Introduction

The following is a tongue-in-the-cheek explanation or different economic systems using two cows as an example:

SOCIALISM

You have two cows.

You give one to your neighbour.

COMMUNISM

You have two cows.

The State takes both and gives you some milk.

FASCISM

You have two cows.

The State takes both and sells you some milk.

NAZISM

You have two cows.

The State takes both and shoots you.

BUREAUCRATISM

You have two cows.

The State takes both, shoots one, milks the other, and then throws the milk away.

TRADITIONAL CAPITALISM

You have two cows.

You sell one and buy a bull.

Your herd multiplies, and the economy grows.

You sell them and retire on the income.

SURREALISM

You have two giraffes.

The government requires you to take harmonica lessons.

AN AMERICAN CORPORATION

You have two cows.

You sell one, and force the other to produce the milk of four cows.

Later, you hire a consultant to analyse why the cow has dropped dead.

https://organizationsandmarkets.com/2009/02/25/21-economic-models-explained/

There are three main types of economic systems:

  • traditional
  • command
  • market

Then there is also a mixed system, which is a combination of the main types.

Before we discuss these types of economic systems, watch the following video from the beginning to 1:45 minutes:

Activity

Do the following activity before you proceed:

Given the three types of economic systems, which one do you think is the predominant economic system in South Africa?





The South African economy does have elements of a traditional system, but it is not the predominant (principal/leading) system. For example, many sons or daughters take over the family business out of a sense of duty or make economic decisions based on customs or beliefs.

The South African economy does have elements of a command system but it is not the predominant (principal/leading) system. For example, the government control some parts of the economy, like setting a price for petrol and diesel or providing public goods and services, like roads and waste management.

While the market plays a dominant role in the South African economy, it is not a purely market system. We have many free markets but there is also government influence, therefore we do not have a pure market system.

The predominant economic system in South Africa is mixed because we have elements of a market system, a command system and a traditional system.

The South African economy has elements of a traditional, command and market system and it is therefore regarded as a mixed system.