Types of Economies
The world of today has been dominated by myriad types of economies developed with the sole aim of maximizing output. The accumulation of assets is an integral part of economic development. These economies are inclined towards protecting the asset-liability ratio from dropping in order to accumulate capital. This paper will focus on three types of economies: capitalism, communism, and mixed economies. It will also examine their characteristics and implications for development.
To begin with, capitalism is the most common type of economy today. It is primarily founded on the basis of private ownership of the factors of production and their corresponding profit margins. Its key attributes and features include private property, capital accrual, remuneration in the form of wages for labor provided and a coherent price mechanism associated with the large regulated and viable markets. Consequently, the sole owners of the factors of production are charged with making all the economic decisions pertaining to investment ventures undertaken. The prices on the other hand, are primarily determined by the competition in the financial and capital markets. According to Stillwell (23), most capitalist economies are deemed as mixed as they are known to combine the attributes of free markets with economic planning and political intervention.
Contrary to capitalism, communism incorporates the traits of socio-political and economic principles that are integrated to work towards a common goal of establishing an organized system. It strives to propagate common ownership of factors of production and eliminate the existing social classes and political influence (Engels 10). It stems from a number of historical groups some of them hailing from Greece and Iran. For instance, the Mazdak front in Persia during the 5th century is a good example that gave rise to communism since it confronted the wealthy classes and sought to overthrow the principles of private ownership of property.
On the other hand, a mixed economy is an entirely new perspective that has been integrated into society. It combines free-market principles with the nationalization of certain economic activities, such that the government takes over the provision of certain public goods. However, some economies also incorporate quite a number of initiatives that are managed by the government. This type of economy is characterized by market supremacy for economic synchronization with profit maximization and capital accumulation being the guiding principles behind such economic undertakings.
In conclusion, it is quite evident that all three types of economies are viable since they all aim at output maximization. However, one may argue in support of a mixed economy as the most suitable and appropriate economy since it allows for both the efficient deliveries of essential public goods while at the same time allowing for private ownership of property and competition in business activities.
Engels, F. The Principles of Communism. CreateSpace Independent Publishing Platform, 2013. Print.
Stillwell, F. Political Economy: The Contest of Economic Ideas. Oxford University Press, 2006. Print.