Types of Economic Systems

In Traditional Economies:
Existed in earlier ages and in some un-industrialized nations. Basic economic decisions were structured on tradition and custom not market activity. It is greatly based on farming for survival. It is also based on primitive methods and tools.

In a Centrally Planned (Command) Economy:

The economy is planned and controlled by a central administration. It is seen in most communist countries. An example is the former Soviet Union. Businesses are not allowed to do as they feel.

In a Market Economy:

A Market Economy is an economy that operates by voluntary exchange in a free market. It is not planned or controlled by a central authority. Most of the production, distribution and exchange is controlled by individuals and privately owned companies instead of the government. A Market Economy is the opposite of a Central Economy.

Mixed Economy:

A Mixed Economy allows public and private enterprises to operate at the same time. It contains all types of economic systems. It combines elements of capitalism and socialism.

The Difference Between Socialism and Communism:

The difference between Communism and Socialism is that Socialism is an economic system and Communism is a political system. Socialism allows the people to have a say in how the economy works. Communism only gives a few people a say in the economy works. Socialism is liberal and Communism is conservative.