Definition of economic system

The concept of the economic system is undoubtedly one of those of great complexity to define but also of most interest to human beings.

System in force and that regulates the commercial and economic activities of a nation

We understand, in general terms, that the economic system is that system implemented to regulate the different economic activities as well as the exchanges resulting from the purchase and sale of products generated by humans or obtained from nature. The economic system, however, is not limited exclusively to economic or commercial issues if it does not that in many ways transcends those borders to also include social, political and social concepts. cultural

The purchase of products or services, the manufacture, development and presentation of these in a society are what make up the economic system.
However, it can take different forms, depending on the country in which it was developed and the historical stage.

Now, today, nations tend to lean towards free market economies because they tend to give more credit when it comes to prosperity and also efficiency when it comes to production from

resources.
Although those who are in favor of this type of system do not consider that the state should not regulate some issues, they do believe it is essential that private initiative is the key to the development and economic improvement of a nation.

Capitalism versus state intervention

The notion of an economic system has existed since the first human societies and communities appeared. This is so since the human being is the only living being that achieved an organization or systematization productive for short- and long-term subsistence purposes. The diversification of work (that is, the fact that each individual was dedicated to a specific productive activity), added to the notion of exchange of these productions between different regions arises with the first human forms of society and has evolved greatly over time.

The economic system is one of the strongest structures that exist in human societies. This becomes visible in the very long duration that economic systems such as feudalism or, currently, the capitalism, they demonstrate in history.

The most current version of the economic system is the one that was progressively imposed in the West since the 15th century and then spread at the end of the 19th century to the whole world: capitalism.

This economic system is based on the production of profit or wealth, in other words, capital. Thus, for capitalism a clear hierarchy is established which means that whoever has more capital has more power, not only at an economic level but also at a social, political and cultural level. Capitalism is based on a strong consumerism that assumes that life only has meaning through the consumption of goods and services understood as fundamental. This constant consumption generates a great disparity between those who have the means and those who do not have them and who, therefore, are left out of the system.

Marxist theory was a strong criticism of this economic system due to this situation of inequality it generates. For Marx, the economic system known as communism would be superior since it implied the opening of goods, services and natural resources in the same way for all men, the disappearance of private property and the destruction of the notion of work as an exploitative method.

On the other hand, there is a planned or also called centralized proposal in which production and distribution of goods is directed by the state, which is the one that decides what should be produced and in how much quantity.

The main criticism made of this position is inefficiency, because it turns out to be impossible for a state to be able to process all the necessary information in order to generate a corresponding assignment of the resources.
If a disadvantage must be attributed to this system, it is the lack of detail that will be required to process all the information.

Meanwhile, we can find an intermediate position to those mentioned and it is one that proposes that economic efficiency will be achieved when goods and services are provided by both parties, state and private.

Beyond the approaches presented, all of them tested throughout history with greater or lesser success according to to the context and the time, we must say that the great discussion today is what should be the intervention of the state in the economy, that is, find the point of Balance in which it generates benefits and of course stop the incursion when instead of improvements there are delays.

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