im learning about economics and the meaning of 3 economic systems
traditional, command, market
traditional i undestand as peooples ecomonic passed down from previoius generations, traditions decide what theses people do for a living and how work is done
command the maid decision maker is the government no person may independently decide to open and run any kind of business
market: it is one nations economic decision are the result of individual decisions by buyers and sellers in the market place.
the question is how do the following types of economics systems capitalism , socialism, and communism
fall under : market , tradition, and command.
i got capitalism /market
socialism / tradition
communism / command
is that right?
Right.
Your understanding is partially correct. Let me explain further:
Capitalism: Capitalism is an economic system where the means of production (such as factories, businesses, and resources) are owned by private individuals rather than the state. In a capitalist system, individuals and businesses make decisions based on their own self-interest and pursue profit. The allocation of resources is primarily determined by market forces of supply and demand. Therefore, capitalism falls under the market economic system you mentioned.
Socialism: Socialism is an economic system where the means of production are owned and controlled collectively by society as a whole. In this system, the government or the community typically plays a significant role in resource allocation, income distribution, and decision-making processes. While individual ownership and private entrepreneurship may still exist to some extent, there is a greater emphasis on social and economic equality. Therefore, socialism does not fit neatly into the traditional economic system you mentioned. It can be considered an alternative system that borrows elements from both command and market systems.
Communism: Communism is an economic and political ideology that aims to create a classless society, where all means of production are collectively owned by the community. In a pure communist system, there is no private ownership, and resources and goods are allocated according to the needs of each individual. All decisions regarding production, distribution, and consumption are determined by the government or a centralized authority. This makes communism fall under the command economic system you mentioned.
To summarize:
- Capitalism: Market system
- Socialism: Mix of market and command systems
- Communism: Command system