Economic system

The economic system, according to the market economy view of modern Western society, is the network of interdependencies and interconnections among economic operators or subjects who carry out the activities of production, consumption, exchange, labor, saving and investment to satisfy individual needs and realize maximum profit by optimizing the use of resources, avoiding waste and increasing individual productivity even while decreasing the cost of labor.

  • Closed or open economy, which does not engage or maintain exchange relationships with other systems.
  • Collectivist or planned economy, a centralized economic system in which the means of production are owned by the community and in which decisions regarding production, investment and consumption are made by the central authority.
  • Controlled economy, in which, although there is private ownership of the means of production, it is up to the central authority to control and direct production and exchange activities.
  • Mixed economy, in which private initiative and public initiative coexist.
  • Market or liberal economy, in which private ownership exists and production and exchange are left to free initiative.
  • Mature economy, developed economic system.
  • Dual economy, in which there are simultaneously developed areas and backward areas, i.e. in which identical factors of production, in different parts of the system, have different marginal productivity.
  • Economy of scale, the gain, in terms of production and cost, resulting from an increase in productive and organizational efficiency. Given the prices of production factors, economies of scale are realized when a certain increase in production implies less than proportional increases in cost.
  • Economies can be internal or external, depending on whether they are achieved within the firm (for example, through plant expansion) or whether they are due to factors external to the firm (for example, the development of the branch of industry to which the firm belongs or of industry in general). They are monetary if they result from changes in the price of production factors or raw materials.
  • War economy, a particular organization of the economic system of a country during wartime, characterized by an accentuated state control over all productive activity, in particular over the supply and use of productive factors, with a view to providing above all for military needs rather than civilian ones.

Agricultural, artisan, industrial, commercial, domestic economy, designation of an economic system in which the prevailing productive activities are respectively agriculture, handicrafts, industry, commerce, and household.

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