Economic System

Topics: Capitalism, Mixed economy, Karl Marx Pages: 5 (688 words) Published: September 6, 2014

Analyzing the Role of Economic System and Socialist System
Professor R. Sarvis

Economic system is a set of theories by which a society determines and formulates the ownership and allotment of economic resources. There are basically four types of economic systems: traditional economic system, command economic system, free-market economic system, and mixed economic system. A traditional economic system rely on culture and tradition. In command economic system, the government operates all functions of production. Market economic system, this system depends on consumers and their purchasing decisions rather government operation. The mixed economic system that merges components of both command and market systems together. Each economic system has its advantages and disadvantages, they must describe what to produce, how to produce it and for whom to produce it. This will paper will focus on economic system and importance of a social system during emergency situation. Economic system for Handling a Crisis of Epic Proportions

The best suitable economic system for handling a crisis of epic proportions is the free-market economic system. The main reason for choosing free-market system is because that involves the private sector owning many resources which leaves the government's important operation as facilitating and boosting economic activity. The government may wish to intercede in the price mechanism mainly on the grounds of wanting to change the allotment of resources and reach what they consider or assess to be an improvement in economic and social welfare. In this system the government can focus on rebuilding and encouraging investment in the private sector. (Bockman, Johanna, 2011). There three important reasons for government intervention, to correct the mistakes of market failure and that correction will helps free market to become effective, to reach great equitable distribution of income, and to improve the economic position.

Socialist System in Emergency Situations
Socialist system is considered as the most appropriate system for handling emergency situations or natural disasters like hurricane, flood, blizzard, forest fire, etc. because the government takes care of paying the people who operate there so everyone can concentrate on assisting the people in need. The earthquake that occurred in Haiti in January 2010 and similar tragedies are regarded as inevitable natural disasters. A socialist system might be the best in responding to the needs of people struck by an emergency situation because it works on the concept of equality for everyone. Socialist system provides all types of facilities including food and water regardless of income and also it has good quality health care facilities such as child care and dental care. (Heilbroner, Robert, 2014). Socialist systems have all kinds of resources to handle emergency situations like Haiti earthquake. The Laws of Supply and Demand

The terms supply and demand refer to the action of the people as they connect with one another in competitive market. In general, the fundamental law of supply and demand motivates services to charge a greater rate in the winter time, when demand is high, and a lower rate in the the summer time, when demand is low.  The demand for energy is higher in the winter period as the temperature decreases. (Turner, W.C., 1997). According to first law of supply and demand, if demand rises and supply remains uninterrupted, a shortage occurs, that causes a greater equilibrium price. So demand is surely greater in winter, and yet the energy supplies are the same as they were at the starting point of the winter - they are not going to increase.

The free-market system plays a significant role in Handling a Crisis of Epic Proportions. In socialistic system, the most important advantage of this system is everyone will receive...

References: Bockman, Johanna (2011). Markets in the name of Socialism: The Left-Wing origins of Neoliberalism. Stanford University Press. 
Heilbroner, Robert. (2014). “Socialism: The Concise Encyclopedia of Economics | Library of Economics and Liberty". 
Turner, W.C., (1997). Energy Management Handbook, Third Edition. Lilburn, Ga.:Fairmont Press, Inc.
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