Economic and Political Systems



Political and Economic Systems

Introduction

Over the decades, it has been very important to consider the basic difference between the purposes of a political and an economic system. Both the systems have a different set of purposes to achieve. It is also very important to understand the different purposes of both the systems. These systems should be operated separately to make it easier to understand the underlined purposes. The government of a state aims to devise a political system through which it could provide certain benefits for their citizens. The basic purpose of a government's political system is to provide protection citizens from one another and outside invasion.

Similarly, a government has some specific purposes which it aims to achieve through their economic system. The core purpose of the economic system is to identify and allocate resources present the country effectively. Another purpose is to identify the correct method of producing goods and services and then distributing them effectively among the citizens. There are four resources in an economic system namely, land, labor, capital and management. The success of an economic system depends upon the effectiveness of allocating and managing these resources (Conklin, 1991).

The state plays a vital role in differentiating the purposes of both these systems and assessing the needs of these systems to prevail in the state. In a capitalist system, the government has the control of the economic activities of the state. It becomes very important for the government to understand the difference the economic and political systems. Vaclav Holesovsky and Ellen M. Wood have discussed comprehensively the subject of separation and relationship between political and economic systems. They also discussed the role and responsibilities of the state with respect to this subject. The basic essence that both the authors provided about the separation and relationship of economic and political system are discussed as follows.

Market Capitalism and the Government Sector

Vaclav Holesovsky, in his book “Economic Systems: Analysis and Comparison” have discussed the subject, Market Capitalism and the Government Sector. The author emphasizes to explain the role of the government in a capitalist economic system. The basic problem that a government faces is effective allocation of resources. There are many traditional ways of achieving optimization of resources, and it is also noticed that these ways are useful. Holesovsky in his book gives us an opportunity to understand how governments can achieve their economic objectives by having effective relationship with the markets.

Holesovsky mentions that the private sectors have the ability to respond to the demand with supply and vice versa. Private sectors provide an appropriate setting to achieve the objectives effectively which a government might lack to achieve. This provides openings for alternatives and opportunities for competition in the market. This creates an open and free market which further gives rise to democracy. Competiton provide a variety of opportunities for progress as competitors keep on innovating new ways of surviving in the market. Despite of such a unique system, there are some problems present within the system due ...