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Economic system

system of ownership, production and exchange

An economic system is a system of production, resource allocation, exchange, and distribution of goods and services in a society or a given geographic area. It includes the combination of the various institutions, agencies, entities, decision-making processes, and patterns of consumption that comprise the economic structure of a given community. As such, an economic system is a type of social system.

Circulation model of economic flows for a closed market economy.
CONTENT : A - F , G - L , M - R , S - Z , See also , External links

Quotes

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Quotes are arranged alphabetically by author

A - F

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  • (Capitalism is) an economic system based on private, rather than state, ownership of businesses, factories, transport services, etc, with free competition and profit-making.
    • Allwords.com: Lemma "Capitalism", 2006.
  • So far we have studies how, for each commodity by itself, the law of demand in connection with the conditions of production of that commodity, determines the price of it and regulates the incomes of its producers. We considered as given and invariable the prices of other commodities and the incomes of other producers; but, in reality the economic system is a whole of which the parts are connected and react on each other. An increase in the incomes of the producers of commodity A will affect the demand for commodities Band C, etc., and the incomes of their producers, and, by its reaction will involve a change in the demand for A. It seems, therefore, as if, for a complete and rigorous solution of the problems relative to some parts of the economic system, it were indispensable to take the entire system into consideration. But this would surpass the powers of mathematical analysis and of our practical methods of calculation, even if the values of all the constants could be assigned to them numerically.
  • The state of an economy is the resultant of real flows and money flows. The financial institutions operating through capital and money markets is institutional infrastructure. It lubricates the wheel of the economic system
  • I should like to suggest to you that the cause of all the economic troubles is that we have an economic system which tries to maintain an equality of value between two things, which it would be better to recognise from the beginning as of unequal value.
  • Today we have access to highly advanced technologies. But our social and economic system has not kept up with our technological capabilities that could easily create a world of abundance, free of servitude and debt. This could be accomplished, if we implement a resource-based economy.

G - L

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  • In the infinitely complex economic system on which we rely for our daily bread, no productive function is more important than that of our business leaders. These men are charged with the responsibility of giving direction and unity to the efforts of the many who participate in economic activity. It is their job to make the plans and decisions which will transform economic effort into the particular goods and services wanted by a myriad of consumers. Conversely, it is their job also to translate consumers' needs into employment opportunities for labor and other economic resources
  • I am a capitalist, and after a 30-year career in capitalism... I'm not just in the top one percent, I'm in the top .01 percent of all earners. Today, I have come to share the secrets of our success, because rich capitalists like me have never been richer... How do we manage to grab an ever-increasing share of the economic pie every year? ... here's the dirty secret. There was a time in which the economics profession worked in the public interest, but in the neoliberal era, today, they work only for big corporations and billionaires... We could choose to enact economic policies that raise taxes on the rich, regulate powerful corporations or raise wages for workers... But neoliberal economists would warn that all of these policies would be a terrible mistake, because raising taxes always kills economic growth, and any form of government regulation is inefficient, and raising wages always kills jobs.
    Well, as a consequence of that thinking, over the last 30 years, in the USA alone, the top one percent has grown 21 trillion dollars richer while the bottom 50 percent have grown 900 billion dollars poorer, a pattern of widening inequality that has largely repeated itself across the world. And yet, as middle class families struggle to get by on wages that have not budged in about 40 years, neoliberal economists continue to warn that the only reasonable response to the painful dislocations of austerity and globalization is even more austerity and globalization.
  • The old economics is correct, of course, that competition plays a crucial role in how markets work, but what it fails to see is that it is largely a competition between highly cooperative groups -- competition between firms, competition between networks of firms, competition between nations -- and anyone who has ever run a successful business knows that building a cooperative team by including the talents of everyone is almost always a better strategy than just a bunch of selfish jerks. So how do we leave neoliberalism behind and build a more sustainable, more prosperous and more equitable society?
    The new economics suggests just five rules of thumb. First is that successful economies are not jungles, they're gardens, which is to say that markets, like gardens, must be tended, that the market is the greatest social technology ever invented for solving human problems, but unconstrained by social norms or democratic regulation, markets inevitably create more problems than they solve. Climate change, the great financial crisis of 2008 are two easy examples.
  • Inclusion creates economic growth. So the neoliberal idea that inclusion is this fancy luxury to be afforded if and when we have growth is both wrong and backwards. The economy is people. Including more people in more ways is what causes economic growth in market economies...The third principle is the purpose of the corporation is not merely to enrich shareholders. The greatest grift in contemporary economic life is the neoliberal idea that the only purpose of the corporation and the only responsibility of executives is to enrich themselves and shareholders. The new economics must and can insist that the purpose of the corporation is to improve the welfare of all stakeholders: customers, workers, community and shareholders alike.
  • We complain of the increased tempo of our lives, but our frenetic lives are just reflection of the economic system that we have created.
  • The US, burdened by de facto tax boycotts by the rich and corporations, is sinking in debt, the highest in our history. The US government budget deficit was $2.77 trillion for the 2021 budget year that ended Sept. 30, the second highest annual deficit on record. It was exceeded only by the $3.13 trillion deficit for 2020. Total US national total debt is over $30 trillion. Household debt grew by $1 trillion last year. The total debt balance in our government Ponzi scheme is now $1.4 trillion higher than it was at the end of 2019. Our wars are waged on borrowed money. The Watson Institute at Brown University estimates that interest payments on the military debt could be over $6.5 trillion by the 2050s. None of this debt is sustainable.
    At the same time, the US is facing the ascendency of China, whose economy is projected to overtake the US economy by the end of the decade. Washington’s slew of desperate financial tricks – flooding the global market with new dollars and lowering interest rates to near zero – staved off major depressions after the 2000 dot.com crash, 9/11 and the 2008 global financial meltdown. The cheap interest rates led corporations and banks to borrow massively from the Federal Reserve, often to paper over shortfalls and bad investments. The result is that US businesses are deeper in debt than at any time in US history.
  • We are socialists, we are enemies of today’s capitalistic economic system for the exploitation of the economically weak, with its unfair salaries, with its unseemly evaluation of a human being according to wealth and property instead of responsibility and performance, and we are all determined to destroy this system under all conditions.
    • Adolf Hitler, In a speech (1 May 1927), as quoted in Adolf Hitler : The Definitive Biography (1976) by John Toland.
  • The British came to India primarily as traders but ultimately succeeded in carving out a strong empire in India. During their rule of over two centuries, they brought about far-reaching changes in the economic system of India. They completely destroyed the isolationist and self-sufficing character of the village;…
  • The Ethics of Competition is a book of Frank H. Knight's writings on a common theme: the problem of social control and its various implications. Knight believed in free economic institutions but was also aware that the competitive economic system could be improved. One of the central figures of neoclassical economics in the twentieth century, Knight pursued a lifelong campaign against irrationalities of nationalism, religious fanaticism, and group conflict, while conceding that these were fundamental orientations of human action that might yet frustrate his own work as an economist. While Knight vigorously defended human freedom and the liberal order, he also was sufficiently moved by the shortcomings of liberalism as to condemn it as rife with abuse.
    • Frank Knight, Richard Boyd. The Ethics of Competition, 1935/2009; Abstract
  • Changing our civilization’s operating system to one that naturally leads to life-affirming policies and practices rather than rampant extraction and devastation. An ecological civilization is both a new and ancient idea. While the notion of structuring human society on an ecological basis might seem radical, Indigenous peoples around the world have organized themselves from time immemorial on life-affirming principles. Every year that we head closer to catastrophe—as greater climate-related disasters rear up, as the outrages of racial and economic injustice become even more egregious, and as life for most people becomes increasingly intolerable—the old narrative loses its hold on the collective consciousness. Waves of young people are looking for a new worldview—one that makes sense of the current unraveling, one that offers them a future they can believe in. It’s a bold idea to transform the very basis of our civilization to one that’s life-affirming. But when the alternative is unthinkable, a vision of a flourishing future shines a light of hope that can become a self-fulfilling reality. Dare to imagine it. Dare to make it possible by the actions you take, both individually and collectively—and it might just happen sooner than you expect.

M - R

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  • The economic structure of the ideal society also resembles the structure of a healthy human body. Production, distribution and consumption should have an organic, interdependent relationship such as that which exists between the digestive, circulatory and metabolic systems. There should not be destructive competition due to overproduction; nor should there be excessive accumulation or overconsumption due to unfair distribution, which would be contrary to the welfare of all people. There should be adequate production of necessary and useful goods, fair distribution to supply what is sufficient for people's needs, and reasonable consumption in harmony with the purpose of the whole.
  • Here's what I don't think works: An economic system that was founded in the 16th century and another that was founded in the 19th century. I'm tired of this discussion of capitalism and socialism; we live in the 21st century; we need an economic system that has democracy as its underpinnings and an ethical code.
  • Capitalism is an organized system to guarantee that greed becomes the primary force of our economic system and allows the few at the top to get very wealthy and has the rest of us riding around thinking we can be that way, too - if we just work hard enough, sell enough Tupperware and Amway products, we can get a pink Cadillac.
  • It's a historical phenomenon that in 250 years, a nation could move from a colony into the most prosperous nation of the world and the leader of the world. It is indeed an achievement, a tribute to the talent of the American nation, the American people and an optimal political and economic system.

S - Z

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  • But what I believe is that if a person's individual rights or right to be a part of our economic system is violated under statute, we aggressively go after it. But we don't issue mandates to businesses that you've got to do this and you've got to do that.
  • An economic system is not a linear system, and... this fact stands in the way of the determination of the parameters of the system by methods that presume linearity, and... it introduces great difficulties in the extrapolation from past behaviour for purposes of prediction.
    • Arnold Tustin (1953) The Mechanism of Economic Systems: An approach to the problem of economic stabilisation from the point of view of control system engineering. p. ix.

See also

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