Today governments use several economic systems to coordinate market relations within their countries and on the global market. Economists provide various classifications, however, the two major economic systems that evolved first are planned and market economy. Economic systems explain how major processes in the industry and market are regulated. Over the time, different hybrid economic systems have derived from the basic planned (or command) and market economies.
One of the oldest economic systems is the command economy. Production, distribution, and pricing are regulated by the centralized power. Individual businesses have little power to influence market because governments regulate business activity and distribute resources. All facilities and equipment involved in manufacturing are owned by the government. Command economy can be beneficial if the authority supplies resources wisely and rewards employees involved in manufacturing. Shortage of jobs is rather uncommon in command economies such as socialism.
In the market economy, all processes are regulated by businesses. People start their own business, invest capital in it, determine ways of production, employ workers, pay salaries, and reinvest revenue. Prices are formed by entrepreneurs and further regulated by competition. The market economy is a characteristic feature of capitalist nations. People certainly benefit from managing their own business irrespective of the governmental policy, and consumers stimulate efficiency of companies.
Pure command and market economies are uncommon these days because most economic systems are a combination of both types. In mixed economies, both governments and businesses regulate processes in the market so that each party can benefit from this cooperation.