Economic Systems: IN BRIEF



Lefkowitz – GOVT/ECON Name ___________

Three Economic Systems

Below are descriptions of three of the most significant economic systems in the history of human civilization. Please respond to the questions on the back of this sheet.

I. PRIMITIVE SUBSISTENCE

II. ANCIENT CENTRALIZED STATES

III. CAPITALISM

1. What are the ‘pros’ and ‘cons’ of each of these systems? Explain your responses fully. (write small)

2. Using these three examples of different “economic systems”, can you make a definition of what an “economic system” is?? Start by identifying the elements that all these systems seem to have in common and then make several generalizations about “economic systems” in general.

3. Briefly sketch or diagram each of the three economic systems in a way that shows *how* it works:

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SOURCE: “Economic Systems,” The New Encyclopedia Britannica: MACROPAEDIA, pp.908-912, Vol.17, 2007.

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o the most ancient economic system, originating with “cave-men/women”.

o rigid social structure: individuals have their place in the group based on family hierarchies and this is permanent and unchanging, rooted in long-standing tradition.

o they sustain themselves with hunting and gathering, or perhaps simple agriculture.

o when there are economic problems, the group simply migrates.

o everything about the group’s daily lives is taken up with the process of subsistence (i.e. survival).

o an example from a tribal society:

▪ It seems very unequal when you watch Bushmen divide the kill, yet it is their system, and in the end no person eats more than the other. That day Ukwane gave Gai still another piece because Gai was his relation, Gai gave meat to Dasina because she was his wife’s mother... No one, of course, contested Gai’s large share, because he had been the hunter... No one doubted that he would share his large amount with others, and they were not wrong, of course; he did. (from The Harmless People by E.M. Thomas, quoted in Britannica)

o The first examples of this system emerged in Egypt, China and India.

o They were “great systems of social coordination” that were responsible for the vast temple complexes, irrigation systems, fortifications, and cities of ancient India and China, and the kingdoms of the Inca and Maya.

o A powerful, centralized authority commanded large portions of the population to carry out these huge projects – and anything else that the ruler or the elites wanted – instead of doing the village-based labor that those people had done traditionally.

o These systems can generate large surpluses of wealth with this productive power, mainly for the benefit of the elites and their general ‘glory’.

o For example:

▪ [the pharaoh Khufu] ordered all Egyptians to work for himself. Some accordingly, were appointed to draw stones from the quarries in the Arabian mountains down to the Nile, others he ordered to receive the stones when transported in vessels across the river… And they worked to the number of a hundred thousand men at a time, each party during three months. The time during which the people were thus harassed by toil lasted ten years on the road which they constructed, and along which they drew the stones; a work, in my opinion, not much less than the Pyramids. (Herodotus, c 5th BC/BCE, quoted in Britannica)

o Also called a ‘market society’ or ‘market economy’ (as distinct from a society which has market-places in which you can buy and sell goods), it is a social order in which individuals are expected to provide for themselves and even encouraged to try to earn as much as they can.

o The organizing principle of this society is the generalized search for material gain.

o It evolved in civilizations of the West where first empires and then the power of royalty faded, as ‘nation-states’ began to develop. Likewise, it emerged as the use of slaves and then serfs disappeared and, instead, society divided into categories like ‘workers’, ‘landlords’ and ‘entrepreneurs’.

o In this system, the government is separate and distinct from the economy (i.e. the means of production and distribution), as opposed to the ruling class performing both functions.

o The mechanism of competition in capitalism is that producers make what the public has the means and desire to pay for.

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