ECONIMICS REMEDIAL CLASSES ASSIGNMENT

Name: Mohammed Mymoon

Roll No:2017085

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TOPICS PAGE NO

1.Economic systems………………………………………..3

2.Economic Equality……………………………………….6

3.Niti Ayog………………………………………………….9

4.Finance commission………………………………………12

5.wages………………………………………………………16

6.Economic Freedom………………………………………19

7.Social Security…………………………………………….25

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 1.Economic systems

What is an Economic System?

An economic system is a means by which governments organize and distribute available

resources, services, and goods across a geographic region or country. Economic systems
regulate factors of production, including capital, labor, physical resources, and entrepreneurs.
An economic system encompasses many institutions What, agencies, entities, patterns, as well
as decision-making procedures.

Types of Economic Systems

There are many economies around the world. Each comes with a distinguishing characteristic,
although they all share some basic features. Each of the economies functions based on a unique
set of conditions and assumptions. Thus, economic systems can be categorized into four main
types: traditional economies, command economies, mixed economies, and market economies

1. Traditional economic system

The traditional economic system is based on goods, services, and work, all of which follow
certain established trends. It relies a lot on people, and there is very little division of labor or
specialization. In essence, the traditional economy is very basic and most ancient of all four
types.

Some parts of the world still run a traditional economic system. Particularly, rural settings in
second- and third-world nations, where economic activities are predominantly farming or other
traditional income-generating activities.

There are very little resources to share in communities with traditional economic systems. The
reason is the resources don’t occur naturally or access is restricted by other influential systems.
Thus, the traditional system lacks the potential to generate a surplus, as is the case with other
systems. Nevertheless, because of its primitive nature, the traditional economic system is
highly sustainable. In addition, due to its small output, there is very little wastage compared to
the other three systems.

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2. Command economic system

In the command economic system, there is a dominant and centralized authority, which is
usually the government, which controls a significant portion of the economic structure. Also
known as the planned economic system, the command economic system is common in
communist societies since production decisions are a preserve of the government.

If an economy enjoys access to many resources, the chances are that it will lean towards a
command economic structure. In such a case, the government comes in and exercises control
over the resources. Ideally, centralized control covers valuable resources such as gold or oil.
The people regulate other less important sectors of the economy such as agriculture.

In theory, the command system works really well as long as the central authority exercises
control with the general population’s best interest in mind. However, command economies face
many challenges, and they are slightly rigid compared to other systems. That is, they react
slowly to change because power is centralized.

3. Market economic system

Market economic systems are based on the concept of free markets. In other words, there is
very little government interference. The government exercises no control or say over resources,
and it does not interfere with important segments of the economy. Instead, regulation comes
from the people and the relationship between supply and demand.

The market economic system is mostly theoretical. That is to say, a pure market system doesn’t
really exist. Why? Well, all economic systems are subject to some kind of interference from a
central authority. For instance, most governments enact laws that regulate fair trade and
monopolies

From a theoretical point of view, a market economy facilitates substantial growth. Arguably,
growth is highest under a market economic system, and the economy exists separately, away
from any form of government interference.

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However, its greatest downside is that it allows private entities to amass a lot of economic
power, particularly those that own resources of great value. Thus, the distribution of resources
is not equitable because a select few enjoy most of them, while a huge part of the remaining
population fight for the little that is left

4. Mixed economic system

Mixed systems combine the characteristics of the market and command economic systems. For
this reason, mixed systems are also known as dual economic systems. While there is no
straightforward way to define a mixed system, sometimes the term describes a market system
under strict regulatory control in certain segments of the economy.

Many countries in the west follow a mixed system. Most industries are private, while the rest,
comprising of public services, is under the control of the government. Thus, the government
and the private sector serve a significant role in maintaining a mixed economy.

Mixed systems are the norm globally. Supposedly, a mixed system combines the best features
of market and command systems. However, practically speaking, it’s been challenging. Some
governments exert much more control than is necessary.

Final Word

Economic systems are grouped into traditional, command, market, and mixed systems.
Traditional systems focus more on goods, services, and work, and they are influenced by
traditions and beliefs. A centralized authority influences command systems while a market
system is under the control of forces of demand and supply. Lastly, mixed economies are a
combination of command and market systems.

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 2.Economic Equality

Equity or economic equality is the concept or idea of fairness in economics, particularly in

regard to taxation or welfare economics. More specifically, it may refer to equal life chances
regardless of identity, to provide all citizens with a basic and equal minimum of income, goods,
and services or to increase funds and commitment for redistributionInequality and inequities
have significantly increased in recent decades, possibly driven by the worldwide economic
processes of globalisation, economic liberalisation and integration.This has led to states
'lagging behind' on headline goals such as the Millennium Development Goals (MDGs) and
different levels of inequity between states have been argued to have played a role in the impact
of the global economic crisis of 2008–2009.

Equity is based on the idea of moral equality. Equity looks at the distribution of capital, goods,
and access to services throughout an economy and is often measured using tools such as the
Gini index. Equity may be distinguished from economic efficiency in overall evaluation of
social welfare. Although 'equity' has broader uses, it may be posed as a counterpart to economic
inequality in yielding a "good" distribution of wealth. It has been studied in experimental
economics as inequity aversion.

In public finance, vertical equity is the idea that people with a similar ability to pay taxes should
pay the same or similar amounts. It is related to the concept of tax neutrality or the idea that
the tax system should not discriminate between similar things or people, or unduly distort
behavior.

Vertical equity usually refers to the idea that people with a greater ability to pay taxes should
pay more. If the rich pay more in proportion to their income, this is known as a proportional
tax; if they pay an increasing proportion, this is termed a progressive tax, sometimes associated
with redistribution of wealth.

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Horizontal equity means providing equal health care to those who are the same in a relevant
respect (such as having the same 'need'). Vertical equity means treating differently those who
are different in relevant respects (such as having different 'need'), (Culyer, 1995).

Health studies of equity whether particular social groups receive systematically different levels
of care than do other groups. There are many ways to identify preventable or unjust disparities,
including the study of health outcomes using quintile analysis or concentration indexes

Equitability in fair division means every person’s subjective valuation of their own share of
some goods is the same. The surplus procedure (SP) achieves a more complex variant called
proportional equitability. For more than two people, a division cannot always both be equitable
and envy-free

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 3.Niti Ayog

The NITI Aayog (Hindi for Policy Commission) (abbreviation for National Institution for
Transforming India) is a policy think tank of the Government of India, established with the aim
to achieve sustainable development goals with cooperative federalism by fostering the
involvement of State Governments of India in the economic policy-making process using a
bottom-up approach. Its initiatives include "15 year road map", "7-year vision, strategy and
action plan", AMRUT, Digital India, Atal Innovation Mission, Medical Education Reform,
agriculture reforms (Model Land Leasing Law, Reforms of the Agricultural Produce Marketing
Committee Act, Agricultural Marketing and Farmer Friendly Reforms Index for ranking
states), Indices Measuring States’ Performance in Health, Education and Water Management,
Sub-Group of Chief Ministers on Rationalization of Centrally Sponsored Schemes, Sub-Group
of Chief Ministers on Swachh Bharat Abhiyan, Sub-Group of Chief Ministers on Skill
Development, Task Forces on Agriculture and op of Poverty, and Transforming India Lecture
Series.

It was established in 2015, by the NDA government, to replace the Planning Commission
(योजना आयोग) which followed a top-down model. The NITI Aayog council comprises of all
the state Chief Ministers, along with the Chief Ministers of Delhi and Puducherry, the
Lieutenant Governor of Andaman and Nicobar, and a vice chairman nominated by the Prime
Minister. In addition, temporary members are selected from leading universities and research
institutions. These members include a chief executive officer, four ex-official members and
two part-time members. it doubled the current growth - developing self-sufficient cluster target
growth of 8.5%NITI Aayog has started a new initiative on the advice of Prime Minister
Narendra Modi called NITI Lectures: Transforming India. The aim of this initiative is to invite
globally reputed policy makers, experts, administrators to India to share their knowledge,
expertise, experience in policy making and good governance with Indian counterparts. This
initiative will be a series of lectures started with first lecture[3] delivered by Deputy Prime
Minister of Singapore Mr. Tharman Shanmugaratnam. He delivered lecture on subject called
"India and the Global Economy" at Vigyan Bhavan, New Delhi. The Prime Minister spoke

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about the idea behind this lecture series and stated that his vision for India is rapid
transformation, not gradual evolution.[4]

On 31 August 2017, NITI Aayog developed a State Statistics Handbook that consolidates key
statistics across sectors for every Indian State/UT. While the State data on crucial indicators is
currently fragmented across different sources, this handbook provides a one-stop database of
important State statistics

The NITI Aayog comprises the following:

The Prime Minister as the Chairperson.

A Governing Council composed of Chief Ministers of all the States and Union territories with
Legislatures and lieutenant governors of Union Territories(except Delhi and Pondicherry)

Regional Councils composed of Chief Ministers of States and Lt. Governors of Union
Territories in the region to address specific issues and contingencies impacting more than one
state or a region.

Full-time organizational framework composed of a Vice-Chairperson, five full-time members,

two part-time members (from leading universities, research organizations and other relevant
institutions in an ex-officio capacity), four ex-officio members of the Union Council of
Ministers, a Chief Executive Officer (with the rank of Secretary to the Government of India)
who looks after administration, and a secretariat.

Experts and specialists in various fields.

With the Prime Minister as the Chairperson, presently NITI Aayog consists of:

Vice Chairperson: Rajiv Kumar[10]

Ex-Officio Members: Amit Shah, Rajnath Singh, Nirmala Sitaraman and Narendra Singh
Tomar

Special Invitees: Nitin Gadkari, Piyush Goyal, Thawar Chand Gehlot and Rao Inderjit Singh

Full-time Members: V. K. Saraswat (former DRDO Chief), Ramesh Chand (Agriculture

Expert)[13] and Dr. Vinod Paul (Public Health expert)

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Chief Executive Officer (CEO): Amitabh Kant

Governing Council: All Chief Ministers of States (and Delhi and Puducherry), Lieutenant
Governor of Andaman & Nicobar Islands, and Special Invites

Objectives

To evolve a shared vision of national development priorities, sectors and strategies with the
active involvement of States in the light of national objectives.

To foster cooperative federalism through structured support initiatives and mechanisms with
the States on a continuous basis, recognizing that strong States make a strong nation.

To develop mechanisms to formulate credible plans at the village level and aggregate these
progressively at higher levels of government.

To ensure, on areas that are specifically referred to it, that the interests of national security are
incorporated in economic strategy and policy.

To pay special attention to the sections of our society that may be at risk of not benefiting
adequately from economic progress.

To design strategic and long term policy and programme frameworks and initiatives, and
monitor their progress and their efficacy. The lessons learnt through monitoring and feedback
will be used for making innovative improvements, including necessary mid-course corrections.

To provide advice and encourage partnerships between key stakeholders and national and
international like-minded Think tanks, as well as educational and policy research institutions.

To create a knowledge, innovation and entrepreneurial support system through a collaborative

community of national and international experts, practitioners and other partners.

To offer a platform for resolution of inter-sectoral and inter departmental issues in order to
accelerate the implementation of the development agenda.

To maintain a state-of-the-art Resource Centre, be a repository of research on good governance

and best practices in sustainable and equitable development as well as help their dissemination
to stake-holders.

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To actively monitor and evaluate the implementation of programmes and initiatives, including
the identification of the needed resources so as to strengthen the probability of success and
scope of delivery.

To focus on technology upgradation and capacity building for implementation of programmes

and initiatives.

To undertake other activities as may be necessary in order to further the execution of the
national development agenda, and the objectives mentioned in above.

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 4.Finance commission

The commission was set up to give recommendations for devolution of taxes and other fiscal
matters for five fiscal years, commencing 1 April 2020. The main tasks of the commission were
to "strengthen cooperative federalism, improve the quality of public spending and help protect
fiscal stability" Some newspapers like The Hindu and The Economic Times noted that
commission's job was made harder because of the roll-out of goods and service tax (GST)
regime in India, as, it had taken certain powers concerning taxation away from the union and
the states, and, had given them to the newly formed GST CouncilThe peer-reviewed journal,
Economic and Political Weekly, further noted that even after the passage of the Fiscal
Responsibility and Budget Management Act, 2003, some states still incur revenue deficits, so,
the commission would have to either recommend the disbandment of revenue deficit grants,
or, would have to recommend ways for further fiscal consolidation

The commission's chairman, N. K. Singh, said that the commission would need to define
populism, as, the commission's terms of reference (ToR) had a provision for rewarding states
which were successful in eliminating or reducing expenditure incurred on populist schemes
Singh added that the commission would need to reappraise the formula of devolution of
revenue through the union's taxes, because of a provision in its ToR Singh further said, in a
lecture to Indian Institute of Management Ahmedabad students, that one of the commission's
challenges was to find a balance between equity and efficiency adding that urban and rural
local bodies—the constitutionally-mandated third-tier of government in India—needed to be
further empowered to stimulate added economic growth.

Chief Economic Adviser to the Government of India, Arvind Subramanian, said that the
commission may need to function like the first finance commission because of an increased
decentralisation and change in India further suggesting to divide the tax devolution system into
four pots – "return", "redistribution", "risk sharing" and "reward", while also saying that tax
devolution was no more a north–south issue However, Subramanian's ideas were opposed by
Pinaki Chakraborty, a professor at the National Institute of Public Finance and Policy, and a
member of the Fifteenth Finance Commission's advisory council, who said that having a

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division of tax devolution into four pots would violate "the objective of offsetting revenue
disabilities."

The commission's chairperson, N. K. Singh, said in April 2019 that there should be mechanisms
through which the Finance Commissions and the GST Council could coordinate to "ensure
there are multiplier benefits of a higher growth trajectoryhe commission visited several states,
and held meetings with senior political and non-political state government officials of different
states; most states also generally submitted a memorandum to the commission outlining their
needs and demands to the panel. It also met with representatives of the industry and
bankers.[58][59] Das acted as chairman of the commission in state visits without Singh The
commission further met with the representatives of various federal government agencies,
including the vice-chairman and chief executive officer of its quasi-autonomous policy think-
tank, the NITI Aayog, Rajiv Kumar and Amitabh Kant respectively

The commission was headquartered in New Delhi at the Jawahar Vyapar Bhawan on Tolstoy
Marg and its offices were provided security cover by the Central Industrial Security Force

In July 2019, the commission's term was extended by a month to November 2019, and its terms
of reference (ToR) were expanded by the Union Cabinet and asked it to consider whether
"adequate, secure and non-lapsable" funds could be provided for funding defence and internal
security, and how would a distinct system to fund defence and internal security be
operationalised

The commission constituted an advisory council "to advise it on matters related to its terms of
reference" The council consisted of president of Forum for Strategic Initiatives and former
Chief Economic Adviser to the Government of India, Arvind Virmani; Oxus Research and
Investments chairman and a part-time member of the Prime Minister's Economic Advisory
Council, Surjit Bhattal; a former deputy director in the IMF, Sanjeev Gupta; a professor at the
National Institute of Public Finance and Policy, Pinaki Chakraborty; JP Morgan chief India
economist, Sajjid Chinoy; and a managing director and India economist and strategist at Credit
Suisse, Neelkanth Mishra. Politicians—including chief ministers and finance ministers—;
retired civil servants; judges; and economists from South Indian states opposed the

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commission's terms of reference as, it used the data of 2011 census, instead of the data of 1971
census, as previous commissions hadPoliticians from the south believed that this would dilute
the share of South India in the pool of union's tax revenue, because of its shrinking population
vis-à-vis the north since 1971 Communist Party of India (Marxist) central committee member
and Kerala finance minister, T. M. Thomas Issac, proposed a meeting of finance ministers of
the ten states and union territories to discuss the commission's ToR. In response, Subhash
Chandra Garg, Union Economic Affairs Secretary, said that the terms of reference were
balanced and were "not one way or the other", adding that according to the second provision
of the ToR, states with a good total fertility rate—especially, the ones which had reached the
replacement rate (2.1 children per woman)—would be incentivised.Garg's views were
reiterated by the nation's finance minister and Bharatiya Janata Party (BJP) Rajya Sabha leader,
Arun Jaitley, who—in a Facebook post—said that the row over the commission's terms of
reference was "needless" and could not have been "further from the truth".[89][90] Prime
minister and BJP Lok Sabha leader, Narendra Modi, said that vested interests were behind the
allegations that the commission's terms of reference being biased against certain states and
union territories and called such allegations "baseless".

Finance ministers of the states of Karnataka, Kerala and Andhra Pradesh and the finance
minister of the Union Territory of Puducherry met at a conclave in Kerala's capital,
Thiruvananthapuram, in April 2018 and collectively denounced the commission's terms of
reference, calling them to be in contradiction with the principles of federalism.Five state and
two union territory finance ministers met in Andhra Pradesh's capital, Amaravati, and drafted
a memorandum to the president, Ram Nath Kovind, seeking changes in the commission's terms
of reference The group of finance ministers eventually met the president on 17 May 2018

In July 2018, the vice president, Venkaiah Naidu—in his capacity as the chairman of Rajya
Sabha—asked the commission's chairman, N. K. Singh, if certain states would be penalised
with the use of 2011 census and was ensured by Singh that performing and progressive states
would not be penalised by the commission.

Classification of Delhi

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Aam Aadmi Party (AAP) convener and the chief minister of Delhi, Arvind Kejriwal, criticised
the commission for treating the National Capital Territory of Delhi neither as a state nor as a
union territory (UT), saying that the Delhi government deserved a ₹52,000 crore (US$7.5
billion) grant from the union government if it qualified as a UT in the commission's eyes else
it deserved more devolution of union government's tax revenue as a state Kejriwal added that
the Government of Delhi would move the Supreme Court of India on the matter. AAP national
executive and political affairs committee member and Delhi deputy chief minister and finance
minister, Manish Sisodia said that the terms of reference of the commission were
"unfair"Sisodia was a part of the group of state and union territory finance ministers who met
with the presidentIn addition, AAP national joint secretary, Akshay Marathe said—citing
Central Board of Direct Taxes figures—that the National Capital Territory of Delhi contributed
as much as ₹1.08 lakh crore (equivalent to ₹1.1 trillion or US$16 billion in 2018)—or 13 per
cent—of the nation's direct tax revenue and got around ₹325 crore (equivalent to ₹341 crore or
US$49 million in 2018) from the Government of India in return.

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 5.wages

A wage is monetary compensation (or remuneration, personnel expenses, labor) paid by an

employer to an employee in exchange for work done. Payment may be calculated as a fixed
amount for each task completed (a task wage or piece rate), or at an hourly or daily rate (wage
labour), or based on an easily measured quantity of work done.

Wages are part of the expenses that are involved in running a business.

Payment by wage contrasts with salaried work, in which the employer pays an arranged amount
at steady intervals (such as a week or month) regardless of hours worked, with commission
which conditions pay on individual performance, and with compensation based on the
performance of the company as a whole. Waged employees may also receive tips or gratuity
paid directly by clients and employee benefits which are non-monetary forms of compensation.
Since wage labour is the predominant form of work, the term "wage" sometimes refers to all
forms (or all monetary forms) of employee compensation.

In modern mixed economies such as those of the OECD countries, it is currently the most
common form of work arrangement. Although most labour is organised as per this structure,
the wage work arrangements of CEOs, professional employees, and professional contract
workers are sometimes conflated with class assignments, so that "wage labour" is considered
to apply only to unskilled, semi-skilled or manual labour.

The most common form of wage labour currently is ordinary direct, or "full-time". This is
employment in which a free worker sells their labour for an indeterminate time (from a few
years to the entire career of the worker), in return for a money-wage or salary and a continuing
relationship with the employer which it does not in general offer contractors or other irregular
staff. However, wage labour takes many other forms, and explicit as opposed to implicit (i.e.
conditioned by local labour and tax law) contracts are not uncommon. Economic history shows
a great variety of ways, in which labour is traded and exchanged. The differences show up in
the form of:

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Employment status – a worker could be employed full-time, part-time, or on a casual basis.
They could be employed for example temporarily for a specific project only, or on a permanent
basis. Part-time wage labour could combine with part-time self-employment. The worker could
be employed also as an apprentice.

Civil (legal) status – the worker could for example be a free citizen, an indentured labourer, the
subject of forced labour (including some prison or army labour); a worker could be assigned
by the political authorities to a task, they could be a semi-slave or a serf bound to the land who
is hired out part of the time. So the labour might be performed on a more or less voluntary
basis, or on a more or less involuntary basis, in which there are many gradations.

Method of payment (remuneration or compensation) – The work done could be paid "in cash"
(a money-wage) or "in kind" (through receiving goods and/or services), or in the form of "piece
rates" where the wage is directly dependent on how much the worker produces. In some cases,
the worker might be paid in the form of credit used to buy goods and services, or in the form
of stock options or shares in an enterprise.

Method of hiring – the worker might engage in a labour-contract on their own initiative, or
they might hire out their labour as part of a group. But they may also hire out their labour via
an intermediary (such as an employment agency) to a third party. In this case, they are paid by
the intermediary, but work for a third party which pays the intermediary. In some cases, labour
is subcontracted several times, with several intermediaries. Another possibility is that the
worker is assigned or posted to a job by a political authority, or that an agency hires out a
worker to an enterprise together with means of production

Wage labour has long been compared to slavery by socialistsAs a result, the term "wage
slavery" is often utilised as a pejorative for wage labour Similarly, advocates of slavery looked
upon the "comparative evils of Slave Society and of Free Society, of slavery to human Masters
and slavery to Capital, and proceeded to argue persuasively that wage slavery was actually
worse than chattel slavery Slavery apologists like George Fitzhugh contended that workers
only accepted wage labour with the passage of time, as they became "familiarized and
inattentive to the infected social atmosphere they continually inhale[d]"

According to Noam Chomsky, analysis of the psychological implications of wage slavery goes
back to the Enlightenment era. In his 1791 book On the Limits of State Action, classical liberal

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thinker Wilhelm von Humboldt explained how "whatever does not spring from a man's free
choice, or is only the result of instruction and guidance, does not enter into his very nature; he
does not perform it with truly human energies, but merely with mechanical exactness" and so
when the labourer works under external control, "we may admire what he does, but we despise
what he is. Both the Milgram and Stanford experiments have been found useful in the
psychological study of wage-based workplace relations Additionally, as per anthropologist
David Graeber, the earliest wage labour contracts we know about were in fact contracts for the
rental of chattel slaves (usually the owner would receive a share of the money, and the slave,
another, with which to maintain their living expenses.) Such arrangements, according to
Graeber, were quite common in New World slavery as well, whether in the United States or
Brazil C. L. R. James argued in The Black Jacobins that most of the techniques of human
organisation employed on factory workers during the industrial revolution were first developed
on slave plantations

For Marxists, labour-as-commodity, which is how they regard wage labourprovides a

fundamental point of attack against capitalism"It can be persuasively argued," noted one
concerned philosopher, "that the conception of the worker's labour as a commodity confirms
Marx's stigmatisation of the wage system of private capitalism as 'wage-slavery;' that is, as an
instrument of the capitalist's for reducing the worker's condition to that of a slave, if not below
it That this objection is fundamental follows immediately from Marx's conclusion that wage
labour is the very foundation of capitalism: "Without a class dependent on wages, the moment
individuals confront each other as free persons, there can be no production of surplus value;
without the production of surplus-value there can be no capitalist production, and hence no
capital and no capitalist!"

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 6.Economic Freedom

Economic freedom, or economic liberty, is the ability of people of a society to take economic
actions. This is a term used in economic and policy debates as well as in the philosophy of
economics One approach to economic freedom comes from the liberal tradition emphasizing
free markets, free trade, and private property under free enterprise. Another approach to
economic freedom extends the welfare economics study of individual choice, with greater
economic freedom coming from a larger set of possible choices.Other conceptions of economic
freedom include freedom from want and the freedom to engage in collective bargaining

The liberal free-market viewpoint defines economic liberty as the freedom to produce, trade
and consume any goods and services acquired without the use of force, fraud or theft. This is
embodied in the rule of law, property rights and freedom of contract, and characterized by
external and internal openness of the markets, the protection of property rights and freedom of
economic initiative There are several indices of economic freedom that attempt to measure free
market economic freedom. Based on these rankings, correlative studies have found higher
economic growth to be correlated with higher scores on the country rankings With regards to
other measures such as equality, corruption, political and social violence and their correlation
to economic freedom, it has been argued that the economic freedom indices conflate unrelated
policies and policy outcomes to conceal negative correlations between economic growth and
economic freedom in some subcomponents. According to the liberal free-market view, a secure
system of private property rights is an essential part of economic freedom. Such systems
include two main rights, namely the right to control and benefit from property and the right to
transfer property by voluntary means. These rights offer people the possibility of autonomy
and self-determination according to their personal values and goals Economist Milton
Friedman sees property rights as "the most basic of human rights and an essential foundation
for other human rights."[ With property rights protected, people are free to choose the use of
their property, earn on it, and transfer it to anyone else, as long as they do it on a voluntary
basis and do not resort to force, fraud or theft. In such conditions most people can achieve much
greater personal freedom and development than under a regime of government coercion. A
secure system of property rights also reduces uncertainty and encourages investments, creating

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favorable conditions for an economy to be successful.Empirical evidence suggests that
countries with strong property rights systems have economic growth rates almost twice as high
as those of countries with weak property rights systems, and that a market system with
significant private property rights is an essential condition for democracy According to
Hernando de Soto, much of the poverty in the Third World countries is caused by the lack of
Western systems of laws and well-defined and universally recognized property rights. De Soto
argues that because of the legal barriers poor people in those countries can not utilize their
assets to produce more wealth.[15] One thinker to question private property was Pierre-Joseph
Proudhon, a socialist and anarchist, who argued that property is both theft and freedom.

Freedom of contract

Freedom of contract is the right to choose one's contracting parties and to trade with them on
any terms and conditions one sees fit. Contracts permit individuals to create their own
enforceable legal rules, adapted to their unique situations.However, not all contracts need to be
enforced by the state. For example, in the United States there is a large number of third-party
arbitration tribunals which resolve disputes under private commercial law. Negatively
understood, freedom of contract is freedom from government interference and from imposed
value judgments of fairness. The notion of "freedom of contract" was given one of its most
famous legal expressions in 1875 by Sir George Jessel MR:

[I]f there is one thing more than another public policy requires it is that men of full age and
competent understanding shall have the utmost liberty of contracting, and that their contracts
when entered into freely and voluntarily shall be held sacred and shall be enforced by courts
of justice. Therefore, you have this paramount public policy to consider – that you are not
lightly to interfere with this freedom of contract.

The doctrine of freedom of contract received one of its strongest expressions in the US Supreme
Court case of Lochner v New York which struck down legal restrictions on the working hours
of bakers.

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Critics of the classical view of freedom of contract argue that this freedom is illusory when the
bargaining power of the parties is highly unequal, most notably in the case of contracts between
employers and workers. As in the case of restrictions on working hours, workers as a group
may benefit from legal protections that prevent individuals agreeing to contracts that require
long working hours. In its West Coast Hotel Co. v. Parrish decision in 1937, overturning
Lochner, the Supreme Court cited an earlier decision:

“ The legislature has also recognized the fact, which the experience of legislators in many
States has corroborated, that the proprietors of these establishments and their operatives do not
stand upon an equality, and that [p. 394] their interests are, to a certain extent, conflicting. The
former naturally desire to obtain as much labor as possible from their employees, while the
latter are often induced by the fear of discharge to conform to regulations which their judgment,
fairly exercised, would pronounce to be detrimental to their health or strength. In other words,
the proprietors lay down the rules and the laborers are practically constrained to obey them. In
such cases, self-interest is often an unsafe guide, and the legislature may properly interpose its
authority.

From this point on, the Lochner view of freedom of contract has been rejected by US courts.

Economic and political freedom

Some free market advocates argue that political and civil liberties have simultaneously
expanded with market-based economies, and present empirical evidence to support the claim
that economic and political freedoms are linked.

In Capitalism and Freedom (1962), Friedman further developed Friedrich Hayek's argument
that economic freedom, while itself an extremely important component of total freedom, is also
a necessary condition for political freedom. He commented that centralized control of
economic activities was always accompanied with political repression. In his view, voluntary
character of all transactions in a free market economy and wide diversity that it permits are
fundamental threats to repressive political leaders and greatly diminish power to coerce.
Through elimination of centralized control of economic activities, economic power is separated

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from political power, and the one can serve as counterbalance to the other. Friedman feels that
competitive capitalism is especially important to minority groups, since impersonal market
forces protect people from discrimination in their economic activities for reasons unrelated to
their productivity.

Austrian School economist Ludwig von Mises argued that economic and political freedom
were mutually dependent: "The idea that political freedom can be preserved in the absence of
economic freedom, and vice versa, is an illusion. Political freedom is the corollary of economic
freedom. It is no accident that the age of capitalism became also the age of government by the
people

In The Road to Serfdom, Hayek argued that "Economic control is not merely control of a sector
of human life which can be separated from the rest; it is the control of the means for all our
ends."[27] Hayek criticized socialist policies as the slippery slope that can lead to
totalitarianism.

Gordon Tullock has argued that "the Hayek-Friedman argument" predicted totalitarian
governments in much of Western Europe in the late 20th century – which did not occur. He
uses the example of Sweden, in which the government at that time controlled 63 percent of
GNP, as an example to support his argument that the basic problem with The Road to Serfdom
is "that it offered predictions which turned out to be false. The steady advance of government
in places such as Sweden has not led to any loss of non-economic freedoms." While criticizing
Hayek, Tullock still praises the classical liberal notion of economic freedom, saying,
"Arguments for political freedom are strong, as are the arguments for economic freedom. We
needn’t make one set of arguments depend on the other.

Indices of economic freedom

Main article: Indices of economic freedom

The annual surveys Economic Freedom of the World (EFW) and Index of Economic Freedom
(IEF) are two indices which attempt to measure the degree of economic freedom in the world's

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nations. The EFW index, originally developed by Gwartney, Lawson and Block at the Fraser
Institute[30] was likely the most used in empirical studies as of 2000. The other major index,
which was developed by The Heritage Foundation and The Wall Street Journal appears
superior for data work, although as it only goes back to 1995, it is less useful for historical
comparisons.

According to the creators of the indices, these rankings correlate strongly with higher average
income per person, higher income of the poorest 10%, higher life expectancy, higher literacy,
lower infant mortality, higher access to water sources and less corruption. The people living in
the top one-fifth of countries enjoy an average income of $23,450 and a growth rate in the
1990s of 2.56 percent per year; in contrast, the bottom one-fifth in the rankings had an average
income of just $2,556 and a -0.85 percent growth rate in the 1990s. The poorest 10 percent of
the population have an average income of just $728 in the lowest ranked countries compared
with over $7,000 in the highest ranked countries. The life expectancy of people living in the
highest ranked nations is 20 years longer than for people in the lowest ranked countries.

Higher economic freedom, as measured by both the Heritage and the Fraser indices, correlates
strongly with higher self-reported happiness.

Erik Gartzke of the Fraser Institute estimates that countries with a high EFW are significantly
less likely to be involved in wars, while his measure of democracy had little or no impact.

The Economic Freedom of the World score for the entire world has grown considerably in
recent decades. The average score has increased from 5.17 in 1985 to 6.4 in 2005. Of the
nations in 1985, 95 nations increased their score, seven saw a decline, and six were unchanged.

Using the 2008 Index of Economic Freedom methodology world economic freedom has
increased 2.6 points since 1995.

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Members of the World Bank Group also use Index of Economic Freedom as the indicator of
investment climate, because it covers more aspects relevant to the private sector in wide
number of countries.

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 7.Social Security

Social security is "any government system that provides monetary assistance to people with an
inadequate or no income". In the United States, this is usually called welfare or a social safety
net, especially when talking about Canada and European countries.

Social security is asserted in Article 22 of the Universal Declaration of Human Rights, which
states:

Everyone, as a member of society, has the right to social security and is entitled to realization,
through national effort and international co-operation and in accordance with the organization
and resources of each State, of the economic, social and cultural rights indispensable for his
dignity and the free development of his personality.

In simple terms, the signatories agree that the society in which a person lives should help them
to develop and to make the most of all the advantages (culture, work, social welfare) which are
offered to them in the country.

Social security may also refer to the action programs of an organization intended to promote
the welfare of the population through assistance measures guaranteeing access to sufficient
resources for food and shelter and to promote health and well-being for the population at large
and potentially vulnerable segments such as children, the elderly, the sick and the unemployed.
Services providing social security are often called social services.

Terminology in this area is somewhat different in the United States from in the rest of the
English-speaking world. The general term for an action program in support of the well being
of poor people in the United States is welfare program, and the general term for all such
programs is simply welfare. In American society, the term welfare arguably has negative
connotations. In the United States, the term Social Security refers to the US social insurance

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program for all retired and disabled people. Elsewhere the term is used in a much broader sense,
referring to the economic security society offers when people are faced with certain risks. In
its 1952 Social Security (Minimum Standards) Convention (nr. 102), the International Labour
Organization (ILO) defined the traditional contingencies covered by social security as
including:

Survival beyond a prescribed age, to be covered by old age pensions;

The loss of support suffered by a widowed person or child as the result of the death of the
breadwinner (survivor’s benefit);

Responsibility for the maintenance of children (family benefit);

The treatment of any morbid condition (including pregnancy), whatever its cause (medical
care);

A suspension of earnings due to pregnancy and confinement and their consequences (maternity
benefit);

A suspension of earnings due to an inability to obtain suitable employment for protected

persons who are capable of, and available for, work (unemployment benefits);

A suspension of earnings due to an incapacity for work resulting from a morbid condition
(sickness leave benefit);

A permanent or persistent inability to engage in any gainful activity (disability benefits);

The costs and losses involved in medical care, sickness leave, invalidity and death of the
breadwinner due to an occupational accident or disease (employment injuries).

People who cannot reach a guaranteed social minimum for other reasons may be eligible for
social assistance (or welfare, in American English).

Modern authors often consider the ILO approach too narrow. In their view, social security is
not limited to the provision of cash transfers, but also aims at security of work, health, and
social participation; and new social risks (single parenthood, the reconciliation of work and
family life) should be included in the list as well.

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Social security may refer to:

social insurance, where people receive benefits or services in recognition of contributions to

an insurance program. These services typically include provision for retirement pensions,
disability insurance, survivor benefits and unemployment insurance.

services provided by government or designated agencies responsible for social security

provision. In different countries, that may include medical care, financial support during
unemployment, sickness, or retirement, health and safety at work, aspects of social work and
even industrial relations.

basic security irrespective of participation in specific insurance programs where eligibility may
otherwise be an issue. For instance, assistance given to newly arrived refugees for basic
necessities such as food, clothing, housing, education, money, and medical care.

A report published by the ILO in 2014 estimated that only 27% of the world's population has
access to comprehensive social security.

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