|
An economic system, or economic order,[1] is a system of production,
resource allocation and distribution of goods and services within a society or
a given geographic area. It includes the combination of the various
institutions, agencies, entities, decision-making processes and patterns of
consumption that comprise the economic structure of a given community. An
economic system is a type of social system. The mode of production is a related
concept.[2] All economic systems must confront and solve the three fundamental
economic problems: What kinds and quantities of goods shall be produced. How
goods shall be produced. How the output will be distributed When to produce
.[3] The study of economic systems includes how these various agencies and
institutions are linked to one another, how information flows between them, and
the social relations within the system (including property rights and the
structure of management). The analysis of economic systems traditionally
focused on the dichotomies and comparisons between market economies and planned
economies and on the distinctions between capitalism and socialism.[4]
Subsequently, the categorization of economic systems expanded to include other
topics and models that do not conform to the traditional dichotomy. Today the
dominant form of economic organization at the world level is based on
market-oriented mixed economies.[5] An economic system can be considered a part
of the social system and hierarchically equal to the law system, political
system, cultural and so on. 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.
List of economic systems"
Capitalism Communism Socialism Feudalism Distributism Statism Fascist
socialization Hydraulic despotism Inclusive democracy Market economy
Mercantilism Mutualism Network economy Non-property system Palace economy
Participatory economy Potlatch Progressive utilization theory (PROUTist
economy) Proprietism Social Credit Workers' self-management Overview Economic
systems is the category in the Journal of Economic Literature classification
codes that includes the study of such systems. One field that cuts across them
is comparative economic systems, which include the following subcategories of
different systems: Planning, coordination and reform. Productive enterprises;
factor and product markets; prices; population. National income, product and
expenditure; money; inflation. International trade, finance, investment and
aid. Consumer economics; welfare and poverty. Performance and prospects.
Natural resources; energy; environment; regional studies. Political economy;
legal institutions; property rights.[6]
|
|
| |
Main types Capitalism Capitalism generally features the private
ownership of the means of production (capital) and a market economy for
coordination. Corporate capitalism refers to a capitalist marketplace
characterized by the dominance of hierarchical, bureaucratic corporations.
Mercantilism was the dominant model in Western Europe from the 16th to 18th
century. This encouraged imperialism and colonialism until economic and
political changes resulted in global decolonization. Modern capitalism has
favored free trade to take advantage of increased efficiency due to national
comparative advantage and economies of scale in a larger, more universal
market. Some critics[who?] have applied the term neo-colonialism to the power
imbalance between multi-national corporations operating in a free market vs.
seemingly impoverished people in developing countries. Mixed economy There is
no precise definition of a "mixed economy". Theoretically, it may
refer to an economic system that combines one of three characteristics: public
and private ownership of industry, market-based allocation with economic
planning, or free markets with state interventionism. In practice, "mixed
economy" generally refers to market economies with substantial state
interventionism and/or sizable public sector alongside a dominant private
sector. Actually, mixed economies gravitate more heavily to one end of the
spectrum. Notable economic models and theories that have been described as a
"mixed economy" include the following: Georgism – socialized
rents on land Mixed economy American School Dirigisme Indicative planning, also
known as a planned market economy Japanese system Nordic model Progressive
utilization theory Social corporatism Social market economy, also known as
Soziale Marktwirtschaft Socialist market economy State capitalism Socialist
economy Socialist economic systems (all of which feature social ownership of
the means of production) can be subdivided by their coordinating mechanism
(planning and markets) into planned socialist and market socialist systems.
Additionally, socialism can be divided based on their property structures
between those that are based on public ownership, worker or consumer
cooperatives and common ownership (i.e. non-ownership). Communism is a
hypothetical stage of socialist development articulated by Karl Marx as
"second stage socialism" in Critique of the Gotha Program, whereby
the economic output is distributed based on need and not simply on the basis of
labor contribution. The original conception of socialism involved the
substitution of money as a unit of calculation and monetary prices as a whole
with calculation in kind (or a valuation based on natural units), with business
and financial decisions replaced by engineering and technical criteria for
managing the economy. Fundamentally, this meant that socialism would operate
under different economic dynamics than those of capitalism and the price
system.[7] Later models of socialism developed by neoclassical economists (most
notably Oskar Lange and Abba Lerner) were based on the use of notional prices
derived from a trial-and-error approach to achieve market clearing prices on
the part of a planning agency. These models of socialism were called
"market socialism" because they included a role for markets, money,
and prices. The primary emphasis of socialist planned economies is to
coordinate production to produce economic output to directly satisfy economic
demand as opposed to the indirect mechanism of the profit system where
satisfying needs is subordinate to the pursuit of profit; and to advance the
productive forces of the economy in a more efficient manner while being immune
to the perceived systemic inefficiencies (cyclical processes) and crisis of
overproduction so that production would be subject to the needs of society as
opposed to being ordered around capital accumulation.[8][9] In a pure socialist
planned economy that involves different processes of resource allocation,
production and means of quantifying value, the use of money would be replaced
with a different measure of value and accounting tool that would embody more
accurate information about an object or resource. In practice, the economic
system of the former Soviet Union and Eastern Bloc operated as a command
economy, featuring a combination of state-owned enterprises and central
planning using the material balances method. The extent to which these economic
systems achieved socialism or represented a viable alternative to capitalism is
subject to debate.[10] In orthodox Marxism, the mode of production is
tantamount to the subject of this article, determining with a superstructure of
relations the entirety of a given culture or stage of human development.
Components There are multiple components to an economic system. Decision-making
structures of an economy determine the use of economic inputs (the factors of
production), distribution of output, the level of centralization in
decision-making and who makes these decisions. Decisions might be carried out
by industrial councils, by a government agency, or by private owners. An
economic system is a system of production, resource allocation, exchange and
distribution of goods and services in a society or a given geographic area. In
one view, every economic system represents an attempt to solve three
fundamental and interdependent problems: What goods and services shall be
produced and in what quantities? How shall goods and services be produced? That
is, by whom and with what resources and technologies? For whom shall goods and
services be produced? That is, who is to enjoy the benefits of the goods and
services and how is the total product to be distributed among individuals and
groups in the society?[11] Every economy is thus a system that allocates
resources for exchange, production, distribution and consumption. The system is
stabilized through a combination of threat and trust, which are the outcome of
institutional arrangements.[12] An economic system possesses the following
institutions: Methods of control over the factors or means of production : this
may include ownership of, or property rights to, the means of production and
therefore may give rise to claims to the proceeds from production. The means of
production may be owned privately, by the state, by those who use them, or be
held in common. A decision-making system: this determines who is eligible to
make decisions over economic activities. Economic agents with decision-making
powers can enter into binding contracts with one another. A coordination
mechanism: this determines how information is obtained and used in
decision-making. The two dominant forms of coordination are planning and
markets; planning can be either decentralized or centralized, and the two
coordination mechanisms are not mutually exclusive and often co-exist.[13] An
incentive system: this induces and motivates economic agents to engage in
productive activities. It can be based on either material reward (compensation
or self-interest) or moral suasion (for instance, social prestige or through a
democratic decision-making process that binds those involved). The incentive
system may encourage specialization and the division of labor. Organizational
form: there are two basic forms of organization: actors and regulators.
Economic actors include households, work gangs and production teams, firms,
joint-ventures and cartels. Economically regulative organizations are
represented by the state and market authorities; the latter may be private or
public entities. A distribution system: this allocates the proceeds from
productive activity, which is distributed as income among the economic
organizations, individuals and groups within society, such as property owners,
workers and non-workers, or the state (from taxes). A public choice mechanism
for law-making, establishing rules, norms and standards and levying taxes.
Usually, this is the responsibility of the state, but other means of collective
decision-making are possible, such as chambers of commerce or workers’
councils.[14]
Typology:
There are several basic questions that must be answered in order for an economy
to run 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 and
different economic systems answer them differently. Many different objectives
may be seen as desirable for an economy, like efficiency, growth, liberty and
equality.[15]
Economic systems are commonly segmented by their property rights regime for the
means of production and by their dominant resource allocation mechanism.
Economies that combine private ownership with market allocation are called
"market capitalism" and economies that combine private ownership with
economic planning are labelled "command capitalism" or dirigisme.
Likewise, systems that mix public or cooperative ownership of the means of
production with economic planning are called "socialist planned
economies" and systems that combine public or cooperative ownership with
markets are called "market socialism".[16] Some perspectives build
upon this basic nomenclature to take other variables into account, such as
class processes within an economy. This leads some economists to categorize,
for example, the Soviet Union's economy as state capitalism based on the
analysis that the working class was exploited by the party leadership. Instead
of looking at nominal ownership, this perspective takes into account the
organizational form within economic enterprises.[17]
In a capitalist economic system, production is carried out for private profit
and decisions regarding investment and allocation of factor inputs are
determined by business owners in factor markets. The means of production are
primarily owned by private enterprises and decisions regarding production and
investment are determined by private owners in capital markets. Capitalist
systems range from laissez-faire, with minimal government regulation and state
enterprise, to regulated and social market systems, with the aims of
ameliorating market failures (see economic intervention) or supplementing the
private marketplace with social policies to promote equal opportunities (see
welfare state), respectively.
In socialist economic systems (socialism), production for use is carried out;
decisions regarding the use of the means of production are adjusted to satisfy
economic demand; and investment is determined through economic planning
procedures. There is a wide range of proposed planning procedures and ownership
structures for socialist systems, with the common feature among them being the
social ownership of the means of production. This might take the form of public
ownership by all of the society, or ownership cooperatively by their employees.
A socialist economic system that features social ownership, but that it is
based on the process of capital accumulation and utilization of capital markets
for the allocation of capital goods between socially owned enterprises falls
under the subcategory of market socialism.
By resource allocation mechanism:
The basic and general "modern" economic systems segmented by the
criterium of resource allocation mechanism are:
Market economy ("hands off" systems, such as laissez-faire
capitalism)
Mixed economy (a hybrid that blends some aspects of both market and planned
economies)
Planned economy ("hands on" systems, such as state socialism, also
known as "command economy" when referring to the Soviet model
) Other related types:
Traditional economy (a generic term for older economic systems, opposed to
modern economic systems)
Non-monetary economy (without the use of money, opposed to monetary economy )
Subsistence economy (without surplus, exchange or market trade )
Gift economy (where an exchange is made without any explicit agreement for
immediate or future rewards and profits )
Barter economy (where goods and services are directly exchanged for other goods
or services)
Participatory economics (a decentralized economic planning system where the
production and distribution of goods is guided by public participation )
Post-scarcity economy (a hypothetical form where resources aren't scarce)
By ownership of the means of production:
Capitalism (private ownership of the means of production )
Mixed economy
Socialist economy (social ownership of the means of production)
By political ideologies:
Various strains of anarchism and libertarianism advocate different economic
systems, all of which have very small or no government involvement.
These include:
Left-wing:
Anarcho-communism
Anarcho-syndicalism
Anarcho-socialism
Right-wing:
Anarcho-capitalism
Libertarianism
Libertarian communism
Libertarian socialism
Syndicalism
By other criteria:
Corporatism refers to economic tripartite involving negotiations between
business, labor and state interest groups to establish economic policy, or more
generally to assigning people to political groups based on their occupational
affiliation. Certain subsets of an economy, or the particular goods, services,
techniques of production, or moral rules can also be described as an
"economy". For example, some terms emphasize specific sectors or
externalizes:
Circular economy:
Collectivist economy
Digital economy
Green economy
Information economy
Internet economy
Knowledge economy
Natural economy
Virtual economy
Others emphasize a particular religion::
Arthashastra –
Hindu economics
Buddhist economics
Distributism – Catholic ideal of a "third way" economy,
featuring more distributed ownership in a mixed economy Islamic economics
The type of labour power::
Slave – and serf -based economy
Wage labour -based economy
Or the means of production:
Agrarian economy
Industrial economy
Information economy
Evolutionary economics
See also::
Evolutionary economics Karl Marx's theory of economic development was based on
the premise of evolving economic systems. Specifically, in his view over the
course of history superior economic systems would replace inferior ones.
Inferior systems were beset by internal contradictions and inefficiencies that
would make it impossible for them to survive long-term. In Marx's scheme,
feudalism was replaced by capitalism, which would eventually be superseded by
socialism.[18] Joseph Schumpeter had an evolutionary conception of economic
development, but unlike Marx he de-emphasized the role of class struggle in
contributing to qualitative change in the economic mode of production. In
subsequent world history, communist states run according to
Marxist–Leninist ideologies have either collapsed or gradually reformed
their centrally planned economies toward market-based economies, for example
with perestroika and the dissolution of the Soviet Union, Chinese economic
reform and Ð?i M?i in Vietnam. Mainstream evolutionary economics continues
to study economic change in modern times. There has also been renewed interest
in understanding economic systems as evolutionary systems in the emerging field
of complexity economics. See also
|
|
