What economy is made up of the elements of more than one economic system with some industries owned by the government and some privately owned?

Each country has a slightly different economic system. Germany’s is different from France and France’s system is different from that of the US. For instance, France has stricter labor laws such as the 35-hour working week. Yet both the US and France are a mixed economic system – a mixture of government involvement and free markets.

If we were to categorize economic systems by their specific characteristics, there would be close to 200 types of economic systems. Instead, there are four types of economic systems – the traditional system, socialist system, the capitalist system, and a mixed economy.

These are broad types of economic systems but will capture the different varieties that exist in the world today.

Out of the four types of economic systems, the traditional economic system is the most basic. There is no involvement by the government, so people are largely left to conduct economic activities without influence. However, it is a very basic system that relies on basic customs and traditions.

Economic advances such as technology, property rights, and capital investment are largely absent. The way of life is much simpler and the economic relationships are basic. Bartering is commonplace and the use of cash as a medium of exchange is almost non-existent.

Under a traditional economic system, subsistence is the main driver for economic trades, whilst profit is not the main motive. Instead, this system relies on communities and the cohesion between them to provide and sustain each other.

Although it is seen as backward by many, it is highly sustainable. By relying on the community to provide for each other, they are able to produce exactly what it needs. As a result, there is little waste.

To put this system into perspective, it revolves around small tribes and local communities that provide for each other on a micro basis. So there could be thousands of these communities across a large country. In fact, examples in today’s world include Bhutan and Haiti.

A command economic system is often referred to as a socialist or communist system. Under this structure, power is centralised either to the government or a sole ruler. In turn, they decide the rules of the game and command how economic interactions take place.

Economic decisions such as what goods to produce, how much to produce, and its price are decided upon by central powers. So it’s up to them to decide whether it is socially optimal to make iPhones or PlayStations, or whether it’s best to divert these resources to house building or agriculture.

Under a command economic system, central powers own the means of production, so can, therefore, shift it to where they see fit. For instance, if the nation’s central powers want to start making more steel, they may move workers from a construction site and transfer them to a steel factory.

Moving workers may be necessary in order to fulfill long-term economic plans created by central planners. These long-term plans are a key part of command economies – such as the five-year plans adopted in the Soviet Union. In order to organise an economy from the top-down, clear and concise information needs to be passed through the chain of command – which is why a plan is necessary for everyone to understand their role.

Whilst planning can be effective, the issue with such command systems is slow and sluggish to change to economic trends. Where people are wanting more of Product A, central powers produce more of Product B.

Examples include North Korea, Cuba, and the former Soviet Union.

A capitalist economic system is where the means of production is owned and controlled by private enterprise rather than the government. Instead of government dictating what goods and services should be produced, these are driven by supply and demand mechanisms.

When consumers demand goods, it sends a signal to businesses for them to produce more. Equally, when demand for goods falls, it sends a signal to businesses to produce less. This in turn forces the business to offer new products that consumers may desire instead.

Under this form of economic system, government involvement is almost non-existent – other than enforcing law and legal contracts. Instead, the economy is regulated by the fluctuations in supply and demand, as well as other factors such as brand trust and competition.

The capitalist economic system relies on private individuals using capital to produce goods and return a profit. In turn, this increases the private enterprise’s capital stock. The issue with this however is that many individuals can amass great economic power and wealth. Not only does this create social discontent, but can also lead to unscrupulous business practices.

Private monopolies can arise and over-charge consumers and provide low-quality goods. On the other hand, it can be argued that the capitalist system is self-regulating over the long-term. Monopolies don’t last long as customers go elsewhere and new businesses come in to compete. Whilst bad businesses that offer low-quality goods will get a bad reputation and go out of business.

A mixed economy is one of the most common forms of economic systems in the world today. We see it in many developed nations such as the US, Japan, and throughout most of Europe. It is simply a mixture of capitalist and command economic systems.

A mixed economic system often has some level of private ownership of the means of production. However, in a mixed economy, some industries are controlled by the government, whilst others are privately owned. For example, healthcare in the UK is controlled by the government, as well as the BBC – the UK’s main broadcaster.

It is argued that by mixing together aspects of a command and capitalist economy, we can achieve the best of both. However, there is a constant balancing act that needs to be achieved. Too much government intervention and markets become suffocated and the ‘invisible hand’ has little effect – leading to shortages or wasteful oversupply. By contrast, too little government intervention may lead to unscrupulous business practices.

A mixed economy extends beyond just mixed control of the means of production, but also governments involvement through regulation and other forms of intervention. Subsidies, tariffs, and quotas are just some interventionist tools than many mixed economy nations such.

By employing these tools, they interfere in the supply and demand mechanism that allocates resources. Prices become distorted and therefore demand is artificially altered from its equilibrium with supply – thereby contributing to shortages, undersupply, or other socially suboptimal outcomes.

What is the name of the economic system made up of elements of a market and command economy?

What type of economic system is created when these two systems are combined?

In which type of economic system are all productive activities privately owned?

In which of the economic systems below are decisions about production and investment determined by supply and demand alone?