Functions and Criteria of the Economic System – Economy is one of the fields of study that tries to solve the problem of the basic needs of human life through the use of all existing economic resources based on certain principles and theories in an economy that is considered effective and efficient (Abraham Maslow).
Functions and Criteria of the Economic System
Functions & Criteria of Economic System

1. Functions of the Economic System

Economic system has many uses whose functions are very vital for the economy of a country around the world. Of the various economic systems that exist in the world, they have functions in the economy, including the following.
  1. Provide incentives for production.
  2. Function in providing a way / method to coordinate the activities of individuals in an economy.
  3. As a regulator in the distribution of production results to all members of the community so that it can be carried out as expected.
  4. Provide a certain mechanism so that the distribution of production among community members can be carried out properly.

In our country, we find a lot of economic problems, and the government always tries to fight these problems, but even though until now everything has not been done well, then we as good Indonesian citizens are always active in fighting this problem. A small example of what we must do to combat the crisis of economic problems is by trying to study hard, trying to find a broad insight into the world of economics and paying taxes diligently.

2. Economic System Criteria

according to Gregory Grossman (Rahardja & Manurung, 2005; 382) an economic system is a set of components or elements consisting of economic units and agents as well as economic institutions (institutions), which are not only interconnected and interacting, but also to a certain degree with each other. sustain and influence. Or simply the economic system is how the system regulates the economy. In general, we know 3 economic systems, namely the capitalist liberal economic system, the communist socialist economic system, and the mixed economic system.

Economic system that’s good in his opinion Gregory Grossman (Rahardja & Manurung, 2005; 396) which states that an economic system is said to be good when viewed from two aspects, namely;
  • Endurance and Adaptability

There is a wise saying “Nothing is certain in this world, except uncertainty”. Indeed, the reality of life is expressed in the proverb above. Humans are born, live, mature, and die without being able to predict it correctly. That’s why in relation to the human economy, humans compose an economic system. Of course, a good economic system is an economic system that is able to face both short-term and long-term uncertainty.

Regardless of the underlying ideology, an economic system is said to be good if it produces;

  1. Prosperity,
  2. Growth,
  3. Productivity,
  4. Empowerment, and
  5. Maintenance of the environment.

Every country wants good and stable economic growth. In order for these ideals to be realized there are criteria that are owned if an economic system can be said to be relatively good, namely as follows.

  1. Does the economic system in question provide the possibility of achieving a high standard of living?
  2. Is it possible for a steady economic growth?
  3. Does the economic system reasonably respect the economic freedom of individuals?
  4. Does the economic system provide economic certainty for all members of society?
  5. Does the economic system produce goods and services that meet the needs of consumers?
  6. Does the economic system demonstrate an adequate distribution of income?

Reference :

  1. Putong.Iskandar, Introduction to Micro and Macroeconomics:Ghalia Indonesia, 2003
  2. http://myilmu Lintas
  3. Rahardja, Prathama, Introduction to Microeconomic Theory, University of Indonesia, 1999
  4. Salvatore, Dominic, Microeconomic Theory, Erlangga, 1992
  5. Sicat, Gerardo P., Economics. Manila: National Book Store, 1983
  6. Sukirno, Sadono, Introduction to Economic Theory, Rajawali Press, 2002
  7. Sukirno, Sadono, Introduction to Macroeconomic Theory, Rajawali Press, 1994