Economic Systems

The Different Types Of Economic Systems

As one would know, there are actually innumerable and so many types of economies on the planet, and these economies actually co-exist with one another, and all of them have distinctive identities as well as features. However broadly you classify them, you would indeed be basing them on some common characteristics indeed. Well, in this guide, I will be talking about that, the different types, and here they are:

  • Traditional economy
  • Command economy
  • Market economy
  • Mixed economy

The first kind:

Traditional economy is a kind of economic system which is indeed based on all kinds of agriculture, hunting, fishing and whatnot. These economies are certainly based on all kinds of traditional beliefs and ideologies as well. The services, as well as the goods, are all based on the people and their occupation. Money is not at all used in such economies; instead, the barter system is used. Most of the economists have been known to believe that most economies initially started out as traditional economies.

  • This type of economy is mostly centered around a family or even a tribe.
  • They will all have primitive occupations like fishing and hunting.
  • They are also amazingly self-sustained.
  • They pose as less of a threat to the environment, and there is also less to no wastage.

The second kind:

Command economy is the kind where the government has a good monopoly over all of the markets. It would decide what goods will indeed be produced and also in how much quantities. The government will also determine all of the prices of the goods. All of the laws which are important and in relation to the market will also be set by the government.

  • There are no problems of inequality among the citizens.
  • There are also low levels of unemployment.

Market economy

The third kind:

Market economy is the kind where the government has absolutely no control over the market, and the citizens will decide what goods will indeed be produced in what quantities as well. The pricing will be decided by the laws of supply and demand. There is also no competition among the businesses as there is not much of intervening done by the government.

  • There is greater innovation.
  • Good chances of wealth.

The fourth kind:

Mixed economy is the one where the above 3 economies are combined. It also relies on all of the laws of supply and demand. The government would be controlling the production of the goods and services.

– It has all of the advantages of a market economy because there is a free flow of ideas and it also allows the laws of supply and demand to determine the pricing policies and even the creation of wealth.