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This text explores three different economic systems - the traditional, command, and free market systems - and examines their impact on production, quality, efficiency, and worker satisfaction.
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Makin’ Stuff in the Traditional Economic System… We prefer to make stuff the way we’ve always done it!
The Basic Economic Question! • 1. What should we make? • 2. How should we make it? • 3. Who should get what we make?
Life is nice! • Our society is determined to preserve traditions we have learned from our ancestors. We expect future generations to do the same. • We aren’t concerned with accumulating greater wealth than past generations. • We take GREAT pride in the superior workmanship of our society.
Your task is… • With the limited resources of paper, markers, tape, and scissors your society will make bracelets. • Although you COULD make other products you won’t because that’s what your society has ALWAYS made. • You take great pride in being the best bracelet producing society around!
Production procedure… • Each person is to make a bracelet from start to finish. There is NO specialization of labor. • The oldest member of your group uses the paper and scissors first, then passes them clockwise to the next person, who will follow the same procedure. • Each bracelet must be made with a strip of paper that is exactly 11 inches long. • Each bracelet must be designed with at least 6 colors. • A design, reflecting something of a personal nature, should be drawn on the blank bracelet then colored in NEATLY. • After each bracelet is finished, it must be passed around the table clockwise. Each member must loudly praise the fine workmanship. That’s the way it’s always been done! • The finished bracelets must be approved by the oldest member of your society. He or she must find that the quality meets the high expectations of your society! • Because your society values its spare time, after you finish your bracelet you must wait five minutes before starting your next one. Relax! You work to live, you DON’T live to work!
At the end of the day ask yourself… • How did you enjoy working in the traditional system? • Do you think workers in this system would be prone to stress or anxiety produced illness? • Would your society produce quality products? • Would your society produce a large amount of stuff? • Is there a difference between wanting to WORK in this economic system as opposed to wanting to LIVE in this economic system? Why or why not?
The Command Economy – We do as we’re told! • A strong central government makes ALL economic decisions. Your society is highly structured, and each worker is assigned a specific task by your leader. Your society strives to maximize efficiency, which, theoretically, will result in a high standard of living for all. The central government determines what items will be made and how scarce resources will be allocate.
Your goal is to make the items required by the government. Time and resources are expected to be used efficiently! • With your scarce resources of paper, tape, markers, and scissors, you can create rings, bracelets, or necklaces. Your central government has commanded that you make 5 bracelets immediately, then produce necklaces.
Production Procedure: • Your workplace is highly structured. The person sitting closest to the door will be the paper cutter, then moving clockwise, the next persons will draw and color, then the next person(s) will tape the finished product. • A bracelet should be 11 inches long and colored with two colors. Necklaces should be 22 inches long and colored with 3 colors. • The quality control supervisor from the government (Me) has been told that meeting the required quota is SO important that quality won’t be closely examined! • Upon completion of the required 5 bracelets, your group will receive $10 (pretend!) per member. There will be no payment for additional products produced. Payments for additional products will go to the central government.
Now that you’ve produced goods in the command system ask yourself… • How did you enjoy working in this economic system? • Did you have the incentive to produce a lot of stuff? • As a consumer, would you be satisfied with the QUALITY of stuff that was produced? • Did the efficiency of the command system allow you to produce stuff more quickly than did the traditional economic system?
The Free Market System – I want to get rich! • Your society wants to increase its standard of living. You expect to have more stuff than your parents. You strive to make whatever will earn you the greatest profit. Individuals are rewarded according to their contribution to the production of stuff!
Your task is to… • Organize your group HOWEVER YOU THINK WILL MAXIMIZE EFFICIENCY. • Make whatever products YOU THINK will earn you the greatest profit. • You will be paid $2 for each ring your group produces, $5 for each bracelet you produce, and $10 for each necklace you produce. • REMINDER! If what you make is low quality it will not be purchased by consumers and WILL NOT COUNT!!
Production Procedures: • A ring must be 5 inches long and have at least 3 colors. These are worth $2. • A bracelet must be 11 inches long and have at least 4 colors. These are worth $5. • A necklace must be 22 inches long and have at least 6 colors. These are worth $10. • In the market system the consumer rules! Use your resources wisely (you must minimize costs) while producing a quality item that will win the approval of shoppers. You will be paid in full for as many QUALITY items that you produce!
Now that you’ve worked in the free market system ask yourself… • What was it like to work in this system? • Did you produce much stuff? • As a consumer, were you satisfied with the quality of stuff you produced?
Now ask yourself… • Which system is the most productive? • Which system produces the best quality product? The worst? • Which system provided the best incentive to workers? • Which system provided the best environment for workers? • Overall, which system do you think is the best? • If you chose the traditional system, would you be willing to live with less stuff?
