Stephanie Gonzales
Mr. Kenneth Ng
Economics 160
November 13, 2012
Term Paper
Throughout history, many forms of economic systems and practices have been established and utilized in order to keep a sense of success, prosperity, and equality within a society’s own market. Free markets, capitalism and The Do Nothing Principle create and increase collective and individual wealth. Free Market policies pose a threat to dictatorial governments because dictatorial governments regulate or regulate the supply and demand of a free market. However, in Free Markets, each side benefits both the seller and the consumer. Because of this, you find that free market allows only private ownership and not government ownership. According to Nobel Prize economics Milton Friedman, free markets, capitalism and The Do Nothing Principle also promote individual freedom and contribute to bringing down dictatorial governments that mistreat its’ citizens. Today, many Asian dictators adopt free market policies to increase their wealth and power, but hope to deny the theory of Milton Friedman that free markets will lead to their overthrow and downfall. Communist China’s leaders are an example of such dictators. In Communist China, a centrally controlled communist command and control economy has been abandoned and replaced by a semi-market economy. Mao Zedong, Zhou Enlai, and other revolutionary veterans were prepared to embark on an intensive program of industrial growth and socialization. For this purpose the administration adopted the Soviet economic model, based on state ownership in the modern sector, large collective units in agriculture, and centralized economic planning (McGregor 40). The Soviet approach to economic development was manifested in the First Five-Year Plan, which was from 1953-1957. As in the Soviet economy, the main objective was a high rate of economic growth. Soviet planners helped their Chinese counterparts formulate the plan. Large numbers of Soviet engineers, technicians, and scientists assisted in developing and installing new heavy industrial facilities, including many entire plants and pieces of equipment purchased from the Soviet Union. Government control over industry was increased during this period by applying financial pressures and inducements to convince owners of private, modern firms to sell them to the state or convert them into joint public-private enterprises under state control. By 1956, over 65 percent of all modern industrial enterprises were state owned, and 32.5 percent were under joint public-private ownership. No privately owned firms remained. During the same period, the handicraft industries were organized into cooperatives, which accounted for 91.7 percent of all handicraft workers by 1956. In terms of economic growth the First Five-Year Plan was successful, especially in those areas emphasized by the Soviet-style development strategy. A solid foundation was created in heavy industry. Although the reform program achieved impressive successes, it also gave rise to several serious problems. One problem was the challenge to party authority presented by the principles of free market activity and professional managerial autonomy. Another difficulty was a wave of crime, corruption, and moral deterioration caused by the looser economic and political climate. The most fundamental tensions were those created by the widening income disparities between the people who were getting rich and those who were not and by the pervasive threat of inflation. These concerns played a role in the political struggle that culminated in party general secretary Hu Yaobang's forced resignation in 1987. After Hu's resignation, the leadership engaged in an intense debate over the future course of the reforms and how to balance the need for efficiency and market incentives with the need for government guidance and control. The commitment to further reform was affirmed, but its pace, and the emphasis to be placed on
Related Documents: Capitalism: Planned Economy and Free Market Essay
Capitalism vs Marxism An essay on which economy is the better choice. By Kiros Johnson 1 An economy, as defined by dictionary.com, is the management of resources of a country with a view to its productivity. There are multiple economies in this world, all of which think they are better than the other. It’s almost as if the economies are political parties fighting over a piece of land. However, economies vary among all. The writer will…
highest standard of living will last. Seeing the disjoint of Soviet Union, we have to admit that till now, capitalism is still showing its advantage in economic productivity and communism hasn’t welcomed its right moment. But the economic progress China has done so far also shows that with better understanding of “ideology” and advances the Marxism with the times (i.e. practice what is good in Capitalism etc.) can also reach the same goal of improving people’s standard of living. This again, proved that…
knowledge Chapter LO: 3 Course LO: Explain how economic performance is monitored Classification: Concept 16) The situation in which one supplier thoroughly dominates a market and essentially shuts out other competitors is called monopoly. Answer: TRUE Explanation: The situation in which one supplier thoroughly dominates a market and essentially shuts out other competitors is called monopoly. Diff: 1 AACSB: Application of knowledge Chapter LO: 4 Course LO: Compare and contrast different economic…
net/Geckos/the-four-types-of-economic-systems-presentation) 2. Free Market -A marketplace where prices of commodities and services are traded freely between consumers and marketers Example: Capitalism believes that competition in a free market makes the economy strong and static. (http://en.wikipedia.org/wiki/Free_market) (http://www.investopedia.com/terms/f/freemarket.asp) (http://www.econlib.org/library/Enc/FreeMarket.html) 3. Command or Planned Economy -Decisions about the basic economic problems continue…
America is a dominant country in the world’s Economy; it has been the main source of power to fuel the world socially, politically, economically and culturally. However, in the past decade there has been a growing threat to the United States; China. Since the communist regime has been lax it has allowed its Economy to boost up to tremendous numbers that is leading China to the top and America is steadily heading towards the bottom. There is no secret of the current state that the U.S is suffering…
Economic and Political Systems: Capitalism vs. Socialism The political spectrum has played a vital role in economics. For centuries, governments have disputed over numerous economic systems which they consider to be the most suitable, in order to develop and grow today’s nations. In recent years, there has been constant disagreements between left wing and right wing leaders and supporters, for example in Latin America, which has resulted in many economic, social and political problems. This…
other: “Free market” economy (capitalism) vs. “Planned” economy (socialism) Types of Economic Systems The other 2 systems lie somewhere in-between the “market” and “planned” systems. They are the: Mixed economy Some industries are owned or controlled by government while the rest is controlled by private individuals or the private sector. Indicative planning economy Government is market-friendly and encourages private enterprise, but will “tweak” market outcomes…
democratic country with excellent economic system. We are one the leading country in economic terms and being an example for the economy system we are using. In Malaysia, we are into mixed economy system. This economy system is the leading type of economic system that is used in most of the countries such as United States. Mixed economy system includes a mixture of capitalism and socialism. It combines private economic freedom, centralized economic planning and government regulation. Government plays…
multinational corporations and other publicly traded companies that fuel the global stock markets, to the small business enterprises that are the staples of our communities. Business is moving at breakneck speed fueling the world economies, and shaping our societies. A business is any activity that provides goods and services in an effort to earn a profit, (McGowan 2012). It is the backbone of the economy providing the products, and services we consume, the jobs we work to earn income, and the…
that businesses serve 1. Provide Society with necessities 2. Provide people with jobs and a means to prosper 3. Pay taxes that are used by government to provide services for its citizens 4. Reinvest their profits in the economy; increasing a nations wealth 3. Differentiate between goods-producing and service businesses. Goods- Producing Business: Produce tangible goods Capital intensive – require large startup fund for equipment, space etc.…