Lecture slides for Economics (Social Studies/Araling Panlipunan) Gr. 9 & 10 following the basic competencies of the K to 12 curriculum in the Philippines.
2. USAGE NOTES
• These are slides I use for my lectures on allocation and economic
systems, a first quarter topic in Economics under the K to 12
curriculum in the Philippines.
• All copyrighted materials were lifted from their respective sources
under the spirit of fair use. As such, I am uploading these slides in
the interest of helping out other public school teachers like me.
This material should not be used for any commercial purpose.
• Last modified: October 9, 2016
7. ECONOMIC SYSTEM
consists of a matrix of:
1. social institutions (law, political institutions,
religion, etc)
2. agents (individuals or actors)
3. organizations (corporations, unions, charitable
org, not-for-profit firms, etc)
4. society (includes principles, beliefs, values)
8. ECONOMIC SYSTEM
• function: coordinate the activities of agents in the
processes of provisioning and allocation
• most economies are a mixture that includes
elements from all 3 types
10. TRADITIONAL ECONOMY
• evolved over time (traditions & custom form gradually)
• rate of change is slow
• rules of trade not apparent as economy but as moral
system
• medieval European rules against charging interest on
loans—considered a sin in the Christian faith of the
time
13. Command
Economy• an overseeing government decides how resources are
distributed amongst individuals within the system
• trade and individual choice at the consumer and worker
level is minimal or, in some cases, entirely non-existent
• ideal: efficiency, equality
14. Command
Economy• equality: by making sure to allot everyone an
equal amount of wealth
• in reality, the distributors of wealth at the
government level often hoarded wealth for
themselves
15. Market Economy
• individuals meet in markets and decide what economic
decisions they want to make for themselves
• ideal : efficiency, freedom
• emphasis on trade
• exchange of goods and services
16. Mixed Economy
• usually allow most people to decide how to obtain and spend capital,
what work they would like to pursue, how much they would like to
save, and what lifestyle they want to enjoy
17. Mixed Economy
• at the same time, a command-
based system from the
government places restrictions
on making choices and
encourages market participants
to move towards one decision
over another
18. Synthesize What You Have
Learned
Who makes this decision? TRADITIONAL COMMAND MARKET MIXED
What to produce?
How to produce?
How much to produce?
Who gets what is
produced?
Dis/Advantage
19.
20. • Whether a society emphasizes the use of
exchange, reciprocity or eminent domain to
allocate resources, “Any economic system
requires a set of rules, an ideology to
justify them, and a conscience in the
individual which makes him strive to carry
them out.” (Robinson, p13)
formal - law
informal - values, morality
system of ideas, ideals,
beliefs, principles, ethics,
moralsthrough enculturation:
gradual acquisition of the characteristics and norms of a culture or group
by a person, another culture, etc.
21. MARKET COMMAND MIXED
ownership of
means of
production
owned privately owned by state owned both by
state and
individuals
resource
allocation
price mechanism,
supply/demand
rationing both
taxes low high high
trade free trade is
emphasis
free trade is not
the focus
none
stability business fluctuations stable
predetermined, less
flexible, less efficient
social benefit
22.
23. TRY IT
• State planners in Country A met to decide what the country should focus
on producing. After much deliberation, they decided it would be in the
country’s best interest to use their limited resources to produce
automobiles instead of other consumer goods, such as electronics or
textiles. The state planners passed their decision down to factories, and
allocated to them raw materials, workers, and other resources needed to
produce automobiles. Factories were then told how much they should
produce with these resources and who the final products should be
shipped to.
24. TRY IT
• State planners in Country A met to decide what the country should focus
on producing. After much deliberation, they decided it would be in the
country’s best interest to use their limited resources to produce
automobiles instead of other consumer goods, such as electronics or
textiles. The state planners passed their decision down to factories, and
allocated to them raw materials, workers, and other resources needed to
produce automobiles. Factories were then told how much they should
produce with these resources and who the final products should be
shipped to.
25. TRY IT
• In Country B, business owners decide what to produce, how much to
produce, and who to produce for. The CEO of Tarheelia Audio, one of the
leading audio equipment producers in the country, recently decided to
increase production levels of the company’s newest MP3 player model,
and at the same time decrease production levels of their most popular
CD player. The reason for the emphasis on MP3 players is that demand
for CD players has decreased dramatically as MP3 technology has taken
over the market. Simply put, there is more profit to be made in the MP3
market.
26. TRY IT
• In Country B, business owners decide what to produce, how much to
produce, and who to produce for. The CEO of Tarheelia Audio, one of
the leading audio equipment producers in the country, recently decided
to increase production levels of the company’s newest MP3 player
model, and at the same time decrease production levels of their most
popular CD player. The reason for the emphasis on MP3 players is that
demand for CD players has decreased dramatically as MP3 technology
has taken over the market. Simply put, there is more profit to be made
in the MP3 market.
27. TRY IT
• In Country C, people rarely engage in market transactions. For
the most part, they do not need to. Families grow their own
vegetables and raise their own animals or hunt to get meat.
Certain times get tough for people in Country C like when the
winters are particularly cold or animals change their migration
patterns. For this reason, it is important that families stock up
in “good times” and develop relationships with neighbors with
whom they can share or trade.
28. TRY IT
• In Country C, people rarely engage in market transactions. For
the most part, they do not need to. Families grow their own
vegetables and raise their own animals or hunt to get meat.
Certain times get tough for people in Country C like when the
winters are particularly cold or animals change their migration
patterns. For this reason, it is important that families stock up
in “good times” and develop relationships with neighbors with
whom they can share or trade.
29. TRY IT
• In Country D, business owners make most economic decisions. As
long as they abide by fair trade policies, they can decide what to
produce, how to produce, and for whom to produce without
government intervention. These decisions are made by business
owners based on what happens in the market. For example, a
computer manufacturer recently developed a new video gaming
system, but decided to wait until closer to the holidays to release
the system to the public because it believed anticipation among
consumers would allow the company to charge a higher price for
the system
30. TRY IT
• In Country D, business owners make most economic decisions. As
long as they abide by fair trade policies, they can decide what to
produce, how to produce, and for whom to produce without
government intervention. These decisions are made by business
owners based on what happens in the market. For example, a
computer manufacturer recently developed a new video gaming
system, but decided to wait until closer to the holidays to release
the system to the public because it believed anticipation among
consumers would allow the company to charge a higher price for
the system
31. TRY IT
The implementation of the National Nutrition
Council in partnership with the DepEd of this year’s
Nutrition Month with the theme “First 1000 days ni
baby, pahalagahan para sa malusog na
kinabukasan” exhibits a feature of what type of
economic system?
37. • main economic system used during 16-18th
century (age of Imperialism)
• main goal was to increase a nation's wealth
by imposing government regulation on all of
the nation's commercial interests
• belief that national strength could be
maximized by limiting imports via tariffs and
maximizing exports
38.
39.
40.
41.
42. Laissez Faire
• an economic theory from
the 18th century that is
strongly opposed to any
government intervention in
business affairs
"let it be economics”
French for "leave alone"
Francois
Quesnay
43.
44.
45.
46. “While theory states that a pure
market economy uses resources
and labor most efficiently, in
reality, democracies have
additional goals besides
efficiency. ” ~Investopedia
47. “These may include minimum
levels of safety, education,
opportunity or health. To
accomplish these goals, they
introduce some centrally planned
rules and regulations to guide the
pure market forces.” ~Investopedia
49. TRY IT YOURSELF
• Synthesize your understanding of the four economic
systems into a three-minute skit showing scenarios from
each type.
• Make sure to demonstrate characteristics
particular/unique to each type.
• Also demonstrate advantages and disadvantages.
• This will be peer-graded.
50. SKIT PEER GRADING
CRITERIA 1 2 3 4 5 6
The four economic systems were present.
I was able to easily distinguish the economic
systems they demonstrated.
Dis/advantages of each economic system were
showed clearly.
The skit was informative and entertaining.
The group was creative in using readily
available materials in the classroom.
1 – Strongly Disagree
2 – Disagree
3 – Agree
4 – Strongly Agree
54. Capitalism
an economic system organized around the
principles of private property, freedom of
exchange, and limited government
intervention
55. Capitalism
The means for producing and distributing goods (the
land, factories, technology, transport system etc) are
owned by a small minority of people. We refer to this
group of people as the capitalist class. The majority of
people must sell their ability to work in return for a
wage or salary (working class). World Socialist Movement
57. Market Economy
market forces : collective effect of all the
decisions made by individual participants in
the economy - such as consumers and
businesses - according to their free will
73. SOCIALISM COMMUNISM
No private ownership of the
means of production
No private property at all.
Narrow gap between rich and
poor.
Eliminate class.
Capitalist state can be used to
transition to socialism.
Overthrow the capitalist state
through violent revolution.
76. THIS POSTER IS BIASED IN FAVOR OF WHICH ECONOMIC SYSTEM?
What the image does not say:
In a free market economy,
“artists” who are really
talented/exceptional will likely
be successful. Those who are
not as skilled will be forced to
change professions as they will
be unable to compete with
really good artists.
Competition, in this case,
ensures quality.
77. THIS POSTER IS BIASED AGAINST WHICH ECONOMIC SYSTEM?
What the image does not say:
Obamacare is not the first
socialist institution in the USA.
Public schools, the military, the
fire department, national
parks – these are only some of
the many socialist-oriented
programs already existing in
the United States.
katotohanang limitado ang mga pinagkukunang-yaman kung kaya’t kailangang gumawa ng tamang desisyon kung paano gagamitin nang mahusay angmga ito at upang matugunan ang nagtutunggaliang pangangailangan at kagustuhan ng tao
paraan upang maayos na maipamahagi at magamit ang lahat ng pinagkukunang-yaman ng bansa
1 - nakasalalay sa pangangailangan at kagustuhan ng tao
2 - nakasalalay sa kung ano ang input at alam na pamamaraan/teknolohiya
3 - nakasalalay sa laki ng pangangailangan at sa dami ng input
4 - Sino-sino ang makikinabang? Paano pipiliin ang makikinabang?
Close community ties as they depended on each other for survival
Greatly depended on the environment for supplying its needs; cultural practices or beliefs (rituals, religion) form around economic activities (example feasts held during harvest, rites of adulthood for youth timed with the migration of whales, etc.
historical example: USSR
present-day example: North Korea
central authority = government
common allocation method: rationing
efficient in the sense that centralized decision making allows for speedy decision-making due to absence of dissent, the government could identify specific sectors of the industry to specialize in (ex. USSR chose to allocate most of its natural resources toward developing industry/engineering/innovation in order to rival the European superpowers, succeeded and came head to head against USA during the Cold War)
Theoretically most efficient system. No need to spend resources on maintaining a large bureaucracy/central authority/government as the self-interested pursuit of individual actors will lead to equilibrium/balance of the market.
Also very flexible unlike command economies which have to plan ahead due to the scale of planning involved (imagine 90M souls) and once the plan is implemented, it will be very difficult to revise them if an unforeseen event occurs such as a devastating tsunami/earthquake.
Rests on the idea that a nation’s wealth is equivalent to the amount of gold it held so it aimed to attain a balance of trade of more exports than imports
Spurred on imperialism in the quest of European powers to increase the factors of production (land and its natural resources) in order to produce more products for export as well as to search for markets. The colonies were perfect for these two objectives.
Effect of mercantilism: government passes laws and other regulation that favor a particular company/business.
Having naval power was crucial because of this state of affairs
European countries rose to power at the expense of the colonized countries.
Toward the end of 18th century, Mercantilism begun to wane
Reason why most countries in the world today have adopted mixed economic systems
Example
Some methods for exerting dominance are buy-outs/mergers, predatory pricing, use of legal instruments such as patents and copyright to erode competition in a market
human nature – competition, self interest, greed, etc
Role of incentives: in capitalism, one is incentivized by competition to create quality products in order to attract/not lose customers
quality and quantity of work performed
Countries who have claimed to be communist throughout history. None attained the utopian ideal. Tendency to use martial rule to control dissenters.
Same lofty ideal, different means
A shield against propaganda (misleading information) coming from both sides. Social/government support for the arts has been criticized for corruption (SIPSIP). Artists on state pension do not have the incentive to improve their craft and make quality work.
Parallelism, lumping Obama with Vladimir Lenin
Value for freedom to make decisions for oneself is very strong in the United States; due to culture/history
Nanny State – gov’t decides most decisions for citizenry such as whether soda should be banned or not.
Example issue: Gun Rights vs Gun Control
In the Philippines, this free trade agreement (FTA) is an economic issue we should be discussing. Think back to mercantilism. If that system was all about raising barriers to trade to protect local producers, free trade is all about eliminating or reducing the barriers to make trade between countries as free as possible (meaning zero to very low transaction cost). We need to consider whether the following effects would be advantageous to us:
-free entry of workers in all ASEAN countries with licenses acquired locally being recognized regionally
-free entry and exit of products
Given our resources, current level of technology, current status of different sectors of the economy, etc are we ready for ASEAN Integration?
While staunch supporters of the free market economic system and/or capitalism would argue that if a local industry flounders it signals that we are inefficient at producing that particular product/service and should instead reallocate our resources to the production of goods/services where we have a comparative advantage, what would happen to the individuals reliant on these industries in the interim/transition for their livelihood? Should government provide assistance? Should government be proactive in determining these sectors and provide stimulus funding?
The complicated version of what we’ve been discussing