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FREE MARKET AND CENTRALLY PLANNED ECONOMY?

What are the advantages and disadvantages of both free market economies and centrally planned economies? How does the way each system values economic freedom and economic equity? ***How does each system value economic freedon and economic equity?***

Public Comments

1. The free market system places all the emphasis on the individual. That means the individual is free to choose what products to buy, where to work, how much to work, etc. In a centrally planned economy people are told what job they will do, their told how much of a product they get, they're expected to work a lot and receive little in return. The communist mantra is "From those according to their ability and to those according to their need". This may sound great except it doesn't work in reality. People respond to incentives. If the most effective way of receiving a reward is to act needy rather than to work hard then guess what people are going to do? One may say that a disadvantage of a free market economy is that it is very inequitable. While this is true if you compare a poor person from a free market country to an average one from North Korea or Cuba you'll likely find that the "poor" person from the free market economy is better off than the one from the communist country. So if you'd rather be poorer as long as everyone else is poor too then you can consider the inequality of income from free markets to be a disadvantage and the equality under centrally planned to be an advantage. I'll say again, generally those that are poor in a free market economy are better off than the average person from a centrally planned economy.
2. One advantage a socialist approach has over capitalism is that when key industries are regulated the leaders in that industry are subject to the democratic will of the people. Heads of massive multinational corporations under our capitalist system today do not answer to anyone, they're concerns are not for the common good, the environment or anything else, their only concern is to keep pumping money into millionaires pockets Also under a regulated industry you're cutting out all that money pumped into stock holders. think of it logically, if you and 3 friends decided to mow grass all day to make money and you made $500. who wants to give away $450 of it to a millionaire and split $50 when you can just be the sole beneficiary of your own work and split $500
3. Pure free markets don't work at all http://en.wikipedia.org/wiki/Laissez-faire - they don't provide the public goods that any economy has to have; http://www.maxineudall.com/2010/08/the-road-to-serfdom-isnt-paved.html http://en.wikipedia.org/wiki/Public_good they don't provide enough of the private goods with high positive externalities; http://dsp-psd.pwgsc.gc.ca/collection_2009/fin/F21-8-2003-11E.pdf http://worthwhile.typepad.com/worthwhile_canadian_initi/2010/04/the-private-and-public-costs-and-benefits-of-postsecondary-education.html etc. Centrally planned economies do work, though not very well. The Soviet Union was able to defeat Hitler; rise to become a superpower; etc. http://en.wikipedia.org/wiki/Economy_of_the_Soviet_Union#1930-1970 http://www.pkarchive.org/theory/Russia.html China under the Communists was far more effective a country than was China before the Communists took over. And even Cuba has a much higher per capita income than many countries in the world: http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita They provide the public goods and the goods the planners pay attention to, but don't do well as the diversity of goods increases. On the other hand, all the developed countries (including the U.S.) and all the developing countries (including, now, China) have mixed economies: http://en.wikipedia.org/wiki/Mixed_economy Mixed economies have delivered the goods - literally: http://delong.typepad.com/sdj/2010/10/how-much-does-the-market-organization-of-economic-life-matter.html