Economic System in America and China

Introduction

An economic system is the structure of production, allocation of funds, distribution of products and consumption of goods and services in an economy. It is a set of institutions and social relations. On the other hand, is the set of principles by which to address economic problems such as shortage of resources by allocating limited products. In this paper, we would be discussing the economic systems of America and China.

Discussion

United States of America

The idea of an economic system carries the connotation articulated parts (principles, rules, procedures, institutions) functionally harmonized to achieve certain collective purposes. During the articulation of parts each society tries to solve the economic fundamental problem is the satisfaction of basic needs. Throughout its history, but especially during its peak in the second half of the nineteenth century, capitalism had a number of basic features:

The means of production - land and capital are owned privately. Capital in this context refers to buildings, machinery and other tools used to produce goods and services for consumption.

Economic activity appears organized and coordinated by the interaction between buyers and sellers (or producers) that takes place in the markets.

Both owners of the land and capital as workers are free and looking to maximize their welfare, so try to get the most out of their resources and the work that used to produce, consumers can spend as and when they want their income for the highest possible satisfaction. This principle is called sovereignty of the consumer, shows that in a capitalist system, farmers will be forced, due to competition, to use their resources so they can meet the demand of consumers, the interest staff and the pursuit of benefits leads them to pursue this strategy.

Disintermediation of the 1980s prompted international banks particularly U.S. to turn away from the business of generating funds and to identify risks that are transferred credit markets have been liberalized and deregulated. They have a special activity of investment banking generating commissions particularly important. This was the era of Wall Street, the City and the Golden Boys (Ebbinghaus & Manow, 198-205).

A financial industry involving banks, law firms, auditors and rating agencies have developed financial products to high profitability which it is claimed that they have no risk compensation risk. A sphere is developing with phenomenal financial derivatives. Money creation is mainly done by the market rates that govern most of the funds are those established in these markets.

Companies and individuals have been pushed into debt and the United States rose to a situation of negative savings for individuals. The indebtedness of individuals in the United States is over $ 14,000 billion. The household debt increases the turnover of these companies without having to distribute additional wages. The buyers' swelling debt enables companies to make profits higher than they could expect given the quality of their products and their management. The alleged increase in U.S. productivity is purely artificial (Dos, 231-236).

American overconsumption is favourable to importers. The trade deficit is of $ 737Mds. The budget deficit in ...