I Command (economy) you to read this...

For my homework assignment this week, I was given the task of defining three forms of economy, depending on the governments level of control. So I started off by simply defining those terms, which is surprisingly easy with the large content of Google at my fingertips. However, problems arose when I was urged to actually prove I knew what they meant. I must confess that I do know a little bit about them, but explaining them to the whole of my Internet community? Oh my goodness me. Here goes:

Numero Uno: Command Economies.
Definition: An economy where supply and price are regulated by the government rather than market forces. Government planners decide which goods and services are produced and how they are distributed.

My teacher started off our teachings on these three types of economies by giving us a list of six countries: North Korea, Cuba, Hong Kong, USA, Sweden and New Zealand, and we were then asked to put them along a continuum stretching from Command Economies, through Mixed Economies and ending at Free Economies. As he could have easily predicted, I didn't get that many in the correct positioning, but one I did get right was good old North Korea.
North Korea is a Command Economy, as the government controls what supply and trade happens within that country (because they're Communist... Even an ex GCSE history student knows that!). So basically, if the North Korean government decides it wants to make lots of iPhone 5s (topical, eh?) then they demand that companies do. That's an example of a Command Economy.
Another is Cuba (which I didn't put down on my sheet, as other than cigars, I know very little about what the Cuban economy does or how it is operated). So, using Cuban cigars as my example, if Cuba wants to maintain it's status as the best cigar making country on the planet, then the government will demand that industry creates more cigars.

Numero Dos: Mixed Economies.
Definition: An economic system in which both the private enterprise and a degree of state monopoly  (usually in public services, defence, infrastructure, and basic industries) coexist. All modern economies are mixed where the means of production are shared between the private and public sectors.

I, in my own mind, am regarding these economies as 'the middle ones'. They're like trench coats: they fit under the umbrella of summer coat and also winter coat, but are never warm enough for the winter weather, but always slightly too thick on a hot day. Mixed economies, in the same way as trench coats, possess some key components of a command economy in that they are partly controlled by governments; and they also possess the main component of a free economy (that is, free trade).
Oddly, I made a mistake in matching the list of countries to the mixed economy box. Even more oddly, in fact, is that when I discussed this post with my father, he made exactly the same mistake as I did (like father like daughter...) and there I was thinking he was economics oracle...
Anyway, we both made the mistake of not classifying the USA as a mixed economy, which (according to my Economics teacher) it is. Huh. Along with the US, New Zealand and Sweden both have mixed economies too, as their economies are partly controlled by their governments and partly by private businesses and organisations.

Numero Tres: Free Economies.
Definition: A market economy based on supply and demand with little or no government control. A completely free market is an idealised form of a market economy where buyers and sellers are allowed to transact freely (i.e. buy/sell/trade) based on a mutual agreement on price without state intervention in the form of taxes, subsidies or regulation.
(i.e. not an economy where everything is free. Oh, how wondrous that would be...)

I begin with a quote that my father delivered me (again, in our weekly economics discussion) from an origin of which I can't quite remember, but nonetheless, it got the point of free economies across: "Doing business in the US and UK is hard work; but doing business in Singapore and Malaysia is vroom vroom". Why is this, I hear you all crying. The answer is a simple one, and one that is featured in the above definition (which you probably haven't read, which is why I'm repeating it!): there is very little/no government intervention. We were given the example of Hong Kong as a Free economy, but I think that Malaysia and Singapore are more Free because they aren't controlled by a Communist country, mainly because of my father's recent interjection of business into those two areas, and of course, his colleague's fabulous quote.

To recap:
Command economy: where business and trade are commanded by the government
Mixed economy: where business and trade are controlled by a mixture of government and private business
Free economy: when businesses are free from government intervention.
So there you have it, my version of killing three birds with one stone: homework, blog post and revision. Not bad for an evening of 'hard work'.