The Four Main Economic Systems and Their Application in South Africa

The chapter starts by giving the example of how the head of Coca-Cola Europe decided to give away Coke to East Germans as the Berlin Wall was falling in 1989. This gamble, which began as a loss, eventually paid off for Coca-Cola. Six years later, the former East Germany had matched West Germany in the consumption of Coke, an excellent example of the power of markets. The author gives a simplistic explanation of the communist economy. There is no law of supply and demand. The price of an item is the same regardless of where one buys it. This is due to the fact that every business is paid the same by the government for selling a specific item regardless of the amount sold. Our economy is a market economy and economists make two important assumptions.

In a communist economic system, decisions are made by the overall community. In practice, attempts to implement a communist system have developed state-driven economies benefiting only single-party political elitists not accountable to their citizens. Capital assets are owned collectively by the state rather than private parties. Labor rates and the prices of goods are established by the government rather than supply and

Economic systems are the ways in which societies are organized to satisfy the needs and wants of people within them. With economies there are many conflicting ideologies; evidently the mixed economy and the command economy. There are a variety of ways to compare economies from the role of governments, economic growth, size of economy, employment and unemployment, quantity of life to environmental quality.

What is the main purpose of the economic system? The main purpose of the economic system is method used to produce and distribute goods and service. The three economic questions are: “What goods should be produced?” “How should these goods and services be produced” And “Who consumes these goods and services?” The characteristic of a market economics is that self-interest is the motivating force in the free market, self regulating market. The interaction of buyers and sellers motivated by self-interest and regulated by competition, all happen without a central plan. In a market economy, economic decisions are made by individuals and are based on exchange or trade. However, characteristics of a command economic

Economics is the study of how scare resources are used to produce the different things and services that people use. Economic systems are the pathways where communities allocate resources to produce different products and how they use to distribute them towards people. Some economic systems are more efficient in terms of allocating resources than others.

The economic system is a transitional economy which is a centrally planned economy to a market economy.

The economy system was the way they produced and exchanged goods. There are four types of economies, them being the Traditional economy also known as a “barter”, Command economy also called a planned economy, Market economy which is also called a demand economy or capitalism, and a Mixed economy. The economic activities being in levels are Primary, Secondary, Tertiary, and Quaternary activities. The more developed the country the greater number and activities. There are also natural resources such as renewable, non-renewable, and inexhaustible energy sources. Those play a major part in the world trade, the value of natural resource depends on the quality that makes it useful. The economic support systems infrastructure consist of the basic support systems needed to keep the economy going. The infrastructure must be sophisticated to be a more developed country. Measuring the economic development is in per capita income, and is measured by gross natural product or by the second statistic gross domestic product. Countries around the world have different levels of economic development. Developing nations countries lack industrial base and struggle, as developed nations countries are with a high per capita income and varied

The economy is the system of how money is made and used within a particular country or region.

Economic systems are organized way in which a state or nation allocates its resources and apportions goods and services in the national community. An economic system is slackly defined as country’s plan for its services, goods produced, and the exact way in which its economic plan is carried out. There are three types of economic systems exist, they are command economy, market economy, and mixed economy. Command economy is also sometimes called planned economy. The expectations of this type of economy is that all major decisions that related to the construction or production, distribution, commodity and service prices are all made by the government. However, in market economy, national and state governments play a

One of the most popular economic systems in the world is the capitalistic society. Most countries in Europe, The United States of America, Japan, Canada and a number of other countries in the world use capitalism. Capitalism is based on the free market ideas of people such as Adam Smith. This is why MR. Adam Smith considered the father of modern economics. Capitalism has led to wealth creation in most of the world. In a capitalistic system most of all factors of production and distribution like railroads, stores, land, and factories are owned by individual people and not the government. In capitalism the business people get to decide what the get to produce the government does not tell them what to make. Also how much they are going to make

Understanding the fundamental concepts of economics allows us to analyze laws that have a direct bearing on the economy. These laws and theories are essentially the backbone of how economics is used and studied. The law of demand can be expressed by stating that as long as all other factors remain constant, as prices rise, the quantity of demand for that product falls. Conversely, as the price falls, the quantity of demand for that product rises (Colander, 2006, p 91). Price is the tool used that controls how much consumers want based on how much they demand. At any given price a certain quantity of a product is demanded by consumers. As the price decreases, the quantity of the products demanded will increase. This indicates that more individuals demand the good or service as the price is lowered. This can be illustrated using the demand curve. The demand curve is a downward sloping line that illustrates the inversely related relationship of price and quantity demanded.

In the centrally planned command system, gov’t owns all resources and answers the three economic questions. In the free market system, individuals own resources and answer the the three economic questions. In the mixed economy system, free markets exist alongside gov’t intervention.

     “And so it has come to pass, that South Africa today undergoes her rebirth, cleansed of a horrible past, matured from a tentative beginning, and reaching out to the future with confidence,”(Mandela 1994) Nelson Mandela predicts. They

Many of the contemporary issues in South Africa can easily be associated with the apartheid laws which devastated the country. The people of South Africa struggle day by day to reverse “the most cruel, yet well-crafted,” horrific tactic “of social engineering.” The concept behind apartheid emerged in 1948 when the nationalist party took over government, and the all-white government enforced “racial segregation under a system of legislation” . The central issues stem from 50 years of apartheid include poverty, income inequality, land ownership rates and many other long term affects that still plague the brunt of the South African population while the small white minority still enjoy much of the wealth, most of the land and opportunities

The command system, which is also described as Marxism, socialism, or communism, is both a political and economic philosophy. In a communist economy, the government owns most of the firms, subsequently controlling production and allocation of resources. One of the most well-known and well-documented cases of a communist government took place in the Soviet Union, beginning in 1917 and eventually falling in 1992. Idealistically, communism eliminates social classism and provides equal work for all in a particular society. The government appoints a central planning board to “determine production goals for each enterprise and to specify the amount of resources to be allocated to each enterprise so that it can reach its production goals.”