Data Bases • Custom Term Papers • Free Term Papers • Free Research Papers • Free Essays • Free Book Reports • Plagiarism? Links • Top 100 Term Paper Sites • Top 25 Essay Sites • Top 50 Essay Sites • Search 97,000 Papers @ DirectEssays.com • Search 101,000 Papers @ ExampleEssays.com • Search 90,000 Papers @ MegaEssays.com Free Essays • Term Paper Sites • Chuck III's Free Essays • Free College Essays • TermPaperSites.com • My Term Papers • Get Free Essays • Essay World • Planet Papers	Search Lots of Essays Back to Subjects - Economics Comparative Economic Systems Comparative Economic Systems Capitalism is the economic system found in the United States, Japan, and Germany that are based on private ownership of productive property. Items are known as productive since their use can produce other objects of economic value, income, or money. Things such as a worker’s tools, a farmer’s fields, or a factory’s machine can be considered as productive property. The basic four factors of production that are important for any nation’s economy is land, human resource labor, management, and capital. Land sums up to a variety of economic uses for agriculture, mining, and forestry. Men and women who work in mines, factories, offices, hospitals, and other places all provide labor that’s essential to our nation’s economy. Management involves organizing other factors of production and making businesses run efficiently. Capital is a product of the economy that is then put back into the economy to make more products. The United States economy is called capitalistic because it depends on the energy and drive of thousands of individual capitalist. Capitalist create and expand industries, make investments in new technologies, and engage in activities that create jobs and contribute to the high standards of living, by using their privately owned productive property. In such a system individuals are free to start and run their own business; thus, they are also free to dissolve those businesses. However, this system is also known as a free enterprise In a free enterprise system there are five noteworthy characteristics: private ownership, guarantees for property rights, decentralized decision making, competition, and freedom of choice. In a free enterprise most of the means of production are privately rather than publicly owned. A free enterprise system can work only when property rights are guaranteed. Therefore, no person may “be deprived of life, liberty, or property without due process of law.” Under capitalism, basic decisions about what to produce and how to produce it are left to private decision-makers. A person who takes the initiative and risk of starting or expanding a business is called an entrepreneur. Due to several people being free to enter a new business at any time, a number of companies usually offer the same product or service. Competition among multiple sellers helps to hold down prices and keep quality high, since customers are likely to buy from the company with the best product and lowest price. According to laws of supply and demand when supplies become more plentiful, prices tend to drop. Being that a firm is the only source of a product or service, it’s known as a monopoly. Monopolies can be very powerful due to the fact that they can charge as much as they want without any competition. Consumers can choose from a variety of products and services, entrepreneurs can switch from one business to another, and workers can quit their jobs and take new ones all has to do with freedom of choice. Adam Smith claimed in a classic expression that when all individuals are free to pursue their own private interests, an “invisible hand” works to promote the general welfare. On the other hand, the Laissez-Faire Theory confines that governmental activity should be confined to: (1) foreign relations and national defense, (2) the maintenance of police and courts to protect private property and health, safety, and morals of the people, (3) those few other functions that cannot be performed by private enterprise at a profit. Many aspects of American economic life are regulated by government at every level, like the prohibition of trust, and protecting the environment. While American economic life is also promoted by government, as well. For example, the government construct public roads and highways, and provides such services as the postal system, the census, and weather reports. Taking risks and making investments are an essential part of the capitalist system. Every year businesses fail for lack of profit, but those who survive tend to be those who have learned to make the most efficient use of the factors of production. Socialism is an economic philosophy based on the idea that the benefits of economic activity -wealth-should be equitably distributed throughout society. Socialism rejects the concept of private ownership, individualism, and competitions for profit that lie at the heart of capitalistic thought and practice. Present-day socialism developed in a large part as a reaction to the poverty and other miseries that accompanied the Industrial Revolution. Karl Marx, the father of modern-day socialism, was the most significant critic of capitalism to emerge in the nineteenth century. He believed that capitalism was fatally flawed. A powerful socialist movement took shape among European workers and thinkers during the middle and late nineteenth century. Some argued that a socialist society could come only out of a “violent and bloody revolution.” Others argued that socialism could be attained by peaceful means, through the democratic process. The process of organizing enterprises under governmental control-often by taking over privately owned industries, was called nationalization. Socialist stress the goal of assuring that every one in a society is decently housed and fed. Countries that provide extensive social services at little or no cost to the users are called welfare states. All governments, capitalistic or socialist, get their funds from taxation. Although social welfare is quite expensive, taxes in socialist countries tend to be high. Under socialism, decision-making is much more centralized, therefore, governments can direct the economy along desired paths. Socialism has won a large following in developing countries. One reason for socialism appeal is that most developing countries are starting from scratch. It also appeals to leaders who want to mobilize an entire nation behind a program of industrial growth. Critics say socialist countries have a tendency to develop too many layers of bureaucracy. Another criticism is that socialism deprives people of the freedom to decide for them how to use their income. In response, socialist point to the inequalities of wealth and power that exist under capitalism. Communism as it is known in today’s world was born in Europe in the middle of the last century. Communism is often called a collective ideology, for the collective, or state, ownership of all land and other productive property. In November 1917, Lenin and his followers seized power in Russia, established a communist government, and began at once their attempt to create their vision of a communist society. Lenin realized that the attempt to create an instant communist society had failed, and in 1921 he introduced the New Economic Policy, which was a clear compromise between socialist principles and capitalism that was intended to revive agricultural production and promote After Lenin’s death Josef Stalin gained complete control of the Communist party and the government of the Soviet Union by 1928. Stalin hoped to end the nation’s economic backwardness and reduce its military vulnerability. When Mikhail Gorbachev gained power in the Soviet Union in 1985, he inherited an economic system largely unchanged from the one built by Stalin. He proposed instead a program that covered not only the period of the next plan, but also the two that followed until the year 2000. Gorbachev was still in power, but his foundation was weak. The Communist party was then split into factions. One faction, the liberals, wanted the immediate shift to free market capitalism. The other group, the conservatives, wanted a slower transition. Communism is a system founded upon Marx’s prediction of the inevitably of a workers’ revolution against capitalism. The collapse of the Soviet communism, however, has proven, instead, the power and inevitability of the forces of political and economic freedom. Bibliography: Word Count: 1336
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