Economic ideology

Economic ideology

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An economic ideology distinguishes itself from economic theory in being normative
Normative economics
Normative economics is that part of economics that expresses value judgments about economic fairness or what the economy ought to be like or what goals of public policy ought to be....

 rather than just explanatory in its approach. It expresses a perspective on the way an economy
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...

 should be run and to what end, whereas the aim of economic theories is to create accurate explanatory models. However the two are closely interrelated.

A good way of discerning whether an ideology
Ideology
An ideology is a set of ideas that constitutes one's goals, expectations, and actions. An ideology can be thought of as a comprehensive vision, as a way of looking at things , as in common sense and several philosophical tendencies , or a set of ideas proposed by the dominant class of a society to...

 can be classified an economic ideology is to query if it inherently takes a specific and detailed economic standpoint. For instance, Anarchism
Anarchism
Anarchism is generally defined as the political philosophy which holds the state to be undesirable, unnecessary, and harmful, or alternatively as opposing authority in the conduct of human relations...

 cannot be said to be an economic ideology as such, because it has amongst others Anarcho-capitalism
Anarcho-capitalism
Anarcho-capitalism is a libertarian and individualist anarchist political philosophy that advocates the elimination of the state in favour of individual sovereignty in a free market...

 on the one hand and Anarcho-communism on the other as subcategories thereof, which in turn can.

Furthermore, economic ideology is distinct from an economic system
Economic system
An economic system is the combination of the various agencies, entities that provide the economic structure that defines the social community. These agencies are joined by lines of trade and exchange along which goods, money etc. are continuously flowing. An example of such a system for a closed...

 that it supports, such as a capitalist ideology, to the extent that explaining an economic system (positive economics
Positive economics
Positive economics is the branch of economics that concerns the description and explanation of economic phenomena. It focuses on facts and cause-and-effect behavioral relationships and includes the development and testing of economics theories...

) is distinct from advocating it (normative economics
Normative economics
Normative economics is that part of economics that expresses value judgments about economic fairness or what the economy ought to be like or what goals of public policy ought to be....

). The theory of economic ideology explains its occurrence, evolution, and relation to an economy
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...


Capitalism


Capitalism
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...

 is a broad economic system where competition
Competition
Competition is a contest between individuals, groups, animals, etc. for territory, a niche, or a location of resources. It arises whenever two and only two strive for a goal which cannot be shared. Competition occurs naturally between living organisms which co-exist in the same environment. For...

 in a free market
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...

 determines the price
Price
-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...

, production
Production, costs, and pricing
The following outline is provided as an overview of and topical guide to industrial organization:Industrial organization – describes the behavior of firms in the marketplace with regard to production, pricing, employment and other decisions...

 and consumption
Consumption (economics)
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently...

 of goods through the invisible hand
Invisible hand
In economics, invisible hand or invisible hand of the market is the term economists use to describe the self-regulating nature of the marketplace. This is a metaphor first coined by the economist Adam Smith...

 of supply and demand
Supply and demand
Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...

 reaching efficient market equilibrium. Capital
Capital (economics)
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...

, property
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...

 and enterprise
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...

 are privately owned and managed for a profit
Profit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...

.

New enterprises may freely gain market entry without State restriction. Employment
Employment
Employment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as:- Employee :...

 and wages are determined by a labour market that will result in some unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...

. Government
Government
Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...

 and Judicial intervention
Interventionism (politics)
Interventionism is a term for a policy of non-defensive activity undertaken by a nation-state, or other geo-political jurisdiction of a lesser or greater nature, to manipulate an economy or society...

 are employed at times to change the economic incentives for people for various reasons. The capitalist economy will likely follow a business cycle
Business cycle
The term business cycle refers to economy-wide fluctuations in production or economic activity over several months or years...

 of economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...

 along with a steady cycle of small booms and busts.

There are several implementations of capitalism that are loosely based around how much government involvement there is. The main ones that exist today are mixed economies, where the state intervenes in market activity and provides some services, Laissez faire, where the state only supplies a court, a military, and a police, and anarcho-capitalism
Anarcho-capitalism
Anarcho-capitalism is a libertarian and individualist anarchist political philosophy that advocates the elimination of the state in favour of individual sovereignty in a free market...

 where the state does not exist and thus cannot interfere.

Socialism


Socialism
Socialism
Socialism is an economic system characterized by social ownership of the means of production and cooperative management of the economy; or a political philosophy advocating such a system. "Social ownership" may refer to any one of, or a combination of, the following: cooperative enterprises,...

 refers to the various theories of economic organization which advocate either public or direct worker ownership and administration of the means of production and allocation of resources.
(see socialism
Socialism
Socialism is an economic system characterized by social ownership of the means of production and cooperative management of the economy; or a political philosophy advocating such a system. "Social ownership" may refer to any one of, or a combination of, the following: cooperative enterprises,...

)

Communism


As Friedrich Engels
Friedrich Engels
Friedrich Engels was a German industrialist, social scientist, author, political theorist, philosopher, and father of Marxist theory, alongside Karl Marx. In 1845 he published The Condition of the Working Class in England, based on personal observations and research...

 described it (in Anti-Dühring
Anti-Dühring
Herrn Eugen Dührings Umwälzung der Wissenschaft, commonly known as Anti-Dühring, is a book written in German by Friedrich Engels, published in 1878. It had previously been serialised in a periodical. There were two further editions in German in the lifetime of Engels...

), communism
Communism
Communism is a social, political and economic ideology that aims at the establishment of a classless, moneyless, revolutionary and stateless socialist society structured upon common ownership of the means of production...

 is the evolution of socialism so that the central role of the State has 'withered away' and is no longer necessary for the functioning of a planned economy
Planned economy
A planned economy is an economic system in which decisions regarding production and investment are embodied in a plan formulated by a central authority, usually by a government agency...

. All property and capital are collectively owned and managed in a communal, classless and egalitarian society. Currency
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...

 is no longer needed, and all economic activity, enterprise, labour, production and consumption is freely exchanged "from each according to his ability, to each according to his needs".

It must be noted that communism is also a political system as much an economic one - with various models in how it is implemented - the well known being the Marxist Leninist model, which argues for the use of a vanguard party to bring about a workers state to be used as a transitional tool to bring about stateless communism, the economic arrangement described above. Other models to bring about communism include democratic socialism
Democratic socialism
Democratic socialism is a description used by various socialist movements and organizations to emphasize the democratic character of their political orientation...

, which argues for slow social transformation and evolution, or anarcho-communism, which argues similarly to Marxist schools for a revolutionary transformation to the above economic arrangement, but does not use a transitional period or vanguard party.

See also

  • Constitutional economics
    Constitutional economics
    Constitutional economics is a research program in economics and constitutionalism that has been described as extending beyond the definition of 'the economic analysis of constitutional law' in explaining the choice "of alternative sets of legal-institutional-constitutional rules that constrain the...

  • Economic system
    Economic system
    An economic system is the combination of the various agencies, entities that provide the economic structure that defines the social community. These agencies are joined by lines of trade and exchange along which goods, money etc. are continuously flowing. An example of such a system for a closed...

  • Development economics
    Development economics
    Development Economics is a branch of economics which deals with economic aspects of the development process in low-income countries. Its focus is not only on methods of promoting economic growth and structural change but also on improving the potential for the mass of the population, for example,...

  • Ecological economics
    Ecological economics
    Image:Sustainable development.svg|right|The three pillars of sustainability. Clickable.|275px|thumbpoly 138 194 148 219 164 240 182 257 219 277 263 291 261 311 264 331 272 351 283 366 300 383 316 394 287 408 261 417 224 424 182 426 154 423 119 415 87 403 58 385 40 368 24 347 17 328 13 309 16 286 26...

  • Political economy
    Political economy
    Political economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...

  • Social model
    Social Model
    A social, or socioeconomic, model, is the value system associated with the structure of a nation's political economy. There are no set rules that define a social model, only loose definitions characterized by certain attributes.-Taxation:...

  • National Economy Model (Haydarizm)