An economy or economic system is a characterization of how any economy works. Economic systems address 3 issues: what is to be produced, and in what quantities; how production is to occur; and, the how production is to be distributed.
There are 3 main economic systems: traditional, command, and market. A traditional economy relies upon custom or tradition to address production and distribution issues. Traditional economies typically produce to survive, with only modest surplus, and so minimal trade. There are few traditional economies today.
In a command economy, the government decides production and distribution. Command economies were typical in the ancient large-scale civilizations, including Egypt and China. The inept 20th-century “communist” command economy experiment illustrates that the idea of societal progress is a fable.
A market economy relies upon individual initiative to produce and distribute. Market economies are characterized by inefficiencies, overproduction, inequality, corruption, and pollution. As market economies are employed worldwide in the present era, the fruits of civilization owe largely to this economic disorder.