Forms of Economic Systems
Capitalism: Individual or few individuals are the owners of the means of production, who invest the capital and are engaged in production.
Advantages: Quality, prices under control due to competition.
Disadvantages: Inequality, differences between management and labours, social exploitation.
Socialism: This system is against the principles of capitalism. It stands for a society of equality where there will be no difference between the owners of production and the labourers. The philosophy was forwarded by Karl Marx.
Advantages: Betterment of society through introduction of equal sharing of resources and abolition of difference of economic status in the society. No competition; the profit goes to the government. Private ownership of means of production is not there.
Disadvantages: Loss and burden for industries. Since there is assurance of basic needs of the workers, they usually become irresponsible and lazy.
Mixed economy: In this economic system, both the private sector and state intervention control the economy, reflecting characteristics of both market economy and planned economy.
Economic Development of Nations
- What to produce?
- How to produce?
- For whom it is to be produced?