May 25, 2024

Traditional Economic System

In traditional economic systems, economic activities are completely focused on goods and services prescribed by customs and traditions. Production is heavily dependent on individuals, and specialization and division of labor are not uncommon. In other words, traditional economic systems are the most basic and primitive economic structures.

A significant part of the world’s economies is still traditional economy. Especially in the rural areas of the second and third world countries, the economy still heavily depends on agriculture and other traditional economic activities. These economies often suffer from resource scarcity. This may be due to scarcity, the absence of these resources in the region, or the constraints of resources in the region by another, much stronger economy.

Therefore, traditional economies often do not reach the level of production or abundance that other economies do. But traditional economic systems produce less pollution than command, market, or mixed economies, because relatively primitive economic activities are more sustainable and lower production produces less waste.

Command Economic System

The most important characteristic of command economic systems is that there is a single power (usually the state) that monopolizes most economic activities. This type of economy is more common in communist countries. Since all production decisions are planned by the state and there is no free market mechanism, these economies are also called planned economies.

Most economies with an abundance of certain valuables tend to evolve into command economies. The government takes steps to regulate the resource in question and all processes related to it. In practice, centralized control only covers very valuable natural resources in the economy, such as gold and oil. Other activities, such as agriculture, are generally left to the discretion of the public.

Command systems are economies that can work very well in theory, provided that the state uses its power for the benefit of the people. But the truth of the matter, unfortunately, is not like that. In addition, command economies are more rigid than other economic systems due to their centralized structure, and they respond late to changes.

Market Economic System

Market economies are economic systems that have adopted the free market principle and do not allow the state to intervene in the market in any way. In these systems, the state does not control any resource and the economic segments associated with this resource. All arrangements are made only by the power of supply-demand balance.

Market economy is a theoretical concept. In other words, there is no country in the world that fully implements the market economy. This is because in all known economies there is some form of government intervention in one way or another. For example, many governments pass laws to regulate monopolies or to ensure fair trade.

Market economies promise high growth figures on paper. The figures in question are the figures with the highest value among all systems. In addition, it is argued that the economy and the state should be separate structures in market economies. But market economies can result in certain actors – especially those with significant resources – being too powerful. Therefore, income distribution and other positive economic outcomes may not always benefit society.

Mixed Economic Systems

Mixed economic systems, which are also the economic system in Turkey, are economies in which market economies and command economies are mixed to a certain extent. Mixed economies are sometimes referred to as “dual economies”. Although there is no full definition of what we call a mixed economic system, the most common mixed economies are those with a free market, but in which certain areas of the free market are under state control (eg, public goods and services).

Most of the western countries have a mixed economic system. Most industries are controlled by private capital, but some utilities and goods are state-run. Therefore, neither the state nor the private sector can sustain the economy alone; Both roles are important.

Mixed economic systems are accepted as the most ideal economic system today. Mixed economies theoretically have the advantages of both command economies and market economies. But this is not always the case in practice. How much government intervention in the market varies from economy to economy, and in some economies, government intervention is excessive.

the essence of the word

World economies can be grouped under four main headings: traditional, command, market, and mixed. Let’s recap these economic systems in a few sentences.

In traditional economic systems, economic activities are completely focused on goods and services prescribed by customs and traditions. The characteristic feature of command economies is that they have a dominant central power. Market economies are economic systems that have adopted the free market principle and do not allow the state to intervene in the market in any way. Mixed economic systems are economies in which market economies and command economies are mixed to some extent.

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