Economic System or Model
An economic system or model is a mechanism or social institution that organizes production , distribution and consumption for the benefit of a particular society. The idea of an economic system carries with it the articulated connotation of parts (principles, rules, procedures, institutions) functionally harmonized for the consequence of certain collective ends. During this articulation of parts each society tries to solve the fundamental economic problem which is the satisfaction of basic needs.
Three classes of economic models/systems are distinguished:
- Economic liberalism: Based on the premise that the economy can self-regulate itself in a satisfactory way, and points out that the intervention of the State in it is minimal.
- The planned economy: On the contrary, it is the State that controls all aspects of economic life. It does not allow the existence of private property .
- The mixed economy: it is somewhere in the middle between liberalism and the directed economy.
Types of Economic System
Economic systems have a system-rational structure or a system-specific order. This depends on the principles of economic order, the mechanisms and regulations, which are linked to form an overall economic control and coordination system and thus align the economic subjects in satisfying their needs and reducing the scarcity of goods. Those elements of control and coordination that bring about economic activity as a result of their interaction are objects of knowledge in economic systems theory.
Capitalism: characterized by private ownership of the means of production and freedom of competition
Socialism: it aims, contrary to the liberal model, to reform the system of private ownership of the means of production and exchange and to their appropriation (obtaining) by the community through the collectivization of the means of production and change of the distribution of the wealth.
Communism: system of social organization in which all property is owned by the community (government or a person) and each person contributes and receives according to their ability and needs; by the suppression of social classes and the extinction of the State which becomes the administration of things.
Associative: cooperatives, mutuals, associations, or foundations, whose internal functioning and activities are based on a principle of solidarity and social utility.
Capitalist (Corporate, Democratic, Laissez-aire, Mercantilist, Neoliberal, Neomercantilist, Protectionist, Social market, State, Welfare)
Religious (Buddhist economics, Christian, Sabbath economics, Islamic)
By regional model
Asian (East Asian, Chinese, Singaporean)
European (Anglo-Saxon, German, Nordic, Dutch, Rhenish, Soviet)
Latin America (Socialism of the 21st century)
By Property types
Commons (Common ownership)
Market (Free, Open, Regulated)
Planning (In kind, Cybernetics, Indicative, Material balancing)
Commons-based peer production
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Sources: PinterPandai, Corporate Finance Institute, Intelligent Economist, Britannica
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