Pure Free Market Economy vs. a Planned/Commanded Economy
When considering the advantages and disadvantages of the differing economies it quite often seems that one is significantly better than the other until you start to investigate further into what is important to the individual or the country itself. In terms of a compassion between a Pure Free Market verses a Planned economy my first instinct was that a Pure Free Market would be better. However, there are good and bad points to both. Economists benchmark economies on a scale of 1 – 10 this is a way to describe the nature and characteristics of differing economies.
On a scale of 1 – 10 a Pure Free Market economy is more towards a 10, as this is a market which has no economic intervention and regulation of the rules and laws is by the state. The population are encouraged to own their own properties, run their own companies, and the labour prices are based on the market in terms of supply and demand. This enables the labour to be sold to the highest bidder. Conversely in comparison to a Planned economy in which the government or the Central State Planning Agency of the country determines the price of goods and service, in very communist countries such as Russia, China, and Korea the government owns everything and monitors not only imports and exports but also the information stream into the country. The population in contrast to a free market do not own their own land or housing.
A Planned Economy is at the lower end of the spectrum and is an economic system in which the government or state manages the economy. This type of economy can be referred to as a command economy or centrally planned economy in which the state or government controls all major sectors of the economy and formulates all decisions about their use and about the distribution of income, very similar to a communist state. The government dictate what should be produced, how it should be produced, how much and when goods should be...