Types of Economic Systems
An economic system is a basic set of rules for allocating a society’s resources to satisfy its citizens’ needs. The link between economy and society is crucial; every nation’s economic system is shaped by its political and social values.
Regardless of exactly how each economic system operates, they all compete in the same world economy, and all must deal with the same basic questions: How should limited economic resources be used to satisfy society’s needs? What goods and services should be produced? Who should produce them? How should these goods and services be divided among the population? Such questions are addressed differently by the three main economic systems: capitalism, communism, and socialism. The best way to distinguish between these systems is in terms of the freedom they give individuals to pursue their own economic interest. (Keep in mind that even though capitalism, communism, and socialism are discussed here as economic systems, they can be political and social systems as well.)
The main economic system
Reference
Regardless of exactly how each economic system operates, they all compete in the same world economy, and all must deal with the same basic questions: How should limited economic resources be used to satisfy society’s needs? What goods and services should be produced? Who should produce them? How should these goods and services be divided among the population? Such questions are addressed differently by the three main economic systems: capitalism, communism, and socialism. The best way to distinguish between these systems is in terms of the freedom they give individuals to pursue their own economic interest. (Keep in mind that even though capitalism, communism, and socialism are discussed here as economic systems, they can be political and social systems as well.)
The main economic system
Reference
- Michael H. Mescon, Courtland L. Bovée, John V. Thill, Business Today, 9th edition, Prentice Hall, 1999
