Types of economy

Types of Economic Systems

• Types of Economic Systems
• Each type of economy is associated with a separate economic system. An economic system is a method by which resources are organised. At opposite ends of the spectrum are capitalism and communism.
• A capitalist economic system revolves around wage labour and the private ownership of property, businesses, industry, and resources. Capitalists believe that, compared to private enterprises, governments do not use economic resources efficiently, so society would be better off with a privately-managed economy. Capitalism is associated with market economies and usually serves as the basis for mixed economies.
• Communism, on the other hand, advocates for the public ownership of property and businesses. Communism extends beyond an economic system into an ideological system, in which the end goal is perfect equality and the dissolution of institutions- even a government. In order to transition to this end goal, communist governments centralise the means of production and completely eliminate (or heavily regulate) private businesses.
• A related economic system, socialism, advocates for the social ownership of property and businesses. Socialists believe in the redistribution of wealth among all people in order to create equality, with the government serving as the arbiter of redistribution. Like a communist government, a socialist government will also take control of the means of production. Because they depend on centralisation, communism and socialism are both associated with command economies.

Capitalism more-or-less emerged organically from traditional economies as currency supplanted barter systems. Instead of trading goods, private citizens exchanged money for goods. As individuals and businesses became larger and more powerful through the exchange and retention of capital, European thinkers like Adam Smith and Vincent de Gournay explored and developed the concept of capitalism as a large-scale economic system.

• Capitalism more-or-less emerged organically from traditional economies as currency supplanted barter systems. Instead of trading goods, private citizens exchanged money for goods. As individuals and businesses became larger and more powerful through the exchange and retention of capital, European thinkers like Adam Smith and Vincent de Gournay explored and developed the concept of capitalism as a large-scale economic system.
• Communism was largely conceived by one man: Karl Marx. Responding to flaws he identified in the capitalist system, Karl Marx wrote The Communist Manifesto in 1848, in which he reframed human history as a perpetual struggle between economic classes. Marx advocated for the violent overthrow of existing institutions, which he saw as hopelessly corrupt, to be replaced by temporary institutions that would guide their countries to a communist end goal: a stateless, classless society where everyone is perfectly equal.
• Socialism is easily confused with communism. Socialism differs from communism in that it does not share the same end goal of a stateless, classless society. The socialist power structures that redistribute wealth- to create equality- are meant to remain in place indefinitely. Communists frame socialism as an intermediary stage between capitalism and socialism, and in fact, virtually all communist governments are currently practising socialism. However, socialism pre-dates Marx's communism; even ancient Greek thinkers like Plato advocated proto-socialist ideas.