3. CAPITALISTIC ECONOMIC SYSTEM
Closely related to market economies
Existed in a limited form in the economies of all civilization
Customer allocates resources
Customers’ choice for product/services decides what will be produced by
whom
Provides for economic democracy
Emphasizes the philosophy of individualism believing in private
ownership of production and distribution facilities
4. USA, Japan, Uk are the examples of capitalistic
countries.
Capitalism is grounded of free enterprises, which
argues that govt. intervention in the economy should
be restricted.
5. In this, economic system, private poverty and property rights to income are
abolished.
In communistic countries, the resource allocation decisions are made by the
govt. planner.
Consumers are free to spend their income on what is available.
COMMUNISTIC ECONOMIC SYSTEM
6. LIMITATIONS
Reduces individual
freedom of choices
due to restrictions on
items to be produced
Provides less scope
for foreign
investment and
business
Failed to achieve
significant
economic growth
Imposes too many
restrictions on
MNCs and FDI
Obsessed with
rights of workers
7. MIXED ECONOMIC SYSTEM
Purpose is to provide the benefits to the public more or less on equity basis
In this economic system, major factors of production and distribution are owned,
managed and controlled by the state
Other
factors are:
Development of
strong public
sector
Agrarian
reforms
Control
over private
wealth
Regulation of
private
investment,
national self-
reliance
8. This system doesn’t distribute the existing wealth equally among the
people, but advocates the egalitarian principle.
It believes in full employment, suitable rewards for the workers’ efforts.
