How to make Economics beneficial

Hey, I am taking an economics class and I want to strengthen my learning process by talking about what I have learned to friends, peers, and talking 2 u guys at A.E.

What I have learned (but was coinciously aware of before) was that there are three types of economies countries use. (The third is debated)

1. Centrally planned economies: Economy in which the gov. decides how economic resources will be allocated

2. Market Economy: An economy in which the decisions of households and firms interacting in markets allocate economic resources

Now the biggest example of a centrally planned economy has taken place between 1917 to 1991. That being the soviet union in which stores and shops were controlled by government officials. No goods or services were offered to satisfy the customers needs, so the standard of living for the average russian was low. This custom is still practiced in countries like N. Korea and Cuba.

The high-income democracies such as the U.S, Japan, and Western Europe rely on privatly owned firms and companies in which the consumer makes the decision of their wants and needs. In a market economy, the income of an individual is determined by the payment he recieves for what he has to sell. This income is determined on how much he/she gets based on the education, hours put to work, and how hard the worker does his/her job. And luck plays a role, good or bad, as it does elsewhere in life.

Earlier, the U.S interfered very little with the economy. But by the Depression and WW2, the government's role has been increasing to help benefit the poor, sick, and elderly. Some economists do not see the U.S, Japan, or the Western Euro countries as true market economies but as "mixed" Economies. That is, most results occur between buyers + sellers in markets but where the government plays a significant role in allocation of resources.

Ponce, what you write is more or less standard if we are only talking about modern economies.

Pekau, I liked your post. I agree with your conclusions. What is more, I believe that Communist economic life is a wishful thinking.. It is an attemp against the life itself.

an efficient education system. Sounds reasonable. Who pays for the education system though? How many teachers are made available. How much money can the govt give to schools while paying for weapons for their own security at the same time. The way you position the USSR is as if their resources are infinite. You see the army, navy, cosmonaut programs all getting funding and the USSR as big as it is, still has a finite amount of resources to give to every sector of the country. And without a middle class, not enough money was being able to be regenerated.

Originally posted by Antioxos Well there two main theories about the mixed  economies (with some variations)                          1st Keynesian Theory, is an economic theory  based on the ideas of 20th century British economist  Jhon Maynard Keynes . Keynesian  economics promotes a  mixed economy , where both the state  and the private  sector  play an important role. Keynes asserted the importance of aggregate demand  for  goods  as the driving factor of the economy , especially in periods of downturn. From this he argued that government policies could be used to promote demand at a macro level, to fight high unemployment  and  deflation  of the sort seen during the 1930s . 2nd  Monetarism (Milton Friedman,Chicago school ) focuses on the supply and demand for money as the primary means by which economic activity is regulated. Monetary theory focuses on  money supply and on inflation as an effect of the supply of money being larger than the demand for money.Monetarism had an ideological as well as a practical appeal: monetary policy does not, at least on the surface, imply as much government intervention in the economy as other measures.

Originally posted by Antioxos Well there two main theories about the mixed  economies (with some variations)                          1st Keynesian Theory, is an economic theory  based on the ideas of 20th century British economist  Jhon Maynard Keynes . Keynesian  economics promotes a  mixed economy , where both the state  and the private  sector  play an important role. Keynes asserted the importance of aggregate demand  for  goods  as the driving factor of the economy , especially in periods of downturn. From this he argued that government policies could be used to promote demand at a macro level, to fight high unemployment  and  deflation  of the sort seen during the 1930s . 2nd  Monetarism (Milton Friedman,Chicago school ) focuses on the supply and demand for money as the primary means by which economic activity is regulated. Monetary theory focuses on  money supply and on inflation as an effect of the supply of money being larger than the demand for money.Monetarism had an ideological as well as a practical appeal: monetary policy does not, at least on the surface, imply as much government intervention in the economy as other measures.

Originally posted by gcle2003   The chief difference between them from a political point of view is that Keynesianism promotes full employment as the main goal of government, whereas Friedmanism promotes maintaining stable monetary value as the main goal. The first therefore tends to be populist and 'left-wing', favouring the less well-off, whereas the second is conservative and 'right-wing', favouring the better-off.   Neither of them actually works.

Actually Monetarism consider unemployment normal situation of economy and Margaret Thatcher was the first that implement monetarism in U.K and this period it was invented the term "society of 2/3".
In our time there is no doctrines ,the state intervent where it is necessary and also a job of a state is to prevent the creation of cartels in the certain part of a economy..




Edited by Antioxos - 02-Feb-2007 at 14:43

A small thing to note, sorry if it's already been mentioned, is that no-one has ever really imposed an entirely planned, nor an entire free market economy. Personally I think humans are the only specied on earth to have developed a system that is detrimental to most of the species.

Well I meant detrimental to most of the human species, but I suppose it is, in a way, detrimental to the environment too. Take the great depression for example. The whole world got screwed over by a  made up system.

I noticed my post structure wasn't every good in this case, but the last sentence was actually meant to be a general example of how flawed the system is.