WORLD ECONOMIC SYSTEMS

WORLD ECONOMIC SYSTEMS

HS.C2.2 Analyze the role of citizens in the United States political system over time and compare this to the role of citizens in other political systems.

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Mr. David Medley

US Government

Let's hope that you enjoy this class...I enjoyed making it!

This is a building in Washington DC where our elected representatives argue over what's best for us.

United States Capitol Building

Believe it or not, Democracy has been around for thousands of years! The challenge is making it work!

Democracy Works

WORLD ECONOMIC SYSTEMS

Have you ever had a part time job? Maybe you sold cupcakes or walked dogs. How did you set prices? Where did you find customers? What did you do with your earnings? All these questions relate to economics. Understanding economic systems can help you chart your future as you grow older and explore opportunities in the world.

Lisa F. Young/Shutterstock Having a job can help teens learn about economics.

nimon/Shutterstock Floating markets in Asia are a traditional way of selling goods.

THE FOUR TYPES OF ECONOMIC SYSTEMS

Economic systems developed as a way for societies to deal with scarcity (the condition of lacking supply for the demand of a particular good or service). There are four types of systems: traditional economy, command economy, free market, and mixed market economy.

In 1776 the Scottish economist Adam Smith published a book called An Inquiry into the Nature and Causes of the Wealth of Nations. This book was the first to argue for a free market. Smith believed people who act in their own best economic interest create the greatest benefit for society. He promoted the laissez-faire approach (practice of allowing markets to operate freely, without government interference; French for “leave alone”). Free trade, he insisted, was the surest way for nations to build wealth. Most countries in the world have some components of a free market system, but no countries have a pure free market system.

Adam Smith and the Free Market

Everett Historical/Shutterstock Adam Smith (1723–1790) was the first free market economist.

Economic systems exert a powerful influence on everyone’s life. Many choices we make depend upon our economic circumstances. Some systems are fairer than others. A good economic system is one that balances needs with opportunities. It encourages innovation while caring for the most vulnerable. Building such a system remains a work in progress.