Name: Ankit k .

c
Roll no. 4
Email : rk6380415@gmail.com
1. Economic system

 First of all economic system is a system of production, resource allocation

and distribution of goods and services within a society or a given
geographical area.

 An economic system comprise institutions, agencies, entities, decision-

making processes, and consumption patterns, shaping the economic
structure of a community.

 Economic system looks at the following basic question and answer :

 What to produce ?
 How to produce ?
 Far whom to produce ?
 How change is going to be effected and accommodated ?
 These are the fundamental problems of the economy ?
 Capitalist
Economy
Market
Economy

SOLUTION
FOR THE
ECONOMIC
PROBLEM
Socialist
Mixed Economy/
Economy Planned
Economy
A . Capitalist economy

 In a capitalist economy , means of production and property are owned by

individuals and companies .

 The economy is primarily governed by the market mechanism, driven by the

interaction of demand and supply.

 The term market economy is used interchangeably with capitalism , denoting

reliance on market forces.

 Capitalism is built upon foundational concepts such as private property ,the

profit motive and market competition.

 Example of capitalist economies include the USA, UK, Germany, Japan and
singapore.

 Direct government intervention in capitalism is minimal, mainly focused on

controlling is monopolistic practices.
Some outline and key step for capitalist economy work
 Private ownership : Individuals or entities own businesses and assets.

 Entrepreneurship: Start or invest in businesses.

 Market Understanding: Analyze demand, supply, and competition.

 Investing: Explore stocks, bonds, and real estate.

 Risk Management: Understand and manage financial risks.

 Innovation: Adapt to changing market needs and technologies.

 Regulatory Compliance: Follow laws and regulations.

 Financial Literacy: Learn about managing money and investments.

 Networking: Build professional relationships for opportunities.

 Two-class system

Great scope of Private

competition ownership
Features of
capitalist
economy

Limited role of
Profit motive
government
B. Socialist economy

 Karl Marx and Friedrich Engels, through "The Communist Manifesto," pioneered a
novel economic theory that shaped the concept of a socialist economy.

 A socialist economy is characterized by state ownership of the means of

production, where the government or the state controls and manages key resources
and industries

 A socialist economy opposes capitalism by advocating for comprehensive state

ownership of all production factors.

 In this system, all citizens enjoy benefits from goods and services based on equal
rights.

 In this system the government, often through entities like a planning commission,
makes all decisions, including resource mobilization.

 In socialism, the government coordinates all economic activities, disregarding

traditional supply and demand laws, setting it apart from capitalism.
KEY STEP FOR SOCIALIST ECONOMY WORK
 Study Socialist Theory: Understand socialist economic principles, such as
collective ownership, wealth distribution, and planned economies.

 Social Ownership: Shift major industries and resources into public or collective
ownership, reducing private ownership.

 Central Planning: Consider implementing central planning to allocate resources

and set production goals, aiming for equitable distribution.

 Workers' Participation: Emphasize worker self-management and participation in

decision-making processes within organizations.

 Social Safety Nets: Establish robust social welfare programs to ensure basic needs
are met and reduce wealth disparities.

 Democratic Processes: Integrate democratic processes at various levels to ensure

the participation of the people in decision-making

 .Education and Awareness: Promote education on socialist principles to foster

understanding and support among the population.

 International Relations: Consider the global context, as socialism often involves

redefining economic relationships on an international scale.
 Public
ownership
Economic
Social planning
welfare

FEATURES OF
SOCIALIST
ECONOMY

Price control Class- less

Provision of society
basic needs
C . Mixed Economy

 A mixed economic system is a system that combines aspects of both capitalism

and socialism.

 A mixed economic system protects private property and allows a level of

economic freedom in the use of capital, but also allows for governments to
interfere in economic activities in order to achieve social aims.

 This type of economy was introduced by J.M. Keynes after the Great Depression
of 1930s and most of the least developed and developing countries at present are
adopting this economic system.

 In mixed economy system both private sectors and government play vital role
for the mobilization of resources.

 Example like ; France, Russia, and India etc follow the Mixed economy system.
KEY STEP FOR MIXED ECONOMY WORK

 Blend of Ideologies: Combines socialism and capitalism elements.

 Resource Mobilization: Utilizes both market-driven prices and central planning

 Ownership Diversity: Private individuals, companies, and public sector own

means of production.

 Active Participation: Both private sectors and government play vital roles in
resource mobilization.

 Regulatory Balance: Establishes regulatory measures to balance economic

freedom.

 Government Intervention: Intervenes strategically for social welfare and fair

market practices.

 National Planning: Formulates national economic plans for development.

 Flexibility and Adaptability: Adjusts policies to respond to changing economic

conditions.
 Public-Private Collaboration: Encourages partnerships for efficient resource
utilization.

 Social Welfare Focus: Implements programs addressing healthcare, education, and

poverty.

 Stability Measures: Uses fiscal and monetary policies for economic stability.

 Continuous Evaluation: Regularly assesses and adjusts policies for optimal

outcomes.
 Co-existence
of the private Existence of joint
and public sector
sectors

Motive of Business FEATURES OF Regulation of

concerns MIXED private sector
ECONOMY

Provision of
social Private Planned
security property economy