The main task of the economic system is the integration of the totality, which is absolutely all components of the economy: households, individual enterprises, entire industries, relations regarding reproduction, distribution, and so on. Thus, in each society, under the influence of various factors, an individual complex is formed that allows coordinating economic activity. It will be appropriate to consider in detail the main types of such systems and the features of their structuring.
The concept of the economic system
Oddly enough, the use of such a common concept has a very interesting and long history (the era of Antiquity). Translated from the Greek language, “system” means something integral, formed from separate components that are interconnected. Economic subjects organize business processes (main stages: production, exchange, distribution and, finally, consumption), as a result of which various goods are created endowed with a material or spiritual connotation. Thus, the economic system can be defined as the totality of all types of economic activity that economic entities carry out in the process of interaction among themselves regarding the passage of each of the above stages, as well as the regulation of this activity in accordance with the goals.
The key reason for the existence of this category is the universal law of economics, the main idea of which is the relative limited resources. At the heart of his actions are only two factors: the growth of human needs, constantly relevant, and the limited material benefits for their implementation.
As it turned out, the economic system cannot function outside of society, which is why it must have a huge number of entities that are considered to be all participants in the system, functioning in it, whose needs and interests are necessarily realized under professional efforts. Since there are a great many subjects of the economy, and some of them have similar goals in their focus, it is customary to classify them into groups. An example of such groupings is producers and consumers, employers and employees, sellers and buyers, creditors and debtors, and so on.
Absolutely all the functions of the economy are reduced to the indirect interaction of society and the environment, ensuring contact and organization of technological processes, their inclusion in both the social and economic system, and control over them in the interests of business entities. It should be noted that any economic system has the following main features:
- The unity and integrity of all the components of the complex.
- The dependence of the material aspect on the public, and vice versa.
- The complexity and versatility of the structure itself. This can be explained by the fact that each component of the system can act as part of one whole or as a subsystem subordinate to a larger category. For example, modern production is endowed with two subsystems (the sphere of material production and the sphere of intangible production).
In the process of economic development as a specific system, two completely opposite trends can be traced. The first of them strives for stability, that is, to preserve all the components of the system and the relationships formed between them. And the second trend stands for variability, for the introduction of innovative elements, which concerns both the technical and social spheres of society. Due to this state of affairs, the equilibrium of the elements of one population, as a rule, is established only for a certain period of time, after which it is disturbed due to the influence of some internal or external factors.
It should be noted that in the process of considering different economic systems, different criteria are applied. The main ones are the following:
- A form of management that is considered predominant. So, absolutely all systems are classified into complexes with natural and commodity forms of economic management.
- Forms of ownership that have clear advantages relative to a particular system (the following types of aggregates are distinguished: community, private property, cooperative-community, and so on).
- The method of income distribution, according to which economic systems are classified into community-equalization, factor (distribution of income strictly according to production factors), distribution (according to the quantity and quality of labor input).
- The degree of government interference during economic processes. So, there are free, economically controlled, administrative-command and mixed types of business systems.
- A method for coordinating the implementation of professional operations by business entities, according to which it is customary to classify economic systems as planned, market, and traditional.
- The level of openness to international relations and access to the world market.
- The degree of maturity, according to which the systems are subject to division into still developing, fully developed and already degrading.
Types of economic systems. Economic systems (table)
In the process of considering the types of economic systems, it is necessary to touch upon a number of factors, therefore it will be advisable to study this item through a table specially designed for this:
|
The structure of economic systems (types) |
Traditional |
Command and administrative |
Market |
Mixed |
|
Key Points |
It is based on traditions that are passed down from generation to generation and determine specific goods and services for production, as well as the conditions for their production. It is characterized by the backward technology of production processes due to the predominance of manual labor, as well as the multistructure of the economy and the absolute rejection of innovation. |
Decisions on the organization of all economic processes are made solely by representatives of state authorities, therefore manufacturers have practically no freedom of choice. This often leads to minimizing the interest of workers in increasing labor productivity, and hence in production efficiency. |
Key economic issues are resolved in a free manner based on market control mechanisms. In this case, private property predominates, and business entities carry out economic activities solely in accordance with their personal interests. It is appropriate free competition and minimize the influence of state structures. |
Combines the private and public sectors of the economy at the same time. So, in this case, the market and state regulation, capitalist tendencies and the socialization of life merge into a single whole. It is important to note that the main disadvantages of the system are easily smoothed out by the control of state structures. In addition, the state is directly involved in providing society with all sorts of social benefits. |
The main advantages and disadvantages of economic systems
As it turned out, each of the current economic systems is endowed with certain features and specifics. But how to identify the most effective option? For this, it is necessary to evaluate and analyze the main advantages and disadvantages that economic systems are endowed with (the table is presented below):
|
Advantages |
Stability in society; high quality products and services. |
The ability to concentrate efforts and resources in accordance with specific areas of economic activity; ensuring stability both economically and socially. |
Efficient allocation of resources (“invisible hand of the market”); freedom of choice; good quality of goods; stimulation of NTP; flexibility (adaptation to changing market conditions); external economic relations have maximum development. |
Ensuring economic stability and guaranteed growth; protection of competition, its promotion; political stability; social guarantees; stimulation of innovation; support for areas such as education, science, culture. |
|
disadvantages |
Low rates of production processes; continuous work of members of traditional society; products as a subject of exchange; lack of scientific and technical progress (and even rejection of innovations); limited production; significant environmental impact. |
The exclusion of rapid development in terms of implementing the achievements of scientific and technical progress; lack of freedom in relation to production and consumption; low degree of satisfaction of social needs; the emergence of a "black market"; chronic shortage of consumer goods. |
The distribution of revenue is uneven; only those who pay money are satisfied; developmental instability; insufficient funding in terms of research, education; wasteful attitude to natural resources; weakening competition. |
Exclusion of standard schemes; the need for the formation of national models, taking into account the specifics of the organization of society. |
The choice of most countries
It should be noted that the modern economic system of most countries is endowed with precisely a mixed character (see above “The concept and structure of the economic system”). Of course, many issues of both a national and regional direction are solved here by state structures, but there are significant causes:
- In the case of a mixed economy, some social needs, formed in a specific way (drafting laws, maintaining the army, organizing traffic, combating viruses, epidemics, and so on) are much better than other market mechanisms (see above “Structure economic systems ").
- The traditional economy has the power to mitigate most of the negative effects of market mechanisms. Examples of this are significant differences in the financial situation of citizens, damage to the environment caused by the activities of commercial companies, and the like.
Types of structures of the economic system
The most important property of any economic system is the presence of structure. Thus, the category consists of subcategories (households and individual enterprises). A household is a small economic system where resource owners and consumers are within family members. They consume end products and services that are produced by industry-related enterprises. And industries can be described as larger-scale economic systems that produce a certain type of product. They form interbranch complexes (the most significant).
Additional items
It should be noted that any economic system of society (see above “Structure of economic systems”) may include other components:
- Systems of a socio-economic nature (with a political, demographic or natural bias).
- Systems of technical and economic orientation (industry, intersectoral, regional).
All presented complexes serve each other. They are united by one structure of public organization and management, and interact through product exchange. The structure of economic systems serves as the internal organization of social production. That is why its manifestation is carried out through people and their activities in relation to the production of goods and the provision of services.
Functional
The functional structure of the economic system provides for coordination in terms of the interaction of man, the environment and, of course, the product that is created through the application of the efforts of the first two. The structure of the type of structure under consideration distinguishes the following subsystems:
- Society and the life of its individual members.
- The sphere of production, society and nature as a source of resources.
- Infrastructure in relation to ecology, society and the economy.
- Resource, spiritual and recreational environment.
Naturally, the functional structure considers the population and its vital activity as its central link, which ensures the functioning of each macroelement in the structure of the socio-economic system at different levels.
Industry
The sectoral structure of the economic system determines the relations in the economy, which are of industrial-technological nature. In the process of division of labor, they tend to separate themselves into vertical or horizontal structures. In the first case, branches of a single redistribution of the initial or related raw materials are created in the technological plan. And in the second (in accordance with the regions) - the industry, the link between which is the unity of territorial interests.
Sectoral structure is a set of elements of the economic complex, which is characterized by specific proportions and relationships. It is important to note that two key sectors of production are distinguished in the economy: goods of a productive nature (construction, forestry, agriculture, etc.) and services of a productive nature (trade, communications, transport, and others). The characteristics of the sectoral structure are determined, first of all, by the paramount analysis of GDP, the number of people employed in the economy, as well as the concentration of fixed assets by industry.
Regional and monetary
The regional structure is divided into a number of separate components:
- The structure formed by economic zoning based on the division of labor in a territorial manner.
- A structure that is designed in accordance with national-state principles.
- The structure that displays the territorial-administrative structure of each of the subjects of the federation.
- Areas where the implementation of aggregate regional programs is carried out.
The monetary structure of the economic system reflects the monetary aspect of the phenomena and processes taking place in the economy. So, all components of a material nature are expressed in monetary units.
