Major types of economic systems

Economic systems

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Major types of economic system

In the capitalist economic systems, the means of production such as the land, capital, labor, and organizations are owned by the private persons and the state governments do not have more control over the economic activity that is taking place. Meanwhile, in the socialist economic systems, the means of production such as capital and others are owned by the government and all the economic activities taking place in the society are directly controlled by the government (Carlsson, 2012). In the mixed economic system, there is partial control of the government and the individuals over the means of production in the society. Therefore, the power and control over the means of production existing in the market make the entire systems. The most efficient system is a system where there is partial control over the means of production to allow for all the right for production to an individual.

The effect of the economic system

The economic systems entail the systems of production, distribution and the consumption of goods and services in the economy (Granovetter, 2005). Moreover, it represents a system of principles and the techniques by which a problem that is prevalent in the society is addressed. Therefore, most of the organization is structured into various segments such as production area where goods and services are made. For example, when there is scarcity in the market economy, the organization will be forced to reorganize its structure to meet up with the demand of the market. On the other hand, the mixed economy enables a partial control of the means of production by the government and the individuals. And here, the government has the power to alter the structure of the organization through the production policy.

Therefore, in this case, the systems avail protection to the rights of the property due to the economic freedom of the use of the capital while at the same time allow the government through a right in interfering with the economic activity to achieve the social goals. Therefore, through the right, the government could insist on the need to have a quantity survey department in the organization to check on the quality of goods and services in the production process. The additional units affect the flow of the goods and services and sometimes would make the production process to be longer than the standard. On the other hand, there is perhaps a positive effect to the addition of the department in the structure of the organization to ensure that the production takes place in the right manner and consumer are safe from faulty goods and services (Granovetter, 2005).

References

Carlsson, B. (Ed.). (2012). Technological systems and economic performance: the case of factory automation (Vol. 5). Springer Science & Business Media.

Granovetter, M. (2005). The impact of social structure on economic outcomes. The Journal of economic perspectives, 19(1), 33-50.