Types of economic systems

Mankind has long known various types and models of economic systems. They gradually formed in the course of a long historical development.

Classification of economic systems is based on certain criteria. The most common signs by which they are grouped:

- a form of ownership that extends to the means of production;

- ways of managing economic activity.

Based on these principles, these types of economic systems are distinguished : command-administrative, market, traditional and mixed. Each of them occupies a certain place in history. But not all of the above types of economic systems existed simultaneously.

So, in the past the traditional system prevailed. Some of its features still exist today in underdeveloped countries. It is characterized by a multi-level economy, natural forms of management, widespread use of manual labor, the lack of new technology, the simplest forms of labor and production organization , poor infrastructure, poverty among the population. Traditions and rituals, formed over several centuries, cultural and religious values, division of the population into castes and social strata - all this significantly affects the socio-economic processes. Those countries in which the traditional economy still remains , are forced to tolerate the dominance of foreign capital and excessive state interference in the redistribution of national income.

Market economic system. It is characterized by the predominance of private ownership of economic resources. It involves the involvement of many producers and, accordingly, buyers of their goods. All economic entities have personal freedom and freedom to choose entrepreneurial activities, as well as freedom of access to resources, to information, to the achievements of science and technology. Personal interests are the main motivator of the behavior of each economic entity. As a result of independently taken decisions, he wants to get the most revenue. But the economic subject will be able to realize his private interest only when he, besides his interests, represents the interests of society. Distribution of resources, income, pricing and other macro- and microeconomic processes regulate a market mechanism based on free competition. The other types of economic systems differ sharply from this lack of the latter. Indeed, in this case, it is competition that is the main engine of economic development.

The state intervenes during the market system in economic processes very moderately and in a balanced manner. Its role is only to protect the private owner's property and to establish such a legal framework that would favor the functioning of the market. Market actors completely independently take all economic decisions, often taking many risks.

Such a market economy with the prevalence of free competition existed until the 30s of the 20th century.

In the socialist countries of Asia and Eastern Europe, in the former Soviet Union, there was a command and administrative system. This is a non-market economy. The dominance of state power, the monopolization and nationalization of the national economy, the directive, rigid planning of production, the allocation of resources, the lack of competition and free education of prices, and the present commodity-money relations are the bright features of the command and administrative system.

The countries of the modern world can adequately function under a mixed economic system. Its main features:

- a variety of forms of ownership;

- the optimal combination of state methods of regulating the economy with a market mechanism;

- a high level of development of productive forces, the availability of market infrastructure of society.

In a mixed economic system, different types of economic systems are combined in their best manifestation.