Capitalist Economy
- The capitalistic form of economy has its origin in the famous work of Adam Smith – Wealth of Nations (1776)
- An environment of ‘laissez faire’ (non – interference by the government) and Free market.
- Adam smith is known as Father of Capitalism & Father of Economics.
- A capitalist economy is an economic system in which the production and distribution of commodities take place through the mechanism of free markets.
- There is total freedom and private ownership of means of production.
- It is also called a market economy or free trade economy.
- Eg: USA, Australia, and Japan.
Socialist Economy
- It refers to a system of total planning, public ownership and state control of economic activities. Major industries are owned and controlled by the government.
- It is also known as planned economy or Commend economy.
- In a socialist economy, the means of production are owned and operated by the State.
- All decisions regarding production and distribution are taken by the central planning authority.
- Some of the most successful socialist economies are Russia, China, Vietnam, Poland and Cuba.
Mixed Economy
- In a mixed economy, both public and private institutions exercise economic control.
- Mixed economy is the mixture of merits of both capitalism and socialism.
- It tends to eliminate the evils of both capitalism and socialism.
- Eg: India, England, France, and Brazil.
- Father of modern mixed economy – J.M. Keynes
- Father of Indian mixed economy – J.L. Nehru