Post on 18-Jan-2016
Economic Systems
Ohio Wesleyan University
Goran Skosples
4. Roots and Evolution of Economic Roots and Evolution of Economic SystemsSystems
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LEARNING OBJECTIVES
why and how economic systems change
historical systems
contemporary systems
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Why economic systems change?
Why economic systems change:
1. ________________ change
2. ________________ growth
technology + population constrained growth of material output tension change a new system
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2 fundamental ways how economic systems change:
1. ___________________ change• by slow degrees accommodating changes in
the external environment (continuous)- Schumpeter, Institutionalists (Hayek, North, …)
2. ___________________ change (Marx)• building up to crisis and resolving itself by
systematic change (discontinuous)
How economic systems change?
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1. Hunter-gatherer society
• sustainability of the _____________
• changes in technology and population?
2. Pastoral and agrarian societies
• land cultivation and live stock ↑ productivity
• division of labor
3. “Oriental despotism”
• hydraulic societies control of _____ (irrigation systems)
• South and Eastern Asia, Mesopotamia, ancient Egypt...
Systems throughout history
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Systems throughout history
4. Classical slave economies
• flourished where labor was ______ relative to capital and land
• __ employment cost + __ supervisory cost
• needs a strong centralized authority
5. The feudal system (serfdom)
• dominated Europe for about 1000 years
• paying rent in good and services for protection
• a system of hierarchy: monarch, nobility, lower aristocracy and peasantry
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Systems throughout history
6. Mercantilism (commercial capitalism)
• end of feudalism: gunpowder, Black Death and urbanization
• integration of smaller economic spaces
• state involvement (common currency)
• positive balance of ___ and _____________
• favored growth of money supply low interest rates and higher inflation good for merchants
• incorporation of businesses and creation of banks
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7. Industrial capitalism
• The Industrial Revolution: industrialized manufacturing and mass production
• abolishment of mercantile restrictions
• public health, pollution, child labor, education
8. Finance capitalism and imperialism
• fusion of finance and industry (J.P. Morgan’s takeover of the US steel industry)
- control of the industry by a small group of bankers
Systems throughout history
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Socialism – state capitalism
Communism – never attained
Market Capitalism
Welfare State – social democracy
Corporatism – supervisory and coordinating role (labor and capital) of the government. Collective interest over an individual
Economics of Islam – absence of interest rates equity participation
Contemporary Economic Systems