Mankind has long been known for different types and models of economic systems. They gradually formed in the process of long historical development.
The 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;
- methods of managing economic activity.
Based on these principles, the following types of economic systems are distinguished : command-administrative, market, traditional, and mixed. Each of them occupies a specific place in history. But not all of the above types of economic systems existed simultaneously.
So, in the past, the traditional system dominated. Some of its features today are found in underdeveloped countries. It is characterized by a multi-level economy, subsistence farming, the widespread use of manual labor, the absence of new technology, the simplest forms of labor and production organization , underdeveloped infrastructure, and poverty among the population. Traditions and rituals that have been formed over several centuries, cultural and religious values, the division of the population into castes and social layers - all this significantly affects the socio-economic processes. Those countries in which the traditional economy still remains are forced to endure the dominance of foreign capital and excessive state intervention 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 manufacturers and, accordingly, buyers of their goods. All economic entities have personal freedom and freedom of choice of entrepreneurial activity, as well as freedom of access to resources, to information, to the achievements of science and technology. Personal interests are the main motivator for the behavior of each economic entity. As a result of independently made decisions, he wants to receive the greatest income. But an economic entity can realize its private interest only when, apart from its interests, it will also represent the interests of society. The distribution of resources, revenues, pricing and other macro- and microeconomic processes govern the market mechanism, which is based on free competition. The remaining 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 during the period of the market system intervenes in economic processes very moderately and carefully. Its role is only to protect the property of a private trader and to establish such a legal framework that would be conducive to the functioning of the market. Market entities completely independently make all economic decisions, often at the risk of many things.
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, a command-administrative system existed. This is a non-market economy. The dominance of state power, monopolization and nationalization of the national economy, directive, strict planning of production, resource allocation, lack of competition and free pricing, as well as real commodity-money relations are vivid features of the command and administrative system.
The countries of the modern world can function adequately under a mixed economic system. Its main signs:
- 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.
The mixed economic system combines different types of economic systems at their best.