Types of economy. Characteristics

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:41

It has always been hard enough to classify scientific phenomena. Its validity and success will largely depend on the correct choice of the sign of separation. To distinguish types of economy in the modern scientific approach, different signs are used. Since there are several approaches to generalizing and characterizing economic systems, there will be quite a lot of classifications.

Criteria for types of economic systems

In order for the level of abstraction when considering various types of economic systems and their characteristics to be closer to the real processes taking place in social economic life, it is necessary to consider the signs by which they are classified.

In accordance with the existing form of management, there are types of economy with a natural and commodity type of exchange. If we classify the types of the state economy according to the main form of ownership, there are communal, private-property, cooperative-public andmixed types of management.

According to the method of managing the actions of economic entities, such basic types as traditional, market, planned management are distinguished. This is the most common type of classification. The presented types of economic systems and their characteristics provide the most complete picture of the features of the economy of the last two centuries.

Other classifications of types of economic systems

If we take into account the criterion of the method of distribution of income, we can distinguish the community-equalizing type, with the distribution of income in accordance with the land, with the distribution of income in accordance with the factors of production, with the distribution by the amount of labor contribution.

According to the type of state intervention, free, liberal, administrative-command, economically regulated and mixed types of economy are distinguished. And according to the criterion of the involvement of the economy in world relations, one can distinguish between an open and a closed system.

According to the degree of maturity of the system, they are divided into emerging, developed, mature and degrading types of the state economy.

Traditional system classification

In the modern literature of the West there is the most common classification, which contains only three different types of economic systems. In the works of K. R. McConnell and S. L. Brew, such systems as traditional, market and command types of economy are singled out.

However, in the last two centuries alone, there have been many more types of systems in the worldmanagement. These include a market economy with free competition (pure capitalism), a modern market economy (free capitalism), traditional and administrative-command systems.

The presented models are distinguished by the diversity of economic development within individual countries. Therefore, the types of economic systems and their characteristics should be considered based on these features.

Pure Capitalism

A market economy with free competition developed in the 18th century. and ceased to exist in the first decades of the twentieth century. Many elements of this system have entered the modern market economy.

The hallmarks of pure capitalism are private property from investment resources, the mechanism for regulating activities at the macro level is based on free competition, many buyers and sellers who act independently in each field of activity. The hired worker and the entrepreneur acted as legally equal agents of market relations.

Types of market economy until the twentieth century determined economic development through prices and the market. Such a system turned out to be the most flexible, capable of adapting to the realities of the functioning of economic relations in society.

Modern Capitalism

The current market economy emerged in the early twentieth century. during the period of rapid development of the scientific and technological revolution. During this period, the state began to actively influence the development of the national economy.

Planning is seen as a tool of public administration in regulating the economy. These types of economies made it possible to quickly adapt to changing market needs. On the basis of marketing research, the issue of the volume, structure of products, as well as the forecast of priority areas of scientific and technological progress is being resolved.

Large companies and the state began to allocate more resources for the development of the human factor (education, medicine, social needs). The state in developed countries today directs up to 40% of budget allocations to fight poverty. Employing companies take care of their employees by allocating funding to improve working conditions and social guarantees for their employees.

Traditional farming system

In economically underdeveloped countries, the system of using manual labor and backward technologies has been preserved. In a number of such countries natural-communal forms of distribution of the created product predominate. The main types of economy in economically underdeveloped countries presuppose the existence of a large number of small enterprises and industries. This is a lot of peasant handicraft farms. Foreign capital plays a huge role in the economy of such countries.

Traditions, customs, religious values, caste division and other factors hindering scientific and technological progress occupy an important place in the life of a society that implements a traditional economic organization system.

Stateredistributed through the national income budget. Its role is quite active, since it is the central government that directs funds for social support to the poorest segments of the population.

Administrative command system

This system is also called the centralized economic system. Its dominance spread earlier in the countries of Eastern Europe, in a number of Asian states, as well as in the USSR. This economic system is also called centralized. It is characterized by public ownership, which in reality was state property, of all economic resources, bureaucratization of the economy, administrative planning.

The centralized economic system uses direct control of almost all industries from a single center - power. The state has absolute control over the distribution of products and production. This causes the monopolization of all areas of the national economy. As a result, there was a slowdown in scientific and technological progress.

The presented system had its own specific ideology. They explained the process of planning the volume and structure of production as too complicated to be entrusted directly to manufacturers. The central planning bodies determined the structure of the general needs of the country's population. It is impossible to foresee all changes in needs on such a scale. Therefore, the most minimal of them were satisfied.

Mixed economic system

In modern realities in the world there is nothere is not a single system that has the features of only one type of organization of economic activity of the state. This is a mixed type of economy. It is characterized by the combination of the regulatory role of the country against the background of the financial autonomy of production.

The government in the presented system carries out antimonopoly, tax and public policy. The state supports its own enterprises, as well as medical, educational and cultural institutions. Government policy is aimed at preventing unemployment and crises. This contributes to stability and economic growth.

The downside of the presented system is the lack of universal development models, as well as the development of planned indicators in accordance with national specifics.

Having considered the existing types of economy in the past and present, we can highlight their positive and negative features. This approach will make it possible to draw conclusions about the expediency of each organization of economic activity of the state. By applying the positive features of each system, the state can better manage the economy in the current and planned period.