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The ten types of economics and their classification criteria

The most important types of economy

Types of economics constitute a rather large topic. These types can be discussed depending on the criterion that is being classified according to which is treated as a discriminatory factor, and the difference between the criteria for classifying the types of economy does not put them in comparison in terms of preference or that one classification is more accurate than the other, but rather depends on our needs in a certain period of time.




Classification by market systems

If a person wants to analyze a point such as the concept of market, ownership and economic power, then the analysis can be done by first distinguishing between the different types of economy or systems, as shown in the following:


capitalism

In the first place, capitalism is found among the types of economy, it prevails in most Western countries, and is characterized by capitalism (free market) by applying the method of private ownership to almost all commodities and a very large part of the available resources in all their forms are within this system and the laws governing an economy in capitalism are governed by it.


The market is organized according to the policy of supply and demand at any time of the year in exchange for a commodity that he produces from a person whose face it is, the United States of America is the largest country that follows this economic model and advocates its generalization and defends its usefulness.


socialism

The clearest concept of socialism is that it is an economic system in which the state follows the responsibility for interfering in the course of the market in order to ensure the availability of basic goods and services.


The policy followed in this economic type is similar to more strict laws such as Marxism or communism, where the state plays a supervisory role whose goal is not only regulation but also an arbitrary role in which laws are imposed regarding its control over all means of production.


This model goes back to the origin of socialist methods. Socialism is found in Western countries and is largely incorporated into the capitalist ideology, and thus the state does not impose its intervention in the property that belongs to the people.


mixed model

There is the third type of economic system, and the aim of this type is to preserve the free market, but according to conditions and criteria for regulating the workflow or according to rules imposed by public administrations with the right to administer it.


traditional economy

It is the kind of economy that exists in societies that are not too complex, in this case the role of economic agents towards themselves by the usual ways their beliefs and customs determine among themselves.


The traditional economy bears the character of a local market for a small company or group, it is the same type of economy used in the West in the period before the emergence of more complex societies or countries.


One of the advantages of this system is the lack of complexity in the details that are easy for new dealers to understand, and it must be known that the simplicity of this type makes it effective only in economic problems of less complexity.


In addition, it generates a type of economic relationship, the benefits resulting from it are limited, so the possibility of reinvesting this money in the aspect of improvement of production processes is reduced.


Today this economic pattern can be found in societies that are deeply underdeveloped and that often need the help of wealthy, prosperous countries.


Classification by scope

Classification by scope is another way to classify economic types and it is related to the scope of this field.


Microeconomics

Within the economy as a whole, microeconomics has a specific role and is responsible for the behavior of individual agents in terms of developing their own explanation models, such as consumers, firms themselves, investors, and employees.


Microeconomics studies how all the above elements are related, and the market formation as well, when conducting accurate economic analyzes results in obtaining data about goods within the market and their prices.


total economy

When using the classification by scope will result in the emergence of the type of macroeconomics, the role of this type of economics is to study the behavior of economic agents on a larger scale.


This method enables the analysis of a complex economy, and verification of data on employment and patterns of the so-called price behavior in the markets and goods produced, as well as production resources, and the results do not stop there, but even reach data on the balance of payments for large administrations.


Excellence by appraisal

To distinguish between the types of economy, there is an objective or subjective point of view that was established to analyze different economic data, and if someone decides to study the types of economy according to the classification system according to valuation, the types of economy will be as follows:


positive economy

It is a type of economics that reveals economic issues objectively as they are, in this type it is not possible to speak of bad or good results because there are simply no specific value judgments.


But the numbers are determined in a neutral way, for example, you can mention the GDP number for a specific country, but without going into its assessment and judgment, whether positive or negative.


The same is true with unemployment rates, interest rates, the development of a particular industry, investment in any field, or any economic data and indicator. This type is used to make forecasts of the consequences according to the data that is available, and therefore the reports must be impartial.


normative economics

Normative economics is the opposite of positive economics, in which the absence of objectivity and consideration of economic data from a personal perspective results in the possibility of talking about high or low GDP.


Or data for monitoring the expected unemployment in a specific year and other specific data with a positive or negative judgment, and the opposite of positive economics because it does not monitor the reality as it is, but rather judges the results.


Normative economics aims to monitor data and organize to reach the desired goal. The problem is that there is a space for value judgments that open opportunities for the intervention of personal opinions.


Therefore, the distortion of economic indicators often occurs on the part of political factions that have their own goals, and therefore are affected by the individual vision or according to a group, where the same results of economic analyzes are a reason for sadness or joy according to people.


According to the terms of identification

At the academic level, the distinction between the nuclei of economics is used according to the definition or terminology, and according to this the following types of economics are produced:


orthodox economics

The traditional model according to this distinction would be orthodox economics. This genre is spread academically to the education of economics, the criteria for which are taken into account in this model the criteria of rationality, equilibrium, and individuality.


What is distinctive is that the economy is presented according to this model as an exact science, so it explains the behavior of participants in the field with a rational perspective and therefore the results are predictable, and therefore the models developed have the role of providing the possibility of predicting different behaviors from the markets.


opposite economics

The non-traditional economics model is in contrast to orthodox economics which considers traditional economics by definition, heteroeconomics whose main pillars are the institutions and history itself as well as the social structure of the intended market.


It is considered the opposite of the previous type of economics because it is social and thus a subjective science, according to which sometimes economic agents are able to act in a completely unexpected way.


But this is not done according to personal whims but rather is limited by limitations and it must always be kept in mind that the results that are expected may be unrealistic when agents decide to act outside the agreement.


Differentiation according to theory and practice

The distinction is made through the type of performance in terms of whether it was theoretical only or practical and applied, as shown in the following:


  • theoretical economics

Theoretical economics is used to create various theoretical models that enable the interpretation of the behavior of markets and economic agents.


  • Experimental Economics

Experimental economics is in practice in which different theoretical models are tested to verify their effectiveness. Logically, this method of behaving has a limited scope, because experimentation in real environments represents a series of risks with the presence of a sensitive element such as economics, and risks are always not assumed.

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