Spectrum of Economic Systems & Systems of Government
This spectrum depicts the three primary economic systems and how they compare with systems of government that are relevant to the United States (U.S.). Governments are about control, what will be controlled, how much those things will be controlled, what methods will be used to exert or implement that control, and by whom.
While individual economic policy issues are frequently discussed in politics, the underlying economic ideologies are rarely discussed. This is particularly problematic as an economic ideology is often at the root of a policy debate. If you are unaware of the underlying ideological goal of the policy under consideration then you are entirely reliant on rhetoric, propaganda, and the charisma of those encouraging or discouraging support for the policy when deciding whether to support or oppose the policy issue personally.
There are four basic economic systems: a market economy, a mixed economy, a command or planned economy, and a traditional economy. It could be argued that a traditional economy could be considered one of the three main economic systems. However, that is debatable.
A command or planned economy is an economy that the government is attempting to artificially control an economy. A market economy is an economy that is being allowed to function naturally or with minimal intervention. A mixed economy is exactly what it sounds like, an economy that the government is attempting to control in some substantial ways but that is being allowed to function naturally in other ways.
Market Economy
You can see in the chart above and below that the U.S., as an American form of government (see Americanism and Republic), was designed to operate based on a market economy, as one of the primary goals of Americanism was to establish a limited government. The American system of government was not only designed to operate with minimal governmental controls but its design included significant safeguards to prevent the government from being able to take more control than what was allowed by the U.S. Constitution.
Mixed Economy
In comparison, you can see that a mixed economy or Market Socialism is a mixture of a command or planned economy and a market economy. While a market economy can be a goal it is more likely to be a transitional phase between a command or planned economy and a market economy. Many European nations have been incrementally increasing governmental control over aspects of their economies and appear to be considering whether or not to continue to increase or decrease not just national governmental control but throughout Europe through the European Union (E.U.).
Command or Planned Economy
In complete opposition to the U.S. market economy, you can see that a command or planned economy attempts to artificially control the economy to accomplish various goals. Russia, under the United Soviet Socialist Republic (U.S.S.R.), unsuccessfully attempted to implement a command or planned economy prior to its collapse. The goal was to create a utopian nation where everyone worked together for the greater good of the state and where everyone lived peacefully as equals with no one having more than anyone else. In order to transition from a market economy to a command or planned economy the U.S.S.R. intended to incrementally implement first Socialism and then ultimately Communism.
Traditional Economy
Not included on this chart is the traditional economy, or subsistence economy. In spite of its name, a traditional economy is a bit of a wildcard as it is only truly definable on an individual basis. Generally speaking a traditional economy is likely to be rural, based on local customs and traditions, and operate and based on a system of bartering and/or trading.
