Traditional economies feature localized markets and the hand production of goods through methods that are based on the customs, traditions, and religious beliefs of market participants. Traditional economies tend to occur in societies that are mostly rural and agricultural. They are also used by nomadic groups, people who move from place to place as the seasons change or as food animals migrate.

People in traditional economies generally perform the same kind of work that their parents did. In fact, traditional economies often feature multiple generations of families living with or near each other. To the extent that this kind of economy still exists, it does so mostly in developing regions of the world, such as Africa and parts of South America. In the United States, components of a traditional economy still exist among the Amish, especially in Pennsylvania and Indiana.

In command economies, the central government plans most or all economic activity. In these systems, the government often owns the means of production, such as factories, raw materials, and utilities. The government also sets wages, prices, and production goals.

Historically speaking, the best examples of this kind of economy existed in the Soviet Union and other communist Eastern-bloc countries, such as East Germany, Poland, and Hungary. After the fall of the Berlin Wall in 1989 and the collapse of the Soviet Union in 1991, there were just a few countries with command economies: Cuba, North Korea, and China. In China, however, while the nation is Communist in name, there has been significant movement toward privatization of industry and agriculture.

In free-market economies, businesses and individuals have the freedom to pursue their own economic interests. In this kind of economy, the government does not interfere in any way with production, prices, wages, or even safety issues. The market determines all economic outcomes. If consumers do not like a price, they do not buy a particular good. If workers do not like wages or the safety conditions offered by an employer, they seek other employment.

In theory, this type of economy promotes innovation, hard work, and personal choice and responsibility. In reality, a purely free-market economy has never existed. Before the late 19th century, governments often provided subsidies and other grants (such as land for the railroads), and these governments protected new industries, such as New England woolen manufacturing, from foreign competition through the use of tariffs. After the late 19th century, the U.S. government and other governments began to regulate the economy through taxation, rules, fiscal policy, and monetary policy.

Today, most economic systems—including that of the United States—are mixed. In other words, they contain elements of traditional, command, and free-market systems. For example, the Scandinavian countries—such as Sweden, Norway, and Finland—operate on what is called the Nordic Model. These countries promote the possession of private property. However, they also facilitate large-scale collective bargaining of wages between labor and industry and provide an extensive social welfare system.

In the United States, there is a commitment to capitalism. However, the U.S. government does intervene in the markets by regulating some aspects of the economy, such as the setting of minimum wages. The U.S. also has a social welfare system, and its government has, from time to time, directly set prices and wages. Even in the best of times, the U.S. government intervenes in the economy through regulation, monetary policy, and fiscal policy. Finally, although traditional economic practices are on the wane, one can still see remnants of the traditional system in the United States: inheritances, the transfer of small businesses from one generation to the next, and the tradition of caring for older relatives, such as parents and grandparents, in multi-generational households.