This document discusses three main types of economic systems: capitalist, socialist, and mixed. It provides details on the key characteristics of each system as well as their main merits and demerits. A capitalist system is based on private ownership and free market principles, while a socialist system involves public or government ownership and central planning. A mixed system combines elements of both through public-private partnerships and regulation of private enterprise.

1. AN ECONOMIC SYSTEM
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2. An Economic System
An Economic System is a system that involves
production, distribution and consumption
of goods and services between the entities in a
particular society.
It can either be completely owned and operated
either by Manufacturers & Industrialists or
by Government or by both with combining their
efforts.

3. Capitalist Economy System:
 Businesses are managed and owned by corporate &
entrepreneurs.
 Limited role of Government.
 There are free private enterprises.
 Price of goods & services are decided by market
mechanism on the basis of demand & supply.
 Although Profit motive is there but supremacy of
consumers also exists.

4. Merits of Capitalism:
Gives encouragement to business.
Higher rate of Capital formation.
Optimum utilization of resources.
It is a justified system as competent entrepreneurs
are rewarded.

5. Demerits of Capitalism:
Inequality in income.
This income inequality gives rise to class
conflicts.
Problem of unemployment.
Lack of welfare.
Emergence of monopoly.

6. Socialist Economy System:
 Socialist Economy is also referred as Centrally Governed
Economy.
 Institutions are owned by Government on behalf of
public.
 Govt. decides about establishment, location,
production, distribution and prices of goods &
services.
 All activities are carried out for welfare of the society.
 Freedom to choose any occupation is restricted.

7. Merits of Socialism:
There is Social justice for all segments of society.
No class conflicts because of equitable
distribution.
Problem of unemployment is solved.
Better utilization of resources can be done by
putting them to appropriate use.

8. Demerits of Socialism:
 Biggest problem of Redtapism(corruption).
 No encouragement to private owners for their own
venture.
 Concentration of economic power remains in hands of
politicians & govt. officials.
 Social welfare is only a myth as deserving candidates are
not benefited.

9. Mixed Economy System:
 Compromise between Capitalist & socialist Economic
Systems.
 Co-existence of public & private enterprises. Works on
platform of PPP.
 For establishing a private enterprise , entrepreneurs are
required to obtain certain licenses or No Objection
Certificate(NOC) form govt. authorities.
 Both the Profit motive and Social Welfare Motive are
fulfilled.

10. Merits of Mixed Economic System:
Concept of social justice works.
Competition between Public sectors & Private
sectors which ultimately leads to benefit to
society.
Proper Employment opportunities are provided
to the population.
Equitable distribution of income is there.

11. Demerits of Mixed Economic System:
However equal income distribution is emphasized
still some big parties enjoy economic power.
Political parties have a big influence over
bureaucrats & govt. officials.
Sometimes the non deserving people enjoys the
benefits in the name of nationalism.