ntrod tion 1.5
the attempts and the successes of the concerned made available to the population freely or at the
economies as to which extent they have been able subsidised prices by the state and some might
to fulfil the needs of their population. be supplied by the market for which consumers
There are two aspects of the challenge that need to pay. Almost all economies of the world
economies face. First, the availability of the goods today follow one or the other kind of distribution
and services required by the population and system. As the socio-economic composition of the
second, the presence of the supply network. Every population of an economy changes, the mixture of
economy has to, at first, guarantee the required the goods and services to be supplied by the state
level of goods and services out of its production and the market get redefined in the economies
process. For this, proper level of production from time to time.
capacity should be built which requires a
particular level of capital formation or investment. organising an Economy
From where the investible funds will be managed
is altogether a separate question. Whether the One issue which has affected the civilised history
investment will come from the government, the of mankind the most and has been a point of
domestic private sector or the foreigners? Once contentious is how the production process in an
these details are cleared and selected as per the economy should be organised. Should production
socio-economic condition of the economy, a should be the sole responsibility of the state/
proper distribution network for goods and services government or should it be left altogether to the
produced is assured. private sector? Again, will it be better to carry on
production with a joint effort—a mixture of state
Distribution netWork moDels and private enterprises?
In the arena of distribution network, we have three Depending upon the dominant view of the
historically existing models—state, market and time in a particular country, different forms
state-market mix. In the first type of distribution of production patterns evolved and different
system, the state (i.e., the government) takes the economic systems finally came up, providing
sole responsibility of supplying goods and services alternative ways of organising an economy. The
required by the population with no payments being three models of economic system which evolved
done by the consumer—the former Soviet Union in the course of human history are basically the
and Communist China being the best examples. different stages in the evolutionary process of the
In the second category comes the market mode of experiments to define a better way of organising
distribution which functions on the basis of price an economy. We must have a concise overview of
mechanism. In this system, goods and services this evolutionary process:
are made available in the market and on the
1 Capitalistic Economy
basis of their demand and supply, their prices are
determined in the open market and finally they The capitalistic form of economy has its origin
get distributed to the population. This was the in the famous work of Adam Smith—Wealth of
distribution system of the capitalist economies— Nations (1776). Adam Smith (1723–1790), the
the whole of Euro-America. The third and the Scottish philosopher-economist professor at the
most prevalent mode of distribution, the state- University of Glasgow, whose writings formed the
market mix, developed out of the experiences of basis of classical economics, had stressed certain
the former two systems. This distribution system fine ideas which were to take fancy among some of
has certain goods and services which might be the western countries and finally capitalism took