Market economies and planned economies are usually opposed. These models have a number of fundamental differences. Let's consider them in more detail.
General information
The market economy and the planned economy are primarily opposed on the political line. The latter, in particular, is associated with capitalism. This usually implies the liberal development of the economic structure. The command economy is associated with socialism. At the same time, they mean the specific state of the economy in the Soviet years. On the other line, the market economy and the planned economy are opposed by the method of labor integration. The first is the exchange method, and the second is the technological method.
Political line
Some experts believe that a market economy and a planned economy cannot be tied to a specific form of government. This position is substantiated by the following arguments. Experts point out that a market economy today not only does not reject, but, on the contrary, actively uses planning. In particular, it is widely used inside large corporations. In addition, capitalist, but absolutely planned economic systems are known in history. Such a situation, for example, took place in Germany during the Second World War. The country had a strict plan for the production of defense products for a specific period of time throughout the state. In addition, the interaction of related industries was clearly specified.
The specifics of labor integration
Professionalization and differentiation are used in the workplace to increase production efficiency. They are compensated by the integration of labor. It, in turn, is achieved either through the formation of technological chains, or through exchange at a cost in the market. The first option can be used only for the execution of production tasks. This is not to say that it acts as the basis of a planned economy. This is due to the fact that she herself also develops production tasks in accordance with the analysis of economic activity and the state of society. This, in turn, requires the use of market parameters. Nor can we name the method of integration through an exchange that delimits the second structure of the economy under consideration. Of course, it occupies a priority position, but at the same time in the market economy the method of the technological chain is applied. For example, this is the case in conveyor production.
Key difference
The economic system is characterized by negative feedback. This means that the inconsistency between the demand and supply indicators will be sought to minimize. This process is called regulation. The key difference between the structures under consideration is the specificity and method of minimizing this mismatch. The basis of a planned economy is centralized, compulsory and informed regulation. It is carried out through production. In the market model, regulation is spontaneous, autonomous. It is implemented through prices.
Characteristic of a market economy
The economic structure consists of state management institutions, enterprises, and the population. All of these subjects interact with each other using direct and feedback. In theory, 2 extreme states of the management system are allowed. The first assumes an absolute absence of state management of enterprises. Firms in this case are completely autonomous and independent. They freely carry out their activities, make exchange transactions. This is the general characteristic of a market economy. Any effects on it can provoke changes. Nevertheless, she will be able to adapt, since she has a certain margin of stability. It is worth noting that the crisis of overproduction will not necessarily accompany it. It is considered by theorists as a product of the capitalist system, and not the functioning of the market. Inside the enterprises, the technological method of labor integration is mainly used; between the companies, the exchange method.
Regulation specifics
The market model does not need the setting of government agencies. She has the ability to self-regulate. It lies in the fact that attempts by manufacturers to change the cost of production in relation to the equilibrium affects the demand. Its change is aimed at maintaining the price balance. Since the mechanism of self-regulation operates, monopolists cannot infinitely increase the value of goods. Its marginal value will be limited by declining demand.
Benefits
The market economy is inherently focused solely on making the most profitable exchange. In other words, the model does not solve social and other problems. When it is implemented, a systematic approach is excluded, that is, far from all factors and consequences are taken into account. Mainly only profitability is taken into account. Regulation within the system in the short term is carried out by price changes. The key advantage of the model is its speed. This is due to the fact that inertial production is not involved in price regulation. The entity that produces products responds to demand automatically, almost instantly through value and with a certain slowdown through investment of capital in the most profitable sectors.
Team Economy
This is the second extreme state of the economic structure. Another name for it is administrative-command. Regulation is carried out through government agencies from the center. Moreover, within the economic sphere, feedback between entities is rather weak. Businesses receive directions from the center. It also receives signals from the population and producers. In fact, the administrative-command model can function in the absence of a directorate in enterprises. This is explained by the fact that all decisions are made in the center and surrendered down. This model is quite functional. However, the conditions of a planned economy require an operational structure and a perfect arrangement of the central apparatus, the availability of fast and reliable channels for providing feedback.
Tasks
The planned economy system is projected. Therefore, it involves the possibility of setting and implementing a variety of tasks. However, they are not limited solely to economics. The tasks that can be solved with the help of this model also apply to environmental, defense, social and other areas. The relevant government agencies are engaged in their development. At the same time, a systematic analysis of the state of society is carried out, signals from the population, cost and technological evaluation of alternative projects are taken into account. In the normal functioning of the model, the coordination of supply and demand indicators is carried out not by means of prices, but by adjusting production. However, in some cases, a market mechanism may also be used. For example, price regulation is used to prevent product shortages.
Intermediate state
This is the name of the transition from a planned economy to a market one. This condition is different in that the features of both models are present in the economic structure. Along with this, in a transitional state, there is a transformation of all relations in the economic sphere, and not just of individual components. Most foreign and Russian researchers identify the following signs of the intermediate phase:
- The priority of volatility over sustainability.
- Strengthening the uneven development of the economy, manifested in crises.
- The growth of randomness, randomness, spasmodic.
- Increasing the multivariance and alternative development of the economy.
- An increase in the number of contradictions, increased tension and conflict in society in connection with the divergence of interests.
- The emergence and functioning of special transitional forms.
- The historicity of the intermediate state.
- The specificity of the contradictions.
All formerly once socialist states had one task - to switch from a planned type of management to a market one. It was decided by governments in different ways. Meanwhile, in all countries, the transition phase has shared trends.
Structure liberalization
It involves the introduction of a set of measures aimed at drastically reducing or lifting restrictions and prohibitions. Liberalization also provides for the removal of state control over all areas of management. Researchers identify a number of key areas of this activity. First of all, price liberalization is carried out. It involves the removal of state control over the process of value formation. At the same time, there is a transition to pricing in accordance with the indicators of supply and demand. Further, liberalization of operations of economic life is carried out. The state monopoly on economic activity is canceled, and opportunities for doing business are provided. Changes begin in foreign trade. It also removes the monopoly of power on economic relations with foreign partners, opens the way to world markets for domestic producers.
