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Definition of Economic System According to Experts

Edukasistan.com - Hello everyone! It holds significance for us to grasp the system's functioning in our everyday lives. This is because the economic system has a significant influence on how resources and wealth are distributed in society. By comprehending the system, we can gain insights into how economic decisions are made, how markets function and how government policies can influence the economy.

Table Of Contents

    This article will delve into an understanding of the system while exploring the perspectives of renowned economists such as Dumairy, Adam Smith, Karl Marx, Milton Friedman, John Maynard Keynes, Joseph Stiglitz and Paul Krugman. Each economist has different views on the economic system and how it should be run.

    Understanding the system has relevance in our daily lives since it shapes resource distribution and wealth allocation within society. Given that each economist possesses perspectives on how to operate this system, we must learn from their insights to enhance our comprehension of the subject.

    • The economic system refers to a country's organization of producing, distributing, and consuming goods and services.
    • According to Dumairy, the economic system must prioritize the well-being of the people.
    • The notion of markets and the invisible hand was introduced to the system, by Adam Smith.
    • Karl Marx criticized the capitalist system and proposed socialism.
    • Milton Friedman advocates for economic freedom and opposes government intervention.

    Definition of Economic System in General

    Definition of Economic System
    Definition of Economic System According to Experts

    In general, an economic system is a framework that governs how goods and services are produced, distributed and consumed in a society. There are recognized types of systems, including capitalism, socialism and mixed economy.

    Capitalism is characterized by ownership of resources and production by individuals or private companies. In this system, market forces significantly determine prices and resource allocation.

    Socialism involves state or collective ownership of resources and production. The primary objective of socialism is achieving equality and fair distribution. A mixed economy combines elements of both capitalism and socialism, with resources and production being owned by both entities as well as public sectors.

    Definition of Economic System According to Experts

    Understanding the economic system is very important in everyday life because this system affects the distribution of resources and wealth in society. With a good understanding of the economic system, we can better understand how economic decisions are made, how markets operate, and the impact of government policies on the economy.

    Gaining insights from economists' perspectives is crucial for comprehending the concept of a ecnomic system. Each expert has different views and approaches in analyzing and understanding the economy. Let's explore some economists and their viewpoints on the system.

    1. Dumairy

    Dumairy, an economist, offers a standpoint on the economic system. He believes that for Indonesia to grow, it is crucial to focus on developing the industrial sector and promoting foreign investment.

    Dumairy contends that by enhancing the sector, Indonesia can increase the value of products and generate more employment opportunities. Additionally, he supports government policies encouraging investment as he believes they can expedite progress.

    2. Adam Smith

    Adam Smith, an economist widely regarded as the founding father of economics, advocates for free markets and highlights market power as an efficient mechanism for regulating the economy.

    According to Smith, free markets promote efficiency through competition among producers, which drives innovation and enhances product quality. He also argues that in an environment, prices of goods and services are determined by market forces than government intervention.

    3. Karl Marx

    Karl Marx, a philosopher, economist and political theorist, is famous for his theory of communism. Marx posited that capitalism leads to inequality and the exploitation of the working class.

    Marx criticized the concept of ownership of resources and means of production, advocating for the elimination of the system as a means to achieve societal equality. According to Marx's vision of communism, resources and production would be collectively owned by society, and economic decisions would be made based on the needs of society.

    4. Milton Friedman

    Moving on to Milton Friedman, an economist with a reputation for his economic views. Friedman firmly believes in the power and opposes government intervention in the economy.

    Friedman argues that free markets naturally generate efficiency and foster prosperity within society. Additionally, he emphasizes freedom as vital when making choices.

    5. John Maynard Keynes

    John Maynard Keynes, an economist who proposed government intervention as a solution to revive economies during periods of recession or depression.

    John Maynard Keynes proposed monetary measures to boost consumer spending and investment to promote economic growth.

    6. Joseph Stiglitz

    Joseph Stiglitz is an American economist known for his critical views of neoliberalism. Stiglitz argues that free markets do not always produce economic efficiency and social justice.

    Stiglitz emphasizes the significance of government intervention in regulating the economy and safeguarding interests. Additionally, he critiques the inequality and social disparities produced by the capitalist system

    7. Paul Krugman

    Lastly, let's discuss Paul Krugman, another economist renowned for his government intervention perspective on the economy. Krugman asserts that during a recession or depression, the government must provide stimulus to revive the economy. He also highlights how fiscal and monetary policies play a role in addressing unemployment and economic inequality.


    To better understand the economic system, it is essential to study the views of various economists such as Dumairy, Adam Smith, Karl Marx, Milton Friedman, John Maynard Keynes, Joseph Stiglitz, and Paul Krugman. Each has a unique view and provides different perspectives on the best way to regulate the economy, which helps expand our understanding of this topic.

    Understanding the system is essential as it directly affects our lives. This article explored insights into the system and perspectives from notable economists such as Dumairy, Adam Smith, Karl Marx, Milton Friedman, John Maynard Keynes, Joseph Stiglitz and Paul Krugman.

    Different experts hold perspectives on the system, each offering valuable insights into its regulation and development. By comprehending these viewpoints, we can understand how the economy can be managed and its impact on our lives.

    For instance, having a grasp of the system enables us to make financial decisions and manage our finances effectively. Furthermore, it allows us to comprehend the dynamics of the economy and how they influence our lives.

    Therefore, we must continually learn and enhance our understanding of the system. By doing so, we can make wiser decisions and better prepare ourselves for the changes that occur in the economy.

    Frequently Asked Questions (FAQs)

    1. What does "Economic System" refer to?

    The term "economic system" refers to a framework that governs the production, distribution, and consumption of goods and services within a society.

    2. Who are some experts contributing to our understanding of the Economic System?

    Prominent figures who offer insights into the system include Adam Smith, Karl Marx, John Maynard Keynes, and Milton Friedman.

    3. How does Adam Smith define the Economic System?

    Adam Smith, an economist, believed that an effective economic system should be founded on the principles of free markets or laissez-faire.

    4. What is the Economic System according to Karl Marx?

    Karl Marx was a German philosopher and economist who argued that a sound economic system is an economic system based on the principles of socialism or communism.

    5. What is the Economic System according to John Maynard Keynes?

    John Maynard Keynes was an English economist who argued that a sound economic system is based on the principle of government intervention in regulating the economy.

    6. What is the Economic System according to Milton Friedman?

    Milton Friedman was an American economist who argued that a sound economic system is based on free markets and minimal government intervention in the economy.

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