What kind of economic system does the United States have?
3 Answers | Add Yours
The United States has a mixed economy. It is a combination of a free market economy and a command economy. Compared with most other countries around the world, it is more towards a free market economy and less towards a command economy.
In most ways, the US has a market economy. People can pretty much do what they want to do economically -- they can go into whatever business they want, make whatever they want, etc. But there are aspects of a command economy. There is a minimum wage, for example. Also, there are environmental rules and safety rules and other such things.
On the whole, though, the US is pretty much of a free market economy.
United States is said to be having a mixed economy. But however It does have some characteristics of a free market economy.
if u placed it in a economic system line showing command economy on one side, mixed economy in the middle and free market economy on the other end united states would stand somewhere between mixed economy and free market economy. (slightly towards the free market side)
United States is essentially a mixed economy as mentioned and although it is regarded as a capitalist regime it does not entirely fulfill the requirements to be referred as such. To explain this point we should further look into these requirements and determine which ones have been fulfilled and what aspect of the economy blends with these requirements to make it a mixed economy. According to Adam Smith a Scottish philosopher who contributed immensely to the fundamentals of capitalism states that for an economic system to be regarded as purely capitalistic it must satisfy the following:-
- Private property rights- These are policies that ensure the property rights of an individual are protected. This offers individuals an opportunity to privately own or make claims of ownership on a particular property.
- Self interest- This is the need of people to pursue actions that will benefit them and their families.
- Freedom of choice- This allows individuals or people to respond to the market for instance a marketer will market a product but it is your choice to either buy or reject the offer.
- Market prices- prices of goods and services are determined by the market forces of demand and supply.
- Competition- This ensures that no single producer gains monopoly of the market. New and existing businesses are motivated to enter the market to satisfy its varied needs.
United States seems to satisfy all the above but it is important to note that the government is in control of major aspects of the economy such as health and education. Since the Great depression the government has continued to grow regulations in certain sectors of the economy with regards to some of the points forwarded by Adam Smith to ensure equitable gains for all its citizens. This eventually led to the establishment of the current mixed economy a shift from pure capitalism.
Join to answer this question
Join a community of thousands of dedicated teachers and students.Join eNotes