Economic institution involves the consumption, production and distribution of commodities and services. Production is taken in to consideration because it is important to know how much goods should be produced, whether it is profitable to invest in weapons or cars or growing food. And whether to build a big manufacturing plant or medium or small enterprise. Distribution focuses on the issues such as how money should be divided among managerial level employees, labors and owner of the enterprise. The distribution aspect have impact on the family social status and education. Consumption include the issues like the demand and supply of goods and services. In modern world there are two eminent economic systems capitalism and socialism.
Economic Institution of Capitalism
In capitalist system people can own private property and most of the capital is owned by the people or private property. People can buy and sell property for their personal gain. Each individual in capitalist society works for maximizing profit. The success and failure is solely based on free market competition. USA is the best example of capitalist society.
Economic Institution of Socialism
Socialism is the economic system in which the property and means of production is owned by people collectively or society and it is regulated and managed by the government. The means of production are used for the collective good of people. Theoretically socialism have more benefit than capitalism the means of production are owned by society and used for the good and betterment of the people of society. however in capitalist society rich get richer and poor get poorer, because rich people owns the means of production and use them for their personal gain, all the efforts are put together by workers for production and the owner skims all the profits and workers are left with minimum wedge. In which workers can hardly afford their living.
