Market vs Planned Economy free essay sample

When considering the advantages and disadvantages of command and market economies, it may seem like one economic system is better than another, but it all depends on what the viewer deems important. In a market economy, individuals, rather than governments, make the majority of decisions regarding work, consumption, and production. In contrast, a command system is based upon government decision making concerning production, output of goods and services, and use of resources. Both have their good points and their bad, but, each is aimed towards a community that will make use of it. In a market economy, the advantages are normally aimed towards the middle/upper class in a community. We will write a custom essay sample on Market vs Planned Economy or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The concept of a market economy is to allow people to get through life by themselves. People have the ability to make as much money as they can and do what is in their best interest. The whole system revolves around freedom and private gain where in a planned economy, the system is based upon government control and equality among everyone in a community. The key decisions of what products to produce, how the products are going to be produced, and for whom they are going to be produced are the suppliers prerogative unlike the case of the centralized economy. In a free market, competition is encouraged among businesses to increase efficiency and to allow sellers the freedom to increase or decrease prices according to changing market conditions. Almost always, the demand for a good or service will be met. With government’s little interference in the operation of markets except to mainly protect its property rights, a free market system has it’s downfalls too (enotes. om : economic systems). One major problem in a market economy is that it doesnt always provide the basic needs to everyone in the society. The weak, sick, disabled, and old sometimes have trouble providing for themselves and often slip into poverty. With a market economy, companies are continually being forced out of business due to bigger and better technolog y and the competition of lower paid workers. As a result, those companies employees are now unemployed and losing their means of income. Lower paid workers, who can’t consume goods and services like the average employer produces a problem of overproduction of goods. Individuals look at the free market system as social inequality. The rich are getting richer, and the poor are getting poorer (Market Economy: Advantages and Disadvantages By Bertell Ollman). Living in a planned economy, advantages would be seen as government trying to eliminate all private property and distributing its goods and services equally. Every decision based on the production of goods and services is guided by what they believe is good for the country. If done correctly no one is in poverty and no one is wealthier than another. Social services are also stressed in a planned economy. The government will provide equal health care, education opportunities, and make sure all people are fed. A final major advantage of command economies is that they are very stable. Command economies will never have sudden depressions. This form of economic equality also has its disadvantages. In command economies there is very little freedom. The individual usually doesnt have the opportunity to decide what they want to do for a career and they have no control over the goods they receive. Another major problem is that there is little reason for innovations, hard work, or quality of the work. Since everyone’s income is equal, there isn’t a desire to work hard. Lastly, there is little focus on consumer wants (www. economywatch. com: Command Economy). In conclusion, every country has scarce resources and the two economic systems mentioned above are designed to allocate these resources, through a production system, to provide output for their citizens. They both have their own unique positives and negatives. And even though the market based economy is better overall, it really depends on what the viewer considers important.