China calls itself a socialist country, even though it relies heavily on markets.
Venezuela is trying out a “21 st century socialism.”
Most economies are differentiated by the degree to which they rely on markets, not whether they are a socialist or capitalist economy.
Evolving Economic Systems Feudalism – an economic system based on tradition – dominated the Western world from the 8 th to the 15 th century. Mercantilism – an economic system in which the government controls economic activity by doling out the rights to undertake economic activities. Industrial Revolution – technology and machines rapidly modernized industrial production. Capitalism
Forms of E-Commerce (buying and selling over the Internet) C2C (Consumer-to-Consumer) Individuals buying and selling goods to one another online. C2B (Consumer-to-Business) An individual offering goods and services to firms online. B2C (Business-to-Consumer) Firms selling goods and services to consumers through online catalogs and shopping cart software. B2B (Business-to- Business) Firms exchanging goods and services through online sales and auctions.
Income and Expenditures of the Federal Government Social security taxes and contributions (38%) Corporate income taxes (15%) Excise taxes and other (6%) Individual income taxes (41%) National defense (20%) Interest (10%) Health and education (27%) Income security (31%) Other (12%)
Because there is no world government, governments enter voluntary organizations that regulate international markets.
Review Question 3-1: Discuss the differences be- tween capitalism and socialism. Capitalism gives property rights to individuals and relies on market forces through prices to answer the what, how, and for whom economic problems. In socialism society answers the what, how, and for whom economic problems in the best interest of the individuals in society. Government usually owns the means of production and coordinates economic activity with central planning.