Various Economic Systems
1. Traditional Economic System
Traditional economic system that is an economic system in the organization of economic life based on habits, traditions of society for generations that still rely on factors of production as is.
The characteristics of the traditional economic system
There is no clear division of labor.
Still dependent on the agricultural / agricultural sector.
Still has a tradition of family ties, so it is less dynamic.
In the production technology is still simple.
The goodness of the traditional economic system
Cause a sense of kinship and mutual cooperation of each individual in meeting their needs.
Barter exchange is based on a sense of honesty rather than profit.
The bad traditional economic system
The community is still with a static mindset
In limited production results because it only depends on natural factors of production and labor as it is.
2. Centralized Economic System / Command (Socialist)
A centralized economic system is an economic system in which the government has dominant power in an economic activity regulation. Its control is carried out through restrictions on an economic activity carried out by community members. Countries that embrace this centralized economic system include: Russia, the PRC, and Eastern European countries (former Soviet Union countries).
The characteristics of a centralized economic system
All economic activities are regulated and determined by the government in terms of production, distribution and consumption as well as price adjustments
There is no freedom of doing business because private or private property is not recognized
All the means of production are controlled by the state.
The goodness of a centralized economic system
The government can carry out supervision and control easily
The government is fully responsible for all economic activities.
In Prosperity in the community equally.
There is a development plan that is more quickly realized.
The deterioration of a centralized economic system
The existence of suppression of people's creative power so that almost all initiatives, innovations are initiated by the government
The existence of a black market caused by a regulation that is too strict by the government.
The public is not guaranteed in terms of choosing and determining the type of work and in choosing the desired consumption goods.
The government is paternalistic, meaning that the rules set by the government are all true and must be obeyed
3. Liberal (Capitalist) Economic System
Liberal economic system is an economic system based on the widest possible freedom for all people in economic activities without interference from the government. A condition in which the government really takes its hands off in making an economic decision in economic terms is called laissez-faire. Countries that embraced the liberal economic system include: the United States, Britain, France, Belgium, Ireland, Switzerland, Canada, and Indonesia which had embraced the liberal economic system in the 1950s.
The characteristics of a liberal economic system
Private / community are given a lot of freedom in carrying out an economic activity
Having freedom in owning capital goods (capital goods).
In carrying out an economic action based on the enthusiasm to look for its own benefits.
Goodness of the liberal economic system
There is a competition that encourages business progress.
The existence of government interference in a small economic activity that provides wider opportunities for the private sector.
Production based on market demand and community needs.
The recognition of property rights by the state gives the community a spirit of doing business.
The bad of the liberal economic system
The existence of an unfair competition practice, namely the oppression of the weak.
Can lead to monopolies that can harm society.
The emergence of dishonest practices based on pursuing a profit as much as possible, so that ordinary public interests are not heeded or ruled out
4. Mixed Economic System
Mixed economic system, which is an economic system on the one hand the government gives freedom to the community in trying to carry out an economic activity, but on the other hand the government has interference in the economy with the aim of avoiding full control of a group of people in economic resources.