This document discusses different types of economic systems including capitalist, socialist, and mixed economies. A capitalist economy is based on private property, freedom of enterprise and choice, and profit motive. A socialist economy involves social ownership of resources, economic planning, and equality. A mixed economy combines features of both systems, with a coexistence of public and private sectors and economic planning as well as market mechanisms. The document outlines some merits and demerits of each system such as incentives for innovation in capitalist systems and equitable distribution of resources in socialist systems. It concludes by noting a mixed economy can provide stability while harnessing advantages of both other systems.

1. Economies
Develope
d
economy
Developin
g economy

2. Types of economic systems
CAPITALISTIC
SOCIALISTIC
MIXED

3. CAPITALISTIC
ECONOMY

4. CAPITALISTIC ECONOMY SOCIALISTIC ECONOMY
 PRIVATE PROPERTY
 RIGHT TO INHERITANCE
 FREEDOM OF
ENTERPRISE
 FREEDOM OF CHOICE
FOR CONSUMERS
 PRICE MECHANISM
 PROFIT MOTIVE
 SELF INTEREST
 LAISSEZ FAIRE STATE
 SOCIALISTIC OWNERSHIP
OF RESOURCES
 ECONOMIC PLANNING
 SOCIAL WELFARE AS A
MOTIVATING FORCE
 ECONOMIC EQUALITIES
 CLASSLESS SOCIETY
 ELIMINATION OF
COMPETITON
COMPARISON

5. MERITS

6. • SPIRIT OF ENTERPRISE
• INCENTIVE FOR
TECHNOLOGICAL PROGRESS
• EFFICIENT USE OF RESOURCES
• INCENTIVE FOR CAPITAL
FORMATION
• NEW CONSUMER GOODS

7. • FLEXIBILTY AND ADAPTABILITY
• AUTOMATIC WORKING
• ECONOMIC FREEDOM
• INCREASE IN PRODUCTION AND
STANDARD OF LIVING
• EXPANSION OF
INTERNATIONAL TRADE

8. DEMERITS

9. • INEQUALITIES OF INCOME AND
WEALTH
• CLASS STRUGGLE
• ECONOMIC INSTABILITY
• MISALLOCATION OF RESOURCES

10. • WASTES OF CAPITALISTIC
PRODUCTION
• EMERGENCE OF MONOPOLY
POWER
• NEGLECTION OF SOCIAL WELFARE
• DOMINATION OF ECONOMIC
VALUES

11. SOCIALISTIC
ECONOMY

12. MIXED ECONOMY
 CO EXISTENCE OF PUBLIC AND
PRIVATE SECTORS
 CO EXISTENCE OF CAPITALISTIC
AND SOCIALISTIC FEATURES
 ECONOMIC PLANNING
 PROMOTION OF SOCIAL WELFARE
 PRICE MECHANISM
 PROFIT MOTIVE
 PRESERVATION OF FREEDOM
 REGULATION AND CONTROL OF
PRIVATE SECTOR

13. MERITS

14. • BETTER ALLOCATION OF RESOURCES
• FULLER UTILISATION OF RESOURCES
• ELIMINATION OF ECONOMIC INSTABILITY
• EQUITABLE DISTRIBUTION OF INCOME
• ELIMINATION OF CLASS STRUGGLE

15. • PROVISION OF SOCIAL
SECURITY
• INCREASE IN PRODUCTIVE
EFFICIENCY
• RAPID ECONOMIC GROWTH
• PRODUCTION OF MORE USEFUL
GOODS

16. DEMERITS

17. • DIFFICULTIES INVOLVED IN
RATIONAL ALLOCATION OF
RESOURCES
• LOSS OF EFFICIENCY
• LOSS OF INCENTIVES

18. • LOSS OF CONSUMERS’
SOVEREIGNITY
• LOSS OF FREEDOM
• CONCENTRATION OF ECONOMIC
AND POLITICAL POWER
• LOOPHOLES IN THE PLANNING
PROCESS

19. MIXED ECONOMY

20. MERITS

21. • PROPER ALLOCATION OF
RESOURCES
• ECONOMIC STABILITY
• ADVANTAGES OF THE MARKET
SYSTEM
• RAPID ECONOMIC DEVELOPMENT
• CHECK ON CONCENTRATION OF
ECONOMIC POWER

22. DEMERITS

23. • CONFLICT BETWEEN THE PUBLIC
AND PRIVATE SECTORS
• SHORT-LIVED NATURE
• INEFFICIENT OPERATION
• POOR PERFORMANCE OF THE
PUBLIC SECTORS
• EXCESSIVE REGULATIONS