Basic economic models - general overview

Economic models in general form a stable socio-economic relations and relations between economic entities, formed on the basis of prevailing forms of ownership and ways to regulate macroeconomic activities. Households, firms and the state can act as economic entities.

Over the past two hundred years, the world has been dominated by four global economic models. These are two systems with a dominant market economy-pure capitalism and modern capitalism, and two systems of the non-market type-administrative-command and traditional. And already within the framework of this or that general economic model different models of economic development of separate regions and countries are singled out. Below are general descriptions of global economic systems.

Traditional system

This type of management prevails in the underdeveloped countries and implies a low level of technology development, the widespread prevalence of manual labor and the multi-fold economy, which manifests itself in the coexistence of various economic forms. Often, natural-communal forms of production and distribution of products are preserved. In the economy, small-scale production, represented by numerous handicraft and peasant farms, plays a significant role.

In the national economy, functioning according to the traditional system, foreign capital plays a decisive role. The social structure of society at the same time depends entirely on the centuries-old foundations and traditions, caste, class - that significantly inhibits socio-economic development.

Administrative and command system

Economic models of the type of administrative-command were adopted in all countries of the socialist camp (primarily in the USSR) and in some countries of Asia.

The distinctive features of this type of management can be called the following:

• Ownership of economic resources - state,
• Bureaucratization and state monopolization of the economy,
• The basis of economic activity - centralized planning of the economy;
• Demand, supply and demand were determined by centralized planning departments, without the participation of direct consumers and producers, based on a common political ideology.

Net Capitalism

This model operated in the 18-19 centuries and was a system of market economy with pure competition. Economic activity was conducted by individual entrepreneurs-capitalists and, accordingly, they owned the right of ownership. Self-regulation of private capital took place on the basis of free markets, and the state minimally interfered in this process. The hired workers actually lacked social protection in the event of unemployment, old age, illness.

Modern Capitalism

By the middle of the 20th century, with the advent of the scientific and technological revolution, the rapid development of social, technical and production infrastructures, state structures are beginning to participate much more actively in the development of the national economy. Net capitalism is gradually being transformed into a system of developed modern capitalism. Within the framework of this system, national economic models have emerged that have their specific features based on the characteristics of social, national, geographical and historical conditions. Let us analyze some of them.

American model

• Active promotion of small business (about 80% of all new jobs are created by small business representatives);
• The state minimally interferes with the regulation of the economy;
• State property is represented very insignificantly in the total amount of forms of ownership;
• Marked stratification of society into classes of rich and poor;
• A satisfactory standard of living and social security for poor citizens.

Japanese economic model

• The active influence of the state on the development of the economy with the obligatory planning of this development (five-year plans for certain areas of the economy are being compiled);
• The size of wages of ordinary employees and managers of firms differs very insignificantly, therefore the level of incomes in the population is fairly even;
• The economy has a pronounced social orientation (the practice of lifelong hiring, social partnership, etc.).

South Korean model

• State planning, development of five-year plans;
• Strict regulation of foreign economic activity with the aim of developing exports and minimizing imports;
• Control of the state in the banking sector.

Chinese model

• Coexistence of a market and an administrative-planned economy ;
• Maintenance of free economic zones;
• Equal level of incomes of the population;
• The great importance of households;
• Chinese emigrants actively help the development of the national economy.