'Command vs Market Economy\r'

' summons frugal System: When we talk about the marge â€Å"command” in historical context; whether it relates to sparing, political or warfare, command has always been vested in the give of the few. If we relate â€Å"these few” to a group of mickle who exercise power in terms of making decisions (be it economic/social/political and so forth for ALL the raft they govern, we c either this process or system a â€Å"Government”. In a command economic system, this government basically owns and controls most of the economic imaginations of the country.This â€Å" assertion” economic system is also known as â€Å"socialism” or â€Å"communism” (McConnell †Economics) In any economic system decisions have to be make regarding production of goods and services, price setting, education, expenditure on infrastructure, resource allocation, resource/property ownership, resource distribution, establishment of industries and businesses, salari es for individuals etc. In a Command Economic System, all these decisions are taken by the Centre/Government.Public in general/ individuals in general do non have any â€Å"say” in such(prenominal) government decisions. Practically speaking, â€Å"Absolute” command thrift doesn’t exist in this world, even get on perfect â€Å"command economy” of Soviet Federal/Russia had mystical/ securities industryplace influences in its system. McConnell states North Korea and Cuba as near to perfect Command Economic Systems. Pakistan besides took a step towards socialism/nationalization in Zulfiqar Ali Bhutto’s era in 1970s, which later had to be discontinued in wake of emerging capitalistic economic forces at that time.Market Economic System As opposed to Command Economic System, Market Economic System is characterized by near to minimal fibre of Government in governing and directing economic operation of the country. In other words, it is simply the other of a command economic system discussed above. The undischarged features of a market economic system includes â€Å" cloistered” ownership of economic resources (i. e. , land, labor, capital and entrepreneur), coordination of economic activity through markets, production and distribution decisions aken by private businesses and firms, determination of market prices and quantity through forces of exact and supply (rather than government) etc. The concept of market is inherent in understanding the captioned subject. Market is a step forward where buyers and sellers of products come together and through their buying and sell behaviour, price and output for the economy is determined. The sellers seek to maximize their objectives (primarily profit) through engaging in practices that may compromise societal benefits at large (self interest).To keep profitable, businesses initiate/invest in R&D to come upon economies of scale to minimise cost and this lust for mark et power often leads to competition/inter opposition amongst firms which leads to production of goods and services at less than socially optimum level. Though practically speaking a perfect market economy can’t exist (government intervention is required in authoritative areas) Hong Kong, United States and Ireland (ref McConnell) are nearest examples of free market economies in today’s world, where Government’s intervention is minimal.\r\n'