The American Economy & How It Works

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According to countrystudies (2010) in every economic system, entrepreneurs and managers bring together natural resources, labor and technology to produce and distribute goods and services. According to this site, the way these different elements are organized and used also reflects a nation's political ideals and its culture. For example, according to this author, the United States is often described as a 'capitalist' economy, a term coined by 19th century German economist and social theorist Karl Marx to describe a system in which a small group of people who control large amounts of money, or capital, make the most important economic decisions; Marx contrasted capitalist economies to 'socialist' ones, which vest more power in the political system; Marx and his followers believed that capitalist economies concentrate power in the hands of wealthy business people, who aim mainly to maximize profits; social economics, on the other hand, would be more likely to feature greater control by government, which tends to put political aims - a more equal distribution of society's resources, for instance - ahead of profits.

According to countrystudies (2010) while those categories, though oversimplified, have elements of truth to them, they are far less relevant today. According to this site, if the pure capitalism described by Marx ever existed, it has long since disappeared, as governments in the US and many other countries have intervened in their economies to limit concentration of power and address many of the social problems associated with unchecked private commercial interests; as a result, the American economy is perhaps better described as a 'mixed' economy, with government playing an important role along with private enterprise. According to this author, although Americans often disagree about exactly where to draw the line between their beliefs in both free enterprise and government management, the mixed economy they have ...