Economic System Capitalism Socialism And mixed Economy

1. Presentation On Economic System
 Presented By:-
(NR 16118)Rujal Patel
(NR 16069)Milan Kagarana
Pooja Thakkar
(NR 16015)Dipak Bhavsar
Harsh Shah

2.  Economics - Economics is the social science that analyzes
the production, distribution and consumption of goods &
services.
 Economic System is the system of production, distribution and
consumption
 An economic system is a mechanism (also defined as system or
social institution) which deals with the production, distribution
and consumption of goods and services in a particular society.
 The economic system is composed of people, institutions and
their relationships. It addresses the problems of economics like
the allocation of the resources.

3.  An organized way in which a state or nation allocates its
resources and distributes goods and services in the
national community.
 Types:
 Capitalism (Market Economy)
 Socialism (Planned economy)
 Mixed (Capitalism + Socialism)

5. • Capitalism is an economic system in which the means of
production are privately owned and operated for profit, usually in
competitive markets.
• In other words; An economic system in which investment in and
ownership of the means of production, distribution, and exchange
of wealth is made and maintained chiefly by private individuals or
corporations.

6. • ADAM SMITH (FATHER OF ECONOMICS)
• (Book: Wealth of Nations).
Subject to certain restrictions, individuals (alone or with others) are free to
decide where to invest, what to produce or sell, and what prices to charge.
There is no natural limit to the range of their efforts in terms of assets, sales,
and profits; or the number of customers, employees, and investors; or
whether they operate in local, regional, national, or international markets.

7. • Centralized to Decentralized system
• Authoritarianism to representative democracy
• Free flow of resources
• People strive for self interest in free market
• Beneficial for society
• Based on Demand & Supply Forces
• Monopoly to Competitiveness
• Self sufficiency to International interdependence
• Producer interest to customer power

8.  United States
 Canada
 United Kingdom
 Australia
 Japan
 Austria
 Ireland
 Sweden
 Switzerland
 Israel

9.  Americans are known to be risk takers and
capital makers. In the US it is possible to begin
a business of humble means and expand it to
grow into a conglomerate business model for
people wanting to start a new business.
 Capitalism allows private ownership to spur
production of goods and allows the private
owner to keep and track profits for what sells.

10.  In years 1000–1820 world economy grew six-fold, in years 1820–
1998 world economy grew 50-fold
 Provides Choice to customers
 Provides valuable goods and services
 Capitalism actively rewards positive traits like hard work
 Similarly, it punishes negative traits such as laziness and theft
 Narrows the gap between common person and wealthy
 Provides opportunity to realize dreams and desires
 Capitalist societies usually do not have large black markets
 Build on democracy
 Social Good

11.  Downfall of work ethics
 Free Market + Self Interest
 Accumulation of wealth
 Encourages inequality in a
society
 Business lobbying with
government
 Monopolistic tendency
 Human resource exploitation
 Results in great disparities
between income of people
owning the capital resources and
others

13. Collective ownership and democratic control of the material
means of production by the workers and the people
Socialism is a term applied to an economic system in which property is held in
common and not individually, and relationships are governed by a political
hierarchy. Common ownership doesn't mean decisions are made collectively,
however. Instead, individuals in positions of authority make decisions in the name
of the collective group.
Socialists argue that socialism would allow for wealth to be distributed based on
how much one contributes to society, as opposed to how much capital one holds.
A primary goal of socialism is social equality and a distribution of Wealth
based on one’s contribution to society and an economic arrangement that would
serve the interests of society as a whole.

14.  Socialism as we know it today, most commonly refers to "market
socialism," which involves individual market exchanges organized by
collective planning.
 Difference between socialism and communism is that communists directly
oppose the concept of capitalism, an economic system in which
production is controlled by private interests. Socialists, on the other hand,
believe socialism can exist within a capitalist society.

15.  China
 Denmark
 Finland
 Netherlands
 Canada
 Sweden
 Norway
 Ireland
 New Zealand

16.  In China the government manages and
controls the economy. Many of the domestic
companies are owned and run by the
government. Recently, the Chinese
economy has become more geared towards
capitalism, but is still officially socialist. Life in
China remains relatively less stressful and
more relaxed than life in capitalist countries
like America.

17. • Social Ownership of means of production
• Existence of public sector
• Decisive role of Economic Planning
• Production guided by Social Benefits
• Abolition of exploitation of labour

18. i. Better salaries
ii. Stable Environment
iii. Eliminates poverty
iv. Better Products
v. Fulfills survival need
vi. Opportunity for citizens
to explore non-
economically-
productive pursuits

19.  Distorted price signals
 Suppression of economic
democracy
 Slow Technological
advancements
 Minimize self management
 Reduced incentives

20. BASIS OF
DIFFERENCE
CAPITALIST ECONOMY SOCIALIST ECONOMY
Resources Ownership Privately owned State owned
Foundation belief competition brings out the best in
people
cooperation is the best way
for people to coexist
Earning of wealth everyone works for his own wealth everyone works for wealth
which is distributed equally
to everyone
Market Scenario Level playing field Protection to PSUs, Private
enterprises are permitted in
few businesses only
Govt. interference Only in situations where laws have
been broken
Fully involved
Employees motivation Highly motivated on account of
proportional benefits
Rarely motivated as
performance is not rewarded
Merit Perception of better economic
growth because of competition
Equal distribution of income
results in welfare of all
Demerit Few individuals/groups attain
powers, rest are exploited
Hard work is not rewarded,
lazy employees also enjoy
equal level of benefits

22.  Any economy in which private corporate enterprises and public
sector enterprises exist side-by-side, and decisions taken
through market mechanism are supplemented by some form of
partial planning, is to be described as a mixed economy.
 This system overcomes the disadvantages of
both the market and planned economic systems.

23.  Provides a clear demarcation of the boundaries of public
sector and private sector so that the core sector and
strategic sectors are invariably in the public sector.
 The government intervenes to prevent undue concentration
of economic power, and monopolistic and restrictive trade
practices
 The rights of the individual are respected and protected
subject only to the requirements of public law and order
and morality

24.  India
 Iceland
 France
 Cuba
 Russia
 Germany
 South Korea
 Hong Kong

25.  In a mixed economy, private and public sectors go
side by side. The government directs economic
activity in some socially important areas of the
economy, the rest being left to the price
mechanism to operate.
 Before Independence, Indian economy was a
‘laissez faire’ economy. But post-independence,
she adopted the mixed economy system.
 Thus, it is clear from the following arguments that
our economy is a mixed economy.

26.  Resources are owned both by the government as well as
private individuals. i.e. co-existence of both public sector
and private sector.
 Market forces prevail but are closely monitored by the
government.
 Monopolies may be existing but under close
supervision of the government.

27.  Producers and consumer have sovereignty to choose what to
produce and what to consume but production and consumption of harmful
goods and services may be stopped by the government.
 As compared to Market economy, a mixed economy may have less
income inequality due to the role played by the government.
 A mixed economy represents an achievable balance between
individual initiative and social goals.

28.  One disadvantage of mixed economies is that they tend to lean more
toward government control and less toward individual freedoms.
 While most modern forms of government are consistent with some form
of mixed economy, the mixed economy is most commonly associated
with social democratic parties or nations run by social democratic
governments.
 Some critics of contemporary social democracy argue that when social
democracy abandoned Marxism it also abandoned socialism and has
become, in effect, a liberal capitalist movement.
 Marxian socialists argue that because social democratic programs
retain the capitalist mode of production they also retain the
fundamental issues of capitalism, including cyclical fluctuations,
exploitation and alienation.