Significant Economic Systems to Know for AP World History: Modern

Economic systems shape societies and influence global interactions. From feudalism's rigid hierarchies to capitalism's market-driven approach, understanding these systems reveals how they impact wealth distribution, social structures, and the interconnectedness of nations throughout history.

1. Feudalism

   • A hierarchical system where land was owned by lords and worked by vassals in exchange for protection.
   • Social structure was rigid, with a clear division between nobles, knights, and peasants.
   • Economic activity was largely localized, with little trade beyond local markets.

2. Manorialism

   • An economic system tied to feudalism, focusing on the lord's manor as the basic unit of production.
   • Peasants (serfs) worked the land and provided agricultural goods in exchange for protection and a place to live.
   • Self-sufficient estates reduced reliance on external trade, fostering local economies.

3. Mercantilism

   • An economic theory emphasizing the role of the state in managing the economy to increase national wealth.
   • Focused on accumulating precious metals and maintaining a favorable balance of trade through exports.
   • Encouraged colonial expansion and monopolistic practices to control resources and markets.

4. Capitalism

   • An economic system characterized by private ownership of the means of production and market-driven economies.
   • Emphasizes competition, profit motive, and consumer choice, leading to innovation and economic growth.
   • Wealth distribution can be uneven, leading to social and economic disparities.

5. Socialism

   • An economic system advocating for collective or governmental ownership of the means of production.
   • Aims to reduce inequality by distributing wealth more evenly among the population.
   • Often involves extensive social welfare programs and public services funded by taxation.

6. Communism

   • A political and economic ideology advocating for a classless society where all property is publicly owned.
   • Seeks to eliminate private ownership and distribute resources according to need.
   • Historically associated with authoritarian regimes that suppress dissent and centralize economic control.

7. Mixed economies

   • Combines elements of capitalism and socialism, allowing for both private enterprise and government intervention.
   • Aims to balance economic efficiency with social welfare, addressing market failures and inequalities.
   • Common in many modern nations, where the government regulates industries while allowing private ownership.

8. Command economies

   • An economic system where the government makes all decisions regarding the production and distribution of goods.
   • Central planning replaces market forces, often leading to inefficiencies and shortages.
   • Typically associated with authoritarian regimes that prioritize state control over individual freedoms.

9. Free market economies

   • An economic system where prices and production are determined by unrestricted competition between privately owned businesses.
   • Minimal government intervention allows for consumer choice and innovation.
   • Can lead to economic growth but may also result in significant inequalities and market failures.

10. Globalization

    • The process of increased interconnectedness and interdependence among countries through trade, investment, and cultural exchange.
    • Facilitates the spread of technology, ideas, and goods, impacting local economies and cultures.
    • Can lead to economic growth and development but also raises concerns about inequality and cultural homogenization.