Economic Systems and Cold War - Basic Ideas

Economic Systems

Traditional

Command

Market

Everything comes down to
traditions. People in this
system are taking care of
their basic needs and the
community barters with
one another to better meet
those needs.

Only remote areas still use
this system - NO WHOLE
Countries operate this way

Everything comes down to
government control. The
government is making all the
decisions about how the
resources will be used to
produce goods and services
and how and who to trade with.

Operating completely this way
leads to disaster. The
government doesn’t always
know best and without rewards
for hard work or competition
productivity suffers

Everything comes down to the
buyers and the sellers
(consumers and producers). The
“market” determines how the
resources will be used to produce
goods and services and price will
decide who gets things.

Operating completely this way is
dangerous for consumers and
producers. If everything is
allowed so long as you make
money, people can be taken
advantage of or products could be
unsafe.

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TRADITIONAL ECONOMY

Everything comes down to ​

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​ .  People in this system are taking care of their ​

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needs and the community ​

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with one another to better meet those needs.

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COMMAND ECONOMY

Everything comes down to ​

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control.  The government is making ​

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of the decisions about how the ​

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will be used to produce goods and services and how and who to ​

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with.

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none

market

traditional

government

all

resources

trade

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MARKET ECONOMY

Everything comes down to the ​

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and the sellers (consumers and ​

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).  The ​

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determines how the resources will be used to produce goods and services and ​

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will decide who gets things.

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"market"

"government"

"traditions"

buyers

producers

price

Because of known drawbacks of a
pure system everyone in the world

uses a

MIXED ECONOMY

They combine the ideas they like from a command

system and the ideas they like from a market system and

“BAM” the economy that meets their needs.

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ALL countries in the world use a​

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. Countries ​

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the parts of a ​

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and a ​command economy that the country feels is best. This gives countries what they feel are the ​

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of each system without the parts they view as ​

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.

Examples of how a Mixed

Economy Works

Market ideas in blue

Command ideas in red

The company is privately

owned, but there is a

minimum wage

requirement

Company is owned
by the government,

but workers are

paid based on their

productivity

Inspectors check out

the factory to see

workers are safe, but
the companies decides

how the factories will

run

I use my special

recipe for the

cookies I sell, but I
have to list all the
ingredients on the

label

Companies can
produce needed
medicines but the
government sets
price limits for
certain ones.

What do Economic and

Government Systems have to

do with it?

Cold War

At the end of World War II two

SUPERPOWERS emerged…2 countries with
LOTS of power and influence over the rest of

the world. These 2 countries were the

UNITEDSTATES and the SOVIETUNION.

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At the end of World War II two ​

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emerged…2 countries with ​

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of power and influence over the rest to the world.  These 2 countries were the ​

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STATES and the SOVIET ​

Placeholder

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SUPERPOWERS

LOTS

UNITED

UNION

WEAKLINGS

LITTLE

Broken

Both countries want other countries to share their point of
view. The United States forms NATO to promote the
spread of democracy and to protect allies from threats
(Autocratic Countries). The Soviet Union forms the
WARSAW PACT to promote the spread of communism
and to protect allies from threats (Democratic Countries)

The COLD WAR is the period of time from the
end of WWII to the Fall of the Berlin Wall when
tensions were high between the United States (&
“Friends”) and the Soviet Union (& “Friends”)

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​

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countries want other countries to share their point of view.  The United States forms ​

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to promote the spread of ​

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and to protect allies from threats (Autocratic Countries).  The Soviet Union forms the ​

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to promote the spread of ​

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and to protect allies from threats (Democratic Countries)

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The ​

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is the period of time from the end of ​

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to the Fall of the ​

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when tensions were ​

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between the United States (& “Friends”) and the Soviet Union (& “Friends”)

2 Countries With Opposing Views on How a Country

Should Be Run are Competing for Power and Influence

United States

Soviet Union

Believes that a DEMOCRATIC or
DEMOCRACY is the best way to
run a country’s government

This style of government pairs well
with an economy on the MARKET
end of the spectrum.

The United States likes
CAPITALISM

Believes that an AUTOCRATIC or
AUTOCRACY is the best way to run
a country’s government

This style of government pairs well
with an economy on the
COMMAND end of the spectrum.

The Soviet Union likes
COMMUNISM

Perfect Match

Democracy Capitalism
(Market)

Autocracy Communism
(Command)

People have choices on how the
government is run and how the

economy is run. The people decide
how the government is run through

voting. They determine how the
economy is run with their buying
habits. The government’s primary
function in both is to protect their

rights.

The government is in charge of how
the government is run and how the
economy is run. The people do what
the government tells them about how

the government is running the

country. The government tells them
how the economy will run by owning
the businesses, setting the wages,

and setting the prices. The

government “takes care” of everything

because it controls everything.

Match

Match the following

• Communism

• Capitalism

• Traditional

Autocracy

Democracy

Small Community

• Autocracy

• Democracy

• Small Community