Definition and Characteristics of a Democratic Economic System Indonesia has an ideal foundation, namely Pancasila and a constitutional foundation, namely the 1945 Constitution. Therefore, all forms of community and state activities must be based on Pancasila and the 1945 Constitution.

Economic system existing in Indonesia must also be based on Pancasila and the 1945 Constitution. The national economic system based on Pancasila and the 1945 Constitution is structured to realize economic democracy and serve as the basis for implementing economic development.

Indonesia’s economic system based on Pancasila and the 1945 Constitution is called a democratic economic system.

Therefore economic system Democracy can be defined as a national economic system which is the embodiment of the philosophy of Pancasila and the 1945 Constitution which is based on the principles of kinship and mutual cooperation from, by, and for the people under the leadership and supervision of the government.

In an economic democracy system, the government and all the people, both economically weak groups and entrepreneurs are active in the effort to achieve national prosperity.

Definition and Characteristics of a Democratic Economic System
Definition & Characteristics of a Democratic Economic System

In addition, the state plays a role in planning, guiding and directing economic activities. Thus there is cooperation and mutual assistance between the government, the private sector, and the community.

1. Positive Characteristics of a Democratic Economic System

The following are positive characteristics of a democratic economic system, namely:

  1. The economy is structured as a joint effort based on the principle of kinship.
  2. Production branches that are important to the state and affect the livelihood of the people are controlled by the state.
  3. The earth, water and natural resources contained therein are controlled by the state and used for the greatest benefit of the people.
  4. The sources of wealth and state finances are used for consensus on the people’s representative institutions, as well as oversight of policies in the people’s representative institutions as well.
  5. Citizens have the freedom to choose the work they want and have the right to work and a decent living.
  6. Individual property rights are recognized and their use must not conflict with the interests of the community.
  7. The potential, initiative, and creative power of every citizen are fully developed within limits that do not harm the public interest.
  8. The poor and abandoned children are cared for by the state.

2. Negative Characteristics of a Democratic Economic System

In addition to having an economic system that has positive characteristics, a democratic economic system also has things that must be avoided, namely:

  1. System free fight liberalism, namely a system of free competition that destroys each other and can foster exploitation of humans and other nations so that it can cause structural weaknesses of the national economy.
  2. A system of etatism, in which the state and its state economic apparatus are dominant and push and turn off the potential and creative power of economic units outside the state sector.
  3. Unfair competition and the concentration of economic power in one group in the form of a monopoly that harms society.

Reference :

  1. Putong.Iskandar, Introduction to Micro and Macroeconomics:Ghalia Indonesia, 2003
  2. Rahardja, Prathama, Introduction to Microeconomic Theory, University of Indonesia, 1999
  3. http://myilmu Lintas Hukum.blogspot.co.id/2015/12/pengertian-sistem-ekonomi.html

.