In our societies we have two types of economies, planned and free
market economies. Most countries have mixed economies and only three have truly
planned economies. Though the topic stirs up a lot of debate both economies
have their virtues and their drawbacks.
Merriam-Webster defines free market
economy as follows: "an economy in which
most goods and services are produced and distributed through free
markets." This type of economy is also known as capitalism. In this form
of economy, like the definition explains, there is no government interference
and private ownership of businesses and profit is encouraged. The economic
problem is not handled by the government but primarily by the consumer and the
trends of the times. This economy gives people in it incentives for working and
becoming part of the economy by promising them the rewards of their labor.
Economic freedom is usually followed by political freedoms and play an
important role in a functioning society. If a free market economy works at its
full potential all people should receive benefits, not just tycoons and the
high class, as it's described in the "trickle down" theory. Though
these might be great advantages there are also drawbacks like unemployment and
the lack of social benefits provided by the government. The desire for
maximized profit can also harm the environment and "bulldoze" necessary
industries like soap that might not generate as much profit as lucrative jewelry
industries.
Planned economy is define by Merriam-Webster as
follows: " an economic system in which the elements of an economy (as
labor, capital, and natural resources) are subject to government control and
regulation designed to achieve the objectives of a comprehensive plan of
economic development ."
Similarly, the system has its high and low points. Many people don't agree with
the idea of a planned economy but throughout history many governments have
turned to this form of economy to best serve the people. Pros might be low
unemployment rate, a focus on necessary industries, more careful allocation of
resources and the idea that each person matters and works for the good of the
whole. Cons could be the enabling of a black market and informal economy to
meet the desires of the people, the laws of supply and demand don't really
exist, people do not have incentives to work hard for their way of life, people
do not have the freedom to choose what they want to consume.
Personally, I would
prefer to live in and be part of a free market, or capitalist, economy because
of the freedoms that come with it. I would enjoy having the guarantee that my
hard work will pay off and that the quality and importance of my work will be recognized and rewarded. Apart from that having the choice to consume what I please
and have a range of innovative products to choose from also appeals to me. I also believe that
there is no better alternative when it comes to economic systems considering that capitalist economies have long endured where command economies have not.
