Post on 19-Jan-2016
Economic Systems
Combines elements of both free market enterprise & government intervention
Planned economy•Government determinesprice of goods & services,and supply
•Price of goods & services dictated by the market
• many countries operate under a mixed economy• In Canada, certain elements are overseen by the
government such as the military or postal service, while allowing other elements to be controlled by a free market such as the fluctuating cost of gas
How big of a role should the government have in mixed economies?
Economic Liberalism•Adam Smith•No government interference or intervention
a.k.a “Progressive Thought”
• John Maynard Keynes proposed that the government has a role to play during difficult economic times i.e. The Great Depression
• can stimulate the economy by increasing spending during periods of high unemployment, which
• would provide jobs for people; consequently, with higher employment, the economy would
• improve as people would have income to spend on goods and services
• popular in the developed world till the 1980s, “replaced” byNeo-liberalism– a return to freer market economy and reduced role for the government
Keynesian Economics
• Economic globalization: the easy movement of goods, productions, capital and resources among countries
• Elimination of barriers to trade i.e. European Union, North American Free Trade Agreement
Pros & Cons• elimination of trade barriers = economic development
for periphery• no barriers = market for products, cheap labour, profit
for transnational corporations (sweatshops)• less gov’t intervention = no social support i.e.
Homelessness
Impacts of Neo-Liberal Policies
Balance? Government subsidies to farmers = protection from free market