Economic system case summary

Economic system case summary

In simple terms, an economic system is a means or a structure that determines the distribution of goods and services, resources and labor within a society. Ideally, an economic system controls the five factors of production. They include labor, capital, entrepreneurs, physical resources and information resources. It is therefore right to say that the primary purpose of an economic system is to perform the function of deciding what to produce, how to produce, how much to produce, and form whom the production should be done.  Several economic systems exist with each having different goals to achieve. In the case where different economic systems share the same goals, the approach towards the attainments of the goals differs.

The commonly known economic systems are the planned economies and free/market economies. In a planned economy, often referred to as socialism, the government decides how the factors of production are used. In a socialist economic system, the means of production are owned by the government. It, therefore, becomes the responsibility of the government to determine who own business, who the buyers and the sellers are, as well as the people who make the ultimate decisions.

The free economies are commonly revered to as capitalism. In a capitalist market, people make the ultimate decisions on how to utilize the factors of production. It is the people and not the government that decides who to buy from, how they work, and the businesses to operate. The United State is the perfect example of a capitalistic economy. The advantages of a capitalistic economy over the social economy are that it promotes innovation, enhances the efficient allocation of resources and competition.

Tucker Carlson was not wrong when he said that capitalism erodes Christian values, encourages debt, and destroy the nuclear family. A capitalistic economy focuses on profit neglecting social benefits. Through these aspects the values of Christianity is eroded where capitalist only cares for themselves. With limited government involvement, taxes are lower causing the possibilities of increased debt.

Business whether in a capitalistic economy or a social economy is required to uphold corporate moral responsibility. However, in a capitalistic economy, the issues of negative externalities are dominant. Negative externalities involve imposing a cost to people without their consent to achieve business goals. Most manufacturing companies impose a cost to people around without their consent. The noise and the atmospheric pollution caused by manufacturing plants is a perfect example of a negative externality.

Other than negative externalities, business exhibits positive moral responsibilities. Moral responsibility is the extent to which business should be held accountable for their actions. The controversy with the positive moral obligation is to whom firms owe a positive moral duty. Some people argue that firms should only be a moral responsibility to their shareholders only and not to the public. However, I concur with Milton Friedman that firms who are morally responsible carry out corporate social responsibility to solely benefit them.