socialism addresses the FOR WHOM question directly. Not the WHAT, HOW, and FOR WHOM questions.
Disadvantages: Less efficient than capitalism. Because the government provides a broader range of services such as health care, education, and welfare, taxes are generally higher in socialist countries.
Communism-In its purest form, communism is a political and an 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.
Characteristics: Several characteristics distinguish communism from other economic systems.
Disadvantages: Individual freedom is lost
Capitalism-Under capitalism, the means of production are privately owned.
Advantages: One of the main advantages is efficiency, freedom, and capitalism is highly decentralized.
Disadvantages: It does not always satisfy everyone's need.
Socialism-Socialism is an economic system in which 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.
Advantages: Socialism addresses the FOR WHOM question directly. Not the WHAT, HOW, and FOR WHOM questions.
Disadvantages: Less efficient than capitalism. Because the government provides a broader range of services such as health care, education, and welfare, taxes are generally higher in socialist countries.
Communism-In its purest form, communism is a political and an 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.
Characteristics: Several characteristics distinguish communism from other economic systems.
Disadvantages: Individual freedom is lost