Question

To this Question "There are different economic systems used around the world, with varying results. Which system do you think is best and why?

What role does human nature play in determining how these systems may succeed?" (Dont answer quoted question) was answered by 2 people, Reply to each of their repsonses.

1. "Economic systems are an organized way in which a state or a nation allocates, produces and distributes its resources and apportions goods and services within a society. The different types of economic systems around the world are traditional, command, market, and mixed. I personally think that the best system is the mixed system because, in a mixed economic system, the wealth is not distributed equally like it is in socialism. This gives an incentive for people to work at their best and this increases the efficiency of the workplace. Even in a free economy, since people have more freedom, they also have more utility. In capitalism, it has a hierarchy and the business and economy are generally dominated by the upper class, people with money with less government intervention. In some cases, it could be good for the market to have some government intervention to get the optimal outcome but it also reduces the inequality if the government distributes some goods for the poorer individuals. Human nature plays a very important role in this case. Individual and coordinated trust for the system is required in order for the system to succeed. If people were to agree to their role in an economic system, and they were to play their role as it was expected for the system to succeed. Then the system would succeed and in some instances of corruption, a revolution could occur which may often hurt an economic system. "

2. "I feel that the best economic system is the modified capitalist system that the United States uses. By incorporating the best elements of both free-market capitalism while still intervening or regulating business at times helps to avoid many economic issues that pure capitalism allows to fester. For example, pure capitalism requires laissez-faire. In laissez-faire capitalism, the government does not interfere with business at all. A lot of unethical and economically destructive behaviors on behalf of businesses go unchecked such as what happened in 2011 with the banking crisis. The result was a recession in the economy. True laissez-faire capitalism would have simply allowed the banks to fail, however, the economic devastation would have been disastrous. When the US government intervened in a socialist manner by buying positions in US businesses, it rescued the economy from the harms that are caused by pure capitalism. A modified capitalist system is governed by the laws of supply and demand. Supply and demand is a perfect example of human nature at work in the economy. Consumers naturally tend to buy more when the prices are low whereas business are understandably looking for consumers to pay more. The struggle between the interests of consumers and the interests of businesses forces the market to equalize at an equilibrium price. On page 11, Ferrell defines equilibrium price as “the price at which the number of products a business is willing to supply equals the number of products that consumers are willing to buy at a specific point in time”. Therefore, human nature determines the goods and services being produced and at what prices. As a result, many industries spend a lot of resources studying consumer behavior in order to best market their goods and services. The American free-market modified capitalist system is the best economic system because it allows businesses to thrive and consumers to set market demand while still avoiding the pitfalls of pure capitalism. "

Answer 1

1) The four different types of economic systems are traditional, command, market and mixed.Each economy has advantages and disadvantages and if we think mixed is the best than arguments need to be given in its favor.It is a mixture of the command and market economy.The market in mixed economy is free of government intervention except in key areas like education,transportation etc.The drawbacks are that government power rises in imposing laws and regulations , gaining control,getting difficult to access and at the same time getting less flexible .Human nature is important in this system as in all other systems for it to become successful. The economy will succeed depending on the role played by humans as it is expected of them.

2)In a capitalist society there is private ownership of the means of production and profit is the main motive. The features are private property, accumulation of capital,price system,exchange of goods and services in a voluntary way,and free market. The government does have some control over markets and in their operation.Due to private ownership of means of production , there are negative effects in society like Slavery , colonialism etc.So even though capitalism is good in the sense that government has some control , it is bad because of negative social aspects due to private ownership and should be taken care.Here also human nature plays a very important role as goods are produced according to the demand of the consumers and the price that consumers pay in the market.So consumers decide the demand in the market . Equilibrium price is set by the forces of demand and supply.