Every adult should be fully developed in order to be able to fully assess the state of the country. Nevertheless, it is quite difficult to be able to evaluate the actions of the government or understand ideology, having no idea about the economic component. We offer to start small - let's talk about the main types of economic systems, their differences among themselves, characteristic features and implementation examples in the past or now.
What is an economic system?
The economic system means the totality of certain economic elements that together form a certain integrity, are the economic structure of society, create a unity of relations that affects production, distribution, and also exchange on other goods and their use. There are such basic types of economic systems:
- Traditional.
- Market.
- Command and administrative.
- Mixed.
So, when it is clear what an economic system is, we begin to give the basic classifications of the types of economic systems and their features.
Traditional economic system
Traditional economic system is the first form of organization economic relations which appeared in humanity. It is mainly characterized and based on community service. It is based on the collective ownership of the means of work, as well as the places where work takes place: collective cultivation of the field, harvesting and distribution, collective hunting, etc.
It can also be characterized by conservatism, the prevalence of manual labor, the transfer of information on the production of certain goods from generation to generation. The traditional economic system remained unchanged until the high Middle Ages, when the first manufactories appeared. In our time, it can only be found among people who still live by tradition in the depths of uncharted lands: in the north of the Russian Federation, where people still engage in reindeer husbandry without raising the question of profit, or in the jungle and savannah of Asia and Africa.
Market economic system
The market economic system is based on freedom of production, freedom of consumption and free market relations. Such a market system provides for the removal of any restrictions on the production and distribution of goods on land. The states of the planet were closest to the market system in the 19th and early 20th centuries, but after the crisis of 1929 there are no economic systems in the world that would be full-fledged market ones.
Administrative command economic system
This economic system provides for a plan, the implementation of which is tightly controlled. Performers constantly receive instructions regarding production parameters, from whom to buy, to whom to sell. Often the controlling and managing bodies are less competent than the managers of the enterprise, which leads to undesirable consequences from their intervention. Finished, ready-to-eat products are also distributed by higher authorities. An example of such an economic system is the Soviet Union from the time of Brezhnev and Khrushchev. A similar type of management is used in our time in large American corporations, as well as transnational corporations.
Mixed economic system
The most popular economic system in which elements of both a market and a command-administrative system are combined. The main types of economic systems are precisely the various modifications of mixed systems.This allows you to avoid negative aspects or significantly reduce their impact on the economic condition of the state. To one degree or another, it acts in all states of the world. Relying on market mechanisms allows for more or less stable development of the economy, while state mechanisms of influence help to survive crisis moments, which are indispensable elements of a market economy. It is because of this universality that the basic types of socio-economic systems are mixed. Each mixed system is distinguished by its features, the proportions of borrowings from the market and command-administrative systems, as well as its special, unique touches.
Planned economic system
A separate and more detailed attention deserves a planned economic system as a potential system of the future. As a small digression, it can be said that plans as a component of the economy are used in France and Japan and were used in the Soviet Union during the times of Stalin (which ensured, despite the Second World War, economic growth by 20.5 times).
A feature of this economic system is that a specific plan is set before the contractor, which is desirable (very desirable) to be implemented. Certain resources are allocated, which are transferred to the contractor, and it is believed that he is fully competent so that he himself can (if necessary, with a little help) achieve the target. At the same time, it is necessary that the planned indicator was not just invented, but economically justified. Also, the resources allocated for the implementation of the plan should be economically justified.
Judging by the implementation of the planned economy by the three above-mentioned countries (USSR, France and Japan), it should be noted that there are very strong differences within their mechanisms. So, for the USSR of the times of Stalin, the main stake was made on heavy industry and the public sector, which complemented the private cooperative, creating an economic symbiosis. Japan is characterized by economic planning both at the state level and at the corporate level, interaction between the public and private sectors on an equal footing. In France, a planned economy is expressed by the creation of 5 development plans for the country and the allocation of a certain amount of money to help state enterprises and to order the private sector. This information may seem strange to someone both in content and in presentation, but we believe that the description of the main types of economic systems without this information would be incomplete and could create incorrect ideas about the organization of the economy and the relationships within it.
Conclusion
Humanity is gradually developing, improving its economic system, and the main types of economic systems are replacing each other. It is safe to say that the economies of the world will still have time to change dramatically more than once. We can only hope that it will be painless and for the better. And after reading this article, the concept and the main types of economic systems have become closer to you.
