Types Of Economies{On the Basis Of Control,Development,Global Relation’s } (in Hindi)

Lesson 4 of 7 • 49 upvotes • 9:59mins

Vikas Kumar Singh Tomar

1. Socialist Economy: There is still another classification. Socialist Economy and Capitalist Economy. In the Socialist Economy, as that of the U.S.S.R. and China, all means of production, farms, factories, etc., are socialised. That is, they belong to the State. There is no private sector; it is all public sector enterprise. The instruments of production are owned and managed by the State in the interest of general welfare. All profit goes to the State to be ploughed back in further economic development or to be spent on the welfare of the people. There may not be absolute economic equality but equality of opportunity is guaranteed. Employment is guaranteed. The resources are allocated not according to demand or wishes of the people but by a central authority with a view to the overall interests of the State. 2. Capitalist Economy: Such an economy prevails in the U.S.A., the U.K., Western Europe .and most other countries of the world. In this economy, economic .decisions regarding production are taken by private entrepreneurs who are solely guided by the expected rate of profit based on consumer’s preferences, actual or anticipated. Thus profit motive is the mainspring of all economic activity. The institution of private property, dominant role of the entrepreneur, uncoordinat­ed nature of economic activities, competition as well as co-operation and class-conflict are some of the important features of a capitalist economy. Mixed Economy: What may be called a new type of economy seems to be shaping itself. In Britain, which may be regarded as the home of capitalism and free enterprise, certain important industries have been nationalized. India is also following her example. Britain nationalised the Bank of England and the steel industry (steel industry was later denationalized by the Conservative Government). India has nationalised the Reserve Bank of India, the life insurance business and 14 major commercial banks. If the Government of India had not been handicapped by the lack of funds and trained personnel and if it had not been engrossed in more urgent problems, India would have also nationalized certain industries. The Government of India declared in 1948 that for ten years there would be no nationalisation, which meant that when 10 years were over, steps towards nationalisation might be taken. According to the industrial policy of the Government of India announced in 1948 and later in 1956, some industries have been put under State control. These industries are owned by the Government. Such industries may be considered to constitute the socialized or public sector. In a mixed economy, the private sector (capitalism) and public sector (socialism) exist side by side. There are industries which are owned by private capitalists; there are industries which are owned exclusively by the State; and there are industries in which the State and the private capitalists form partnerships.