Compare and contrast the basic types of economics system?

Answer 1

Communism and capitalism are generally considered the two basic economic systems of the modern day. Communism is based on the teachings of Marx's Communist Manifesto. The key principle of the manifesto is the idea that personal property destroys equality and that equality provides people with the best lives possible. Marx teaches that all property should belong to the collective "people" and that the "people" will redistribute all goods equally among themselves. Ideally the people would be a delegation of equal citizens who would decide how to redistribute property for the good of the society as a whole. Workers would be a part of a "collective" which would produce goods for the government to distribute. The key issues with communism as a practice are motivation and ironically enough equality. Laborers in a communist society are traditionally less productive than workers in a capitalist society because no matter how well they perform their occupations they will receive the same goods as the rest of the population. As Stalin's reign portrayed inequality can quickly corrupt communist government because the delegation of citizens whose job it is to distribute goods often favor themselves over the rest of the population. Societies that have accepted communism include Russia/Soviet Union, China/People's Republic of China, North Korea, Cambodia, Cuba, Vietnam and debatably Venezuela.

Capitalism is based on the work of Adam Smith's Wealth of Nations written in 1776. Capitalism is the theory that government should be completely removed from the economic sector and that labor replaces land as the most important economic factor. This is called Laissez Faire economics and is the complete opposite of the communist perspective. Smith asserts that an "Invisible Hand" governs society and that each man's selfish nature will ultimately guide society toward economic growth. This means no tariffs on international trade and no regulation of business practices. Issues with the implementation of capitalism include monopolies, child labor/workers rights, and minimum wage. This philosophy has been accepted in most places which are not communist including the Europe, Africa, Australia, and North and South America with a few of the above exceptions.