Economic Systems Flashcards
Feudalism
How it works:
- Way of structuring society around relationships derived from the holding of land in exchange for service or labour (e.g., farmers provide food and services to knight in return for land)
What to Produce: food mainly
Who Decides: whomever owns the land
Who to Produce it for: some for you, some for the lord who will provide something in return
Uses what combination of factors of production: labour-intensive, tools as capital
Mercantilism
- Amassing wealth by maximising exports over imports
- Based on the idea that there are limited resources; winners and losers
- Impose unfair terms
- Pay little
- Use slaves
- Punish when they slack off or rebel
What to Produce: cash crops
Who Decides: business owners
Who to Produce it for: middle and upper class Europeans
Uses what combination of factors of production: labour-intensive; tools used as capital
Slavery Uses
- On large farms overlooked by overseers
- Used cash crops that are sold at highest prices
- Products quite unrefined
- Products don’t go bbad for a while; ideal for shipping
Capitalism
- Theory created by Adam Smith
- Free trade (unrestricted interational trade) used as wealth
- Employ specialised workers
- Good at maximising wealth; bad at distributing
What to Produce: what market want
Who Decides: what people buy
Who to Produce it for: people who can afford it
Uses what combination of factors of production: capital-intensive
Socialism
- Better at distributing wealth
- Capital is owned by workers
- Creates classless society with no exploitation
- To achieve this, a dictatorship of the working class would be created
- Economy controlled by the state
- 100% socialism is inefficient and corrupt
What to Produce: what state decides
Who Decides: workers and State Planning Agencies
Who to Produce it for: workers
Uses what combination of factors of production: capital-intensive
Note: mixed economies combine aspects of socialism and capitalism
