1.
Economic system
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An economic system is a system of production, resource allocation, and distribution of goods and services within a society or a given geographic area. It includes the combination of the institutions, agencies, entities, decision-making processes. As such, a system is a type of social system. The mode of production is a related concept, all economic systems have three basic questions to ask, what to produce, how to produce and in what quantities, and who receives the output of production. The study of systems includes how these various agencies and institutions are linked to one another. The analysis of economic systems traditionally focused on the dichotomies and comparisons between market economies and planned economies, and on the distinctions between capitalism and socialism, subsequently, the categorization of economic systems expanded to include other topics and models that do not conform to the traditional dichotomy. Today the dominant form of organization at the world level is based on market-oriented mixed economies. Economic systems is the category in the Journal of Economic Literature classification codes that includes the study of such systems, there are multiple components to economic systems. Decision-making structures of an economy determine the use of inputs, distribution of output, the level of centralization in decision-making. Decisions might be carried out by industrial councils, by a government agency, in one view, every economic system represents an attempt to solve three fundamental and interdependent problems, What goods and services shall be produced, and in what quantities. How shall goods and services be produced and that is, by whom and with what resources and technologies. For whom shall goods and services be produced and that is, who is to enjoy the benefits of the goods and services and how is the total product to be distributed among individuals and groups in the society. Thus every economy is a system that allocates resources for exchange, the system is stabilized through a combination of threat and trust, which are the outcome of institutional arrangements. The means of production may be owned privately, by the state, a decision-making system, this determines who is eligible to make decisions over economic activities. Economic agents with decision-making powers can enter into binding contracts with one another, a coordination mechanism, this determines how information is obtained and used in decision-making. An incentive system, this induces and motivates economic agents to engage in productive activities and it can be based on either material reward or moral suasion. The incentive system may encourage specialization and the division of labour, organizational form, there are two basic forms of organization, actors and regulators. Economic actors include households, work gangs and production teams, firms, joint-ventures, economically regulative organizations are represented by the state and market authorities, the latter may be private or public entities
2.
Anarchist economics
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Anarchist economics is the set of theories and practices of economic activity within the political philosophy of anarchism. It is evident that, despite his speculations on the future of machinery, Godwins ideal society is based on the economics of handcrafts and cultivation. For the influential German individualist anarchist philosopher Max Stirner private property is a spook which lives by the grace of law, in other words, private property exists purely through the protection of the State, through the States grace. And what is their principle, whose protector they always love, not that of labour, rather it is interest-bearing possession. Labour certainly, yet little or none at all of ones own, Pierre Joseph Proudhon was involved with the Lyons mutualists and later adopted the name to describe his own teachings. Clarence Lee Swartz gives his own account of the origin of the term, claiming that he word mutualism seems to have been first used by John Gray, an English writer, in 1832. Thus, he saw private property as essential to liberty and a road to tyranny, the former when it resulted from labour and was required for labour. He generally called the possession and the latter property. For large-scale industry, he supported workers associations to replace wage labour, Josiah Warren is widely regarded as the first US anarchist, and the four-page weekly paper he edited during 1833, The Peaceful Revolutionist, was the first anarchist periodical published. Josiah Warren termed the phrase Cost the limit of price, with cost here referring not to monetary price paid, therefore, e proposed a system to pay people with certificates indicating how many hours of work they did. They could exchange the notes at local stores for goods that took the same amount of time to produce. Warren put his theories to the test by establishing an experimental labor for labor store called the Cincinnati Time Store where trade was facilitated by notes backed by a promise to perform labor. The store proved successful and operated for three years after which it was closed so that Warren could pursue establishing colonies based on mutualism and these included Utopia and Modern Times. Warren said that Stephen Pearl Andrews The Science of Society, published in 1852, was the most lucid, in Europe an early anarchist communist was Joseph Déjacque, the first person to describe himself as libertarian. Unlike and against Proudhon, he argued that, it is not the product of his or her labor that the worker has a right to, returning to New York he was able to serialise his book in his periodical Le Libertaire, Journal du Mouvement social. Published in 27 issues from June 9,1858 to February 4,1861, the anti-authoritarian sections of the First International proclaimed at the St. This revolutionary transformation could only be the outcome of the action of the proletariat itself, its trades bodies. Due to its links to active workers movements, the International became a significant organization, Karl Marx became a leading figure in the International and a member of its General Council
3.
Capitalism
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Capitalism is an economic system based on private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system, economists, political economists, and historians have adopted different perspectives in their analyses of capitalism and have recognized various forms of it in practice. These include laissez-faire or free market capitalism, welfare capitalism, different forms of capitalism feature varying degrees of free markets, public ownership, obstacles to free competition, and state-sanctioned social policies. Most existing capitalist economies are mixed economies, which elements of free markets with state intervention. Capitalism has existed under many forms of government, in different times, places. Following the decline of mercantilism, mixed capitalist systems became dominant in the Western world, Capitalism has been criticized for prioritizing profit over social good, natural resources, and the environment, and that is a cause of inequality and economic instabilities. Supporters believe that it provides better products through competition, and creates strong economic growth, the term capitalist, meaning an owner of capital, appears earlier than the term capitalism. It dates back to the mid-17th century, capitalist is derived from capital, which evolved from capitale, a late Latin word based on caput, meaning head – also the origin of chattel and cattle in the sense of movable property. Capitale emerged in the 12th to 13th centuries in the sense of referring to funds, stock of merchandise, sum of money, by 1283 it was used in the sense of the capital assets of a trading firm. It was frequently interchanged with a number of other words – wealth, money, funds, goods, assets, property, the Hollandische Mercurius uses capitalists in 1633 and 1654 to refer to owners of capital. In French, Étienne Clavier referred to capitalistes in 1788, six years before its first recorded English usage by Arthur Young in his work Travels in France, David Ricardo, in his Principles of Political Economy and Taxation, referred to the capitalist many times. Samuel Taylor Coleridge, an English poet, used capitalist in his work Table Talk, Pierre-Joseph Proudhon used the term capitalist in his first work, What is Property. To refer to the owners of capital, benjamin Disraeli used the term capitalist in his 1845 work Sybil. The initial usage of the term capitalism in its modern sense has been attributed to Louis Blanc in 1850, Karl Marx and Friedrich Engels referred to the capitalistic system. And to the capitalist mode of production in Das Kapital, the use of the word capitalism in reference to an economic system appears twice in Volume I of Das Kapital, p.124, and in Theories of Surplus Value, tome II, p.493. Marx did not extensively use the form capitalism but instead those of capitalist, and capitalist mode of production, also according to the OED, Carl Adolph Douai, a German-American socialist and abolitionist, used the phrase private capitalism in 1863. Capital has existed incipiently on a scale for centuries, in the form of merchant, renting and lending activities. Simple commodity exchange, and consequently simple commodity production, which are the basis for the growth of capital from trade, have a very long history
4.
Mercantilism
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Mercantilism was an economic theory and practice that was dominant in Western Europe during the 15th to the mid-18th centuries. Mercantilism is a form of economic nationalism and its goal is to enrich and empower the nation and state to the maximum degree, by acquiring and retaining as much economic activity as possible within the nations borders. Manufacturing and industry, particularly of goods with military applications, were prioritized, Mercantilism sought to ensure the nation produced as much volume and variety of output as possible, so as to limit its dependence upon foreign suppliers. Economic autarky was an element of mercantilism. These aims were primarily accomplished by, Imposing high tariffs on the importation of finished goods, Imposing low, or no taxes on the export of finished goods, and imposing high taxes on the exportation of raw materials. Seeking new markets for manufactured products, so as to artificially increase the demand for domestic production. These policies generally resulted in a balance of trade, which led to the accumulation of precious metals. Historically, such policies sometimes led to war and may have motivated colonial expansion, high tariffs, especially on manufactured goods, are an almost universal feature of mercantilist policy. Mercantilism has been linked to bullionism ever since Adam Smith made the accusation, however, due to the fact that no author self-consciously used the label to refer to their own thoughts mercantilist authors can only be identified retrospectively. It is the supply of things necessary for life and suitable for clothing, the core of mercantile policy was a coherent national industrial policy, which was aimed at generating as much material wealth within the nation as possible. Doing so, it was thought, was the best way to increase the states military, the term mercantile system was used by its foremost critic, Adam Smith, but mercantilism had been used earlier by Mirabeau. Many nations applied the theory, one example being France which was the most important state economically in Europe at the time. King Louis XIV followed the guidance of Jean Baptiste Colbert, his general of finances. Mercantilism was the dominant school of thought in Europe throughout the late Renaissance. Evidence of mercantilistic practices appeared in early modern Venice, Genoa, however, as a codified school of economic theories, mercantilisms real birth was marked by the empiricism of the Renaissance, which first began to quantify large-scale trade accurately. England began the first large-scale and integrative approach to mercantilism during the Elizabethan Era, queen Elizabeth promoted the Trade and Navigation Acts in Parliament and issued orders to her navy for the protection and promotion of English shipping. It was written in the 1620s and published in 1664, numerous French authors helped cement French policy around mercantilism in the 17th century. This French mercantilism was best articulated by Jean-Baptiste Colbert, though policy liberalised greatly under Napoleon, in Europe, academic belief in mercantilism began to fade in the late 18th century, especially in Britain, in light of the arguments of Adam Smith and the classical economists
5.
Protectionism
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Protectionist policies protect the producers, businesses and workers of the import-competing sector in a country from foreign competitors. According to proponents, these policies can counteract unfair trade practices, protectionists may favor the policy in order to decrease the trade deficit, maintain employment in certain sectors, or favor the growth of certain industries. In recent years, protectionism has become closely aligned with the anti-globalization movement, There is a broad consensus among economists that the impact of protectionism on economic growth is largely negative, although the impact on specific industries and groups of people may be positive. The doctrine of protectionism contrasts with the doctrine of free trade, a variety of policies have been used to achieve protectionist goals. Tariff rates usually vary according to the type of goods imported, import tariffs will increase the cost to importers, and increase the price of imported goods in the local markets, thus lowering the quantity of goods imported, to favour local producers. Tariffs may also be imposed on exports, and in an economy with floating exchange rates, however, since export tariffs are often perceived as hurting local industries, while import tariffs are perceived as helping local industries, export tariffs are seldom implemented. Import quotas, To reduce the quantity and therefore increase the price of imported goods. The economic effects of a quota is similar to that of a tariff. Economists often suggest that import licenses be auctioned to the highest bidder, administrative barriers, Countries are sometimes accused of using their various administrative rules as a way to introduce barriers to imports. Anti-dumping legislation, Supporters of anti-dumping laws argue that they prevent dumping of cheaper foreign goods that would cause local firms to close down, however, in practice, anti-dumping laws are usually used to impose trade tariffs on foreign exporters. Direct subsidies, Government subsidies are given to local firms that cannot compete well against imports. These subsidies are purported to protect jobs, and to help local firms adjust to the world markets. Export subsidies, Export subsidies are often used by governments to increase exports, Export subsidies have the opposite effect of export tariffs because exporters get payment, which is a percentage or proportion of the value of exported. Export subsidies increase the amount of trade, and in a country with floating exchange rates, have similar to import subsidies. Exchange rate control, A government may intervene in the exchange market to lower the value of its currency by selling its currency in the foreign exchange market. Doing so will raise the cost of imports and lower the cost of exports, international patent systems, There is an argument for viewing national patent systems as a cloak for protectionist trade policies at a national level. Peter Drahos explains that States realized that patent systems could be used to cloak protectionist strategies, There were also reputational advantages for states to be seen to be sticking to intellectual property systems. In the modern trade arena many other initiatives besides tariffs have been called protectionist, for example, some commentators, such as Jagdish Bhagwati, see developed countries efforts in imposing their own labor or environmental standards as protectionism
6.
Social market economy
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It is sometimes classified as a coordinated market economy. The social market economy was originally promoted and implemented in West Germany by the Christian Democratic Union under Chancellor Konrad Adenauer in 1949 and its origins can be traced to the interwar Freiburg school of economic thought. The social market economy was designed to be a way between laissez-faire economic liberalism and socialist economics. It was strongly inspired by ordoliberalism and the tradition of Catholic social teaching or, more generally, some authors use the term social capitalism with roughly the same meaning as social market economy. It is also called Rhine capitalism, typically when contrasting it with the Anglo-Saxon model of capitalism, rather than see it as an antithesis, some authors describe Rhine capitalism as successful synthesis of the Anglo-American model with social democracy. A2012 comparative politics textbook distinguishes however between the conservative-corporatist welfare state and the social democratic welfare state. Social market economies aim to combine free initiative and social welfare on the basis of a competitive economy, the term social was established by Adenauer to prevent further reference to christian Socialism, which was used in the early party agenda Ahlener Programm in 1947. In putting social policy on par with economic policy, Müller-Armack’s concept was more emphatic regarding socio-political aims than the economic concept. This dual principle also appeared in the name of the model, furthermore, various Third Way conceptions prepared the ground for the socio-economic concept. This desirable order of freedom and equality was labelled by a later publication entitled Weder so – noch so. In his opinion the term was tainted, reminding him too much about ideas of a mixed economy and he vehemently and consistently argued against the view that models were converging. Further, in contrast to Müller-Armack who emphasised the social aspect, by proclaiming the freer an economy is, the more social it is, Erhard once told Friedrich Hayek that the free market economy did not need to be made social but was social in its origin. Ludwig Erhard was rather inclined to Walter Eucken’s ordoliberal competitive market order, although he even considered himself an ordoliberal, Erhard based his economic conception neither on Eucken nor on Müller-Armack. In fact, his doctoral supervisor Franz Oppenheimer and especially Wilhelm Röpke, like Erhard a student of Oppenheimer, was his source of inspiration, Erhard perceived Röpke’s books as works of revelation and considered the economist a brother in spirit. For instance, Müller-Armack stressed that by more socialism he meant the social engagement for, equally, Ludwig Erhard pointed out that the principles of the social market economy could only be achieved if the public was determined to give them priority. They share an involvement in the Anti-Nazi Opposition, whose search for an order for Germany is an important background for the development of this concept. Michel Albert described a concept, Rhine capitalism. While the neo-American model builds largely on the ideas of Friedrich von Hayek and Milton Friedman, Rhine capitalism, Albert analyzes the Rhenish model as the more equitable, efficient, and less violent one
7.
State capitalism
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The term is also used by some in reference to a private capitalist economy controlled by a state, often meaning a privately owned economy that is subject to statist economic planning. This term was used to describe the controlled economies of the Great Powers in the First World War. This practice is claimed to be in contrast with the ideals of both socialism and laissez-faire capitalism. There are various theories and critiques of capitalism, some of which have existed before the 1917 October Revolution. Vladimir Lenin notably described the economy of Russia as state capitalism and he argued that the tools for ending capitalism are found in state capitalism. For anarchists, state socialism is equivalent to state capitalism, hence oppressive and merely a shift from private capitalists to the state being the sole employer, after the October Revolution, Lenin used the term positively. If in a space of time we could achieve state capitalism. State capitalism would be a forward as compared with the present state of affairs in our Soviet Republic. Lenin argued the state should temporarily run the economy, which would eventually be taken over by workers, to Lenin state capitalism did not mean the state would run most of the economy, but that state capitalism would be one of five elements of the economy. The term state capitalism has been used by various socialists, including anarchists, Marxists, perhaps the earliest critique of the USSR as state-capitalist was formulated by the Russian anarchists, as documented in Paul Avrichs work on Russian anarchism. This claim would become standard in anarchist works. Soviet Russia, it must now be obvious, is an absolute despotism politically, murray Bookchin, when speaking about Marxism said that Marxism, in fact, becomes ideology. It is assimilated by the most advanced forms of state capitalist movement—notably Russia, by an incredible irony of history, Marxian “socialism” turns out to be in large part the very state capitalism that Marx failed to anticipate in the dialectic of capitalism. This is a statement if one thinks out its implications. At worse, these parties can seize power and create a new form of society in which the working class is oppressed by new bosses. Another early analysis the USSR as state capitalist came from various groups advocating left communism, one major tendency of the 1918 Russian communist left criticised the re-employment of authoritarian capitalist relations and methods of production. In sum these measures were seen as the re-transformation of proletarians within production from collective subject back into the objects of capital. The working class, it was argued, had to participate consciously in economic as well as political administration and this tendency within the 1918 left communists emphasized that the problem with capitalist production was that it treated workers as objects. Its transcendence lay in the workers conscious creativity and participation, which is reminiscent of Marxs critique of alienation and these criticisms were revived on the left of the Russian Communist Party after the 10th Congress in 1921, which introduced the New Economic Policy
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