Market Economies

• Market economies are based on principals of capitalism. Consumer choice drives what businesses thrive or fail and private enterprise contributes a profound impact to the overall function of a market economy. In market economies, government plays a peripheral role and allows the private business community and citizens at large to determine what products and services come and go. Government enforces certain regulations on businesses---in regards to environmental and product safety, for example---and may step in to assist the financial system only when the economy is in decline. The United States and Japan are examples of market economies.
  
  

Features of the U.S. Economy

• The constitutional principle of "life, liberty and pursuit of happiness" has embodied the principal of cultural and economic freedom in the United States of America since its founding days. The American dream proclaims that a man can make himself into anything he desires. The drive to excel and obtain the American dream supports a profit motive as the primary concern at the heart of a market economy. Business owners can design their business' image, alter its products and change business models---outsourcing work to other countries, for example---to ensure profit and success. Entrepreneurs compete with similar businesses for a consumer's attention and money.
  
  

Command Economies

• Command economies are historically modeled as wartime economies. Large swaths of Europe, Cuba and the nation of Russia, for example, have participated in or continue to expound command economy theory. In contrast to market economies, the haul of the financial system runs through administrative measures of the federal government. Government agencies dictate product prices, directives and regulations. Private businesses are a very small factor in countries with command economies, and they are subordinate to the political winds of overall government control.
  
  

Traditional Economies

• Traditional economies are found in many developing nations. With little access to first-rate technology, education and capital, developing and third-world nations rely most on customs to guide economic life. Farmers and local market systems remain largely unchanged from generation to generation, and function in similar capacities as they did years ago. Bartering between family, friends and neighbors in communities also help sustain the existence of a traditional economy.