ECONOMIC INSTITUTIONS

Those means used by a society to transform the physical environment into goods and to convert human energy into services which are allocated through distribution rules to meet our real and contrived needs

PROPERTY: The socially defined set of rights regarding the use and disposition of social desirables.

TYPES OF PROPERTY:

• Individual: Rights invested in individuals or groups (such as corporations) that are treated as individuals.
• Communal: Rights invested in the community as a whole (kibbutzim, monastery, Native American "hunting-grounds", etc.)
• Public: Rights invested in governmental units (e.g. Federal, state, city, county, etc.)

COMPARATIVE ECONOMIC SYSTEMS IN INDUSTRIALIZED SOCIETIES

CAPITALISM DEMOCRATIC STATE COMMUNISM

SOCIALISM SOCIALISM

of Production)

Ideological Individualistic Mixed Communal Communal

World View

Motivational Self interest/ Social good/ Social good Social good/

System personal gain self interest (with state help) individual will

suppressed

How Economy "Laissez-faire" State State control Self-regulating/

is Regulated self regulation intervention through altruism

through free and free

markets markets

1. To each according to need.

Basic needs are satisfied but not extravagance beyond need.

2. To each according to wants.

Needs plus other things that people desire.

3. To each according to what is earned.

People are the source of their own wealth;

if they earn it, they can spend it; if they don't earn it, they must do without.

4. To each according to what can be obtained -- by whatever means.

Everyone can acquire as much wealth as possible without regard for the interests or hardships of others.

Raw materials + Labor (direct + fringe) + overhead + capital (principal + interest) + taxes + profit* = Price (costs + profit)

COSTS

*(profit = reinvestment + dividends)