What is an economic system: definition, structure, types and models
In truth, a full analysis of what an economic system is will take at least several book volumes. This is if you disassemble every detail. But if you focus on the main points, it is quite possible to briefly talk about what an economic system is.
Initially, let's understand the terminology. We will also answer what an economic system is. So, the totality of all economic processes that occur in society, as well as use as the basis of property relations and organizational and legal forms, is this system. Allocate:
- Market economy of free competition (pure capitalism).
- Administrative command system.
- Modern market economy.
Each system has its own national models of organization of the economy.This is due to a unique past, differences in the level of economic development, social and national conditions. In the transition from one system to another, a special state arises. It is called a transition economy. In this case, the institutions of the new system are intensively developing, and also the remnants of the past days more or less quickly disappear or die. In this regard, often still carry out this classification:
- Administrative team.
Another third option is to combine these lists.
What is an economic system? In this matter, the principles of production of goods and services, as well as their distribution, exchange, consumption and redistribution, play the most important role. Each of them offers its own solutions and answers to questions about what and how to produce, as well as how to distribute the product being created. At the same time, a number of fundamental differences are observed. First, you need to remember the forms of ownership. The second most important element is an economic mechanism. It should be noted that within a certain economic system there is a huge variety of development models for certain regions and countries.Considering them all problematic, so we will pay attention to the most popular. But before that, we will study the structure and types of economic systems.
Pure capitalism (free competition market economy)
The peculiarity of this system is private ownership of existing investment resources, many independent buyers and sellers, market regulation of macroeconomic activity. The main prerequisite is the personal freedom of the participants in the economic activity being carried out. This applies not only to entrepreneurs, but also to employees. This system of economic relations at the forefront of the activities of entities that have capital. At the same time, entrepreneurs seek to increase the level of their incomes, as well as to use the available resources as economically as possible, at the same time realizing organizational and labor abilities in the chosen field.
Modern market economy
This is a very flexible system that can be rebuilt and adapted to various external and internal conditions. Developed in the second half of the last century,when the scientific and technological revolution began to take place, the social and production infrastructure developed rapidly and the state could very actively influence the national economy. The economic mechanism, economic relations and organizational forms of work also underwent changes. So, for example, planned methods can be found within individual companies. How not to recall the state regulation of the economy. Regularity allows you to actively adapt to the market. So, it is possible to make forecasts for the development of social needs, to reduce in advance the production of obsolete products, to switch to models with new quality and in general to previously unseen types of product lines. At the same time, the state can influence the volume, as well as the structure of goods and services produced, adapting to social needs. In addition, the socio-economic system provides for significant investments in the development of the human factor: funding for the education system is allocated, medical services are being improved, and social funds are allocated.
Administrative command system
Although for most people it is associated with the Soviet Union, it has been used before. Its feature is public (in fact - state) ownership of almost all economic resources. There is also monopolization and bureaucratization of the economy, which manifests itself in specific forms. The basis of the economic mechanism is centralized economic planning. It is assumed that all enterprises are managed by a single center. This annuls the independence of economic entities. There are also no free market relationships between individual farms. And since management is carried out by administrative and managerial methods, this undermines the human interest in the result of labor. Quite a significant drawback is the often arising situation where established monopolies that support ministries and departments do not care about introducing new equipment and technologies. The distribution is regulated by the central authorities of the tariff system.
This is when there are complex combinations of different elements of the systems, as well as different types. A distinctive feature is the heterogeneity of elements. Occurs in developing and developed countries. It should be noted that the term “mixed economy” does not have an unambiguous interpretation. It is used only to reflect certain processes. Thus, the economic systems of the countries that have chosen this approach combine the private and public sectors of the economy, government regulation and the market, the socialization of life and capitalist trends. Its characteristics may have a certain independence. Mixing is manifested not only in the diversity of structural elements, but also in the form of the forms of their combination. As an example, social partnership, public-private joint-stock enterprises and the like can be cited. This socio-economic system is considered to be a fully-fledged and adequate form of modern society.
It relies on the use of morally and technically obsolete technologies, the wide distribution of manual labor and the multi-structured economy.The latter means that there are different forms of management. So, one can observe a number of natural-community interaction, which is based on the team and the natural distribution of the product being created. Characteristic is a large number of peasants and small farm artisans.
As you can see, the system of economic relations can have a different type. The models on which they are divided are even more:
- American It is based on the promotion of entrepreneurial activity and enrichment of the most active part of the population.
- Western European model. It is characterized by a significant public sector presence in the field of infrastructure and extractive industries. In addition, significant resources are spent on social needs.
- Swedish model. Characterized by a strong social component in the policy, which aims to reduce property inequality by redistributing national income in favor of the poorest segments of the population.
- Japanese model. It is characterized by a certain lag in the standard of living of the population from labor productivity.This reduces the cost of production and increases competitiveness. Poorly adapted to strong crises in world markets.
- Russian model. Typical for CIS countries. It is characterized by low productivity, low wages, minimal social programs, significant stratification of society.
It should be noted that the economic system of the state and the chosen model solve a lot, but not all. A lot depends on the manual. So, for example, if you competently and quickly manage (for example, using the principles of cybercracy), then you can achieve significant performance from the command-administrative system. At the same time, the modern market was not able to ensure high-quality prosperity in a number of countries, for example, African countries that are south of the Sahara. As you can see, a lot depends on the management of economic systems.