F u n e W Fw & of F m d c rh m Systems md ~c Cmcepu

A 1 i) False vi) True ii) True iii) False iv) False v) False vii) False viii) True ix) False x) True ii) True iii) True iv) True v) False vii) True viii) True ix) True xi) False

B 2 i) False vi) False


iv) False - It Gill depict reality only if C 1 i) False ii) True iii) False its assumptions are realistic. Otherwise, it would have only correct reasoning without applicable conclusions. v) ~ a l s e vi) False ii) h iii) b 2 i) f

vii) True viii) False iv) e v) g vi) c

ix) False vii) d viii) a

1 .Distinguish betwe.en positive and normative economics. Which one should be preferred and why?
2 Write short notes on the following : a) Concept of Equilibrium b) Limitations of Economic Laws c) Ceteris Paribus d) Tracing the Path of Change

3 Distinguish between : a) Microeconomics and Macroeconomics b) Static Economics and Dynamic Economics

4 State the reasons on account of which almost every modern economy is a dynamic

5 In what forms opportunity costs manifest themselves for the consumer, the producer, the investor, and a factor of production?
Note : These questions will help you in understanding the unit bettkr. Try to write answers for them. But do not send your answers to the University. They are for your practice only.




3.0 3.1 3.2 3.3 3.4

Objectives Introduction Economic System Various Economic Systems Capitalism
3.4.1 Emergence of Capitalism
3.4.2 Features of Capitalism

3,4.3 Price Mechanism and the Working of a Capitalist Economy 3.4.4 Modem Corporation in a Capitalist Economy

3.5 Socialism
3.5.1 Building of Socialism 3.5.2 Features of Socialism 3.5.3 Role of Planning in a Socialist Economy

3.6 Mixed Economy
3.6.1 Features of a Mixed Economy 3.6.2 A Case for a Mixed Economy 3.6.3 Limitations of a Mixed Economy

3.7 3.8 3.9 3.10

Let Us Sum Up Key Words Answers to Check Your Progress Terminal Questions




After studying this unit, you should be able to: 0 identify various forms of econdmic systems outline the features of capitalism, socialism and mixed economy 0 explain the working of capitalism, socialism and mixed economy


In our day-to-day life we often talk of capitalism, socialism and mixed economy, These are the economic systems presently found in different countries. In this unit, you will learn what exactly these systems mean. You will further learn as to how these systems emerged or are built and what are generally the modes of their functioning. You will also learn how the,roles of market and the state planning differ from one economic system to the other.

In the earlier section we have referred to 'certain economic systems which will be the subject of major discussion in this unit, But prior to this discussion it is necessary to learn the precise meaning of economic system and the sequential order in which the various econprnic systems have evolved or have been set up, We h a v ~ already discussed (Unit 1) that every society creates an economic system or an economy to solve the basic problem of the imbalance between means and wants. Thus,the word 'econbmic system (economy)' represents the sum total of all institutions, methods and arrangements to deal with the problem of scarcity of means (resources) in relation to unlimited wants and the choice of wants to be satisfied. In other words, the mechanism that decides in a society as to what to produce, how to produce , how much to produce and for whom to produce, is to be known as the eqonomic system,


These make others work. on thc contrary. today thc instruments of labour arc far inore diversified. This ultimately resulted in the destruction s the old order f i. tlicrn rel:~tionsof production will tcst oln xnutital cooperation and there will be no scopo for exploitation of oue s*lassof pcople by another class of people. Means af productio~lcan be classified into two brsacl catcgorics. faudalism. coaflicl betweell pragressivc productive forccs and thc prevailirig relations of production developed. All thesc thingswith wlnicil man works to produce uscful gac~clsand scrvicp are known as means of production. oilseedu. Co~nrnodities like cotton. the term econc~lirric system can be defined as . oilseeds. all the means of productio~n owited hy the ctatc which functions in the interest of are the entire society. then the former will constitute an all powerful class and thc latter will have a very inferior position in the society. machines. chcmict~ls aiinersls which arc in the nature of raw materials and fall in this category.. sucll a situation developed in the eighteenth ce~rtury Europc.relations are known as the 'relations of production'.will always remain in co~st.included in what. On account of c:onflist of' intercsts. . TI~cse kriawn as objectfi ( I ~ ~ B ~ O I. tools.the "productive forces' togetlrer wit& the 'relations of pr6ciuetiun1brrscd on a certain pattern of ownership of 'means of production'.rroductive forces. Relations of Prsd'slctions: In thc process of prt~duction. Iil other words. Therefore. Far setting up modern industries. If. these two of people. house and many to Wc other goocls and serviscs. man needs food.~ ~ W ~ ~ ~ ~ F m m oThis n l c r way of Sysiena d W Calm* looking at the csncept of economic system is sorncwhtat sirn~slistic. we shall hove to eollsidar its productive forces together with the relations of prodllctionq~evailing that society. Discovery of a number of in machines resulted in a conflict in the old oruer. In the first catcgnry we mRy include those means of production on which labour is directly applied. tlne nature. In fact. now productive forces are very developed. Compatibility slnd confllst between productive forces and relations of pr~duction : Over rime not only the population has grown but man's knowledge and awareness has also increased.is known] as mcrans of labour. like ronds. ctc. primitive or modertr. a1 know thiit labour cannot be r~seil 1 alone to pf. and require greater sklll. iron ore. feudal lords were the owners of land and actual farm operations were done by the bodded labour known as serfs. Collective hunting of animals and sharing the fruits of coUective labour was determincd by the backward form of the instruments of labour. the eccnomic systern remains stable.. when productive forces were very baclcward. But o w e on account of adlyartccs in j. Now let us discuss in about these aspects in details. The substance of the whole argument is that over time productive forces lluvc grown and the indications at present are that they will continue to grow in futurc.hunran t~eiitgsintetac! with each other and have certain relations among themselves. This has necessitarcd sustained increase in production. With the progress in the field of science and technology. So long as this . 'Tlncreforc. mineral resources. clothirlg. With these relations of production.. Apnr't from i~rstrutnents other capital equip~nent known as ismet~unnerrh of labour certain other tJiirips. arc ollabcstsr. br~ildings etc. of ralaticans of production will be determined by the ownership of land. It has to use mnter'ials like sugarcane. to produce something havirig rrtility for human beinfis. In contrast. In the earlier sybteli. a In more scientific sense. If these means of l~roduction are owned by a selected group of people and other people. ccmti~iunus intcrnciion takes placc l~etwcen the llrenns of protluctioa and iabouw which detern~ines productive forces Eoil thcsc thc societies. fnctories.t. Thr: relations of production depend cssc~iti:illyon the fact as to who owns the means of production and who provides the labour. These reiations of production are compatible with productive forces. conflict develups brtwccrn theso ~ 1 1 d the relations of production.urt conflict. the economic system is threatened. coal. thcre has been considerablc improvement in machines and tools. the old peasant economy had to be mnrginalised. ports and warc!housc?sare . Those people who own means of production do not provide labour.Ie has to arsr his labo~rs produce. rncn lived together and worked together for their subsistence. In the earlier times. For exalt~pie. ?'hcse. Production Forces : In order to survive. (constituting a vast majorityj provide the labour. factory buildings. and the new economic system known as capitalism emerged. to understand the nature of the economic systern in any society. mi~cl~ines. industrialisation was ruled out. In till societies.e. . all thesc tl~ings. I. compatibility is not disturbed.od!ice anything. tools and such are IP.Machines.

iri Thore was no private property i l l this system. In tl~c situuttorr i d ~ c r e was possiblc for Inan to producc in excess rlcw it of WBI. 'T'c masters appropriated tlnr to wliole output ancl gavc to slaves only that ~noctkas was iibsolutely necessary for their subsistence. 1Jndcr slavery the producers. Over time when productive forc:es cieve!opcd tlr~dman Bci~nlPto c o fiirnaing.----. I-Ience the relations of production in a society boscd on slirvcry became an obstacle for the devclopmcnt of productive forces. t h e was no clnoicc for t11e11but to coopcrate wit11 each other. the institutian of slavery cmergccl. In the course of time when market for suchco~nmodities expanded and the industrial technology advanced. This system lastcd for several tliousuiid years and cilrnc to iin end only about six to seven thotrsand years ago.3-. In the early period of s l i ~ ~ e rrna~tcrs workcd along wit11 sli~vcs. mcnns of production belongcd to individuals who illso had control over thc labour of slaves.. feudel lords :lnd thc nobility.. in cotlrse of tirtie this practice y. LJndcr capitalism the productive forces have registered a spectacular growth and as a result there has been a tremendous increase in the productivity of labour.*- 3. The instruments of Iiibour in this age wcre primitive ancl therefore. 'l'liis contradiction and also the conflict bctwecn the interests of the niasters i\lld the slaves resulted ulti~rrately the break dowo of this economic system. who wcrc invariably slaves. big l corporations havc succeeded in eliminating thc s m ~ lproducer.-----. an : of opportunity was creatcd for the ~leveldpnlent prod~~ctivc of forces.They worked on the land ow~lcd feudal lords by and in return received only that much as was essential for their subsistence. It is this reason why in the present day capitalist system a small number af big prodllcers have control . 'rhe in IICW eco110111ic systerli to clncrge thereafter was feud a 1' s m .--*--. Therefore. The people who actually particijvilcil in flu m :. 'Fine Slave Owninrg Systcna : In this system. the as Improvetl technology ancl raising tlic productivity would have increased orily the surplus to bc i~ppropriatcdby the innstcrs.PI was IIL:CI~CI~ for tiurnan subhistcncc.periitions did not own any land and were know. --. tlne need for setting up factories arose. Witlr the ernergcncc of thc i~ilstitutio~is sluvcry irnd privatc p r ~ p ~ r t the classless of y. Workers were needed to be employed in the factories and their supply would not be forthcoming unless serfs were freed from bonds with the feudal lords. 4 Capitalism : Like the slave system and feudalism. priniitivc society was rcplaccil by a class socicty dividocl into masters and slaves."-- ----. -. 9.VARPOUB FOlRMS*-". the capitalists in their own interest encouraged serfs to fight for their freedom which ultimately resulted in the downhll of feud:ilism. In the earlier phavc capitalism was competitive hut in the course of time. had virtually 110 intcrcst in i~tiproving tcchniqt~cs that did not irnprove their lot. Under fendalism lancl was the pri~lciptll mcans of pro~iuctionant! it bclongcd to iltc king. This was the timc whcn the notion of privatc property alscr beca~rieacceptablc. we learn that the present day economic systems had not existed in the ancient and medieval periods. People hunted eogetQnzr groups arid lived collcctivcly on the fruit of their joint labour.-------Prom the study of history. The new economic system emerged was capitalism. -. tPic rclutiorts of j3roduction started R changing. In this economic system tho production i s largely clone for the market.---. nlso Rut was ab:~ndoncdancl only slaves were ~riade work. Production of other goods was done by artisans and handicraft workers largely to cater to local demand. ~ 3 Fend~lism With the decli~ie the slavcry anti rhe cmergencc of fclrdalism. The sequential order in which economic systems have either cvcc~lvcdo havc been see up is as follows: w 1 Primitive sosiaey - 2 The slave c~wwingsystem 3 Feudalism 4 Capitalisin 5 Socialism 1 PrhHtlve SmieUy : The earliest organisation developrd by man is known as primitive society. From this an incompatibility developed between the relations of production and the productive forces under feudalism. l'his was the time when man was very vyeak and helpless. as scrfs.-OF ECONOMIC SYSTEMS -. capitalism also rests on the private ownerslnip o means of production and the exploitation of one man by f another man..

.... ........ This system does not emerge from capitalism............................................. i) ........ the labour power of workers has become a commodity and this enables the owners of the means of production to exploit labour..... ............. iv) 2 What is capitalism'? ........................ .................................. is expected to result in the downfall of capitalism and the new system which is built thereafter is socialism............................ there is sociatownership of means of production......... In fact it has to be built in a planned manner. Production is carried out with a view to further the well-being of the people rather than maximising private profit of a few individuals............................... and on the other side there are workers having nothing except their labour power......... 4 State whcther the foilowing statements are True or Falsc............... One does not find conflicting classes existing together under socialism........ ........................................ You will learn more about capitalism later in this unit...... capitalism1is the ideal system as there is no scope for the exploitation of ........................... iii) Socialism emerges from capitalism...... it has to bc built...... role of market is limited and great reliance is placed on economic planning which sometimes gives rise to bureaucratisation and corruption.... Econo~nic system based on slavery is exploitative............................... The class conflict. ......... viii) From the point of view of the workers..... You will learn more about socialism later in this unit.......... therefore........... buildings.............. raw materials and all other means of production....+......... t l ~ c econonlic system remains stable........ iv) v) 2ocialisrn does not emerge from the previous systetn.... .. ii) Capitalism is the last ecollonlic systern in social evolution............... the capitalist system is based on class distinctions.......................................... In a socialist economy................... 3 What is socialism'? ............ The interests of these two classes are incompatible and result in what is known as class conflict.............................. Labour power in a socialist society is not a commodity and............................... In fact.......... exploitation of workers comes to an end. When pri)ductive forces are incompatible with relations of psc)dnction................... ............. ii) ............... once it gets sharpened... vii) 111 a primitive society there was class conflict........... 5' Socialism : Socialism is considered the next stage after the decline of capitalism.. On the one side there are capitalists owning machines......FuM*mental Mariad Ecmomlc Spdfimaud W c Conce@ over the major portion of the supply in each line of production........ thus......................... Interestingly................................................ vi) Land is the principal means of production under feudalisnl................. Under socialism all means of production generally belong to the state and... ..workers........

these people who constituted tlie labour force for the capitalist industries..4. 2 Putting-out system in industry : Under fcudalism manufacturing aotivity was carried out ils family cnterprisc and thc workshop.1 Emergence of Capitalism Capitalist relations o f production developed in the womb of feudalism. Since this activity required vcry little labour 21 large nurnhcr of the earlier serfs and their fainily rncnibers were forced to migrate to cities in search of their livelihood. In order to understand how this happen'ed. views differ in defining it.inthc sixteenth century helped in providing this supply of I i l h o ~ ~The enclosure nlovcmcnt mcnnt the enclosing of the earlier cornmon lands r. raw materials and labour all hclongcd to tllc family itself. Now we shall take u p a more detailed discussion of the capitalist economic system. 3. T h e improvement In transportation facilities further induced the setting up of commercial and industrial towns where the merchant capitalists incrcusingly came to occupy an important role. I Fast expanding volume of trade and commerce : Under feudalism an increase in productivity in ilgl-iculturc due to growing productive forces made food and other k~griculturalproducts : i ~ i ~ i l i l inl large quantities. * . What this means is that some of the traits o f capitalism had become visible even before the destruction of feudalism. Sheep rearing had become a lucrative business due to the generation of demnntl for wool from the textile industry. And it was . A large number of countries in the world today are capitalist in their nature. capitalism involves production for a distant market with the objective of maximising profit. economic calculation and rationality. labour power has itself to become a commodity and thus t o bc bought and sold in thc market just like other objects of exchange. According to Sombart and Weber. tools.e. Thus in this way cnicrgcd the ci~pitnlistrclutions of production. was not regarded by Marx to be capitalism.~tion. For capitalism to prevail. Gromwell and Czerwonky identified capitalism with a system of laissez faire o r free private enterprise. i. and ii) the workers who are deprived of the ownership of the means of production. Some well known capitalist countries are the USA. In the opinion of historians like Hamilton and Nussbaum. T h e most scientific and widely accepted definition is the one given by Karl Marx. yet there arc certain features which are common to all of them. West Germany and Japan. by the feudal lords and using i t for rcaring sheep. 3. Though there is a consensus on the existence of capitalism in the various countries. the U K . 'Tlic cnclostlrc movement in Europe accompanied by a large incressc in popuI. Unlike slavery and feudalism where force and custom determined the relationship between classes. Over time ownership of thc tools ilnd workshop also passed into the hands ol'rilcrchant ciipitalist'who hircd thc labour 01' workers i. A mere presence of commodity production. 3 The e n c l o s ~ ~ movement in agriculture : An important rcquiremcnt of capitalist re is relations of productic~n thc availability of an nssured supply of labour which has n o custoniary tics as thosc (11' scrrs i ~ n d e r feudalism i ~ n d which does not own any means of production. it is necessa?y to look at the following fattors which caused the disintegration of feudalism and thus made way for the emcrgcnce of capitalism.2 Features of Capitalism Without douht it can be snid that all capitalist economies do not look identical.3. production for the market.n rcturn for a wage. capitalism can be said to prevail in a country when its people are infused with the spirit of enterprise.4. Grndui~lly the latter phase of feudclism this system in ol' production got rcpli~cetlhy tlic putting-out system Nhich meant that the raw matcriiil was supplied by the merchant capitalist to the craftsrncn to be made into Finishctl products and i n r c t u r ~ ~ former paid a fcc to thc latter for rendering this the scrvicc.4 CAPITALISM By now you must be familiar with thc term capitalism. These commodities were b ~ naturally uscd for trading in distant markets. According to the Marxian approach. under capitalism the relationship between the two classes is free and contractual. It requircs tlie existence of two classes i) the capitalists who own the means of production. capitalism is dcfined in terms of mode of production. France. Let us now study the main features of 'capitalism.

itsr:l$'is :I cor~tmodity call IIC bc~laghtirnil sold in ttrc rt~tirket \ilci: :illy trthttr c:on. 6 Class contradiction : The source of conflict betwccn thc workers anti capitalists is the division of the vallle of a commodity betwecn tliem. The total valuc of any calnmodity can be expressed as TV = NV t SV where TV = Total Value NV = Necessary Value SV = Surplus Value Necessary value is tlie villue of It~bourpower given in tllc lonn of wagc to ~ h c worker.)ur. 3 Labour power. camrma9dity producticrn cxg. capitcllists succeed in eilrning larger profits tlrun what thcy di:ssrtc to gct nn the bnsiskf their rnanagcrial fu~lctio~n.:(1 he u l lo invariably Inrgcr than thc wages they recciwccl.I ctrpitalist t~egins will1 a ccrtitin alnoultt of capitnl which he uses to genelate more c.y ctuitriltute to ~IIc: I [ ~ L I 11. end just.aacrlilactlasrh : A Ou+isIci~Pui't: :I ~:.1. 'l'hc c. they wqrc paid subsistcncr: avagcs wliilc tlicir ca~ntributioilto ths o ~ ~ t pi1.'Vlrc two fticmrs which ccsntri'buted im~aiensclyin thc csllnnsic~n qosilsi~a. 111other wolds. Even now u'hcil cc. Thc decisio~is therefore. hy f to pay for the commodirics and arc in rro wily rcl. with t hc pniv. ~ s l a l111(:1i excli:~ngc: them for crnc nlta)nht:n in tPtc tlrarket dcpdlidinfi otl Illcis b. I I ~uscd for ecculnul:~tion of cspital anti further expansion of output wliich cannoi alwnys hc s ~ ~ l icai Ilic l market due to lack of irdeqthte demand. tlctcrmi~~ccl the ciaparity o the pcoplc arc. thcy arc paid rrl~lchICSS that1 what t1ic. this scnsc tlie In relation between the capitalists 2nd workers invo%ves clcnlc~itof cxploitntio~l.ikcn in accorcli~ncc gains of the producer which depcnd on the relative profitilhility of cn~~~~mioditics in the market.I lalrh:c acr~lc. 'r'l~ercf~rc ~ c t l workers w. ~ l u ~Will1 111~: di~1111i:griltion tc <:. ilntl ii) plsivi!rt: owrrcrdlaip ol'!lIF~Ills 1 ~ i r o t l ~ l c t i ~ ~ i .ite how to produce nncl for whom to produce are t.~lly wciili. machincry and raw m. and ii) the remaining pelat he ~lsos purctiiise thc litt~oi!rpower.tim to t!tc resulting ~ u t p n t . 7'11~ step first in this process is that thc capitiilist uses his initid utock of capital for two purpoea:!.1 Prlveie awtner~liipof the musc~ilhlref 1. Whcthcr lhc laic:ins of productior~arc objects of lak)our likc r a w inaterials or they arc instruments of labour like machincry a~id tools. it w. :In 4 Price mechtialsna : In the capitalist 5ystem. different pe. they are pritnai. au u.trsii~cl ~ ~ r i ~ i n rwit11 tllc objcctivc out ily of selliilg thr: psotluct in t l ~ c rnil'lhet. ccrn~madlty: IJndcr cap~italisn~.l)iv:il'ic rcqeiirc~tacmts. In this situation n capitallst ccooomy i s caught in economic crisis. the tiecisions rcgi~rtling what to produce.. 2 Commodity production : I11 a ca1)italist econolny. : i) some part he spends on thc purchase c~f ecluipmc~~t.'They hire rhc services o f others for this purpose and lay a cl.\s ncit its nrost ~lrtrtni~lcnt.~rncrtlity. 0 With social division of labour. he has more capital than what he Ili~d bcgil~ to with.c.nl~il:iliut oi' cconotny is the private ownership of ttic nlealrs of ~~rtrduction.r:.anrlctl .iterial. The capitalists do not cnmhine thcir own I.it Ciln I~ccomo violcnt irntl t i ~ k ~ ~ c ) I ' Hof po1ificaI uphctlv~il.itc l'or~n.icr. Since tire barguiraing position of the work!. 5 Persistent capital accl~~nuletioal uconotllic cl-isis : 'Tlic process of c:~pit:~list and production car) bc descrihcd ilr one in which .tEitv of prclcluc'tiort :ire : i) soci:li tiiviriion of labour.rs vis-a-vis cmploycrs is /:c~. power. this wily at Lht: end In of the process.ease NV whcrcas thc capitalists nttcmpt to inwca~o 'l'his class contrudiction SV. prot1ur:tion is ~nniilly cornmotlity production. Since you already know that workers do not get thcir rigl~tful sharc in the ti)rm of wages.lnt to incl.)ilcctivc bargaining has become possible tlarougli tr:!de unions.ibour power with t h ~ ? rtleirns of production for carrying out prc~duction. production is c.ily ownccl by tlie capitt~listclass. resillrs in conflict anc! when it nssutnqs itn .1.rn ikclf. tlkc ~ I .~teclto pcoplc's ricctl f o thcm. of the feudal relations. Siirplu~~ is excess value p~*oduccrl tlic: worker ovcr and nbovl: whi~l value by he receives tls wages and goes to thc ckiljiliilist. Thcsc profit5 . ~ You will learn in cieli~ilabout price niechani$ni lutcr in this unit. I C.~pital.1 tlic ~ i ~ r [l ~iI ~~~ S o~ [. Ii1111.i~s p:oducc ~liftcrcllt 1:o0d4.~cl. tivcn Lhr~llgh coll~~ncb~lity prorl~nt~tiou tjc!i:un h:itl under fcuJali!.tpitalist to combines thc matcrinl meuns of production with Ii1bo11rpower to plSotlucco ~ ~ t p u t . workcrs its a groLrp do not receive from thc employers all that they contribute to :hc oi~tpul.


.... Hungary..... Under capitalism labour power is a cosnrnodity........ 3.......... By advertising..... iii) ... Clmesk Your P~~ogrcss B 1 List four capitalist coulatries you kmrov~ . This is referred..................... i) 2... Czechoslovakia...... 11)............ iii) Private profit rather than the needs of the people guide productivtr activities in a capitalist econorny.... As-you know socialism is generally defined as an economic system in which the means... Moreover.......S. ..... The empirical evidence shows that capitalist relations of production began . vi) In a modern corporation there .. a modern corporation can generate demand for the commodities produced by it.....FunbuMnW ~ d ~ ~ d E E D n o m l c S & and Bpric Concepts y m 3 Large scale and diversllied production : The scale of production of a modern corporation is many times larger than that of a household enterprise o r a partnership firm. Some well-known socialist countries in the world today are Soviet Union.......to as producers' sovereignty.. i) ii) There is state ownership of the means of production under capitalism........... of production are jointly owned...... 4 Producers sovereignty : You bave learnf in the previous section that under capitalism the producers produce those commodities for w!lich a market demand exists........... Then we say that consumers sovereignty is prevailing. creates its own demand pateern in the market.. Joint ownership of resources which is the basic feature of socialism helps in promoting social benefit rather than the personal benefit of a few individuals..... Mention the factors which saused the disintegration of feudalism and the risc of capitalism.. This feature provides for a greater scope for state planning under socialism.. Since a corporation will not suffer losses in all the lines of production simultaneously......is separation of ownership from management.....l Building of 8acialism The change from capitalism to socialism is quite unlike the change from feudalism to capitalism.... 3 State whether the following staterjnents are True or False... it can minimise the risk of bankruptcy by diversifying production........ Partnership firm is 'the representative production unit in the developed countries.. however........ iv) .............. iv) The state planning rather than the price mechanism determine the size and pattern of production in v) ti capitalist cconftmy. A ' modern corporation... In such a situation the market preferences of consumers determine the structure of output.... China and the countries of Eastern Europe like Poland.... a corporation carries on diversified activities in different lines of production.

If we study the features of these countries deeply. Over a period of time it is possible that tlie state may alter thc jurisdiction of private qrxncrship. the Soviet Union and China were both in their early stages of capitalist development when they underwent the socialist revolution.. I t I I Consolidation of socialist power through the control ovcr commanding heights : Sincc the level of development of productive forces is low. however. I t . the modern . Coming to socialist accumulation it can be defined i s the accumulation of resources within the socialist sector for its further expansion. 'The state decides un the ceiling on the size of the plot which can be owned by a household. Collective ownership of the means of production should not. Thus sectors like industry transportation and finance are termed as the commanding hcights in an economy. Before taking up the difference between these two methods of accu~nulation. socialist economy rests is the collective ownership of means of production.t economy. Thcse resources can be created either . it were some of the backward capitalist economies which changed over to so'cialism. In other words. however. It in one the can hc said thtrt npproxi~natcly third I J ~ world's population presently belo~lgs to socialist countries. 2 Socialist accumulation and primitive socialist accumulation : When a backward capitalist economy becomes a socialist economy. However. they differ considerably. Because of thc backwardness of the economy. bad expected that it would be a mature capitalist economy which would undergo the transition to socialism.Tliey are nevertheless very useful in the further developnlent of thc economy. The two socialist giants of today. Thus socialismcannot develop spontaneously but has. in a capitalia. . viz. a person is allowed to hire labour to work on his piece of land. The reason is that the socialist economies eliminate the scope: for exploitation of one person by another. is necessary it to know that a socialist economy soon after the revolution does not socialise all the rncans of production. needs to be added that though some amount of private ownersilip is allowed even under socialism. through socialist acculnulation or through primitive socialist accumulation. Only after this revolution socialist relations can be established in the economic sphere.. the use restrictions than to which such resources can be put to is subject t? much under cupitnlism.5. Marx and Engels who propounded the theory of historical materialism.to develop prior to complete destruction of feudal relations. Hpwever. prirnitive socialist accumulation is of much greater importance than socialist eccurnulation for the generation of funds for developn~entin a socialist economy. The problems of socialist construction in such an economy can be explained as follows: "L'. there continues to exist a non-socialist sector. for its development resources have to bc accumulated within the economy. For example. the basic institutions on which they rest are the same. in reality as things worked out. The salient foaturcs of a socialist economy can be discussed as follows: 1 Socialwnership of means of production : The fundamental institution on which a . This had important implication from the point of view of the building of socialism. to be built up.manufacturing sector and infrastructure in such an economy are quite undcrdcvclopcd. Private activity in the form of cultivation on privately owned small plots of land is allowed in almost all the known socinlist countries. The socialist revolution whereby political power is transferred from the few to all is a starting point of socialism. Primitive socialist accumulation on+the other hand refers to the accumulation in the non-socialist sector of the economy in order to furtlicr cxpand the socialist scctor. particularly in trade and agriculture. which views the development of society in a sequential manner. . be taken to mean that all thc resources are jointly owned. The socialist production relations on the contrary would 'be established only after the elimination of the capitalist production relations. What it implies is that the crucial resources to begin with are under the state control. I 3. 'The leaders in an attempt to consolidate the socialist rcvolution and provide the groundwork foi rapid economic change try to socialise these commanding heights as fast as possible.. This is prohibited in a socialist economy so ' that only fanlily labour is engaged ow the privately owned land.2 Features of Socialism As yot~ know a large number of cointries in thc world are now sdcia~ist nature.

As a result a sociqlist economy is free from class conflict. Generally.to inequalities in rent. are collectively owned. Thus it can be understood that the working of socialist f economy is more conducive to an equitable distribution c ~ incorne as cornparcd to a capitalist economy. the decisions. You will learn more about the role ofplanning in a socialist economy in the next section. But under socialism. Since natural resources like forests are collectively owned under socialism. 5 3 Role of Planning in a Socialist Economy A s we have discussed in the preceding section. 5 Freedom of choice in consumption and oceupatioll : Though major decisions in n socialist economy are taken by the leadership. a sbcialist economy is Inore planned. the crucial resources like factories.Fwtdomntal Robkmsof E c w d c System and Bask Concept8 . As you have learnt in slavery.. The experience of a large number of countries shows that inequalities in the distribution of income are generally much less in terms of wage income as compared . However. . and (2) the class of people who do nof own resources. it can beadditionally due to rent. etc. The distinction between the two types of planning systefhs can be easily followed if we understand thedistinction between decisions taken at the following three levels jn a socialist economy. planning is a basic characteristic of a sotialist economy. decisions pertaining to their utilization have to be taken by the state. an individual is allowed to decide the type of goods hc would like t o consume.e. it is necessary for you to remember that they all are not found to the same extent in all the present day socialist countries of the worJd: 3 . and (2) sale of labour services in the market which in return brings wage income. This will. Thus. Such income is known as the social dividend. prafit and interest. in these systems ther'e. the income from the use of such resources is distributed among all the people. profit and interest income. In other words.is a continuous conflict of interest between these two classes. These are the major characteristics of a socialist economy. Therefore. It can be distributed on the basis of each individual's contribution to the output. Socialist economies can havc either centralised planning or decentralised plitrlning. 2 Non-antagonistic system -absence of class conflict : The socialist system call uc termed as a non-antagonistic system. . Private income under socialism takes only the second form whereas under capitalism it takes both the forms. its distribution between consumptioi~and investment a d the sectoral distribihTn of ihvestmgt. given the type of goods and services. for example. Also an individual is allowed to do the jo. planning implies that the economic decisions are talten in a coordinated manner by the Central Planning Board.b of his choice. The)' are. some other factors such as the number of persons in a family or the number of dependants (i. profit and interest income. withlrespect to consumption and occupation are left to an individual's discretion. feudatism and capitalism. Thus it is not possible to classify the people in a socialist economy into two classes on the basis of ownership of the means of production. some people own the resources and other people have no command over the resources. concerned with the rate of growth of national output. 1 Decisions a t the macro level : These macro level decision8 determine the overall direction hf econolnic development. however. Major economic decisions are takcn by a body which is commonly known as the Central Planning Board. Hence the functioning of a socialist economy is different fromthat or capitalist economy where the individuals are allowed greater autonomy in decision making. An individual is free to choose his pattern of consumption. railways.. In contrast to a capitalist economy. 3 Equitable distribution of income : For an individual there are primarily two sources of income : (1) ownership of resources like land and capital which yield income in the form of rent. Thus inequality in income distribution in a socialist economy can be due to wage income. whereas in a capitalist economy.he children and aged in a family) may also be taken into consideration. these systems can be characterised as having two classes : (1) the class of people who own resources. 4 Planned economy and the limited role of market : Since major resources are owned by the state in a socialist economy. Rationing a s a method of distribution of goods is not a ncccssery characteristic of socialism. A non-antagonistic system is one where there is no conflict among different groups of people in the society. be subject to his income and availability of goods in the economy. Howcvcr. mines. Therefore market in a socialist economy as a coordinator of decisions is much less important than in a capitalist economy.

3 Decisions at the individual level : Exan~ples such decisions are the composition df of household consumption subject to household income and the choice of occupation. Once the two are calculated. on siccount of the scale of caordination required in decision making the balance at any point of time is not perfect. The balancc i s arrived at by keeping in mind social welfare rather than private welfaie as it happens under capitalism. the level and composition of output of an enterprise. Whether economic planning is centralised or decentralised. just like the price mechanism under capitalistn. how to produce and for whom to produce.'the planning is said to be docentralised. planning under socialismis used to determine what to produce. Generally whkn a primitive capitalist eosnomy undergoes the socialist transition. the requirements are based o n a set of priorities. Since the economy. With greater sophistication in techniques of plaoning such mismatch can be reduced. its primary role is t o solve the central problems of the. and on the other it tries to determine the requirements of the economy for various goods and services.2 Decisions a t the enterprise level : These decisions determine. . an attempt is made to strike a balahce between the requirements and the resource availability. if the enterprises are allowed to take enterprise level decisions. the planning is considered'to be centralised one. which may be decided by the political leadership of the country. The Planning Commission which is entrusted with this task makes on the one hand an estimate of the total availability of material (natural and human resources). macro level decisions are taken by the Central Planning Board and individual level decisions are left to individuals concerned. Whether planning is centralised or decentralised will depend on the fact as to who takes the enterprise level decisions. If these decisions are taken by the Central Planning Board. In other words. the enterprise from which it will obtain the inputs and the enterprises to which it will supply its output. Over time with the development of the socialist economy it is expected that the economy will move towards greater decentralisatidn. it follows a centralised planning system in the phase following the change-over from capitalism to'socialism. In other words. economy. for example. there is a mismatch between demand and supply ofvarious cortlmodities. is planned. Ilowever. I I i i i t In all socialist economies. On the other hand.

factories. However. Tklercfore. of a pure capitalist economy. Some people believe that mixed economy is a system in which elements of both capitalism and socialism co-exist. The presence of market. and prk~ducergoads.6 MIXED ECONOMY In a discussion on economic systems. and is characterised by the Mixed ecoiiomy in true sense is a variant of capitalis~n co-existence of public and private sectors.Fundmental PmbYms o Eeonomic f Systems md pasic Crmcepls 3. raw materials. there exists a public sector and the state may attempt to regulate economic activities through some system of econoniic planning and various physical. The private sector generally accounts for 70 to 90 per cent of the gross output in a mixed economy. Peasants carry out production either for the consumption of the household or for thc rtlarket and often for both.6. 3. It is this reason why there is a clost5 resenlblance b?twcen capitalism anckthe niixed economy. they are being introduced in a basically capitalistic economy.1 Features of a Mixed Economy 'A mixed economy has many features. lnachines. The small and cottage industries sector remains entirely in the private hands.attempts to maximise his profit and therefore his activities are guided largely by profit objective. the role of the public sector is supplenientary tcr the role of plivate sector. private ownership of m a n s of production and large part of production in the private sector motivated by the profit are the important features of capitalism that exist in a mixed ekonomy. He concentrates on the production of those commodities for which adequate demand exists in the market even though they may be less essential for human existence. Cieiierally in a mixed econorny agricultural land belongs to individuqls:Sorne of them are peasants and some others are landlords. E ~ c h these can~mnditics factors of of and production hakc prices which arc determined gei'lcrally by . 1 Private ownerslnlp of meanas of production and profit iuided prcsdurtion : In a inixed economy. Landlords either elnploy labni~r fasrn operations or give for land to tenants on rent. This view is. what exactly it means is not clear to many people. Soine basic aqd heavy inclusrries which for variolas reasons cannol be set up in the private sector are developed in the public sector. In fact. however not correct. in most of the mixed economies. In allocating resources to the production of these com~noditiesthe producer wit1 surely maximise his profit. buildings and So on. it is quite natural on the part of certain persons to convince themselves that in a mixed economy certain features of both socialism and capitalism blend together to produce an economic system which is superior to them. In the industrial sector most of tlre production units are privately owned.lie frceplay of thc forces of demarid and supply. but also far factors of production like labour. Prices of various camrrlodities and the factors of production and thc changes . economic planning and public sector lose thcir socialist character once. Thus. The major part of this production is done for sale in the market. Nevertheless such an economy in its character would be distinctly different froni the capitalistic economy of the earlier period. Besides. tools.!s of production. This explains why a private producer simply does fiot care to produce even the most essential commodities if he thinks that their production will not ensure maximisatiqn of his * profit. monetary and fiscal controls. In such an economy markets exist not only for "consurrier goods.r the conditions of scarcity the governrrient atternptsto regulate the prices of essential commodities with the view to provide essential commodities to everybody in the society at a fair price. The presence of public sector and adoption of some planning techniques do not allow us to place that economy even loosely in the category of socialism. This is because in building a mixed econoiny no attempt is made to completely eliminate the basic features o f a capitalis1 econo'my. . From the above discussion we can easily identify the following characteristic features of a mixed economy : . Planning and controls are:the comrnonly used devices under socialism. 2 Decisive rote of ranrket mnech8nism : The market occupies the most strategic position in a ~n~ilved economy. Sometimes it1 a mixed econury und~. While preserving the essential institutions of a capitalist economy. A pritrake producer often. capital and land. it is now a common practice to refer to the concept of mixed economy. the government only tries to inoderate their working through certain regulatory devices. right to property is guaranteed. This naturally allows people to acquire ownership of the rnea. They own larid.

a number of less developed capitalist In ccononlics rcliancc is placed on economic planning for speeding up the rate of growth and for rcalising some other objectives. how to produce and for whom to produce. With thc market rcguli~tcdsystem.ciety. The latter is however not completely rulctl out. Further. prices ccasc to be rcli:iblc criteria for decision making. it is this h~storical necessity rather than any ideological stance that explains the creation of public scctor in a basically capitalistic economy and thereby transforming it into a mixed economy. The only difference between the [ales of milrlret mechanism in capitalism and the mixed economy is that in the former it is c6mpletely free. This howcvcr does not metin that adoptian of planning invariably transforms an economy into a sociali:. The most important of these : are as fc~llows I Unstable framework of mixed economies: In all mixed economies both public and + . Without equilibrium of aggregate demalid and supply. In fact. while in the latter i t operates under certain state controls which sometimes may be quite stringent. Thc intervention of thc state through economic planning in the form of physical and Inclnetary controls and public sector activities can moderate market system in sirch a manner thiit thc ecoqomy performs better. 4 Economic planning: Economic planning was first adopted in socialist countries. they found the conditions prevailing in their' economies wereahardly conciucive to economic development. unemployment and income inequalities.6. 4 When mirrkct functioning results in an equilibrium in aggregate demand and aggrcgatc supply. In mixed economics econornic planning is done relying more on ccononlic incentives rather than-direction. The need for crenting'a public sector was felt particularly by the less developed ecorlolnies in the posj Second World War period. therc is nothing in the system that will ensure the economy to operate at full employment. In the process of development if the need arises for tackling the problems of poverty. This is the reason why in capitalist countries owners of the means of prdd"ction are extremely rich whcreas tlic workers are poor. They discovered that the market regulated system tlocs not ensure the realisation of their objectives. Obviously the private sector at this juncture hi~dno capabiliti'cs to develop them. despite the fact that it has tackled some of the problems of a free market economy. This point you have learnt earlier in the section dealing with capitalism.6. then stirte can also ulldertaite special unemployment.3 Limitations of a Mixed Economy A mixed economy. qy adopting economic planning thcy'could overcome the limitations or the markgt mechanism.\. I 3. transport and energy sectors were underdeveloped and basic and capital equipment industries were virtually non-existent. Further economic planning can be used t o givc .direction to cconomic development.ignore equity. In these countries. After the Second World War when these countries got Independence. 2 7'hc markct decisions do not ensure allocation of resources in sudh a manner that most csscntiul commodities and services are prodiiced before resources are made irvailablc for producing lcss essential goods and services. An attempt to introduce economic planning in basically capitillistic economy transforms it into what is now known as a rnixctl economy.that take place in them generally guide the producers in taking decisions with respect to what to produce. 3 'l'ti~market fails to perform in such a manner that aggregate demand always equals agpcgatc supply.t econt~. suffers from a number of weaknesses. 3 Public sector: In a rnixed ecyrlomy the public sector co-exists with the private sector. there arc four major difficulties ITllc market mechanism has a tendency to. poverty alleviation and minimum nccds programmes for the well being of the economically deprived sections of the s!. Under these circumstances the intervention of the state in the economies of these countries was considered cssential for initiating the process of econonlic development. 3.2 Case for a Mixed Economy i ? The lcss devclopcd economics found that they could not go along the path followed by the prcsent day developed countries.ny.

Since in a mixed economy classes of haves and have nots exist and the state power is in the hands of thc former. results in the growth of big corporations and concentration of economic power. .. These ecoliomists argue that oncc thc public sector has performed its function in the earlier phase of development. . Adoption of discretionary controls in a mixed economy creates scope for corruption. . . . .. In their attempts to gain increasing economic power. Often in the same country with the changes in correlation of politics1 forces their roles change. The efficiency particularly at the managerial level is low in the public sector in a numhcr of less developed countries because of the non-availability of specially trained managerial cadre.. Development of transport facilities. Under the circumstances general administrators are assigned the job of managing public sector enterprises though they may npt possess t l ~ c required capability to do the same. .importance of the public sector.' . economic inequ21liticsshow tendcncy to increase. In this situation the role of economic planning is undermined and there is increasing stress on privatisation. . ~ ... 1 6 1 1 " . The capitalist class. . I . ( . .... " * .." .. thc government has rarely the will to prevent the tcndency of the concentration of economic power. This clearly reflects that the mixed economy is a relatively less stable system and its character undergpez a change under political pressures. I I . . 1 1 < . . . I . .. 2 Concentration of economic power : In an underdeveloped economy the laissez faire is being transformed into a mixed economy with the objective of accelerating the process of economic growth. .role in the earlier phase of economic planning. . ' . In the private sector the law of capitalist development operates and in course of time larger firms wipe out smaller firms from the market.is considered redundant and economy shows a tendency to revert back to an essentially market oriented economy. . . Further. . " . Poor also may not get a fair treatment in such a society. . .. . . . I I . ~ 1 . the big corporatioqs are helped not only by the economies of scale but also by their capital raising abilities vis-a-vis small producers. s .. . . . The growth process. . .. These larger firms enjoy considerable monopolistic power and dictate terms to small producers. which affects adversely the efficiency of the public enterprise.. . . . . . . . Check Yoparr finro$:re~h 8) . . .. _ . _ . . 4 Denial of social justice: In a mixed economy there is not enough scope to reduce income inequalities and alkviate Doverty. . . ( . under their constant pressure regulatory system is also being dismantled. . . ( . I I .. I I . India's case evidently proves that in spite of the government's desire to keep growth of mo~lopoliesunder check there has taken place the concentration of economic power due to in-built system of the mixed ec&omy. professional institutes which impart training in management and technology. 5 Built-In tendency to slide back: The mixed economy is rightly viewed by some economists as a variant of capitalism. .. L ' . l I I I t . Over time the correlation of political forces in this country has undergone a change.. . . . May be because at that time the capitalist class in this country was not as strong as it is today. I l ._. in India the public sector was assigned an important... . . .~ . Corrupt officials invariably misuse their authority for personal gain.. . . . The consumers also all the time remain at the receiving end. however.. Often the licensfng policy of the government also helps them in their expansion activities. " . .. . . .. of private sector is combined with an inequitable distribution of private ownership 1 of the means of production. energy sector. . . . ) l .Fundamental ~roblernsnf Economic Systems and Basic Concepts private sectors co-exist and the role which they play are rarely the same. . . l .. I I I I I . I . I . traders and big and large farmers have now emerged quite strong and they are presently attempting to undermine the. 3 Bureaucratic inefficiency and corruption: The efficiency level of public enterprises is generally low and corruption may also be found in the state sector. and the setting up of basic industries in the public sector induce activity in the organised private corporate sector on a larger scale._.. its presence . . . . . . . . I . For example. It creates distortions in decision making and often does not allow speedy execution of decision :~tdifferent levels. ' .. In such an economy when the institution .

emerged from feudalism and the factors which contributed to its evolutiorl were : 1) fast expansion of trade-and commerce. The labour power becomes a s commodity and is thus bought and sold like any other object of exchange. In a capitalistic economy the role of price mechanism is decisive. Socialism is an economic system in which means of production are jointly owned and the production and distribution activities are carried out according to the state -\ - . 3) labour power itself a commodity. In fact there is a sequential order in which economic systems have either evolved o r have been set up. 2) Slavery owning system. This implies that people in their various capacities as producers. In the present day capitalism corporation is the representative unit. 4) Capitalism. Such sequential order is ': 1) Primitive society. People are not completely free to choose an cconomic system. The salient features of a capitalistic econollly are : 1) private ownership of the means of4production.7 LET US SUM UP In any society the form of the economic system depends on the given productive forces in conjuction with the prevailing relations of production. 2) the putting out syGem in industry. 3) Feudalism. and 6) class contradiction. consumers and suppliers of factor services attempt to take economic decisions o n the basis of prevailing prices with a view to maximise their satisfaction or income. Capitalism refers to that economic system where means of produotion are piivntely owned and production i done for the market. and 5) Socialism. This implies that the fact as to who ow:is.3.thc means. 4) predominant role of price mechanism.of production and who provides the labour power broadly determine the economic system that any society will have at some point of time. 5) persistent capital accumulation and ~conomic crisis. Capitalism .2) commodity production. and 3) the tnclosure movement in agriculture.

Market Mechanism : System of interaction between buyers and sellel-sof commoclities and factor services. Putting Out System : System in which raw ma.ch'means of production are ow7:ed by the govcrnment and production is carried out in the larger interests of the people. feudal lords and nobility and the actual farm operations were carried out by serfs who were landless.an. 3. The need for creating a mixed economy arises due to the failure of the economy which is solely dependent on the market for economic decisions. and 4) economic planning. 2) concentration of economic power. Laissez faire : The principle of allowing economic activities without government control.2) decisive role of market mechanism. suffers from the followi~~g weaknesses : 1) instability in the framework. Private Sector : Sector in which means of production are privately owned and production is carried out for profit. The mixed economy. Economic System : Productive forces in conjunction with relations of production based on a certain pattern of ownership of means of production. and 5 ) freedom of choice in consumption and occupation. Public Sector : Sector in whi. Its salient features are : 1) private ownership of means of-production and profit guided production.terials were supplied by the merchant capitalists to craftsmen for producing goods and the latter rendered labour service for payment of a'certain fee. Economic planning is an essential characteristic of a socialist economy.. It has to be consciously built after the socialist revoludon has been carried out successfully. Primitive Socialist Accumulatibn : Accumulation in the non-socialist sector of the eonomy in order to further expand the socialist sector. production belong to the state " .Fundamenid Prdblems of Exononiic System aqd nmic concepts plans. Producers Sovereign$ : Implying that the producer can sell any product by relying on advertisement. 2) absence of class conflict. The salitnt features of a socialist economy are: 1) social ownership of means of produ\. Relations of Production : The relations which arise among people in the process of production. 4) economic planning and the limited role of market. imitations of the market mechanism are often overcome by introducing some' kind of economic planning and physical and monetary controls. 3) public sector. Profit Motive : The profit earning objective that activates producer in the private sector. s Economic Planning : Coordinated manner of taking decisions by the state and implementing them. and 5 ) built-in tendency to slide back. 4) denial of social justice. ~ l a s 'Conflict : Conflict between the two classes. 3) bureaucratic inefficiency and corruption. Mixed economy which is a variant of capitalism. Socialism does not emerge from capitalism. 3) equitable distribution of income. Planned Economy : An economy in which economic planning rather than mnrkct has the decisive role. Socialism : An economic system in which means of. such as the worker and capitalist. . Mixed Economy : An economic system characterised by the c'o-existence of private and public sectors. is characterised by the co-existence of public and private scctbrs. Feudalism : An economic system in which land which is the principal means of production bclonged to the king.8 KEY WORDS Capitalism : An economic system in which means of production are privately owned and production is carried out for the market. however. Productive Forces : The means of production and labour power in thelr interaction. Primitive Society : The earliest organisation developed by m'an that calnc to an cnd about six to seven thousand years ago.

5 What arc the salient features of a mixed economy? How is it diffarent from c. 3 [listinguish hctwcen capitalism and socialism. price mechanism in the cs capiti~list economy. Explain the role of economic plann~ng a in socialist cconorn)/. Which one of these economic systems i h 4upcrior in your opinion'? Give reasons. But. .~pitalisni? Note : Thcsc quc!ititans will help you to understand the unit better.wtic~only. Describe the role of. Economlc System -r 3. do not send your answers to the lJniversj. i) False vi) True C 3 i ) Fillse vi) False D :i i ) True vi) Truc ii) Fals'e iii) False iv) True vii) False viii) False ii) True iii) True iv) False v) True v) False v) True v) False ii) Truc iii) False iv) True vii) True viii) False ii) False iii) False iv) True 3. Surplus Value : The excess value produced by the worker over and above what he receives as wage and that goes to the capitalist.aqid production is carried out keeping in view the needs of the society.60 TERMINAL QUESTIONS I What do you understand by economic system? Discuss the various economic systems in their sequential order. 'Fry to write ilnswcrs far thcrn. 3 1Scscrihc the fcetures of socialism. P I I I 4% 7 E:xpll~in thc f c ~ ~ t u r of capitalism.ty. These are t o r your pr.9 ANSWERS TO CHECK YOUR PEtOGRESS 7 8 I I I I A 4 i) False vi) True R 3. Socialist Accumulation : Accumulation of resources within the socialist sector for its fuyther expansion.

Chand & CoilNew Delhi. Analysis of Economic Systems and Microeconomic Theory. . Nordhaus. . 1985. . Modern Economics. 1986. . ~ c o n o m i c s qcgraw-Hill. .Hague.-agd William D. Paul A . 1988. S.. .L. + Stonier and . New Delhf ~isra S. A Text Book of 'Economic Theory. Ahuja) H. Delhi..Fundnmenlal Problem8 of Econ~mle Syatems and Bnslc Concepts SOME USEFUL BOOMS Satnuelson. Prbgathi Publications. ELBS Edition.K.

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