There are numerous nations with various assemblages and economic systems in the modern globe. Contemporary market economies now include the government as a prominent and active player (Li & Maskin, 2021). For instance, a command economy is entirely managed and planned by the state using a centralized financial plan. On the other hand, in a market economic system, resources and markets can be privately owned without the government’s involvement and operate according to the supply and demand paradigm. Every economic system has benefits and drawbacks that can be leveraged to a country’s advantage to optimize productivity and create the best economy.
Capitalism is the type of economic system that most accurately characterizes the American economy. Capitalism refers to a system in which the proprietors control the means of production, including labor, capital goods, natural resources, and enterprise, and get their revenue from these components. Essentially, it gives business owners the power to run their enterprises profitably and motivates them to do so (Amadeo, 2021). The capitalist system is not flexible and always produces crises (Delanty, 2019). As a result, the US has a mixed economy, which combines the market and command economies besides capitalism. Overall, to secure people’s rights to own enterprises and private property, it outlines a market system in which the government may exercise control over some sectors and industries.
Russia, China, and the US have all established separate and distinctive economic systems. China has a social market economy, whereas the US has a mixed economy. An economic system known as a social market economy consists of businesses held equally by the public and the government. As a result, the Chinese government can pick which industries get subsidies and which markets get protected while also making money from their businesses (Samuelson, 2019). In the past, Russia had a command economic system, in which the government or another powerful centralized authority dominated and controlled the economic structure. Today, Russia has a mixed economy, with state intervention limited to the oil and gas sector.
A political system is the set of formal legal institutions that makes up a state. Decisions on the usage, production, and distribution of resources in any particular society are made through these frameworks. My experience has taught me that various political systems exist, including democracy, monarchy, dictatorship, communism, and oligarchy. Democracy is the system of government that I embrace and serves as my nation’s foundation. Generally, this allows people to choose the country’s political leader by voting.
The political policy is a regulation or guiding principle that should help make decisions to benefit the community or unit. The government, political parties, and businesses are only a few groups that make up the American political system. In the US, Congress must approve every act or policy before its implementation. In contrast, in Japan, when a bill is supported by the House of Representatives and the House of Councilors in Japan’s Diet, it becomes law.
The voluntary nature of capitalism and its inventive synthesis of the two fundamental characteristics of self-interest and empathy underpins its morality. In essence, these virtues must be broadly recognized and accepted for enterprises to succeed and maintain capitalism. The vice of capitalism is that it denies individuals without financial assistance and equal education opportunities (Amadeo, 2021). Generally, this may discourage some people from starting their businesses, even though they may have amazing ideas that could positively impact the nation’s market and economy.
The study of and manipulation of the economy are central to economic systems. Politics is the application of using power to persuade people. A policy is a purposeful set of rules designed to direct behavior and produce logical results. Essentially, these concepts have a close relationship because one of the main political battlegrounds is how well the economy performs (Pettinger, 2020). Due to the diversity of perspectives, many economic issues are intrinsically political because they are influenced by regulations formed at this level.
Amadeo, K. (2021). How capitalism works compared to socialism and communism. The Balance.
Delanty, G. (2019). The future of capitalism: Trends, scenarios and prospects for the future. Journal of Classical Sociology, 19(1), 10-26.
Li, D. D., & Maskin, E. S. (2021). Government and economics: An emerging field of study. Journal of Government and Economics, 1, 1-15.
Pettinger, T. (2020). The relationship between economics and politics. Economics Help.
Samuelson, R. J. (2019). Why China clings to state capitalism. The Washington Post.