The Advantages and Disadvantages Of A Market Economy. 27/9/96 Command and Market economies Neil SamtaniWhen considering the advantages and disadvantages of command and marketeconomies, you may notice that they are usually straight forward, yet, bothadvantages and disadvantages may merge at times, resulting in an unclear issue,that could be debatable whether it is for the good of the society, or for thegovernment. Therefore, what I am trying to say, is that no matter how hard youtry, it is always impossible to debate on which economic system is better. Bothhave their good points and their bad, but, each is aimed towards a communitythat will make use of it.
This community has usually got a majority of peopleeither rich or poor, and, social class usually effects the way people may choosetheir government. In a market economy, the advantages are normally aimed towards themiddle/upper class in a community. This is why we normally find them in richercommunities (i. e. England, USA).
The concept of a market economy is to allowpeople to get through life by themselves. Government usually does little tochange the economy, and, the control is given to the people with the money, or,rather, the people with the businesses. The main people in such an economy areusually the consumers, the producers, the owners of private property, and, thegovernment. These are the people with the power. The whole system revolvesaround private gain rather than the interests of everyone in a community.
Sincethe rich are in control of the economy, their decisions result in the richgetting richer and the poor getting poorer. This is a perfect example of what Imentioned before, which is the way that you can not categorise all statements. This would be an advantage for the rich, but, a disadvantage for the poor. However, governments may also affect the situation, resulting in the richgetting richer, and, the poor managing to stay alive. The entire idea of the market economy is freedom.
The freedom for peopleto do what they want, make what they want, and, sell what they want (to acertain extent). This can also be described as being able to decide WHAT isgoing to be produced (what products), HOW it is going to be produced(organisation, etc. ) and FOR WHOM it is going to be produced. This is definitelyan advantage, as freedom and rights are allowed. Besides this, the norm is thatyou’re wage is affected by the amount you work.
The harder a person works, themore you would expect to get paid. This is another advantage, since people arepaid by the amount they work : a lot of work results in a high outcome, and ahigh income for the person. This is an incentive to work too, since, the pointstated previously can affect a person negatively, since, not enough work canresult in pay cuts or, even job losses. Since the economy is controlled by the rich, a problem that is bound tooccur is the economic growth rates increasing and decreasing. This can result inpeople either spending a lot of money (ending up with more people beingemployed) , and, people not spending a lot of money (ending up with people beingfired, to save money). This means that there is little job security, which isone of the disadvantages we are facing today.
This means that not working hardcan result in no source of income. However, since the economic growth changes somuch, nothing can be certain. You can be rich one moment, and bankrupt the next. This also means that a man willing to work can not have a job, and below thepoverty line, which is another disadvantage.
There are not always enough jobs toaccommodate the people with the ability to work. Advantages DisadvantagesEveryone has rights and freedom to build what they wwant, sell what theywant, and buy what they canafford. Poor people can not necessarily affordmuch. Since there is little government interaction with the community, thepeople have to manage to live without their help. It is usually possible to increase living standards by increasing yourlevel of work, or your quality of it. The economy is controlled by the rich,and, therefore the richhave the power.
Their decisions would always be to getthemselves richer, and, that makes the poor poorer. There are strong incentives built into the system to innovate andproduce high quality goods (high quality goods = higher income, low qualitygoods = lower income / unemployment)Since the economy is controlled by thepeople, stable growth is is very difficult. This can result in job losses, dueto a the economic cycle. (boom followed by bust) This result in low job security. Free markets provide choice for the incentives to innovate, and theeconomy to grow. There are bound to be losses.
Since job security is low, andthe economy can not always be predicted, bankruptcy is and poverty can creep upon anyone.
