Discussion of Economic System

Continuing the discussion in the previous article about the economics history, this time I will explain the understanding of the economic system.

Economic System:

1. Market economy System / liberals: an ideology of liberalism / capitalism
2. Centralized economic system / state / socialist: the ideology of communism / Marxism
3. Mixed economic system: ideology does not include the above systems; of government intervention

ECONOMIC PROBLEMS :

1. What should be produced?
   
   • In the liberal market economy system: resolved through the price mechanism in the market through a process of market equilibrium.
   • In the centralized economic system / socialist: determined by the planning committee appointed by the dictator or ruling party.
   • In the mixed economic system: is determined by the government through taxes, interest rates, subsidies, directly controls, etc. can replace the operating functions of the price mechanism in determining what will be produced.
2. How to produce it? (More combination of production factors)
   
   • In the liberal market economy system: resolved through the price mechanism in the market to obtain the lowest production costs.
   • In the centralized economic system / socialist: determined by the planning committee appointed by the dictator or ruling party.
   • In the mixed economic system: determined by government policy measures.
3. For whom to produce? (How does the total output is divided between different consumer)
   
   • In the liberal market economy system: resolved through the price mechanism in the market, the economy will produce commodities that satisfy consumer purchasing power.
   • In the centralized economic system / socialist: determined by the planning committee appointed by the dictator or ruling party.
   • In the mixed economic system: determined by government policy measures, such as through taxes (the rich) to be distributed in the form of subsidies to people.

Characteristics of Market Economy System:

1. Everyone is free conduct of economic activities
2. Every person has free capital goods and other property
3. Economic activities undertaken by the private / individual
4. Each person was given the freedom to consume goods and services
5. Production and distribution activities in the push by the principle of seeking maximum profit, solely for personal
6. Every entrepreneur free competition, free pricing and contracts with anyone

Weaknesses Market Economy System / Liberal:

1. Large investors have a dominant position in competition
2. Achieving maximum benefit private interests dedicated
3. Difficult to achieve equitable distribution of income
4. The occurrence of human exploitation
5. It often happens social unrest
6. Countries that apply: American, English, French, German, Dutch

Characteristic of Centralized Economic System:

1. Every person does not have the freedom to try
2. Every person does not get the recognition of property rights
3. All economic activity regulated by the central government
4. Economic resources and the means of production fully controlled by the state / government
5. Every person has a social status and economic level of the same

Weaknesses Centralized Economic System:

1. People often find it difficult to obtain needed goods
2. This system can turn off individual creativity
3. In countries that use this system often social unrest
4. Countries that use the common socialist system covering all the existing shortcomings
5. Countries that apply: China, Cuba, Bulgaria, Vietnam, Czech, Romania, and Poland

Types of Economic Sciences:

1.Positive Economics: learn or discuss about what or how the economic problems faced by a society actually completed.2.Normative Economics: learn or discuss about what should be or how the economic problems faced by a society should be solved.

Science In Development of Economic Thought

1. Islamic as a living system (way of life)
2. The position of reason in Islamic and the impact on the development of science
3. History of economic thought in Islamic

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