Production and distribution processes differ between different countries, and also within a single country where the method of production changes from one stage to another according to the internal and external circumstances that the country is going through.
This change in the method of production and distribution may change according to the nature of the adopted economic system.
So what do we mean by the economic system? What are the types of economic systems? What is the concept of the economic system?
1 – The economic system:
The economic system is defined as a set of economic and legal relations that govern, manage, and organize the economic life of society at a certain time, as this system affects the nature of the mutual relations between people and various resources, especially natural resources.
It is based on providing all the means that help individuals interact with the consumer environment and contribute to making them benefit from the natural, industrial, and financial resources surrounding them.
It is also known as a set of mechanisms and institutions for decision-making and implementing decisions related to production and income in a specific geographical area.
2 – The factors that make up the economic system are:
The economic and social thought is placed in three main factors that make up the economic system, which are:
- Incentives: Incentives are meant to be the motives affecting the economic system, such as wars, economic recession, recovery, and growth.
- Form: It means all the societal factors that the economic system is part of the work and the nature of production.
- Nature: It is all the means and methods that transform raw materials into useful materials and this is done
Using machines, technology, and even electronic devices.
3 – The importance of studying economic systems
The importance of studying economic systems lies in:
A- Opening the way for economic actors in society to know the goals and objectives that build the economic system without other systems, which makes it easier for them to know and understand it and work to make it successful according to their positions.
B- Avoid falling into failed economic systems, and follow the approach of successful economic systems.
C- Conduct scientific comparisons between the economic system followed and the economic systems produced by other countries to determine which economic systems are the most suitable, effective and worthy of being followed.
D- Benefit from the experiences of previous economic systems in dealing with crises and economic problems that they encountered.
4 – The relationship between the economic system and the economic model. In order to determine the relationship between the economic system and the economic model, we must first define the economic model:
The economic model is defined as:
A simplified and relational representation of reality that allows the scientist to analyze and study. Through this definition, it becomes clear that the economic system refers to the foundations and principles on which the economic life of society is based. As for the model, it only includes problems, most of which are technical and do not directly affect the foundations and principles of the system itself. Therefore, the economic system is based on the same foundations and principles. As for the application, the door is open to different ideas and models.
It is possible for there to be different applications and models of the same system without affecting the general character of the economic system in question. For example, there are differences in the application of the capitalist system in both the United States of America and Western Europe, but this difference in models does not affect the foundations and general principles of the capitalist economic system. Thus, it is possible for any country to move from one economic model to another without affecting its economic system, and this is what is called changing economic systems.
Dr. Mohammad Alabaddi
