The types of economic systems that exist can vary from a highly developed one in which private property is the only property in exchange for money, to a highly developed one where no property exchanges take place, and where money is recognized as the only measure of value. One can also question the definition of what are the types of economic systems, for there really are no fixed or clear-cut definitions. Some people believe that the very concept of what are the types of economic systems is not absolute because it would be possible for there to be different types of economic systems as defined by certain individuals while others would disagree. For this reason, it really is best left for you to determine what are the types of economic systems that suit your particular needs.
The classical system is one that is largely based on private property being the only property exchanged for goods or services. This type of economic system tends to produce a relatively stable economic situation, although it can be prone to severe fluctuations due to changes in the value of currencies. The classical system also tends to have little government intervention into the economy and relies heavily on free-market capitalism. In some respects, this type of economy is considered to be the opposite of the centrally planned system because it lacks the planning or central planning measures of the centrally planned systems.
The free-market system, on the other hand, is one in which markets are allowed to function with no interference from any outside sources. In this kind of economic system, prices set directly by consumers and producers are allowed to fluctuate freely. It is rare to find any sort of intervention by any sort of authority or political power. This sort of economy thrives on competition and deals with the problems of supply and demand on its own.
The other two systems, we will discuss are mixed economies and planned economies. A mixed economy is one in which there are elements of both centralized and decentralized planning mechanisms. With a mixed economy, elements of both are present but not in a drastic form. In this respect, the mixed economy is similar to our own laissez faire system of government.
Another type of economy we will discuss is the planner economy. This type of economy attempts to balance the distribution of income and wealth across society. It is not without flaws. For example, the planner economy encourages certain forms of specialization at the expense of other forms of specialization. Also, over time, as specialization occurs and monopolies become common, those who benefit from the monopoly to begin to demand more and so the equilibrium of the economy shifts away from free-market principles and toward a controlled economy.
Hopefully this article has given you some useful insights about what are the types of economic systems. Although free-market economies provide the vast majority of the economic activity in our society, there are various forms of capitalism, socialism, and hybrid models that exist today. So, as you continue to study and research the world of economics, you will no doubt come across many different models and understand how each type of economic system functions in the real world.
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