Comparative Economic Systems


  • Compare market-based economies with centrally planned economies
  • Identify characteristics of mixed economies
  • Make lecture more memorable to increase retention

Relevant Clips:


The United States population tends to have a pretty positive view of capitalism (60% have a positive image) and a not so favorable view of socialism (35% have a positive image). A recent poll of younger generations, however, found that the majority (51%) of young adults between 18 and 29 do not support capitalism, but it isn’t clear that they prefer socialism as only 33% said they support that system. While respondents may be taking extreme views of each ideology, the US system is positioned as a more mixed-economy that leans toward more capitalism. Parks and Rec has a variety of clips that can aide in distinguishing the role of the government in enterprise.


The opening clip, “Ron Swanson on Capitalism,” has Leslie and Ron sitting in a diner discussing the role of government in society. Ron remarks that the free market is the only way that society can move forward. In this episode, Leslie tried to protect a dying business (a video rental store) with a government bailout that Ron vehemently opposed. Government intervention in markets with market failures, like externalities and public goods, can help correct the actions of the free market, but government intervention in well-functioning markets is typically viewed negatively by economists. In these markets, the role of the government is based on correcting equity issues, not improving efficiency. In “European Socialism,” Ron reiterates his hatred for command-based economies that don’t allow the free market to function on its own.


The final three clips focus on the role of the government in society. In “Steak, Cigars, and Health Problems,” Ron focuses on how being a free American means that he can do whatever he wants with his body. As soon as he tries to light the cigar, we see the first glimpse of regulation about smoking indoors. This doesn’t faze Ron as he knows he can smoke it outside. In the case of smoking, the negative externality of smoke implies that government intervention is probably okay. In “Ron’s Toxic Workshop,” Ron needs a license to continue selling products in town so he invites the City Planner to come by for an inspection. In a purely free market system, if Ron’s workshop was too unsafe, he would bear the risk of injury if anything were to happen. Government regulation exists, however, to alleviate some of the risks associated with electrical wiring or safety regulations. This typically occurs in larger companies where employees exist, but they have been extended to Ron’s one-man workshop. A free market argument is that workers have the right to choose their employer and an unsafe workshop would need to compensate workers for bearing additional risk. Government regulation in this sense can be seen as lowering wages of workers willing to bear the risks of an unsafe working establishment. Extra pay for accepting unsafe working conditions could be a compensating differential for workers.

The series of videos allow students to see the extreme side of a pure market economy, but then to consider the advantages of government intervention in areas like smoking indoors or workplace safety. The US population doesn’t always agree on the role of government intervention, but because they accept some levels of intervention, the US operates more closely to a mixed economy instead of a pure market based economy. This could potentially explain why young adults aren’t in favor of capitalism, but don’t know of a good alternative. Much of the focus of market systems is on the extremes, but most market systems exist in the middle with various advantages and disadvantages.