What are the Types of Economics Systems?

TYPES OF ECONOMICS SYSTEMS.

The economic systems are classified in the following three categories.

i. Capitalism.

ii. Socialism.

iii. Mixed economy.

iv. Islamic economic system.

v. Open economy.

vi. Closed economy.

•  CAPITALISM.Capitalism is that economic system in which capital flows freely in the economy and finds its ways to production, and distribution in the private sector with minimum interference of the government. It is also called market economy.
  
  In other words we can says that the economic system in which most of the business units are owned and controlled by the private sector with minimum interference of government is called capitalist economy. 

• SOCIALISM.Socialism is that economic system in which the means of production and distribution are held under collective ownership and control in public interest and are proletariat by source of power establishing a society free of class conflict. It is also called communist economy.
  
  In other words we can say that the economy in which most of the business units are owned and controlled by the government sector is called communist economy.

• MIXED ECONOMY.Mixed Economy is that economic system in which the business is owned by public sector, as well as private sector is called mixed economy.
  
  In other words we can say that the economy, which carries the features of both capitalism and communism, is called mixed economy.

• ISLAMIC ECONOMIC SYSTEM.Islam offers a definite economic system based on zakat, ushr, baitulmal, dignity of labour, interest free economy, legitimate income and avoidance of extravagance, and observing the rights and duties.
  
  In other word we can say that Islamic economic system is free from exploitation. It allows every person to earn his of her livelihood from legitimate sources and discourage the concentration of wealth and extravagance.

• OPEN ECONOMY.The economy, which encourages foreign trade and has extensive financial and non-financial contracts with the rest of the world in areas such as education, culture and technology, is called open economy.

• CLOSED ECONOMY.The economy in which there are no foreign trade transactions or any other form of economic contracts with the rest of the world is called closed economy.

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