It is believed that every economy in the world is different to one and another. As a result, economists have been able to distinguish between four basic economies.
As already said, no economy is similar to the other but it goes without saying that they might share some identical traits and attributes. Economists have laid down some analysis upon how different these economies are to each other and what similarities do they share. After researching for days, they came to conclusion and outlaid four basic types of economies. Mixed, Command, Traditional and Market Economies.
A nation can’t run without an economy. An economic system’s job is to organise and distribute resources, goods and services throughout a nation. The quintessential factors of production; Capital, Land, Labour, Enterprise, make that possible.
Mixed Economy is an amalgamation of the two already existing economies, Command and Market. It is also the most frequently adopted economy structure in the world. In a mixed economy, most industries are privatised and the other large ones are handled by the government. It also contains the best qualities of two economies and that’s the reason why its normal in almost every country.
In a Command Economy, an authoritative figure is appointed to take care of the economy. That authoritative figure is Government, most of the times. Command economy also goes by the name of Planned Economy. Production decisions are also carried out by the government in this economy. Also, if a country is rich in resources and factors of production, it will most likely shift towards the command economy. The government takes control over the resources to make sure private owners don’t consume them and exploit the people.
It is very much the name suggests. A Traditional Economy is built on the foundation of traditional methods. A traditional economic system mainly relies on history, customs and beliefs. Tradition is the main aspect that guides as to how to produce, where to produce and for whom to produce. Societies that adopt to this sort of economy also mainly depend on fishing, agriculture, livestock herding or hunting. Surprisingly, barter system is used in traditional economies. There’s no sight of any sort of money or cash.
In a Market Economic system, the government plays a minor role. The government doesn’t have potent control over resources as well. They refrain from collapsing with private sectors – who are playing the vital role in keeping the economy flowing. Although there is no such thing as a perfect market system. Almost every economic system is accountable to a higher degree (Government) and in Market System, there’s no such thing.