The word democracy comes from ancient Greek words meaning ‘people’ and ‘rule of government’. It is a system of government of a country whose leaders have been elected by the people. When the elected representatives meet in parliament to make laws, the form of government is a parliamentary democracy. Monarchy
A monarchy is a form of government led by an individual who holds the position for life, having inherited the position, and who passes it on to a relative, usually a son or daughter. In the past, all monarchs held great power and made the all decisions and laws of the country. This is known as absolute monarchy. Today most monarchs act as Head of State, filling a ceremonial role with little or no power regarding the actual governing of the country. A constitutional monarchy is a country which has a written Constitution that sets out the rules for how the country will be governed and the rights and responsibilities of its people, and has a monarch as Head of State. Republicanism
A republic is a country whose head of government is an elected or chosen president. Sometimes the president is also the head of state, for example the President of the United States. Presidents are usually elected for a specific length of time, called a term of office. In some countries a president may only serve a particular number of terms. A republic may or may not be democratic. In a democratic republic, the people choose their leaders through elections, although in countries where president is a ceremonial role, it may be by government appointment rather than by election. In some undemocratic republics the leaders are chosen by a small number of people and may stay in office for a long time, sometimes without ever being elected or re-elected. In some cases there may be elections, but these may be conducted in corrupt ways, or electors are not given a free choice of who to vote for. Communism
Communism is an economic system in which there is little or no private ownership - property is held by the community rather than by individuals. All economic activity is controlled by the government, including things like what crops are grown, what goods are manufactured, and to whom they are sold and at what prices. The decisions made by communist governments are those that are normally made by private individuals in non-communist countries. Karl Marx, whose beliefs formed a foundation of communism
Communist governments are usually a form of totalitarianism, and traditionally allow only approved candidates to stand for election and there is usually little or no choice of candidate at an election. Economic System
1. Capitalist Economic System
A Capitalist economic system is one characterised by free markets and the absence of government intervention in the economy.
In practice a capitalist economy will need some government intervention, primarily to protect private property. (This is important to distinguish capitalism from anarchism, where there is absolutely no government present)
In the real world, many economies which are viewed to have a capitalist economic system may have government spending taking up 35% of GDP. This is because the government pays for welfare, health, education and national defence. However, the economy is still viewed as capitalist because in the area of private enterprise firms are free to decide what to produce and for whom.
Capitalist economic systems invariably lead to inequalities of wealth and income. However, it is argued that this inequality provides an incentive for wealth generation and economic growth.
A Capitalist economic system is often contrasted to a Socialist or Communist economic system where economic decisions are made centrally by government agencies.
Different Types of Capitalism
o Turbo capitalism - free market capitalism with little government regulation
o Responsible capitalism- Free markets but also social welfare net.
Advantages and Disadvantages of Capitalism
Advantages of Capitalism
1. Reduction in cost of production due to efficient control 2. Efficient control of production process
3. Improved quality of goods
4. Consumer’s choice is given full weight
5. Varieties of products
Disadvantages of Capitalism
1. Inequality in the distribution of national wealth
2. Fluctuations in the level of employment
3. Class conflicts
4. Waste of talents
2. Socialism Economic System
Socialism is an economic system in which the means of production are owned and managed by the State. Ownership of means of production is not allowed. People can have personal property which is transferable and inheritable. In socialism economic activities are carried on mainly for social gains and personal interest is of less significance. In this economic system the anti social activities like smuggling and hoarding find no place. Economic activities are planned with the motive of social benefit by a central planning authority. The individuals in socialistic society surrender their economic freedom in exchange of assurance of freedom from wants by the State. It is the responsibility of the State to provide food, lodging and clothing besides other requirements, by assigning a suitable job to each one of them.
Characteristics of Socialism
Following are the characteristics of socialism
1. In socialism means of production are owned by the State 2. Economic activities are planned by the central planning authority 3. Absence of competition
4. Equal opportunities to all
5. No economic freedom to the people
Advantages and Disadvantages of Socialism
Advantages of Socialism
1. Social Benefit. Over production and concentration of wealth in the hands of few does not exist. Every one is guaranteed of the basic requirements of life. 2. Rational Allocation of Resources. There is always a rational allocation of available resources to meet various ends, well adjusted to the national requirements. 3. Full Employment of Manpower. Each one gets a job according to his ability. In socialistic economy everyone has to work and contribute to the national output. 4. Absence of Anti Social Activities. Personal gain in socialistic economy ceases to exist so anit social activities like adulteration, hoarding and smuggling are not here.
Disadvantages of Socialism
1. Loss of economic freedom
2. Lack of incentive to work hard in socialism
3. Compulsion and coercion in socialism
4. it is against the human nature
3. Communism Economic System
Communism is an economic system where means of production are controlled and managed by a Central State Authority, and there is also a restriction on the ownership of personal property. In communism personal belongings, as clothing, watches, and shoes are allowed to be owned by individuals and the houses are owned by the State.
Communism is the extreme form of Socialism
In communism individuals are assigned work by the State and they are given a bit remuneration of their service normally in kind. People get ration from Government department. People do not have choice of their own. They have to be content with whatever is prescribed for them. State provides all social services such as educational, recreational and hospital facilities.
Advantages and Disadvantages of Communism
Advantages of Communism
o Following are the merits of communism
o Careful life
o Full employment of manpower
o Rapid development and economic growth
o Equitable distribution of wealth
Disadvantages of Communism
o Personal freedom is lost
o Workers are treated as machines
o Materialistic approaches to life problems
o Central State Authority holds all means of production
4. Mixed Economy System
o A mixed economy means that part of the economy is left to the free market, and part of it is run by the government.
o In reality most economies are mixed, with varying degrees of state intervention.
o Mixed economies start from the basis of allowing private enterprise to run most business. Then the governments intervene in certain areas of the economy, such as regulation, and spending money on public services.
Advantages of Mixed Economies
o Most business and industry can be left to private firms. Private firms tend to be more efficient than government controlled firms because they have a profit incentive to cut costs and be innovative.
o Mixed economies can reduce the amount of government regulation and government control prevalent in a command economy.
o Mixed economies can enable some government regulation in areas where there is market failure. This can include:
o Regulation on the abuse of monopoly power, e.g. prevent mergers, prevent excessively high prices.
Disadvantages Mixed Economies
o Can be difficult to know how much governments should intervene, e.g. discretionary fiscal policy may create alternative problems such as government borrowing.
o Mixed economies are criticised by Socialists for allowing too much market forces, leading to inequality and an inefficient allocation of resources.