At all historical stages of the development of mankind, the society faces the same question: what, for whom and in what quantities, taking into account the limited resources. The economic system and types of economic systems are designed to solve this problem. Moreover, each of these systems does this in its own way, each of them has its own advantages and disadvantages.
The concept of the economic system
The economic system is a system of all economic processes and production relations that has developed in a particular society. This concept is understood as an algorithm, a way of organizing the production life of a society, which assumes the existence of stable relations between producers on the one hand and consumers on the other.
The content of the concepts of “economic system” and “types of economic systems” is highly dependent on a particular scientific school. So, in some schools they are considered and described using macroeconomic concepts, in others - through the behavior of people, thirdly, attention is focused on their systemic nature, etc.
The main processes in any economic system are the following:
- production;
- distribution;
- exchange;
- consumption (benefits).
Production in any of the existing economic systems is based on appropriate resources. However, some elements still differ in different systems. We are talking about the nature of socio-economic relations, management mechanisms, motivation of producers, etc.
Economic system and types of economic systems
An important point in the analysis of any phenomenon or concept is its typology.
Characterization of the types of economic systems, in general, comes down to an analysis of five basic parameters for comparison. It:
- technical and economic parameters;
- the ratio of the share of state planning and market regulation of the system;
- property relations;
- social parameters (real income, the amount of free time, labor protection, etc.);
- system functioning mechanisms.
Based on this, modern economists distinguish four main types of economic systems:
- Traditional
- Team planning
- Market (capitalism)
- Mixed
Let us consider in more detail how all these types differ from each other.
Traditional economic system
In the era of primitive society in the world, the very first economic system was born, which was based on subsistence farming. Today, the traditional type of economic system is almost never found (with the exception of certain regions of Latin America, Asia and Africa, as well as some third world countries).
This system of economy is characterized by gathering, hunting, and low-productivity farming based on extensive methods, manual labor, and primitive technologies. Trade is poorly developed or not developed at all.
Perhaps the only plus of such an economic system is weak (almost zero) environmental pollution and minimal anthropogenic pressure on nature.
Team Planning Economic System
A planned (or centralized) economy is a historical type of management. Nowadays, it is not found anywhere in its pure form. Previously was characteristic of the Soviet Union, as well as some countries of Europe and Asia.
Today they often talk about the shortcomings of this economic system, among which are:
- lack of freedom for producers (commands “what and in what quantities” to produce were sent from above);
- dissatisfaction with a large number of economic needs of consumers;
- chronic shortage of certain products;
- the emergence of a black market (as a natural reaction to the previous paragraph);
- the inability to quickly and efficiently implement the latest achievements of scientific and technological progress (thanks to which the planned economy always remains one step behind other competitors of the global market).
Nevertheless, this economic system also had its advantages. One of them was the opportunity to ensure social stability for everyone.
Market economic system
The market is a complex and multifaceted economic system that is characteristic of most countries of the modern world. Also known by another name: "capitalism". The fundamental principles of this system are the principle of individualism, free enterprise and healthy market competition, based on the ratio of supply and demand. Private property dominates here, and the thirst for profit is the main stimulus to production activity.
Nevertheless, such an economy is far from ideal. The market type of economic system also has its drawbacks:
- uneven income distribution;
- social inequality and social insecurity of certain categories of citizens;
- system instability, which manifests itself in the form of periodic acute crises in the economy;
- predatory, barbaric use of natural resources;
- poor financing of education, science and other unprofitable programs.
In addition to these, economists also identify the fourth - a mixed type of economic system, in which both the state and the private sector are of equal weight. In such systems, the functions of the state in the country's economy are reduced to supporting important (but unprofitable) enterprises, financing science and culture, controlling unemployment, etc.
Economic System and Types of Economic Systems: Country Examples
It remains to consider examples of modern countries for which this or that economic system is characteristic. For this, a special table is presented below. Types of economic systems in it are filed taking into account the geography of their distribution. It is worth noting that this table is very subjective, since for many modern states it can be difficult to unambiguously assess which of the systems they belong to.
| Type of economic system | Country Examples |
| Traditional | Vanuatu, Barbados, Zimbabwe, Chad, Ethiopia, etc. |
| Team planning |
USSR, India until the beginning of the 90s, Hitler Germany |
| Market | USA, Canada, Japan, France, Switzerland, South Africa, etc. |
| Mixed | China, Russia |
What type of economic system in Russia? In particular, Moscow State University professor A. Buzgalin described the modern Russian economy as a “mutation of late capitalism”. In general, the economic system of the country is today considered to be transitional, with an actively developing market.
