Exercise 1- Planned Economies versus Mixed Economies PDF

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JaLynn Roy Prof. Williams BUSI 101-OL1

Comparison of Capitalism, Planned Economies, and Mixed Economies

In the world today, there are at least three consecutive powers in the world: Capitalism, Planned Economies, and Mixed Economies. They all have their advantages and disadvantages. Each national government has to choose the economic strategy that it believes is the most reliable approach to improve and sustain its economy. Capitalism is the economic concept developed based on the writings of Adam Smith. Capitalism according to (Kelly and Williams BUSN¹¹: introduction to business) benefits the nation by having four fundamental rights; the right to own a business, the right to private property, the right to free choice, and the right to fair competition. Based on these ideals, the government doesn't have any control over private companies; therefore, these private companies and individuals have the right to their property and capital goods; this the freedom of choice. Freedom of choice is the right for many businesses to do what they want for as long as revenue increases. Companies may reduce prices to attract more consumers or raise rates to deliver a better-quality product (Ross How Do Mixed Economic Systems and Pure Capitalism Differ?). Consequently, capitalism is also called a free market economy and is in stark contrast to a planned economy by a government or command economy. Capitalism may, in my view, be one of the best economic strategies for entrepreneurs and startups. On the other hand, a

planned/command economy is on the opposite side of capitalism. As a planned economy, business decisions are made entirely by the government. Planned or Command Economy according to (Hall Command vs. Mixed Economy: What's the Difference?) is where the government controls the market costs of goods and services and determines whether to distribute products and services in the most desirable areas. Planned economies are divided into two main groups, capitalism, and communism. Many assume that this economic strategy will be more productive with the support and influence of the government. That is why some countries worldwide are still following this strategic example, including China and North Korea. In other words, people rely solely on the state for food, housing, income, and health, so this strategy, unlike capitalism and a mixed economy, does not allow private companies to do certain things, as there is no free market (Ross). Mixed Economy, last but not least, is very similar to capitalism. A mixed economy enables individuals to manage private companies and property, but also, according to (Comparing Economic Systems) the government is involved in several key businesses, such as the postal service, military, parks, and schools. A Mixed Economy sounds like the best economic policy since most countries in the world, including the United States, have a mixed economy. Mixed economies prefer and continue to support private and public enterprises, making both the people and the government thrive. Every economic policy has its pros and cons but choosing what is best for human equality should be a statewide moral responsibility.

Works Cited

Kelly, Marce, and Chuck Williams. BUSN¹¹: Introduction to Business. Cengage, 2019. Ross, Sean. “How Do Mixed Economic Systems and Pure Capitalism Differ?” Investopedia, Investopedia, 6 Feb. 2020, www.investopedia.com/economics-4689800. Hall, Mary. “Command vs. Mixed Economy: What's the Difference?” Investopedia, Investopedia, 8 Apr. 2020, www.investopedia.com/ask/answers/033015/what-differencebetween-command-economy-and-mixed-economy.asp. “Comparing Economic Systems.” Ushistory.org, Independence Hall Association, www.ushistory.org/gov/13b.asp.

Capitalism How goods are produced How prices are formed Major Ideals -

Results -

Mixed Economy

• Markets can operate freely • Markets are regulated by with no rules government laws • Efficiency • Efficiency • Supply and demand • Supply and demand • Taxes • Businesses are only • Workers and consumers form focused on profits unions to get rights and • Competition among protections businesses will produce • Government makes laws to the best ideas and protect businesses, workers, products to improve and the economy society & income • Taxes used for public works and government to improve society • Exploitation and suffering • Unions obtain workers’ rights of workers • Government protects • Economic crashes and workers and businesses recessions can happen • Economy is more stable, almost every decade fewer recessions

Command/Planned Economy • Government control of the economy • Government sets the prices • Government controls the means of production and should protect equality among workers

• Workers are treated equally with some only earning more because they work harder and for more hours • Government is the top social class; they have all power...