What Type of Economic System Operates in CARICOM Countries?.
No two economies are organized in exactly the same way, but all have to solve three fundamental problems:.
1. What should be produced in the economy?.
What quantities of food, mobile phones or banking services should be produced by the economy? How many trees need to be felled to meet the demand for pulp for newspapers and magazines? Should we spend extra money on national defense or should more resources be devoted to health care and education?.
2. How should production be organized?.
Should a firm use labour or machinery to produce their goods? How many workers should be employed? Should production take place in Port of Spain or Newcastle or in the UK or Caribbean? These are all examples of important production decisions.
3. For whom should production take place?.
Should everybody be entitled to an identical share of production, or should some receive more than others? We know that the distribution of income and wealth in the UK and every other economy is not equal. There are large-scale inequalities in people's living standards. Indeed the gap between rich and poor has widened considerably over the last twenty years.
An economic system is a distinctive method of providing answers to these basic economic questions. All such systems are complex. They include producers of every sort- publicly and privately owned, as well as domestically owned and foreign owned. They include consumers of every sort- young and old, rich and poor, working and non-working. They include laws, rules, regulations, taxes, subsidies, and everything else that governments use to influence what is produced, how it is produced and who gets it. Customs of every conceivable kind, and the entire range of Contemporary mores and values also influence them.
There are four types of economic systems:.
1. Capitalists, free, free market, unplanned, laissez-faire.
A free market economy is one where economic decisions are made through the free market mechanism.