An economic system is the organization of production, distribution, and consumption for goods and services. An economic system includes the different economic structures and components that make up a society. The different types of economic systems transfer information between each other and are related to one another. Economic systems share the concept of mode of production and are most often centered on capitalist mixed economies.
Economic systems all share the problem of having to supply the unlimited wants of consumers with limited resources. Economic systems have to address the primary economic decisions of what to produce, how to produce it, and who to produce it for. The general function of an economic system is to stabilize the economy, guide economic progress, distribute goods, services, and resources, as well as manage production. The function of the government, ownership of profits and resources, and price determination are some of the components of economic systems.
Economic systems differ in the way they allocate means of production and in their use of inputs. An important distinction between capitalist economic systems and socialist economic system is the objective of each system. In a socialist economic system, the objective of production is to produce goods and services in order to satisfy demand. In capitalist economic systems, the objective of production is profit maximization.
The types of general economic systems include the barter economy, capitalism (free economy), gift economy, global economy, mixed economy, participatory economy, socialism (planned economy), and traditional economy. Each differ in their characteristics and how they address the primary economic decisions.
1. The Role of Behavioral Economics and Behavioral Decision Making In Americans' Retirement Savings Decisions. Retrieved from www.ssa.gov/policy/docs/ssb/v70n4/v70n4p1.html© BrainMass Inc. brainmass.com January 20, 2021, 11:36 pm ad1c9bdddf