Overview Of The United States Economic System

Business and the economy go hand in hand. Businesses provide the goods and services, which in turn drives the nations’ economies. There are several economic systems: capitalism, socialism, and communism. These economic systems have both pros and cons and will be discussed in depth in the following chapters. Capitalism is the economic system we are most familiar with because it is what the United States uses. As stated by Marce Kelly and Chuck Williams in BUSN 8, “capitalism-also known as the private enterprise or free market system-is based on private ownership, economic freedom, and fair competition” (2016, Pg. 24). This form of economy gives, almost, complete control to individuals and business owners. The government plays a very small role

27). The government plays a bigger role in a socialistic economy than it does in a capitalistic economy. A benefit of a socialistic economy is that the government uses the tax money to provide services to its country. For example, in America we are responsible for paying our health insurance and higher education. But in a socialistic economy, like Sweden, the higher taxes taken from businesses provide the country with free higher education and free healthcare (Kelly & Williams, 2016, Pg. 28). While this sounds fine and dandy to the individuals who are benefiting from these free services, entrepreneurs aren’t as motivated to be as profitable as possible. The decline in entrepreneurs and high taxes has prevented socialistic economies from being truly

Unlike the other two, communism is also viewed as a political system. Communism is a planned economy in which the government oversees practically all of the country’s enterprises (Kelly & Williams, Pg. 28). The idea behind communism and the benefit was supposed to be that of equality among all. Karl Marx, who founded communism, didn’t like to see extremely rich people while other people were struggling. However, the cons far outweigh the pros in this economy. Countries such as China, Soviet Union, Cuba, North Korea, and Vietnam took communism and forced people where to work and in some cases, what to buy (Kelly & Williams, Pg. 28). Thankfully, most nations ruled by communism began to adopt more of the free market values, causing growth in their economies and a better standard of living. The challenges that a country would face if it changed from one economic system to another would depend on what system they are switching from. Let’s use a free market system like the United States as an example. If the United States were to switch from a capitalistic economy to say communism, there would be a total uprising among the people. The challenges faced would be for the political party in power to prove to the people that change is necessary and that better times will be