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Topics: Capitalism, Mixed economy, Property Pages: 7 (1832 words) Published: March 19, 2013
The Business System: Government, Markets and International Trade Chapter 3

Masaga, April B.
Sebastian, Jo Ann D.
Reyes Marvin Sergio L.

The process by which the economic and social systems of nations are connected together so that goods, services, capital and knowledge move freely between nations. Economic System
The system a society uses to provide goods and services it needs to survive and flourish. Economic Systems
The economic system accomplishes two basic economic task:
The task of producing goods and services, which requires determining what will be produced, how it will be produced and who will produce it. The task of distributing these goods and services among its members which requires determining who will get what and how much each will get. To accomplish these two tasks, economic system rely on three kinds of social devices: Tradition-based societies

Command economy
Market economy
Economic Systems
Tradition-Based Societies
Small and rely on traditional communal roles and customs to carry out the two basic economic tasks. Individuals are motivated by the community’s expression of approval or disapproval and the community’s productive resources - such as its herds are owned in common E.g. Bushman, the Inuit, Kalahari hunters and Bedouin tribes.

Economic Systems
Command Economy
Based primarily on a government authority (a person or a group) making the economic decisions about what is to be produced, who will produce it and who will get it. Productive resources such as land and factories are owned or controlled by government and are considered belong to the public. E.g. China, Vietnam, North Korea, Cuba, former Soviet Union run their economies primarily on the basis of commands. Economic Systems

Market Economy
An economic system based primarily on private individuals making the main decisions about what they will produce and who will get it. Productive resources like land and factories are owned and managed by private individuals. Essentially on Supply and Demand

E.g. most countries
Free Markets
Markets in which individuals are able to voluntarily exchange goods with others and to decide what will be done with what he or she owns without interference from government. Free Markets And Rights : John Locke

John Locke (1632-1704), an English political philosopher developed the idea that human beings have a “natural right” to liberty and a “natural right” to private property. The two natural rights that free markets are supposed to protect are:- the right to freedom

the right to private property
Free markets preserve the right to freedom for each individual to voluntarily exchange goods with others free from the coercive power of government. Free markets preserve the right to private property for each individual to decide what will be done with what he/she owns without interference from government.

Locke’s State of Nature
All are free and equal
each individual would be equal to others
free from constraints
Each person owns his body and labour, and whatever he mixes his labour into. People agree to form a government to protect their right to freedom and property. Lockean Rights
The right to life, liberty and property
Individuals have an absolute right to do whatever they want with their property and the government has no right to interfere with or confiscate an individual’s private property even for the good of society (Fifth Amendment of US Constitution) E.g. Land Acquisition Act

When a person expends labor/effort to create or improve something, that person acquires property rights over that thing E.g. writing a book, software programs
Criticism of Lockean Rights
Locke’s critics focus on four weakness in his argument:
1.The assumption that individuals have natural rights: This assumption is unproven and assumes that the rights to liberty and property should take precedence over all other rights. If humans do not have the overriding rights to...
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