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The advantages and disadvantages of a market economy

The Advantages and Disadvantages Of A Market Economy.

27/9/96 Command and Market economies Neil Samtani

When considering the advantages and disadvantages of command and market

economies, you may notice that they are usually straight forward, yet, both

advantages 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 the

government. Therefore, what I am trying to say, is that no matter how hard you

try, it is always impossible to debate on which economic system is better. Both

have their good points and their bad, but, each is aimed towards a community

that will make use of it. This community has usually got a majority of people

either rich or poor, and, social class usually effects the way people may choose

their government.

In a market economy, the advantages are normally aimed towards the

middle/upper class in a community. This is why we normally find them in richer

communities (i.e. England, USA). The concept of a market economy is to allow

people to get through life by themselves. Government usually does little to

change 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 are

usually the consumers, the producers, the owners of private property, and, the

government. These are the people with the power. The whole system revolves

around private gain rather than the interests of everyone in a community. Since

the rich are in control of the economy, their decisions result in the rich

getting richer and the poor getting poorer. This is a perfect example of what I

mentioned 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 rich

getting richer, and, the poor managing to stay alive.

The entire idea of the market economy is freedom. The freedom for people

to do what they want, make what they want, and, sell what they want (to a

certain extent). This can also be described as being able to decide WHAT is

going 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 definitely

an advantage, as freedom and rights are allowed. Besides this, the norm is that

you're wage is affected by the amount you work. The harder a person works, the

more you would expect to get paid. This is another advantage, since people are

paid by the amount they work : a lot of work results in a high outcome, and a

high income for the person. This is an incentive to work too, since, the point

stated previously can affect a person negatively, since, not enough work can

result in pay cuts or, even job losses.

Since the economy is controlled by the rich, a problem that is bound to

occur is the economic growth rates increasing and decreasing. This can result in

people either spending a lot of money (ending up with more people being

employed) , and, people not spending a lot of money (ending up with people being

fired, to save money). This means that there is little job security, which is

one of the disadvantages we are facing today. This means that not working hard

can result in no source of income. However, since the economic growth changes so

much, 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 the

poverty line, which is another disadvantage. There are not always enough jobs to

accommodate the people with the ability to work.

Advantages

Disadvantages

Everyone has rights and freedom to build what they wwant, sell what they

want, and buy what they canafford. Poor people can not necessarily afford

much. Since there is little government interaction with the community, the

people have to manage to live without their help.

It is usually possible to increase living standards by increasing your

level 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 get

themselves richer, and, that makes the poor poorer.

There are strong incentives built into the system to innovate and

produce high quality goods (high quality goods = higher income, low quality

goods = lower income / unemployment) Since the economy is controlled by the

people, stable growth is is very difficult. This can result in job losses, due

to a the economic cycle.(boom followed by bust) This result in low job security.

Free markets provide choice for the incentives to innovate, and the

economy to grow. There are bound to be losses. Since job security is low, and

the economy can not always be predicted, bankruptcy is and poverty can creep up

on anyone.

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