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8/6/2019 Types of Economies (Pub and Priv)
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TYPES OF ECONOMIES
8/6/2019 Types of Economies (Pub and Priv)
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WHO AND WHY? Who makes economic decisions?
Who owns resources?
Who provides goods and services?
Why?
8/6/2019 Types of Economies (Pub and Priv)
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Either ... or ...FREE MARKETECONOMY
COMMAND ECONOMY
(PLANNED ECONOMY)
WHO
makeseconomicdecisions?
WHY?
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Either ... or ...FREE MARKETECONOMY
COMMAND ECONOMY
(PLANNED ECONOMY)
WHO
makeseconomicdecisions
The market:
-supply and demand-sellers-buyers
-producers ±consumers
The state
WHY? -to allow competition
and thus make theeconomy more efficient
-to provide betterquality products atlower costs
-to redistribute wealth
in the country morefairly
-to care for publicneeds
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Group the f ollowing expressions: government interference
privately-owned companies
market mechanism
market reliance
state-owned companies
central planners
laissez-faire
government-run business
central planning system privately-run companies
government intervention
USSR
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PLANNED E. vs. MARKET E. government
interference
state-ownedcompanies
central planning
government
intervention USSR
market mechanism
market reliance
privately-ownedcompanies
privately-run companies
laissez-faire
8/6/2019 Types of Economies (Pub and Priv)
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... or both...FREE MARKETECONOMY
(FREE ENTERPRISEECONOMY)
COMMANDECONOMY
(PLANNEDECONOMY)
MIXEDECONOMY
WHO
makeseconomicdecisions
The market:-supply anddemand
-sellers-buyers
-producers ±consumers
The state Both themarket andthe state
WHY -to allowcompetition andmake the economymore efficient
-to provide betterquality products atlower costs
-toredistributewealth in thecountry morefairly
-to care forpublic needs
To benefitfrom botheconomicsystems
8/6/2019 Types of Economies (Pub and Priv)
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Identify the advantages and disadvantages of themarket economy as opposed to the command
economy (R: p.13). - Assignment
FREE MARKETECONOMY
COMMAND ECONOMY
(PLANNED ECONOMY)
advantages
disadvantages
8/6/2019 Types of Economies (Pub and Priv)
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´The market has a keen ear for private
wants, and a deaf ear for public needs.µ (R. Heilbroner)
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MIXED ECONOMY
PUBLIC SECTOR VS. PRIVATE SECTOR
Who provides goods and services?
Why? (What is their interest?)
What do the two sectors consist of?
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WHO AND WHY?
PUBLIC SECTOR VS. PRIVATE SECTOR
The government,local authorities(e.g. municipalities,counties)
Care f or sociallyimportant issues of public interest (e.g.protectingenvironment,
consumers, education) Less profitable and
unprofitablebusinesses
Private owners
Making a profit
Profitable businesses
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WHAT DOES IT CONSIST OF?
PUBLIC SECTOR VS. PRIVATE SECTOR
State services: e.g.education, defence,social welfare, public
safety, utilities Government-owned
industries: e.g. publiccorporations* (e.g.electricity company)
Municipalenterprises: local government, e.g. buscompany
Privately-ownedcompanies
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The division is not always so clear ...
PRIVATE S.PUBLIC S. PRIVATE S. ?...
nationalisation
denationalisation
privatisation
... and there may be cases of cooperation ....
PPP
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nationalisation vs. privatisation Are the following arguments in favour of nationalisation
or privatisation?
1. The sale of an industry raises money for the
government.2. Competition makes an industry more efficient.3. It is socially right.4. These companies are more likely to innovate
and develop desirable products than theseowned by « .
5. The government has a better control of theeconomy.
6. Consumers are offered more choice and betterquality.
7. An industry is more efficiently managed by thatsector.
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What is privatization, anyway?
(Read the text, find answers - R:p.24)
in the broadestsense
contractor
seek
though
leap
state enterprise issue vouchers
general public
auctions
public stockoffering
contradictory goals
raise money
attract
layoffs proponents
argue
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Homework:1. R: p.27a) fill in b)heading f or each pg.
2. MK:pp.129 and 130
Compare the two textsThe Role of Government:
Galbraith vs.Friedman
Make clearly structured notes based on
the two texts. (Use graphics to show the structure:e.g., bullet points, vs.,etc., «)-Wed group: TO BE SUBMITTEDIN CLASS (HANDWRITTEN)
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Free market economy or state
intervention in times of crisis (1)? ³Ten short days saw the nationalisation,
failure or rescue of what was once theworld¶s biggest insurer, two of the world¶s
biggest investment banks, and two giantsof America¶s mortgage markets´
³The bankruptcy of Lehman Brothers and the sale of Merrill Lynch to Bank of America´
³ government rescue of American International Group (AIG)´
T he Economist , 20 Sept 2008
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Free market economy or state
intervention in times of crisis (2)?³Regulation is necessary and much
must now be done to improve thelaws of finance´:
better oversight
more transparency
supervision of giants
accounting that values risk better
safer financial transactions(derivatives)
T he Economist , 20 Sept 2008
