irst, second and third. First world economies are those based on market industries. Second world economies are those which are centrally planned. Third world economies are those of developing nations (pp. 37, 38). The authors then go on to suggest that the role of political systems is to integrate the society while the role of the economic system is to allocate resources. Democracies are contrasted with totalitarian regimes, with the central difference being that democracies are characterized by wide participation in the decision making process while totalitarian regimes have limited participation. Typically, democracies have multiple political parties, while some (such as Mexico) have a single dominant party.
All economic systems allocate resources, according to Daniels and Radebaugh. However, a market system allocates resources based on individual wants and needs, while a command economy uses the government to centrally plan resource allocation. Written largely before recent economic and political upheaval in eastern Europe, the text suggests that
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