Economic Philosophies: Introduction

• Economic philosophies are also known as economic ideologies
• It refers to a set of economic ideals that a given person, society, country, people ascribe to
• It refers to what this group of people/person believe the economy ought to be
• It expresses a perspective on the way an economy should run and to what end
• In Economics parlance, we can say that economic philosophies take a normative approach as opposed to a positive approach
• This is because economic philosophies involve making judgments about economic fairness or what the outcome of the economy or goals of public policy ought to be
• Examples of ideas that are dealt with under economic philosophies include:
  • Whether people should be allowed to privately own land and other resources (factors of production)
  • Whether governments should be allowed to meddle in business affairs
  • The extent to which certain industries must be regulated by the government
  • Whether the government must make sure there is an equitable distribution of wealth
  • How should prices be set within the economy or a given industry
  • Should the government pursue nationalisation of certain or all industries
  • Should the government pursue social welfare?
  • Should the government introduce and administer universal health care?
  • Should the government pursue policies to make sure there is an equitable distribution of wealth?
• To this end, over the centuries various economic ideologues have been put forth:
  1. Capitalism
  2. Socialism
  3. Communism
  4. Fascism
  5. Laissez-faire
  6. Marxism–Leninism
• One thing to note is that economic ideology is often part of a broad political idealogy
• Economic philosophies are sometimes confusingly called economic systems
• Strictly speaking, economic systems are often a mere result of economic ideologies
• Leaders who hold certain economic ideologies, create an economic system based on these ideals
• Economic systems are thus positive in nature i.e. they are what is as opposed to what ought to be
• Hence, for example, capitalism is often implemented in the form of a Free Market Economic system
• On the other hand, Communism frequently leads to the adoption of a Command Economic system
• Like all ideals, the economic systems are often a poor imitation of the ideology

To access more topics go to the Advanced Level Business Studies/ Business Enterprise Skills page

To access more topics go to the Advanced Level Business Studies/ Business Enterprise Skills page