Economic System of Nation.
The Economic System of Nation is a components of economic environment. The economic system of a particular nation exhibits its economic concept, economic structure and exposure. The economic system mainly may be of four types, viz, Capitalism, Socialism Mixed and Communism.
Capitalist Economic System:
The system of capitalism stresses the philosophy of individualism believing in private ownership of all agents of production, in private sharing of distribution processes that determine the functional rewards of each participant and in individual expression of consumer choice through a free market place. The Capitalist economic system has following essentials —
- Economic freedom
- Profit is main object
- Freedom to make decisions
- Full freedom for investment and savings
- Freedom in allotment of resources
- Free competition
- A free market place
- Freedom to select business and profession
- Limited interference of Govt.
- Private property
- Private ownership
Socialist Economic System:
The socialist economic system are those system which is to be organised, managed and owned by the government, with the benefits accruing to the public. This system has following essentials:
- Central planning
- Central agents
- Profits recognised
- Lack of full competition
- Pricing and wages are determined by the Govt.
- Emphasis on distribution of income between public.
- Public is free to select an employment viz occupation, profession, business and work
- Full control of Govt
Mixed Economic System:
An economy which is governed by_the capitalism and socialism system called is mixed economic system. This system has co-ownership of public and private sector. A mixed economic system is a system in which the public sector and private sector are allotted their respective roles in promoting the economic welfare of all sections of the community. This system has following essentials:
- Profit induced commodity production
- Public sector
- Direction to economic activities by the market mechanism
- Economic freedom
- Sector distribute between public and private
- Private ownership of the means of production
- Economic planning
- Monopoly trends
- Pre-capitalist relations of production in agriculture
- Public interest
- Development of both sector.
The mixed economic system divided in the following forms:
Public Sector: By state undertaking is meant the industrial, commercial and economic activities carried on by the Central Government or by a State Government or jointly the Central Government and State Government and in each case “either solely or in association with private enterprises so long as it is managed by a self contained management.
Private Sector: A sector which is managed, controlled and operated by the individual called private sector. (In this sector all decision are made by the owner and capital invested by the owner.
Mixed Sector: This sector is also known as joint sector. “Joint Sector comprises of joint ownership between Government and Private entrepreneurs.” –
Co-operative Sector: A sector which makes co-ordination between public and private sector is called co-operative sector. It is very useful and successful in all kinds of economy systems. This system has following motto
- One for all and all for one.
- Do one and Do all.
- One die and All die.
Communist Economic System:
This system goes further to abolish all private property and property right to income. The state would own and direct all instruments of production. Sharing in the distributive process would have no relation to private property since this right would not exist. This system consists following features
- Absence of competition with state owned markets and industries.
- Profits not allowed.
- State provides all resources to start business owned by the State.
- Economic production owned by the State.