Economic systems
Every society must decide how to produce and distribute goods; capitalism and socialism give different answers.
Capitalism
In capitalism, the means of production, such as factories and land, are mostly privately owned, and markets set prices through supply and demand. Profit motivates production. Supporters credit capitalism with innovation and growth; critics point to inequality, insecure work, and boom-and-bust cycles.
Socialism and mixed economies
In socialism, the means of production are owned collectively or by the state, and the economy is planned to meet social needs. Most real economies are mixed: largely market-based but with government roles in healthcare, education, transport, and regulation. Countries differ in where they strike that balance.
Globalisation and the economy
Global trade lets companies move production to wherever labour and materials are cheapest. Outsourcing has created jobs in some countries while factory jobs declined in others. Multinational corporations operate across many countries, sometimes with budgets larger than small nations.
Flashcard
An economy based on private ownership and markets
Check your understanding
A country where most businesses are private but the government runs healthcare and public transport has a: