4 Types of Economic Systems

Hello to introduce the content. This is part of my series about economics and the different systems. Normally I do content direct on Bitcoin and cryptocurrency. In general anything to do with currency relates and really works directly with the economy. In fact currency is what makes the economy in some aspects.

I am doing to tell you four different types of economic systems. The economy is what serves the people to bring about different things.  There are many different economies in the world. Many different characters between all of them as well.  The four types of economic systems are traditional, market, command and a mixed system. All them have unique features with a mixed of different strengths and weaknesses.

Traditional Economic System

This is the oldest system that is known. Many places still follow this system that has many elements.  This seen in more rural, second and third world countries. Where the systems are more of farming, fishing and other forms of agriculture. Trading is done on a barter system and usually no money or currency system is used. The direction of this system is the production of goods to meet the needs of the community.  The idea of trading does not exist and the idea of a market is not thought of.  You can see the change in farming activities and then the over supply of crops get traded. Each member of this economy has a specific and distinct role which makes people of this economy socially satisfied. The problems with this type of system is that the community do not have access to modern technology, medicine and utilities.

Command Economic System

This method is more further ahead then traditional system.  Here you get the direction from the government and controls all aspects.  Government makes decision on what type of products produced and the amounts as well.  The value of the goods is determined by the government bodies. Main reason is the government controls the entire system and properties.  More less the free market does not have much influence in this type of system.  A good example of a command system is China, North Korea and Cuba.   The negative to this type of system is the individual needs of the people are not usually met and ever really addressed as well. There is also a lack of competition with all business and industry since the government owns all these systems. Often results in a slow growth of the economy since everything is centralized by the government. 

Market Economic System

This system is very market driven and almost like a free market one. This one has less control by the government Here the industries and citizens dictate where to distribute the resources, what types of goods and services are needed.  Often there is little restriction on the market by the governments.  This one does create the best separation from government and citizens in this system. In the free market economy, businesses produce profitable goods and services and give a lot of incentives for private enterprises. In the free market economic system, there is a high scope of innovation because businesses invest a lot in research and development. A negative on this is that there can be an unequal balance since monopolies can happy and business can take over the resources vs using for social and other needs.

Mixed Economic System

This system combines market and command system. More less you can call it a dual system too. Here the industries create the economy with the rules made out by the governments.  Most the western societies use this method, where you get a mix of government and business running the whole community. Still this system the government has less control then the Control economic system.  In mixed economies, the government is liable for creating health care and social welfare programs. Besides all this, the government uses taxation policies to lower inequality and distribute income fairly among its population. There is a mix of pro’s and con’s to this, where many people may think the government is taking too much control. Also people can see their community is more profit driven then by ethics.

In general these are the four types of systems we have for economy. The method that each economy is manage determines success of each society Some economies work better then others. Sometimes the wrong type of economy is used in a specific country.

Now let’s hear back from you. What type of economy you think would work best for you or your community you live in? Do you think making your community entirely profit driven a good idea? Do you think the government should have full control of everything economically. Let’s hear back from you on this and your responses.

Thanks for listening.