Capitalism and Sociology: Types of Economic Systems, Essay Example

Economic systems represent the various agencies, consumers, institutions and entities that form the economic structure of a society. It shows the linkages between the economic entities and agencies, the flow of information in between them and the social relationships they possess. Economic systems involve practices like production, economic input allocation, distribution of products, and consumption of goods. The policies relating to financial institutions and government are also part of the economic systems (Henslin 114). Four different types of economic systems are in use today. Depending on the interests of a society it puts emphasis on a given economic system.

The traditional economic system is a family or community based system relying on customs of the community to make their choices of economic importance. The provision of goods and services, the exchange of resources and general work of the people follow a given pattern according to tradition. The standards of living in this system are static, and the occupants do not enjoy much of occupational and financial mobility. Their economic traits are, however, predictable. The interest of the community is considered first before an individual, but in some circumstances, the ownership of private property is respected (Henslin 120). It is a socialist economy evident in the Australian Aborigines and Amazon tribes.

The command economic system is a centrally controlled economy involving the government as the sole decision maker.  Also, known as the planned economic system entails the regulation of prices and wages by the government. It decides on the use and distribution of resources among its people and at times the works done by individuals (Henslin 124). Socialism is a command economy where the government assumes control over of socialist regions and countries. It is observable in communist countries like China and Cuba.

Market economic system is an individuals or consumer based economy. It relies on the consumption options of consumers who are the sole decision makers. The interaction strategy of consumers or individuals and companies in the market determine the way of allocation of resources and distribution of goods and services. Individuals get the chance to decide the best way to invest their resources the goods and services to produce, training to pursue and jobs to take (Henslin, 127). The government is totally absent in the economic affairs of a pure market economic system. This is a capitalist economy and present in the past United States economy.

A mixed economic system incorporates the involvement of the government in to a market based economy. In this type, both the government and the consumers or individuals have say in the economic development. It incorporates elements of command and market economies, however, individuals make most of the decisions relating to the market, but the government plays a central role in allocating and distributing resources (Henslin 132). This capitalistic system is mainly seen in the Unites States and Japan today.

A mixed economic system is more beneficial than the rest and living it is a substantial decision to make. This is mainly because such an economy provides fair competition among its constituents and the quality of services and products is not at all compromised. Regulation of market prices is at its maximum enhancing the existence of all investors in the marketplace. Natural resource utilization is also optimized in a mixed economy with both the government and private entities. There is also power provision to individuals and not just the government, which is significant for the existence and survival of businesses in the economy (Henslin 139). Monopoly is reduced in such systems since both the government and private sectors enter in to businesses. This system is successful, and its benefits can be observed in the United States’ economy.

Work cited

Henslin, James M. Essentials of Sociology: A Down-to-Earth Approach. Boston: Allyn and Bacon, 2002. Print.