Economic systems have formal and informal rules that help regulate a society. They also determine what to produce, how to produce and how to distribute goods and services. Each system’s priorities are to promote economic progress and maintain the economic stability. There are 4 types which consist of: Traditional, Market, Command and Mixed. I believe the best option would be the Mixed-Market economic system. It not only has economic institutions but also a mix of private as well, which in turn exercises economic control.
Production is owned by private and public firms along with the government to help monitor the economy. The same principle applies to resources since both have a share with the land/natural resources, capital and labor/ entrepreneurship. One advantage of this system is the preeminent authority that consumer and producer holds because of their ability to choose what to consume/ produce as long as it lies within the consent of the federal government. It is a positive factor since nothing dangerous or threatening services or goods will be on the racket, providing a safe and healthy economic society.
The social cost of business activities have the possibility of a reduction by completing a cost-benefit analysis by the government. There is a freedom of enterprise ownership, profit earning, social welfare and politics for people to take advantage of. Altogether, these private/public sectors work together in order to bring more production, a positive quality with the Mixed-Market system. The Traditional economic system would not the most outstanding option to choose because it is based on past generations that uses those experiences as the inundation for their current economic decisions.
Since production has been transferred by methods used their ancestors, it will be exactly the same as the original. They believe in the concept that “A product is created this way since it has always been like this”. This system has the disadvantage of not having the economy as a priority, rather than meanwhile it focuses more on religion and culture. With that occurring, it leads to lower productivity creating a lower development of the society. On the other hand, there is the benefit that it only produces goods and revise needed for survival.
But also there are no duplicates in their roles because this system already has their Jobs established. With the Market economic system, also known as Free Market, there is absolutely no government involvement in any of the economic decisions. The consumers have the freedom to pick what should or should not be produced and is shown through the purchases that are made. There is a high rate of competition in this system due to the business aspect to businesses determining now stunt will be made. Those who eave the larger amount of money are able to buy the most goods.
All these qualities lead it to a downfall, making it an unsafe choice of a system. There will be a significant number of unemployed people because businesses in this economic standard will only employ those factors of production which will be profitable. More machines will be made, thus cutting amount of labor needed. Because there is control in this system, hierarchy could take place because it displays “survival of the fittest” because only the best will succeed. Also, harmful goods may be encouraged nice there are no restrictions on what can be produced, impairing the society.
Lastly, the Command economic system would not be the best option because the government or a dictator controls the entire economic system. They run all the businesses, control all employment and have the say in how goods and services are produced. Another problem with command is that everything is distributed equally, there is no choice for the people. It creates a dilemma in the situation there is no personal gain because of the equality. Because people cannot think for themselves, there will be little to no innovation.