Economic systems

Contents
Classification of economic systems: 3
Closed economy system: 3
Cults system: 4
Primitive communality (The public domain): 4
Slavery´-or-servitude system: 5
Feudal system: 6
The capitalist system: 7
The socialist economic system: 9
Economic system and economic regulation: 11
Contemporary economic systems: 12
The global economic system: 13


Economic systems
Prof. Dr Moustafa El-Abdallah Al Kafry
The Economic System is the set of economic, legal, and social relationships that govern the course of economic life in a society at a particular time. The economic system focuses on a set of relationships, rules and foundations that govern the interaction and mutual influence between human needs on the one hand and the natural, human, knowledge and technical resources available on the other hand. The economic system is an integral part of the general social system, influenced and affected by it.
Antonelli defined the economic system as a set of relationships and institutions that characterize the economic life of a specific group in time and space. It has a Sombart appearance that combines the following three elements:
• The Essence: the set of motives and motivations that drive economic activities.
• Form: That is, a set of social, legal, and institutional factors that define the framework of economic activity and the relationships between all those involved in economic activity, such as the type of property, the work system, and the role of the state in the economic life of society.
• Physical content: that is, the technical level of production represented by the level of development of the means of production through which goods and services are obtained.
The nature of the economic system is determined by the logical overlap between the three mentioned elements. Sombart stresses that the element of form is the main determinant of the nature of the system, because it is an expression of the spirituality that ultimately reflects the intellectual (belief) background on which the system is based. Spirituality also corresponds to a certain level of development of the means of production.
Marxist analysis relied on economic measures as a basis for differentiating between economic systems, as it prepares them, along with the social and legal structures compatible with them, the superstructure that results from the dominant production method consisting of social production forces and production relations, and differentiates between economic systems on the basis of ownership of the means of production and the class that controls in which.
Classification of economic systems:
Economic systems are classified according to a number of indicators and standards, the most important of which are:
1. The classification that depends on the type of ownership, the work system, the state’s contribution, and other factors, to differentiate between economic systems.
2. A classification that adopts the type of ownership is the only factor that differentiates it from economic systems.
According to the first classification, it is noted that there are basic and secondary (marginal) economic systems.
Among the most important basic economic systems: the closed economy system, the craft economy system, the capitalist economic system, and the socialist economic system. As for the secondary economic systems, among them are the sect’s system and the cooperative system.
Closed economy system:
The closed economy system is based on the principle of self-sufficiency, and it is characterized by the low level of development of the means of production and technology, which leads to a decrease in the quantities of production.
Artisan economic system:
It arose and developed with the emergence of the city and its development, and is characterized by the increase in the skill of the craftsman who mastered the manufacture of the commodity, and is based on the private ownership of the means of production, and the craftsmen being subject to unwritten laws but rather stemming from customs and traditions. In his work, the craftsman relies on the use of simple manual equipment and produces small quantities of goods on demand.
Cults system:
This system is based on professional organizations called denominations, which include all workers in one profession. Its goal is to reconcile the classes that make up society, and to combine business and capital into a single job structure. It depends on the private ownership of the means of production. It notes the development of the technical level of the means of production.
As for the second classification adopted by the Marxist theory, which depends on the type of production method associated with the type of ownership of the means of production, it differentiates between economic systems based on private ownership of the means of production and in which man exploits his fellow man, and another economic system based on collective ownership of the means of production without exploitation. This classification unifies the concept of the socio-economic system and the concept of socio-economic formation.
The Marxist theory developed the concept of the economic system until it became a socio-economic configuration determined by the method of production which is determined by the type of ownership of the means of production and the relations of production. Thus, the concept of the economic system has been ---dir---ectly affected by the concepts of production method and socio-economic formation. On the basis of this classification, Marxist theory separated five economic and social systems that correspond almost to the stages of human economic development. But in the transition from one economic system to another, there must be a transitional stage in which more than one socio-economic pattern coexists at the same time. These systems are:
Primitive communality (The public domain):
The primitive communality was the first socio-economic system in history, and the means of production used by man were simple and primitive, as were the skills of work, the experience of individuals, and their knowledge are very few. Therefore, individuals could not face nature except by grouping and combining their efforts. Individuals lived in autistic tribal commons on the basis of blood kinship, dominated by simple customs and traditions. The few crops that did not nearly satisfy the human need were distributed equally among the members of the commons, so there was no surplus of crops that could be extracted from others, and there was no economic disparity´-or-exploitation relations in society. The main means of production was land, and the natural economy (production - distribution - consumption) dominated this socio-economic formation. The mode of production was cooperative and collective.
Among the most important stages of the development of the primitive communal system:
• Pre-clan society´-or-(primitive herd).
• The tribal communality stage, divided into two phases: - Maternal tribal communal. -Parental clan mediators.
• Agricultural areas, and in it the person started the stage of settling on the banks of rivers, cultivating the land and raising livestock.
Slavery´-or-servitude system:
The Slavery system´-or-slavery, which replaced the primitive communal system, is the first system in history based on man s exploitation of his fellow man and class rivalry. Slavery was in its early stages called "parental slavery"´-or-home slavery, and the number of slaves was small, and Mr. Malik the slave worked on the land with his slaves, and work was not-limit-ed at this stage to the slave alone as happened in the next stage. The production method in the slave system began its history when the exploitation of slaves became prevalent in the production process, and when society was divided into two conflicting classes: the exploited "masters" and the exploited "slaves". The slave society includes to these two classes the free class, such as craftsmen, small peasants, merchants and moneylenders. Class system formed under this system, and political control became restricted to the class of masters in society. The contradiction appeared between physical work and mental work, because physical work is allocated to him by slaves for material production, while mental work was allocated to the masters who specialized in government administration, politics, philosophy, poetry, literature and art. The sabbatical to do these works has had a positive impact on the development of knowledge, humanities and the progress of human society. In the light of the slave system, the exchange of goods appeared, which transformed a gradual transformation into organized trade, and markets emerged that exceeded the borders of one country, and the so-called foreign trade appeared. The increased production quantities of goods allocated to the market and the expansion of trade exchanged led to an increase in the disparity in ownership and wealth at the expense of slave labor. The land remained the main means of production. Economic activity depended on agriculture and livestock raising with the emergence of artisan production. With the development of organized trade, money emerged, which began to occupy an important place in the economies of the slave society.
Feudal system:
Feudalism replaced slavery. The feudal system is based on the feudal class s ownership of the means of "land" and the exploitation of peasants. The land remained the main means of production. The feudal monarchy was over a certain area, including cities, villages, and the serfs therein. This property was not merely a legal form, but an economic relationship whose content included the feudal land exploitation and the disadvantaged population, thus ensuring their survival. This form of ownership determines the position of people in the process of social production and determines the class structure of feudal society as well as the manner in which products are distributed. Besides, there were other types of ownership in the feudal system, but they were very-limit-ed, such as the ownership of small private and artisan peasants for their private investments.
In the stage of the formation of the feudal system, the main features of the feudal production method began to be determined, especially the emergence of feudal real estate ownership, and the emergence of types of feudal real estate rent as a distinct economic type of production relations in this system. The dependence of the free peasants on the feudal lords was carried out in various methods of varying degrees. The contradictions between the feudal lords and the peasants began to become more and more apparent. The work of the peasants was the basis for the establishment and continuation of the feudal society. They were producing in response to the needs necessary for themselves, the feudal lord and his entourage, and the state apparatus.
As the feudal production method evolved, it gradually shifted from the forced rent-based system to the in-kind rent system, then into cash rent. The feudal lord, according to the system of forced labor, seized the work in its natural way, so the peasant was not concerned with the work´-or-its results. With the appearance of rent in kind and cash, the feudal lender gets the result of the work represented by a portion of the product, which is the surplus product. The farmer became more interested in the results of the work. The productive forces in the feudal system achieved a high level of development compared to their level in the slave system. And from the increasing commodity and monetary relations, cash is slowly taking an active contribution as a measure of value, and the exchange and commodity-monetary relations have expanded from the development in labor tools and means and the division of social work.
The capitalist system:
Production in this system is for exchange and profit. The ownership of the means of production in it belongs to a few classes of society who are the capitalists. As for the rest of society, who are the majority, it has only its work force and its members work as wage workers who employ the means of production that the capitalists own. This system has the advantages:
• Freedom of economic activity.
• Economic resources in the capitalist system are allocated through the market mechanism,
• Economic decisions are taken in a framework of decentralization.
• The state does not interfere in economic activity, which is carried out by institutions and individuals, ---dir---ectly.
The capitalist system also assumes that economic units always strive to increase the amount of profit for a product and increase the benefit to the consumer. The individual here performs a dual ---function--- in the economic system once as a producer and once as a consumer, but it is always driven by economic motivation, i.e. achieving his personal interest.
The capitalist economic system is based on a market mechanism that cannot perform its ---function---s adequately unless it is characterized by freedom, full competition, and no government interference, then neither producers nor consumers, in its sole capacity, can influence the prices prevailing in the market.
Among the most important disadvantages of the capitalist economic system are that:
Large variations in income and wealth are permitted, and the market mechanism leads to a further concentration of wealth.
Under the pressure of modern technological developments and the concentration of wealth, the market mechanism leads to a decline in competition and the spread of monopoly. The capitalist economic system is also characterized by periodic fluctuations in economic activity and the occurrence of economic crises associated with the phenomena of inflation and unemployment.
The capitalist economic system does not usually achieve the optimum level of savings, and it also suffers from many difficulties in ---dir---ecting savings towards productive investment.
It focuses on private goods and services without the public because it is more profitable and faster in terms of payoff.
The establishment of a spontaneous balance in economic life under the capitalist system requires respect for the principle of free competition. The market mechanism is able to achieve this balance through the interaction of factors of supply and demand in the market.
Adam Smith explains the mechanism of a spontaneous equilibrium based on the distinction between two types of prices: natural price (which is equal to the cost of producing the goods´-or-equal to the value of the goods), and the current price (which is the price that is formed by supply and demand in the market). And the current price remains hovering around the natural price and approaching it to be equal in most cases through the spontaneous balance that takes place in the market between supply and demand, and if there is any imbalance, it is inevitably inevitable, so the equilibrium state will undoubtedly return. This spontaneous balance is only disturbed by the failure to apply the principle of free competition.
The socialist economic system:
In it, ownership of the means of production belongs to the whole society (collective ownership of the means of production), and the main objective of economic activity is to strive to meet the growing needs of citizens. The consequence is that there is a large disparity in income and wealth between individuals, as the economic disparity in the socialist system is related to the disparity in the quantity and quality of work. It is not a system of property and inheritance. The socialist economic system depends on a central and comprehensive planning method in economic management, which sets ambitious goals and seeks to achieve them by restricting the available resources and ---dir---ecting them consciously and adequately. Planning in socialism is comprehensive, central, and mandatory.
The socialist economic system is characterized by the domination of the state by the state over the economy, and it has the main contribution to production and distribution processes by its control over the means of production (public ownership).
Economic activity usually aims to seek to achieve the goals adopted by the state. The essential feature of the development of productive forces and production relations in the socialist system lies in the planned systematic organization of the socialist economy. Socialist production is based on an evolving social division of labor, and this leads to a solid relationship between the various branches of the national economy, which assumes a correct quantitative proportion between these branches.
In order to determine this proportion, it must determine in advance the volume of social production and the volume of production in the various branches and from each type of product according to the needs of individuals and the requirements of society. In this way, society can plan and determine, according to the material and human resources it owns, the quantities of production of various types of products (means of production´-or-consumables) while maintaining the necessary proportion between the branches of production. These proportions allow for the systematic, planned, continuous and increasing development of each branch of production, and for social production as a whole. Because the market mechanism stops working in the socialist system, the process of developing production in a systematic manner becomes an objective necessity in the conditions of socialism.
Among the most important disadvantages of the socialist economic system:
• Neglecting financial incentives, as it is not expected that the individual wage earner in the state will make every effort to increase production and reduce costs if the distribution law is not activated according to the quantity and quality of work.
• The principle of centralization gives the planning process a high degree of inflexibility and bureaucracy. This leads to lower levels of productivity.
• Centralization of planning leads to the economy s inability to cope with the urgent changes in economic life, especially those that are difficult to predict quickly and effectively.
This explains that the structures of the macroeconomic system are not contiguous structures´-or-add to each other with a spontaneous and simple addition, but rather constitute an organic bond and a harmonious grouping (expressing stable relations). This means that the concept of the economic system has evolved to clarify internal relations in human societies. The structures that make up the economic system have a general character and at several levels. Therefore, the system requires a legal, political and moral structure, and these structures also necessitate the need to show the dominant side at the level to be known. If the technology is the dominant, the machine controls within the system, but if the superstructure is the dominant, the pursuit of profit in the capitalist system appears as a basic law, while satisfying the needs is the basic law in the socialist system. The two main features of the economic system are the necessity of its compatibility and its relative permeability. These two characteristics result from the two main features of the components of the system, namely the flexibility of structures and their ability to conform. Because the superstructures and infrastructures are flexible and variable, the economic system can actually evolve and transform. However, the transformation takes place in a way that the structures cannot reconcile with one another, and this leads to a transition from one economic system to another. Economic systems always remain in a movement of evolution, and the factors responsible for this development are divided into subjective factors that are organically linked to economic variables such as increased productivity and development of the level of technical means of production, and external factors that are not ---dir---ectly related to economic phenomena such as geographical and scientific discoveries, wars and political conflicts between contemporary systems.
Economic system and economic regulation:
It is necessary to differentiate between the concept of the economic system and the concept of economic regulation by defining each of them: the economic system, as mentioned earlier, is the group of relationships and institutions that distinguish the economic life of a particular society in time and space, while economic regulation is a method that the economic system uses to organize economic activity and various economic activities. The nature of economic regulation differs from one economic system to another, and for example two types of economic organizations can be mentioned:
Free economic regulation, which is the means of the capitalist economic system in organizing activities of economic activity based on the freedom of economic activity. This regulation is characterized by decentralization and spontaneity, and one of its most important characteristics is that it is an economy in which the balance is based on the market mechanism, and depends on the private project, and the state does not interfere in economic activity except in---dir---ectly.
The planning economic regulation on which the socialist economic system depends to achieve its economic goals, whereby compulsory and centralized planning achieve a balance in the economic system and its activities.
Among the most important characteristics of this regulation:
• The existence of a comprehensive and compulsory central plan that ---dir---ects all economic activities and events to achieve the goals of the socialist economic system.
• The market mechanism loses its effectiveness in this economic organization to be replaced by the plan, and the state interferes in economic activity through its ownership of the means of production (public ownership).
• The project here becomes an economic unit in a coordinated economic body. The project is a separate economic unit from a legal point of view only.
Contemporary economic systems:
In the twentieth century, the world was divided into free nations, colonial peoples, and peoples. The colonial system retreated due to the growth of national liberation movements, and many peoples gained their independence in Asia, Latin America and Africa. Nevertheless, our contemporary world still witnesses a division of another kind between the countries of the world. There are rich industrialized advanced countries (the countries of the North) and poor, underdeveloped countries, the peoples of the Third World (the countries of the South).
The contemporary world witnessed a number of economic systems, the most important of which are:
1. The Capitalist Economic System.
2. Socialist economic system.
3. The mixed economic system,
which tries to reconcile the capitalist and socialist systems, avoids their prominent faults and focuses on their positive aspects. Therefore, many developing countries intend to intervene in the sectors of economic activity and energy sources through economic planning in order to achieve development and eliminate underdevelopment. The state performs an important ---function--- in the mixed economic system, as it affects various aspects of economic activity through the financial, monetary, commercial and development policies that it exercises. The state itself may carry out economic activity within certain-limit-s if the public interest so requires. Developing countries want to use general economic policies to ---dir---ect and manage economic activity with a view to achieving social justice, encouraging individual initiative, respecting the right to property, and the cooperation of different sectors, all of which contribute to the overall development process.
It can be said that most contemporary economic systems are mixed economies. Competitive economic systems have emerged, and the study of comparative economic systems has become a method that economics uses more than a separate part of, and this is consistent with what was prevalent before. The study of comparative economic systems is the use of methods of comparative analysis, and these methods can be applied to the study of topics in any subfield of the economy (such as tax systems and labor ---union---s in different countries) and the study of economics in its entirety (such as socialist theories,´-or-the overall achievements of national economics). Selected).
The global economic system:
Our contemporary world is characterized by the wide internationalization of economic life, which is called the "globalization of the economy", and international economic problems have had a major impact on aspects of economic life within a single country, even in an individual s economic life and activity. In the context of this global development, a new concept called the global economic system has emerged. It represents the economic relations that exist between peoples´-or-the economic relations between countries as independent political entities. It is noticeable that the global economic relations have increased and intertwined considerably in our contemporary world, especially after the signing of the GATT agreements and the emergence of the World Trade Organization.
The global economic system in its current stage is characterized by exploitation because it helps to focus control and economic power in the hands of a few developed rich countries, and inequality in international trade, as it sets rules for foreign trade and the global monetary system serving the interests of developed countries at the expense of developing countries. It should be noted that the global economic system has failed to solve the basic problems of developing countries, especially the problem of hunger, poverty, underdevelopment and the inability to compete with the rich developed countries.

Prof. Dr Moustafa El-Abdallah Al Kafry, P H D Economics
Faculty of Economics - University of Damascus
Damascus, Syria, PO Box 12341
Email: [email protected]

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