Economic Systems And their definition And Types

This article is about the systems and the types of economy and it talks about a lot of aspects of it, we got information for as much as we could which is very beneficial.

The Concept of the Economic System Generally:

It is a group of economic laws and customs and traditions which are being used to the rare and limited economic resources rationally for satisfying the multi-needs of the individual in achieving economic welfare

Economic system job (regardless the system type)

The economic system job represents the economic system in work in order to solve the economic problem of scarcity of the economic resources and the multiplicity of human needs, so the economic system (in terms of the concept or the job) is related to the economic problem.

Types of Economic Systems:

  1. Free capitalist economic system
  2. Central Socialist economic system
  3. Mixed economic system (that combines the two previous systems)

Properties of Capitalist Economic System:

  1. Private property (individually) for means of production
  2. The dependence on the market mechanism (the forces of supply and demand) in organizing the economic processes.
  3. The sovereignty of competition between the producers, that turns out to be a monopolistic competition in a developed phase.
  4.  The capitalist system aims between the producers through the productive process in order to make the possible maximum profit
  5.  The role of the country in the production process is limited, this shortens specific fields as security and defense and the dependence of the economic principle of freedom.
  6. The rise of the unemployment rate
  7. The big disparity in the levels of income between the individuals in the community.
  8. The emergence of so-called globalization and phenomenon and privatization policy
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Properties of Socialist Economic System (Central planning):

  • The social property for the means of production
  •  There should be devices of responsibility for organizing the economic processes (central planning)
  • There is no competition between the producers, and it does not aim to making a profit
  • The existence of essential that is defined by the country
  •  There is no big disparity in the levels of income between the individuals
  • The existence of a big statistical database about all the aspects of the economy
  • The rate of the unemployment is less than the capitalist system.

Properties of the Mixed Economic System:

  • The existence of the public sector side by side with the private sector in the economic activity
  • The existence of the governmental orientation and planning and market mechanisms together.
  • The activities of the private sector are being watched by the country
  •  Protection the sovereignty of the consumer.
  • Securing the country for the interests of labor and workers against the unemployment
  • The limit of the monopoly control.

You can also divide the economic system based on the property of the wealth, for the individuals or the country.


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