THE ECONOMIC ENVIRONMENT

THE ECONOMIC ENVIRONMENT

Economic systems are usually categorized as capitalist, socialist, or mixed. It
is possible, however, to classify them according to method of resource allo-
cation and control (market economy or command economy) and type
of property ownership (private ownership or public  ownership). Ex-
panding this concept to include mixed ownership and control results in the
taxonomy shown in Fig. 2.2. For example, Hong Kong would most likely fit
in block A, whereas the  People's Republic of China would probably fit in
block I, although it might be in the upper left-hand corner of block I. The
United States might fit in block D, although it would be in the upper part of
that block.
    The ownership of the means of production range from complete private
ownership at one extreme to complete public ownership at the other extreme.
In reality, the extremes do not actually exist anywhere. The United States, for
example, is considered to be the prime example of private enterprise, yet
the government owns some means of production, and it actively produces in
such sectors of the economy as education, the  military,  the postal service
(which is quasi-public sector),  and certain utilities. The Soviet Union, which
espouses public ownership of the means of production, allows peasant farm-
ing on a small-scale, private basis. Most countries lie somewhere in the mixed
category, which is very broad  and includes varying degrees of  public and
private ownership. Similarly, the control of economic activity takes place on
a continuum from market to command economies, with the actual situation
lying somewhere in between. Tremendous economic change is currently tak-
ing place, especially in the centrally planned economies.

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