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An economic system is a particular set of social institutions which deals with the production, distribution and consumption of goods and services in a particular society. The economic system is composed of people and institutions, including their relationships to productive resources, such as through the convention of property. It addresses the problems of economics, such as the allocation of scarce resources in a given economy. Examples of contemporary economic systems include capitalist systems, socialist systems, and mixed economies. Economic systems is the of economics that includes the study of respective systems.

Overview

-An economic system is a set of methods and standards by which a society decides and organizes the ownership and allocation of economic resources. At one extreme, production is carried in a private-enterprise system such that all resources are privately owned. It was described by Adam Smith as frequently promoting a social interest, although a only a private interest was intended. At the other extreme, following Karl Marx and Vladimir Lenin is what is commonly called a pure-communist system, such that all resources are publicly owned with an intent of minimizing inequalities of wealth among other social objectives.^[1]

Alternatively, 'economic system' refers to the organizational arrangements and process through which a society makes its production and consumption decisions. In creating and modifying its economic system, each society chooses among alternative objectives and alternative decision modes. Many objectives may be seen as desirable, like efficiency, growth, liberty, and equality.^[2]

Part of a social system

An economic system can be considered a part of the social system and hierarchically equal to the law system, political system, cultural system, etc. 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.

Basic types Economic systems

The basic and general economic systems are:

• Market economy (the basis for several "hands off" systems, such as capitalism).
• Mixed economy (a compromise economic system that incorporates some aspects of the market approach as well as some aspects of the planned approach).
• Planned economy (the basis for several "hands on" systems, such as socialism).
• Traditional economy (a generic term for the oldest and traditional economic systems)
• Participatory economics (a recent proposal for a new economic system)

There are several basic and unfinished questions that must be answered in order to resolve the problems of economics 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. Different economic systems answer them differently.

Division of economic systems

Typically, "hands-on" economic systems involve a greater role for society and/or the government to determine what gets produced, how it gets produced, and who gets the produced goods and services, with the stated aim of ensuring social justice and a more equitable distribution of wealth (see welfare state). Meanwhile, "hands-off" economic systems give more power to private individuals (and perhaps corporations) to make those decisions, rather than leaving them up to society as a whole, and often limit government involvement in the economy.

The primary concern of "hands-on" economic systems is usually egalitarianism, while the primary concern of "hands-off" economic systems is usually private property. Libertarians target individual economic freedom as a primary goal of their "hands-off" policies.

The following list divides the main economic systems into "hands-on" and "hands-off," it attempts to structure the systems in a given section by alphabetical order and in a vertical hierarchy where possible.

"Hands-on" systems

• Communism
• Anarcho-communism (a form of libertarian socialism)
• Socialism
• Libertarian socialism
• Market socialism
• State socialism
• Feudalism

"Hands-off" systems

• Capitalism
• Anarcho-capitalism
• Laissez-faire capitalism
• Corporate capitalism
• Mutualism (a form of libertarian socialism)
• Gift economy

"Compromise" systems

• Mixed economy
• American School
• Dirigisme
• Japanese System
• Mercantilism
• Social market economy also known as Soziale Marktwirtschaft
• PROUT also known as Progressive Utilization Theory
• Distributism
• Georgism

List of economic systems by Name

An etymologist's approach to economic systems, this list attempts to sort all possible economic systems in alphabetical order, without any division or hierarchization.

See also

• Economy
• History of economic thought
• Political economy
• Economic ideology

References

Further reading

• Richard Bonney (1995), Economic Systems and State Finance, 680 pp.
• David W. Conklin (1991), Comparative Economic Systems, Cambridge University Press, 427 pp.
• George Sylvester Counts (1970), Bolshevism, Fascism, and Capitalism: An Account of the Three Economic Systems.
• Robert L. Heilbroner and Peter J. Boettke (2007). "Economic Systems". The New Encyclopædia Britannica, v. 17, pp. 908-15.
• Harold Glenn Moulton, Financial Organization and the Economic System, 515 pp.
• Jacques Jacobus Polak (2003), An International Economic System, 179 pp.
• Frederic L. Pryor (1996), ''Economic Evolution and Structure: 384 pp.
• Frederic L. Pryor (2005), Economic Systems of Foraging, Agricultural, and Industrial Societies, 332 pp.

External links

• Social Studies VSC Glossary
• Glossary-Cultural Anthropology
• ECONOMIC SYSTEMS, a refereed journal for the analysis of market and non-market solution, by Elsevier since 2001.
• Economic Systems by WebEc, 2007.
• World Economic Systems

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