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Economic system
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Economic systems
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An economic system is a particular set of social institutions which deals with the production, distribution and consumption of goods and services in a particular society. The economic system is composed of people and institutions, including their relationships to productive resources, such as through the convention of property. In a given economy, it is the systemic means by which problems of economics are addressed, such as the economic problem of scarcity through allocation of finite productive resources. Examples of contemporary economic systems include capitalist systems, socialist systems, and mixed economies. Economic systems is the economics category that includes the study of respective systems.
Contents
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1 Overview
2 Division of economic systems
2.1 “Hands-on” systems
2.2 “Hands-off” systems
2.3 “Compromise” systems
3 List of economic systems by Name
4 See also
5 References
6 Further reading
7 External links
[edit] Overview
-An economic system is a set of methods and standards brought by which a society decides and organizes the ownership and allocation of economic resources. At one extreme, production is carried in a private-enterprise system such that all resources are privately owned. It was described by Adam Smith as frequently promoting a social interest, although only a private interest was intended. At the other extreme, following Karl Marx and Vladimir Lenin is what is commonly called a pure-communist system, such that all resources are publicly owned with an intent of minimizing inequalities of wealth among other social objectives.[1]
Alternatively, economic system refers to the organizational arrangements and process through which a society makes its production and consumption decisions. In creating and modifying its economic system, each society chooses among alternative objectives and alternative decision modes. Many objectives may be seen as desirable, like efficiency, growth, liberty, and equality.[2]
Part of a social system
An economic system can be considered a part of the social system and hierarchically equal to the law system, political system, cultural system, etc. There is often a strong correlation between certain ideologies, political systems and certain economic systems (for example, consider the meanings of the term “communism”). Many economic systems overlap each other in various areas (for example, the term “mixed economy” can be argued to include elements from various systems). There are also various mutually exclusive hierarchical categorizations.
Basic types Economic systems
The basic and general economic systems are:
Market economy (the basis for several “hands off” systems, such as capitalism).
Mixed economy (a compromise economic system that incorporates some aspects of the market approach as well as some aspects of the planned approach).
Planned economy (the basis for several “hands on” systems, such as socialism).
Traditional economy (a generic term for the oldest and traditional economic systems)
Participatory economics (a recent proposal for a new economic system)
There are several basic and unfinished questions that must be answered in order to resolve the problems of economics satisfactorily. The scarcity problem, for example, requires answers to basic questions, such as: what to produce, how to produce it, and who gets what is produced. An economic system is a way of answering these basic questions. Different economic systems answer them differently.
[edit] Division of economic systems
Typically, “hands-on” economic systems involve a greater role for society and/or the government to determine what gets produced, how it gets produced, and who gets the produced goods and services, with the stated aim of ensuring social justice and a