The concept and types of economic system

The economic system is a set of methods for organizing economic and economic processes occurring in society: the production of material goods and their distribution, consumption, use of the state's natural resources and so on. In turn, the types of economic system Are determined by the nature and form of the processes of production, exchange, distribution and consumption in society. The diversity of human civilizations demonstrates to us a wide variety of forms of management. However, as a rule, modern scientists classify all types of economic system in the history of human society into four main variants. Consider them.

Types of economic system: traditional economy

This is historically the earliest and most primitive form of management. Such societies are deeply taboo and traditional. And it is precisely traditions that determine the main economic issues: how much and what to produce, for whom, and how to use it in production, what incentive and coercion system will be, and how to distribute the final product among members of society. Such economies are accompanied by archaic, backward technologies, the widespread use of manual labor, and the conservatism of society with respect to any innovations. In addition to historical examples, this type of management is present in a number of modern underdeveloped countries.

Administrative-command type of economic system

This option was implemented in the first quarter of the 20th century by the corporate fascist regime and the socialist states. The key moment of these economies is the nationalization of all means of production and financial structure: factories, factories, banks and so on. As a result, the state government gets its full power over economic management: pricing, supply on the market, wage growth, the balance of development of sectors of the economy and so on. Everything is subordinated to the supremacy of state needs.

Types of economic system: free market

The country's economic development is recognized as a natural process. There is no direct control over this sphere. The state provides ample opportunities for private owners. However, it leaves behind itself indirect methods of regulation of economy, like a fiscal policy. In a free market, a free decision and competition often lead to a revival of economic activity. But at the same time, the emergence of monopoly giants and their subsequent usurpation of the market, interference in the political and social life of the country.

Mixed type of economic system

This is a kind of legacy left by the two previous types, and some of their consensus. In the most progressive states of today, it is the mixed system that operates in its different versions: the United States, Japan and most of the EU countries. It allows the operation of the free market. At the same time, the state, using its fruits, retains significant levers of influence on the state economy. Thus, the shortcomings of the two previous systems are smoothed out.