An economic system, or economic order, is a

system A system is a group of interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by its open system (systems theory), environment, is described by its boundaries, str ...

of production,

resource allocation In economics, resource allocation is the assignment of available resources to various uses. In the context of an entire economy, resources can be allocated by various means, such as markets, or planning. In project management, resource allocatio ...

and distribution of

goods and services Goods are items that are usually (but not always) tangible, such as pens or Apple, apples. Services are activities provided by other people, such as teachers or barbers. Taken together, it is the Production (economics), production, distributio ...

within an

economy An economy is an area of the Production (economics), production, Distribution (economics), distribution and trade, as well as Consumption (economics), consumption of Goods (economics), goods and Service (economics), services. In general, it is ...

. It includes the combination of the various

institution An institution is a humanly devised structure of rules and norms that shape and constrain social behavior. All definitions of institutions generally entail that there is a level of persistence and continuity. Laws, rules, social conventions and ...

s, agencies, entities, decision-making processes, and patterns of consumption that comprise the economic structure of a given community. An economic system is a type of

social system In sociology, a social system is the patterned network of relationships constituting a coherent whole that exist between individuals, groups, and institutions. It is the formal Social structure, structure of role and status that can form in a smal ...

. The

mode of production In the Marxist theory of historical materialism, a mode of production (German: ''Produktionsweise'', "the way of producing") is a specific combination of the: * Productive forces: these include human labour power and means of production (tools, ...

is a related concept. All economic systems must confront and solve the four fundamental economic problems: * What kinds and quantities of goods shall be produced: This fundamental economic problem is anchored on the theory of pricing. The theory of pricing, in this context, has to do with the economic decision-making between the production of capital goods and consumer goods in the economy in the face of scarce resources. In this regard, the critical evaluation of the needs of the society based on population distribution in terms of age, sex, occupation, and geography is very pertinent. * How goods shall be produced: The fundamental problem of how goods shall be produced is largely hinged on the least-cost method of production to be adopted as gainfully peculiar to the economically decided goods and services to be produced. On a broad note, the possible production method includes labor-intensive and capital-intensive methods. * How the output will be distributed: Production is said to be completed when the goods get to the final consumers. This fundamental problem clogs in the wheel of the chain of economic resources distributions can reduce to the barest minimum and optimize consumers' satisfaction. * When to produce: Consumer satisfaction is partly a function of seasonal analysis as the forces of demand and supply have a lot to do with time. This fundamental economic problem requires an intensive study of time dynamics and seasonal variation vis-a-vis the satisfaction of consumers' needs. It is noteworthy to state that solutions to these fundamental problems can be determined by the type of economic system. The study of economic systems includes how these various agencies and institutions are linked to one another, how information flows between them, and the social relations within the system (including

property rights The right to property, or the right to own property (cf. ownership), is often classified as a human right for natural persons regarding their Possession (law), possessions. A general recognition of a right to private property is found more rarely ...

and the structure of management). The analysis of economic systems traditionally focused on the dichotomies and comparisons between

market economies A market economy is an economic system in which the decisions regarding investment, production, and distribution to the consumers are guided by the price signals created by the forces of supply and demand. The major characteristic of a mark ...

and

planned economies A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, ...

and on the distinctions between

capitalism Capitalism is an economic system based on the private ownership of the means of production and their use for the purpose of obtaining profit. This socioeconomic system has developed historically through several stages and is defined by ...

and

socialism Socialism is an economic ideology, economic and political philosophy encompassing diverse Economic system, economic and social systems characterised by social ownership of the means of production, as opposed to private ownership. It describes ...

. Subsequently, the categorization of economic systems expanded to include other topics and models that do not conform to the traditional dichotomy. Today the dominant form of economic organization at the world level is based on market-oriented

mixed economies A mixed economy is an economic system that includes both elements associated with capitalism, such as private businesses, and with socialism, such as nationalized government services. More specifically, a mixed economy may be variously de ...

. An economic system can be considered a part of the

and hierarchically equal to the

law system The contemporary national legal systems are generally based on one of four major legal traditions: civil law, common law, customary law, religious law or combinations of these. However, the legal system of each country is shaped by its unique hi ...

political system In political science, a political system means the form of Political organisation, political organization that can be observed, recognised or otherwise declared by a society or state (polity), state. It defines the process for making official gov ...

cultural Culture ( ) is a concept that encompasses the social behavior, institutions, and Social norm, norms found in human societies, as well as the knowledge, beliefs, arts, laws, Social norm, customs, capabilities, Attitude (psychology), attitudes ...

and so on. There is often a strong correlation between certain

ideologies An ideology is a set of beliefs or values attributed to a person or group of persons, especially those held for reasons that are not purely about belief in certain knowledge, in which "practical elements are as prominent as theoretical ones". Form ...

s 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.

List of economic systems

Anarchy Anarchy is a form of society without rulers. As a type of stateless society, it is commonly contrasted with states, which are centralized polities that claim a monopoly on violence over a permanent territory. Beyond a lack of government, it can ...

Capitalism Capitalism is an economic system based on the private ownership of the means of production and their use for the purpose of obtaining profit. This socioeconomic system has developed historically through several stages and is defined by ...

Colonialism Colonialism is the control of another territory, natural resources and people by a foreign group. Colonizers control the political and tribal power of the colonised territory. While frequently an Imperialism, imperialist project, colonialism c ...

Communism Communism () is a political sociology, sociopolitical, political philosophy, philosophical, and economic ideology, economic ideology within the history of socialism, socialist movement, whose goal is the creation of a communist society, a ...

Corporatism Corporatism is an ideology and political system of interest representation and policymaking whereby Corporate group (sociology), corporate groups, such as agricultural, labour, military, business, scientific, or guild associations, come toget ...

Dirigisme Dirigisme or dirigism () is an economic doctrine in which the state plays a strong directive (policies) role, contrary to a merely regulatory or non-interventionist role, over a market economy. As an economic doctrine, dirigisme is the opposite ...

Distributism Distributism is an economic theory asserting that the world's productive assets should be widely owned rather than concentrated. Developed in the late 19th and early 20th centuries, distributism was based upon Catholic social teaching princi ...

Feudalism Feudalism, also known as the feudal system, was a combination of legal, economic, military, cultural, and political customs that flourished in Middle Ages, medieval Europe from the 9th to 15th centuries. Broadly defined, it was a way of struc ...

* Hydraulic despotism *

Inclusive democracy Takis Fotopoulos (; born 14 October 1940) is a Greek political philosopher, economist and writer who founded the Inclusive Democracy movement, aiming at a synthesis of classical democracy with libertarian socialism and the radical currents ...

Keynesian economics Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomics, macroeconomic theories and Economic model, models of how aggregate demand (total spending in the economy) strongl ...

Market economy A market economy is an economic system in which the decisions regarding investment, production, and distribution to the consumers are guided by the price signals created by the forces of supply and demand. The major characteristic of a mark ...

Mercantilism Mercantilism is a economic nationalism, nationalist economic policy that is designed to maximize the exports and minimize the imports of an economy. It seeks to maximize the accumulation of resources within the country and use those resources ...

* Mutualism * National syndicalism * Network economy * Non-property system *

Palace economy A palace economy or redistribution economy is a Economic system, system of economic organization in which a substantial share of the wealth flows into the control of a Centralisation, centralized administration, the palace, and out from there to ...

Participatory economy Participatory economics, often abbreviated parecon, is an economic system based on participatory decision making as the primary economic mechanism for allocation in society. In the system, the say in decision-making is proportional to the impa ...

Potlatch A potlatch is a gift-giving feast practiced by Indigenous peoples of the Pacific Northwest Coast of Canada and the United States,Harkin, Michael E., 2001, Potlatch in Anthropology, International Encyclopedia of the Social and Behavioral Scienc ...

* Progressive utilization theory (PROUTist economy) * Proprietism * Resource-based economy *

Social democracy Social democracy is a Social philosophy, social, Economic ideology, economic, and political philosophy within socialism that supports Democracy, political and economic democracy and a gradualist, reformist, and democratic approach toward achi ...

Social Credit Social credit is a distributive philosophy of political economy developed in the 1920s and 1930s by C. H. Douglas. Douglas attributed economic downturns to discrepancies between the cost of goods and the compensation of the workers who made t ...

Socialism Socialism is an economic ideology, economic and political philosophy encompassing diverse Economic system, economic and social systems characterised by social ownership of the means of production, as opposed to private ownership. It describes ...

Statism In political science, statism or etatism (from French, ''état'' 'state') is the doctrine that the political authority of the state is legitimate to some degree. This may include economic and social policy, especially in regard to taxation ...

Workers' self-management Workers' self-management, also referred to as labor management and organizational self-management, is a form of organizational management based on self-directed work processes on the part of an organization's workforce. Self-managed economy, ...

Academic field of study

Economic systems is the category in the ''Journal of Economic Literature'' classification codes that includes the study of such systems. One field that cuts across them is comparative economic systems, which includes the study of the following aspects of different systems: * Planning, coordination and reform. * Productive enterprises; factor and product markets; prices; population. * National income, product and expenditure; money; inflation. * International trade, finance, investment and aid. * Consumer economics; welfare and poverty. * Performance and prospects. * Natural resources; energy; environment; regional studies. * Political economy; legal institutions; property rights.

Main types

Capitalism

generally features the private ownership of the means of production ( capital) and a

market economy A market economy is an economic system in which the decisions regarding investment, production, and distribution to the consumers are guided by the price signals created by the forces of supply and demand. The major characteristic of a mark ...

for coordination.

Corporate capitalism In social science and economics, corporate capitalism is a capitalist marketplace characterized by the dominance of hierarchical and bureaucratic corporations. Overview In the developed world, corporations dominate the marketplace, compri ...

refers to a capitalist marketplace characterized by the dominance of

hierarchical A hierarchy (from Greek: , from , 'president of sacred rites') is an arrangement of items (objects, names, values, categories, etc.) that are represented as being "above", "below", or "at the same level as" one another. Hierarchy is an importan ...

bureaucratic Bureaucracy ( ) is a system of organization where laws or regulatory authority are implemented by civil servants or non-elected officials (most of the time). Historically, a bureaucracy was a government administration managed by departments ...

corporation A corporation or body corporate is an individual or a group of people, such as an association or company, that has been authorized by the State (polity), state to act as a single entity (a legal entity recognized by private and public law as ...

was the dominant model in Western Europe from the 16th to 18th century. This encouraged

imperialism Imperialism is the maintaining and extending of Power (international relations), power over foreign nations, particularly through expansionism, employing both hard power (military and economic power) and soft power (diplomatic power and cultura ...

and

colonialism Colonialism is the control of another territory, natural resources and people by a foreign group. Colonizers control the political and tribal power of the colonised territory. While frequently an Imperialism, imperialist project, colonialism c ...

until economic and political changes resulted in global

decolonization Decolonization is the undoing of colonialism, the latter being the process whereby Imperialism, imperial nations establish and dominate foreign territories, often overseas. The meanings and applications of the term are disputed. Some scholar ...

. Modern capitalism has favored

free trade Free trade is a trade policy that does not restrict imports or exports. In government, free trade is predominantly advocated by political parties that hold Economic liberalism, economically liberal positions, while economic nationalist politica ...

to take advantage of increased efficiency due to national

comparative advantage Comparative advantage in an economic model is the advantage over others in producing a particular Goods (economics), good. A good can be produced at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior t ...

and

economies of scale In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of Productivity, output produced per unit of cost (production cost). A decrease in ...

in a larger, more universal market. Some critics have applied the term

neo-colonialism Neocolonialism is the control by a state (usually, a former colonial power) over another nominally independent state (usually, a former colony) through indirect means. The term ''neocolonialism'' was first used after World War II to refer to ...

to the power imbalance between multi-national corporations operating in a

free market In economics, a free market is an economic market (economics), system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of ...

vs. seemingly impoverished people in

developing countries A developing country is a sovereign state with a less-developed Secondary sector of the economy, industrial base and a lower Human Development Index (HDI) relative to developed countries. However, this definition is not universally agreed upon. ...

Mixed economy

There is no precise definition of a "mixed economy". Theoretically, it may refer to an economic system that combines one of three characteristics: public and private ownership of industry, market-based allocation with economic planning, or free markets with state interventionism. In practice, "mixed economy" generally refers to market economies with substantial state interventionism and/or sizable

public sector The public sector, also called the state sector, is the part of the economy composed of both public services and public enterprises. Public sectors include the public goods and governmental services such as the military, law enforcement, pu ...

alongside a dominant

private sector The private sector is the part of the economy which is owned by private groups, usually as a means of establishment for profit or non profit, rather than being owned by the government. Employment The private sector employs most of the workfo ...

. Actually, mixed economies gravitate more heavily to one end of the spectrum. Notable economic models and theories that have been described as a "mixed economy" include the following: *

Georgism Georgism, in modern times also called Geoism, and known historically as the single tax movement, is an economic ideology holding that people should own the value that they produce themselves, while the economic rent derived from land—includ ...

– socialized rents on land *

Mixed economy A mixed economy is an economic system that includes both elements associated with capitalism, such as private businesses, and with socialism, such as nationalized government services. More specifically, a mixed economy may be variously de ...

(It can be categorized under many titles) ** American School **

Developmental state Developmental state, hard state, State-led developmentalism or in some cases Neo-developmental state, is a term used by international political economy scholars to refer to the phenomenon of state-led macroeconomic planning in East Asia in the la ...

(Government-directed capitalist economy) **

Indicative planning Indicative planning is a form of economic planning implemented by a state in an effort to solve the problem of imperfect information in market economies by coordination of private and public investment through forecasts and output targets. The r ...

, also known as a planned market economy ** Japanese system **

Nordic model The Nordic model comprises the economic and social policies as well as typical cultural practices common in the Nordic countries (Denmark, Finland, Iceland, Norway, and Sweden). This includes a comprehensive welfare state and multi-level colle ...

(Social democrat economics of Nordic countries) ** Progressive utilization theory **

(economies based on tripartite negotiation between labor, capital, and the state) **

Social market economy The social market economy (SOME; ), also called Rhine capitalism, Rhine-Alpine capitalism, the Rhenish model, and social capitalism, is a socioeconomic model combining a free-market capitalist economic system with social policies and enough re ...

, also known as ''Soziale Marktwirtschaft'' (Mixed capitalist) ** New Economic Policy (Mixed socialist) **

State capitalism State capitalism is an economic system in which the state undertakes business and commercial economic activity and where the means of production are nationalized as state-owned enterprises (including the processes of capital accumulation, ...

(Government-dominated capitalist economy) **

Socialist Market Economy The socialist market economy (SME) is the economic system and model of economic development employed in the China, People's Republic of China. The system is a market economy with the predominance of public ownership and State-owned enterpr ...

(Mixed socialist)

Socialist economy

Socialist economic systems (all of which feature

social ownership Social ownership is a type of property where an asset is recognized to be in the possession of society as a whole rather than individual members or groups within it. Social ownership of the means of production is the defining characteristic of ...

of the

means of production In political philosophy, the means of production refers to the generally necessary assets and resources that enable a society to engage in production. While the exact resources encompassed in the term may vary, it is widely agreed to include the ...

) can be subdivided by their coordinating mechanism (planning and markets) into planned socialist and

market socialist Market socialism is a type of economic system involving social ownership of the means of production within the framework of a market economy. Various models for such a system exist, usually involving cooperative enterprises and sometimes a mix ...

systems. Additionally,

can be divided based on their property structures between those that are based on

public ownership State ownership, also called public ownership or government ownership, is the ownership of an industry, asset, property, or enterprise by the national government of a country or state, or a public body representing a community, as opposed t ...

, worker or consumer

cooperative A cooperative (also known as co-operative, coöperative, co-op, or coop) is "an autonomy, autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned a ...

s and

common ownership Common ownership refers to holding the assets of an organization, enterprise, or community indivisibly rather than in the names of the individual members or groups of members as common property. Forms of common ownership exist in every economi ...

(i.e. non-ownership).

is a hypothetical stage of socialist development articulated by Karl Marx as "second stage socialism" in '' Critique of the Gotha Program'', whereby the economic output is distributed based on need and not simply on the basis of labor contribution. The original conception of socialism involved the substitution of money as a unit of calculation and monetary prices as a whole with

calculation in kind Calculation in kind or calculation in-natura is a way of valuating resources and a system of accounting that uses disaggregated physical magnitudes as opposed to a common unit of calculation. As the basis for a socialist economy, it was proposed ...

(or a valuation based on natural units), with business and financial decisions replaced by engineering and technical criteria for managing the economy. Fundamentally, this meant that socialism would operate under different economic dynamics than those of capitalism and the price system. Later models of socialism developed by neoclassical economists (most notably Oskar Lange and Abba Lerner) were based on the use of notional prices derived from a trial-and-error approach to achieve market clearing prices on the part of a planning agency. These models of socialism were called "market socialism" because they included a role for markets, money, and prices. The primary emphasis of socialist planned economies is to coordinate production to produce economic output to directly satisfy economic demand as opposed to the indirect mechanism of the profit system where satisfying needs is subordinate to the pursuit of profit; and to advance the

productive forces Productive forces, productive powers, or forces of production ( German: ''Produktivkräfte'') is a central idea in Marxism and historical materialism. In Karl Marx and Friedrich Engels' own critique of political economy, it refers to the combin ...

of the economy in a more efficient manner while being immune to the perceived systemic inefficiencies ( cyclical processes) and crisis of

overproduction In economics, overproduction, oversupply, excess of supply, or glut refers to excess of supply over demand of products being offered to the market. This leads to lower prices and/or unsold goods along with the possibility of unemployment. T ...

so that production would be subject to the needs of society as opposed to being ordered around

capital accumulation Capital accumulation is the dynamic that motivates the pursuit of profit, involving the investment of money or any financial asset with the goal of increasing the initial monetary value of said asset as a financial return whether in the form ...

. In a pure socialist planned economy that involves different processes of resource allocation, production and means of quantifying value, the use of money would be replaced with a different measure of value and accounting tool that would embody more accurate information about an object or resource. In practice, the economic system of the former

Soviet Union The Union of Soviet Socialist Republics. (USSR), commonly known as the Soviet Union, was a List of former transcontinental countries#Since 1700, transcontinental country that spanned much of Eurasia from 1922 until Dissolution of the Soviet ...

and

Eastern Bloc The Eastern Bloc, also known as the Communist Bloc (Combloc), the Socialist Bloc, the Workers Bloc, and the Soviet Bloc, was an unofficial coalition of communist states of Central and Eastern Europe, Asia, Africa, and Latin America that were a ...

operated as a

command economy A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, ...

, featuring a combination of

state-owned enterprise A state-owned enterprise (SOE) is a business entity created or owned by a national or local government, either through an executive order or legislation. SOEs aim to generate profit for the government, prevent private sector monopolies, provide goo ...

s and

central planning A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, ...

using the material balances method. The extent to which these economic systems achieved socialism or represented a viable alternative to capitalism is subject to debate. In

orthodox Marxism Orthodox Marxism is the body of Marxist thought which emerged after the deaths of Karl Marx and Friedrich Engels in the late 19th century, expressed in its primary form by Karl Kautsky. Kautsky's views of Marxism dominated the European Marxis ...

, the

is tantamount to the subject of this article, determining with a superstructure of relations the entirety of a given culture or stage of human development.

Components

There are multiple components of an economic system. Decision-making structures of an economy determine the use of economic inputs (the

factors of production In economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, goods and services. The utilised amounts of the various inputs determine the quantity of output according to the rela ...

), distribution of output, the level of centralization in decision-making and who makes these decisions. Decisions might be carried out by industrial councils, by a government agency, or by private owners. An economic system is a system of production, resource allocation, exchange and distribution of goods and services in a society or a given geographic area. In one view, every economic system represents an attempt to solve three fundamental and interdependent problems: * What goods and services shall be produced and in what quantities? * How shall goods and services be produced? That is, by whom and with what resources and technologies? * For whom shall goods and services be produced? That is, who is to enjoy the benefits of the goods and services and how is the total product to be distributed among individuals and groups in the society? Every economy is thus a system that allocates resources for exchange, production, distribution and consumption. The system is stabilized through a combination of threat and trust, which are the outcome of institutional arrangements. An economic system possesses the following institutions: * Methods of control over the factors or

: this may include ownership of, or property rights to, the means of production and therefore may give rise to claims to the proceeds from production. The means of production may be owned privately, by the state, by those who use them, or be held in common. * A decision-making system: this determines who is eligible to make decisions over

economic activities Economics () is a behavioral science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyse ...

. Economic agents with decision-making powers can enter into binding contracts with one another. * A coordination mechanism: this determines how information is obtained and used in decision-making. The two dominant forms of coordination are planning and markets; planning can be either decentralized or centralized, and the two coordination mechanisms are not mutually exclusive and often co-exist. * An incentive system: this induces and motivates economic agents to engage in productive activities. It can be based on either material reward (compensation or self-interest) or moral suasion (for instance, social prestige or through a democratic decision-making process that binds those involved). The incentive system may encourage specialization and the

division of labor The division of labour is the separation of the tasks in any economic system or organisation so that participants may specialise (Departmentalization, specialisation). Individuals, organisations, and nations are endowed with or acquire specialis ...

. * Organizational form: there are two basic forms of organization: actors and regulators. Economic actors include households, work gangs and production teams, firms, joint-ventures and

cartel A cartel is a group of independent market participants who collaborate with each other as well as agreeing not to compete with each other in order to improve their profits and dominate the market. A cartel is an organization formed by producers ...

s. Economically regulative organizations are represented by the state and market authorities; the latter may be private or public entities. * A distribution system: this allocates the proceeds from productive activity, which is distributed as income among the economic organizations, individuals and groups within society, such as property owners, workers and non-workers, or the state (from taxes). * A public choice mechanism for law-making, establishing rules, norms and standards and levying taxes. Usually, this is the responsibility of the state, but other means of collective decision-making are possible, such as chambers of commerce or workers' councils.

Typology

There are several basic questions that must be answered in order for an economy to run satisfactorily. The

scarcity problem In economics, scarcity "refers to the basic fact of life that there exists only a finite amount of human and nonhuman resources which the best technical knowledge is capable of using to produce only limited maximum amounts of each economic good. ...

, 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 and different economic systems answer them differently. Many different objectives may be seen as desirable for an economy, like

efficiency Efficiency is the often measurable ability to avoid making mistakes or wasting materials, energy, efforts, money, and time while performing a task. In a more general sense, it is the ability to do things well, successfully, and without waste. ...

, growth,

liberty Liberty is the state of being free within society from oppressive restrictions imposed by authority on one's way of life, behavior, or political views. The concept of liberty can vary depending on perspective and context. In the Constitutional ...

and equality. Economic systems are commonly segmented by their property rights regime for the means of production and by their dominant resource allocation mechanism. Economies that combine private ownership with market allocation are called "market capitalism" and economies that combine private ownership with economic planning are labelled "command capitalism" or

dirigisme Dirigisme or dirigism () is an economic doctrine in which the state plays a strong directive (policies) role, contrary to a merely regulatory or non-interventionist role, over a market economy. As an economic doctrine, dirigisme is the opposite ...

. Likewise, systems that mix public or cooperative ownership of the means of production with economic planning are called "socialist planned economies" and systems that combine public or cooperative ownership with markets are called "market socialism". Some perspectives build upon this basic nomenclature to take other variables into account, such as class processes within an economy. This leads some economists to categorize, for example, the Soviet Union's economy as

state capitalism State capitalism is an economic system in which the state undertakes business and commercial economic activity and where the means of production are nationalized as state-owned enterprises (including the processes of capital accumulation, ...

based on the analysis that the working class was exploited by the party leadership. Instead of looking at nominal ownership, this perspective takes into account the organizational form within economic enterprises. In a capitalist economic system, production is carried out for private profit and decisions regarding investment and allocation of factor inputs are determined by business owners in factor markets. The means of production are primarily owned by private enterprises and decisions regarding production and investment are determined by private owners in

capital market A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers ...

s. Capitalist systems range from ''

laissez-faire ''Laissez-faire'' ( , from , ) is a type of economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies or regulations). As a system of thought, ''laissez-faire'' ...

'', with minimal government regulation and state enterprise, to regulated and social market systems, with the aims of ameliorating market failures (see economic intervention) or supplementing the private marketplace with social policies to promote equal opportunities (see

welfare state A welfare state is a form of government in which the State (polity), state (or a well-established network of social institutions) protects and promotes the economic and social well-being of its citizens, based upon the principles of equal oppor ...

), respectively. In socialist economic systems (

production for use Production for use is a phrase referring to the principle of economic organization and production taken as a defining criterion for a socialist economy. It is held in contrast to production for profit. This criterion is used to distinguish commun ...

is carried out; decisions regarding the use of the means of production are adjusted to satisfy economic demand; and investment is determined through economic planning procedures. There is a wide range of proposed planning procedures and ownership structures for socialist systems, with the common feature among them being the social ownership of the means of production. This might take the form of

by all of the society, or ownership cooperatively by their employees. A socialist economic system that features social ownership, but that it is based on the process of capital accumulation and utilization of capital markets for the allocation of capital goods between socially owned enterprises falls under the subcategory of market socialism.

By resource allocation mechanism

The basic and general "modern" economic systems segmented by the criterium of

mechanism are: *

("hands off" systems, such as ''laissez-faire'' capitalism) *

(a hybrid that blends some aspects of both market and planned economies) *

Planned economy A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, ...

("hands on" systems, such as state socialism, also known as "command economy" when referring to the Soviet model) Other types: * Traditional economy (a generic term for older economic systems, opposed to modern economic systems) **

Non-monetary economy A moneyless economy or nonmonetary economy is a system for allocation of goods and services without payment of money. The simplest example is the Family economics, family household. Other examples include Barter, barter economies, Gift economy, gi ...

(without the use of

money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are: m ...

, opposed to monetary economy) **

Subsistence economy A subsistence economy is an economy directed to basic subsistence (the provision of food, clothing and shelter) rather than to the market. Definition "Subsistence" is understood as supporting oneself and family at a minimum level. Basic subsiste ...

(without surplus, exchange or market trade) **

Gift economy A gift economy or gift culture is a system of exchange where valuables are not sold, but rather given without an explicit agreement for immediate or future rewards. Social norms and customs govern giving a gift in a gift culture; although there ...

(where an exchange is made without any explicit agreement for immediate or future rewards and profits) ** Barter economy (where goods and services are directly exchanged for other goods or services) *

Participatory economics Participatory economics, often abbreviated parecon, is an economic system based on participatory decision making as the primary economic mechanism for allocation in society. In the system, the say in decision-making is proportional to the impa ...

(a decentralized economic planning system where the production and distribution of goods is guided by

public participation Public participation, also known as citizen participation or patient and public involvement, is the inclusion of the public in the activities of any organization or project. Public participation is similar to but more inclusive than stakeholder e ...

) *

Post-scarcity economy Post-scarcity is a theoretical economic situation in which most goods can be produced in great abundance with minimal human labor, so that they become available to all very cheaply or even freely. Post-scarcity does not mean that scarcity ha ...

(a hypothetical form where resources are not scarce)

By ownership of the means of production

(

private ownership Private property is a legal designation for the ownership of property by non-governmental Capacity (law), legal entities. Private property is distinguishable from public property, which is owned by a state entity, and from Collective ownership ...

of the

) *

Socialist economy Socialist economics comprises the economic theories, practices and norms of hypothetical and existing socialist economic systems. A socialist economic system is characterized by social ownership and operation of the means of production that m ...

(

of the means of production)

By political ideologies

Various strains of

anarchism Anarchism is a political philosophy and Political movement, movement that seeks to abolish all institutions that perpetuate authority, coercion, or Social hierarchy, hierarchy, primarily targeting the state (polity), state and capitalism. A ...

and

libertarianism Libertarianism (from ; or from ) is a political philosophy that holds freedom, personal sovereignty, and liberty as primary values. Many libertarians believe that the concept of freedom is in accord with the Non-Aggression Principle, according t ...

advocate different economic systems, all of which have very small or no government involvement. These include: *

Left-wing Left-wing politics describes the range of Ideology#Political ideologies, political ideologies that support and seek to achieve social equality and egalitarianism, often in opposition to social hierarchy either as a whole or of certain social ...

Anarcho-communism Anarchist communism is a far-left political ideology and anarchist school of thought that advocates communism. It calls for the abolition of private real property but retention of personal property and collectively-owned items, goods, and se ...

Anarcho-syndicalism Anarcho-syndicalism is an anarchism, anarchist organisational model that centres trade unions as a vehicle for class conflict. Drawing from the theory of libertarian socialism and the practice of syndicalism, anarcho-syndicalism sees trade uni ...

Anarcho-socialism Libertarian socialism is an anti-authoritarian and anti-capitalist political current that emphasises self-governance and workers' self-management. It is contrasted from other forms of socialism by its rejection of state ownership and from other ...

** Communalism *

Right-wing Right-wing politics is the range of political ideologies that view certain social orders and hierarchies as inevitable, natural, normal, or desirable, typically supporting this position based on natural law, economics, authority, property ...

Anarcho-capitalism Anarcho-capitalism (colloquially: ancap or an-cap) is a political philosophy and economic theory that advocates for the abolition of centralized states in favor of stateless societies, where systems of private property are enforced by pri ...

Libertarianism Libertarianism (from ; or from ) is a political philosophy that holds freedom, personal sovereignty, and liberty as primary values. Many libertarians believe that the concept of freedom is in accord with the Non-Aggression Principle, according t ...

Libertarian socialism Libertarian socialism is an anti-authoritarian and anti-capitalist political current that emphasises self-governance and workers' self-management. It is contrasted from other forms of socialism by its rejection of state ownership and from other ...

** Mutualism **

Syndicalism Syndicalism is a labour movement within society that, through industrial unionism, seeks to unionize workers according to industry and advance their demands through Strike action, strikes and other forms of direct action, with the eventual goa ...

By other criteria

refers to economic tripartite involving negotiations between business, labor and state interest groups to establish economic policy, or more generally to assigning people to political groups based on their occupational affiliation. Certain subsets of an economy, or the particular goods, services, techniques of production, or moral rules can also be described as an "economy". For example, some terms emphasize specific sectors or externalizes: *

Circular economy A circular economy (also referred to as circularity or CE) is a model of resource Production (economics), production and Resource consumption, consumption in any economy that involves sharing, leasing, Reuse, reusing, repairing, refurbishing, and ...

* Collectivist economy * Digital economy *

Green economy A green economy is an economy that aims at reducing environmental risks and ecological scarcities, and that aims for sustainable development without environmental degradation, degrading the environment. It is closely related with ecological econ ...

Information economy Information economy is an economy with an increased emphasis on informational activities and information industry, where information is valued as a capital good. The term was coined by Marc Porat, a graduate student at Stanford University, wh ...

* Internet economy *

Knowledge economy The knowledge economy, or knowledge-based economy, is an economic system in which the production of goods and services is based principally on knowledge-intensive activities that contribute to advancement in technical and scientific innovation. ...

* Natural economy *

Virtual economy A virtual economy (or sometimes synthetic economy) is an emergence, emergent economy existing in a virtual world, usually exchanging virtual goods in the context of an online game, particularly in massively multiplayer online games (MMOs). Peop ...

* Human Resource Economic System Others emphasize a particular religion: *

Arthashastra ''Kautilya's Arthashastra'' (, ; ) is an Ancient Indian Sanskrit treatise on statecraft, politics, economic policy and military strategy. The text is likely the work of several authors over centuries, starting as a compilation of ''Arthashas ...

– Hindu Economics *

Buddhist economics Buddhist economics is a spiritual and philosophical approach to the study of economics. It examines the psychology of the human mind and the emotions that direct economic activity, in particular concepts such as anxiety, aspirations and self ...

– Catholic ideal of a "third way" economy, featuring more distributed ownership in a mixed economy * Islamic economics The type of

labour power Labour power (; ) is the capacity to work, a key concept used by Karl Marx in his critique of capitalist political economy. Marx distinguished between the capacity to do the work, i.e. labour power, and the physical act of working, i.e. labour. ...

: *

Slave Slavery is the ownership of a person as property, especially in regards to their labour. Slavery typically involves compulsory work, with the slave's location of work and residence dictated by the party that holds them in bondage. Enslavemen ...

– and

serf Serfdom was the status of many peasants under feudalism, specifically relating to manorialism and similar systems. It was a condition of debt bondage and indentured servitude with similarities to and differences from slavery. It developed du ...

-based economy *

Wage labour Wage labour (also wage labor in American English), usually referred to as paid work, paid employment, or paid labour, refers to the socioeconomic relationship between a worker and an employer in which the worker sells their labour power under ...

-based economy Or the

: *

Agrarian economy An agrarian society, or agricultural society, is any community whose economy is based on producing and maintaining crops and farmland. Another way to define an agrarian society is by seeing how much of a nation's total production is in agricultur ...

* Industrial economy *

Evolutionary economics

Karl Marx Karl Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, political theorist, economist, journalist, and revolutionary socialist. He is best-known for the 1848 pamphlet '' The Communist Manifesto'' (written with Friedrich Engels) ...

's theory of economic development was based on the premise of evolving economic systems. Specifically, in his view over the course of history superior economic systems would replace inferior ones. Inferior systems were beset by internal contradictions and inefficiencies that would make it impossible for them to survive long-term. In Marx's scheme,

feudalism Feudalism, also known as the feudal system, was a combination of legal, economic, military, cultural, and political customs that flourished in Middle Ages, medieval Europe from the 9th to 15th centuries. Broadly defined, it was a way of struc ...

was replaced by

, which would eventually be superseded by

.''Comparing Economic Systems in the Twenty-First Century'', 2003, by Gregory and Stuart. .

Joseph Schumpeter Joseph Alois Schumpeter (; February 8, 1883 – January 8, 1950) was an Austrian political economist. He served briefly as Finance Minister of Austria in 1919. In 1932, he emigrated to the United States to become a professor at Harvard Unive ...

had an evolutionary conception of economic development, but unlike Marx he de-emphasized the role of

class struggle In political science, the term class conflict, class struggle, or class war refers to the economic antagonism and political tension that exist among social classes because of clashing interests, competition for limited resources, and inequali ...

in contributing to qualitative change in the economic mode of production. In subsequent world history, many

communist state A communist state, also known as a Marxist–Leninist state, is a one-party state in which the totality of the power belongs to a party adhering to some form of Marxism–Leninism, a branch of the communist ideology. Marxism–Leninism was ...

s run according to Marxist–Leninist ideologies arose during the 20th century, but by the 1990s they had either ceased to exist or gradually reformed their centrally planned economies toward market-based economies, for example with

perestroika ''Perestroika'' ( ; rus, перестройка, r=perestrojka, p=pʲɪrʲɪˈstrojkə, a=ru-perestroika.ogg, links=no) was a political reform movement within the Communist Party of the Soviet Union (CPSU) during the late 1980s, widely associ ...

and the

dissolution of the Soviet Union The Soviet Union was formally dissolved as a sovereign state and subject of international law on 26 December 1991 by Declaration No. 142-N of the Soviet of the Republics of the Supreme Soviet of the Soviet Union. Declaration No. 142-Н of ...

Chinese economic reform Reform and opening-up ( zh, s=改革开放, p=Gǎigé kāifàng), also known as the Chinese economic reform or Chinese economic miracle, refers to a variety of economic reforms termed socialism with Chinese characteristics and socialist marke ...

and in Vietnam. Mainstream

evolutionary economics Evolutionary economics is a school of economic thought that is inspired by evolutionary biology. Although not defined by a strict set of principles and uniting various approaches, it treats economic development as a process rather than an equil ...

continues to study economic change in modern times. There has also been renewed interest in understanding economic systems as evolutionary systems in the emerging field of

complexity economics Complexity economics is the application of complex system, complexity science to the problems of economics. It relaxes several common assumptions in economics, including general equilibrium theory. While it does not reject the existence of an equ ...

References

External links

Economic system
at ''

Encyclopædia Britannica The is a general knowledge, general-knowledge English-language encyclopaedia. It has been published by Encyclopædia Britannica, Inc. since 1768, although the company has changed ownership seven times. The 2010 version of the 15th edition, ...

'' entry.
"Social Studies VSC Glossary"

"Economic Systems"
a refereed journal for the analysis of market and non-market solution by Elsevier since 2001.

by WebEc, 2007. {{DEFAULTSORT:Economic System Political economy Management cybernetics