Major Economic Systems

Economic Systems rarely exist in a pure form. Based on major features, the classification of major economic systems is presented here. 

Pure Capitalism 

It is the form of economy where there exists private ownership of productive capacity, very limited government role, economic agents are motivated by self-interest, and markets relied upon efficient allocation. Poverty, inequity, and several social ills are associated with the lack of protection afforded by the government.

 

Command Economic System

It is a form of economic system in which government makes the decisions with the force of law. It is often associated with dictatorships.

 

Traditional Economic System

It is another form of an economic system that is based on social mores or ethics or other non-market, nonlegislative bases. It may include traditions like Christmas gift-giving and so on.  

Socialism 

It is another popular economic system that focuses on maximizing individual welfare based on perceived needs, not contributions. It is generally concerned more with equity than efficiency.

 

Communism 

It is such a form of economic system in which everyone shares equally in the output of society (according to their needs), generally, no private holdings of productive resources are there. The former Soviet Union espoused communism but also was mostly command. 

Mixed Economic System 

It is a form of an economic system that contains elements of more than one system. It may include the good features of all other forms like capitalism, command, socialism with some features of communism and traditional economic systems. 

All of the high-income, industrialized economies are mixed economies.