Economic Systems

       In order for societies to produce and distribute goods efficiently they have to follow certain methods or economic systems. The economic systems of different nations allow different levels of economic fulfillment. 


      However, economic limitations remain among people all over the world. All of these systems work under three key questions:

What goods and services should be produced?

How should these goals and services be produced?

Who consumes these goods and services?

There have been four main economic systems developed to answer these questions. Each system has a different set of goals and reflections towards the values of their societies.

Traditional economy bases its methods on habits and customs therefore leaving little room for progress and development. It is based on family practices, boys take on the roll of their fathers as do girls of their mothers and so the cycle continues and it all remains traditional.

Market economies consist of people making their own economic decisions based on trade and exchange. The decisions each individual makes determine what is produced and how and who will purchase the goods and services. Market economies can also be called free markets, or capitalism. Capitalism consists in a privately owned economy where people make their own economic decisions.

Command economies or centrally planned economies consist of the government making all economic decisions and setting all economic limitations. Command economies tend to exist frequently in communism. Communism consists of a command economy with all economic and political power in the hands of the government.

Mixed economies are the most modern type of economic systems. they consist in market-based economic systems and the government only plays a limited role. This type of system works better in socialism, a political philosophy based on the belief that democratic means should be used to distribute wealth evenly throughout a society.