What is the economic system of the United States? The economy of the United States is based on a mixed economy. The country’s economic system combines elements of a market economy and a planned economy.
The United States has a highly diversified economy with a mix of high-tech industries, manufacturing, and services. It is the world’s largest economy, with significant sectors including finance, healthcare, retail, and entertainment. Agriculture and natural resources also play a role.
In the United States, the economy is composed of a private sector, consisting of individuals and businesses that make autonomous decisions based on self-interest, and a public sector, where the state determines the production and distribution of certain goods and services. No country is purely capitalist or purely communist.
What do the freedom indexes tell about the economic system of the United States?
Now, to determine if a country is mostly a market economy or a planned economy, it is useful to examine some economic indexes. For instance, according to the 2022 Index of Economic Freedom, which measures the ability of every human to control his own labor and property, the United States is ranked 25th globally and 3rd in the Americas indicating that the country has a mostly free economy.
In a similar way, the 2022 Freedom House index evaluates the state of political rights and civil liberties globally. Generally, market economies tend to align more with democracy and freedom, while command economies tend to be characterized by greater state control and fewer democratic and civil liberty protections. The United States gets a score of 83/100, which qualifies it as Free.
The United States is a country where the government does not control what people do for political reasons, and people have the freedom to choose (what, how much, and how to produce, whether to buy or not, selling price, etc.)
The Link Between Public Sector Employment and the Economic System of the United States
An indicator of the extent to which the State is involved in the economy is the number of public sector employees. In the United States, according to ILOSTAT, the number of public sector employees as a percentage of the total workforce is 13.6% (2021).
In the country’s mixed economy, the number of public sector employees as a percentage of the total workforce varies based on the specific policies and practices adopted by the State.
Some economic activities are left to the private sector while others are under government control. The bigger the public sector the closer is the economy to being a command economy.
What do the biggest companies in the United States say about the country’s economic system?
The biggest company in the United States should also be looked at, as well as whether it is a state-owned or private company. In this case, Apple is an American tech giant based in Cupertino, CA, known for its innovative products like the iPhone, iPad, and Mac.
Apple Inc. is a publicly traded company, meaning its ownership consists of numerous shareholders who own the company’s stock. The largest institutional shareholders as of February 2021 were the Vanguard Group, which owned over 1.3 billion shares or about 7.83% of the outstanding shares, BlackRock with 1.11 billion shares (6.60% of shares outstanding).
It shows how the biggest companies in the US are privately owned.
The historical factors that have influenced the economic system of the United States
The US has evolved from a largely agrarian economy to a mixed economy in the last century. This was due to the rise of industrialization, the growth of the service sector, the emergence of new technologies, and the increasing role of government in the economy.
These changes have allowed for greater economic growth and stability, while also providing more opportunities for individuals and businesses.