Introduction
Due to the increased changes in the economic sector and the need for the protection and conservation of the factors of production so as the future generations can be assured of survival, there is a need for all to understand the results human actions have on the atmosphere and environment. These include but are not limited to the actions of getting raw materials, disposing of the wastes into the atmosphere as we continue with the production and the use of materials that are not eco-friendly.
This in return gives the need for a form of market structure to be put in place, which will allow for the accountability of all the costs, both direct and indirect to be calculated together with the rest of the costs. This paper seeks to find the applicability of such a system and its comparison with the rest of the systems.
Economic systems
An economic system is an overall approach a state adopts for the production, distribution, and consumption of goods and services. It is the way the platform in which the money is used for paying for the goods and services, the goods and services change hands (Conklin, 1991, p. 98). In the current economy, the types of economies adopted by the state depend on the control the state is willing to have on the way the businesses are run within its borders or if it is willing to let the market forces control how the business is run.
This has in turn resulted in two broad economic systems in the current economies. These are the market economies and the command or the type of economy that has a body that makes all the economic decisions concerning a given area. These two have given rise to the mixed economic system and the traditional system.
The traditional economic system is based on the traditional means of production and the customs are used as what guides the decision-making process. These decisions are directed towards the welfare of the family or the society at large.
The market economy/ capitalistic economy
These are the kinds of economic systems where the number of goods and services to be produced and supplied are determined by the market forces of demand and supply in the market at that given time. The market forces are not influenced by the government or any other central forces. In this kind of economy, the goods and services belong to and are managed by the individual who is responsible for the decision-making and is driven by the motive to maximize profits in the course of doing business.
Market economies function through the voluntary exchange of goods and services and the state only comes in to ensure that the platform is stable the business is carried out and this act ensures that there is continuity in the way the business operates (Economics, n.d).
Advantages of the market economy
In this kind of economic system, the individuals are the decision-makers on what to buy or sell as there is no control apart from the forces of demand and supply. This enables competition as the trader and the buyer trade at what is convenient for them (Economy, n.d).
The high competition acts to increase the quality of the goods as the traders fight over the customers. This might also lead to reduced prices for the goods and the services. Since profits are the major motivator for the sellers, increased production may result as they strive to increase production to increase profits. There is a wide variety of goods to choose from as production is not limited as long as there is demand (Emas Team, 2001, p. 17).
Disadvantages of the market economy
Consumers may be exploited by the traders since no regulations are governing how trade is carried out. In addition, the high levels of competition may turn to be unhealthy as the forces of demand determine how and when to trade
This kind of system has no stability as there is no control and due to the freedoms accorded to the stakeholder in these systems. These fluctuations in the markets may result in either exploitation of the buyers by the sellers or massive losses incurred by the sellers.
The relationship between the market system and environmental Friendliness
Environmental friendliness is any act that is aimed at reducing or eliminating any harm to the environment. This may be through the formulation of policies and laws that are aimed at enforcing the need to preserve the environment through the production and supply of goods and services that are nature friendly.
For there to be a reassurance that the future is secure in that the actions we do today will not affect our future welfare in negative ways there is a need for human beings to have an idea of the consequences of their actions. The impact of their action should then be seen not only through the end products or the results of the actions but through the investigation of all the impacts of the action so that the overall costs can be established (Wolff, 1992).
The consciousness of the impacts some of these actions have on the environment will give rise to the need for affirmative action regarding the processes of production and consumption.
In the market economy, if all the costs involved are added to the prices of the goods and services the overall costs of the products will go up. Since this economy is profit-driven and there is competition, an increase in prices will affect the business equilibrium and therefore the market forces of demand and supply will shift (Wolff 1992).
To ensure that there will be sustained development through the sustainability of the means of production, the stakeholders involved in the processes of production, distribution, and consumption of goods and services together with all the other players in the market should therefore take responsibility for their actions (Eco Friendly, 2009).
This can be achieved through the introduction of an economic system that is geared towards safeguarding the environment by protecting it from the producers who are only interested in the number of profits they can get from the exploitation of the environment.
The environmentally friendly economic system
For there to be any success in the preservation and good usage of the environment there is the need for sensitizing the general public on what is going on and why action needs to be taken to correct the issue. People need to have information on what is wrong so that they can take the initiative and initiate corrective measures.
Many corporations have realized the need to act on their corporate responsibility as this acts to improve the relations between the corporations and their customers or the stakeholders. In this kind of system, a central overseer which might be the government may regulate the way the environment is exploited. Laws and policies can be put in place and instead of this economy being subjected to the forces of demand and supply, the government may initiate mechanisms to regulate the market centrally. This may be aided by the use of other organizations that are biased towards environmental conservation.
The producers may be encouraged to use more environmentally friendly means of production and this may be made more attractive by the use of government subsidies on the people who adopt the eco-friendly methods.
The other methods of production that are not eco-friendly may be made more unattractive by making them more expensive through increased taxation and those who don’t follow the laid down procedures and laws can be fined or even have their licenses withdrawn.
On the part of the consumers, the increased costs as a result of the inclusion of the damage the process of production and consumption has on the environment may cause problems. That is why information on why the environment should be conserved should be availed to them. They should be educated on the means and how they can conserve the environment and this in return would lead to reduced costs of the final products.
Advantages of the environmentally friendly economic system
There is increased hygiene in the working places as the wastes products got from the production process are well disposed of leading to increased health in the working places (Facts about Solar Energy., 2006).
Increased recycling reduces the cost of looking for the raw materials as the byproducts are used again for production. This in the end will reduce the overall cost of production (Emas Team 2001 p11). The reduced cost of the emissions into the atmosphere leads to increased health security as it reduces the rates of emission of carbon dioxide into the atmosphere. There is a closer relationship between the producer and the consumers especially when there is a common goal and here it is to ensure a cleaner better environment. Sustained growth is guaranteed as the resources are well managed.
Disadvantages
There is an increased initial cost as the economy transforms to be eco-friendly. The capital required is high and may not be affordable to all
Since the production process is controlled by the central body the freedom to compete is therefore curtailed as the amounts produced and the way they are produced is controlled.
The process of performing the corporate duties is expensive hence the producer’s return on capital is lowered. Since the state will be the producer as well as the regulator there would be a clash of interest (Wolff, 1992).
Conclusion
The economic systems in a given area depend on the state policy or ideology and they determine the processes of production and consumption of goods and services. They act to direct the way the producers and the consumers relate to the markets. The free market system allows for the free interaction between the two leaving the forces of demand and supply to control the market activities. The government control is limited as the needs and wants of the buyers together with quantities the producers are willing to supply to the markets act as the determiners of how the market will run.
An economic friendly system would ensure that the environment is well exploited to ensure that there are still some resources remaining for future generations. This would in the long run increase the value of the goods and services as the cost of producing them would eventually go down due to the reduced impact on the environment.
References
Conklin, D. W. (1991). Comparative economic systems: objectives, decision modes, and the process of choice. Cambridge, Cambridge University Press. Web.
Eco Friendly. (2009). Being Eco Friendly. Web.
Economy. (N.d). Advantages of Market Economy. Web.
Emas Team. (2001). Communication from the Commission: Emas Environmental Statement.. Web.
Facts about Solar Energy. (2006). Facts about Solar Energy: Solar Energy Advantages Disadvantages. Web.
Wolff, M. (1992). Fact: Non-industrial and regulated industrial systems are the most environmentally friendly. Web.