Class notes Economics and Business (introduction)

MACROECONOMICS
THE POLITCAL SPECTRUM
Political Spectrum & Economy is complex and interrelated

 operating in a capitalist society, determines the basis of the economic system withing that
country. For example, UK, US, Hong Kong and Canada
 economy characterised by private ownership of assets and the free market. Businesses
decide the price income and distribution of goods.
 Operating in a socialist society = greater government intervention and less Laissez-faire
mindset. Govt aims to allocate resources and wealth more equally.

Laissez-faire  meaning “allow to do” the practice of government intervention in an economy.

 No society = completely left/right wing  most countries operate in a mixed market
economy (e.g Australia) which incorporates socialism with capitalism and/or communism.
 Govt plays large role in trade and defense
 Market is driven by motivation and self-interest but govt can safe guard markets.

Spectrum of Political Ideologies

Communism

 Classless
 Common Ownership
 Lack of motivation to fill important aspects of society.
 e.g A Janitor gets paid the same a doctor - why would someone study to be a doctor then?

Socialism

 public ownership of essential services
 e.g., Emergency services,
 Lack of incentives and slow economic growth. (However more motivation than communism)

Social Democracy

 mixed market economy
 strong welfare
 e.g. Centrelink and jobseeker during the pandemic (in Australia
 progressive tax
 FDR

Liberalism

 Limited government intervention
 Lots of individual rights
 Example: America
 Private Property Rights, capitalism etc.
 Laissez-faire