The Advantages and Disadvantages of Traditional, Command and Market Economies

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In the world of today there are three major types of economies.
Traditional economies are dictated by tradition, customs, and, to
a large extent, religion. As time goes on this type of economy is
becoming more and more scarce. Command economies, such as
the former Soviet Union, North Korea, and Cuba, have a central
government that controls just about everything in the society.
The third and final major economy is the market economy. This
is a mostly free economy, where the central government is weak
and the businesses do as they please to make a profit. Each of
these economies has many positive and negative aspects.

Traditional Economy

One of the few advantages existing in a traditional economy is
that the roles of individuals are clearly defined. Every member of
the society knows exactly what they are to do and most don’t
have any complaints about it. There are also many disadvantages
to this type of society. These societies are often very slow to
change and when new technologies are introduced, these ideas
and techniques are discouraged.

Command Economy

Command economies have many advantages to it. One
advantage is that equality is focused on. The government tries to
eliminate all private property and distribute its good equally. If
done correctly no one is in poverty and no one is wealthier than
another. Social services are also emphasized in this type of
economy. The government will provide equal health care,
education opportunities, and make sure all people are fed.
A third advantage to this type of economy is that it is capable of
rapid change for major problems. The government owns the
companies, so if production needs need to be shifted into a
different area, the government is capable of doing it rather
quickly.
A final major advantage of command economies is that they are
very stable. Command economies will never have sudden
depressions. Although command economies may seem like a
utopian form of economics, they also have many disadvantages.
In command economies there is very little freedom. The
individual usually doesn’t have the opportunity to decide what
they want to do for a career, and they have no control over the
goods they receive. Another major problem is that there is little
reason for innovations, hard work, or quality of the work.
Since no one makes more money than everyone else, the people
feel like there is no reason to work hard. A third disadvantage is
that there is little focus on consumer wants. Finally, when it
comes to minor day-to-day changes, the government has a hard
time coping with them.

Market Economies

In recent years, market economies have been coming more and
more popular. Three major examples of market economies are
The United States, Japan, and France. One major advantage is
that market economies can adjust to change easily. If there is a
demand for one thing, companies have the ability to change
what they produce instead of having to go through too much
government protocol first. Rational self-interest in market
economies is also encouraged. People have the ability to make as
much money as they can and do what is in their best interest.
Another positive to market economies is that the government
tries to stay out of the way of businesses. Although the
government sets certain standards businesses must follow, for
the most part businesses can do as they please, allowing them to
produce what they want, how they want. A fourth advantage to
the market economy is that there is a great variety of goods and
services for consumers. If there is a demand for a good or
service, the demand will almost always be met in a market
economy.
Although there are a lot of positives to market economies, there
are also many negatives that go along with it too. One major
problem with this type of economy is that it doesn’t always
provide the basic needs to everyone in the society. The weak,
sick, disabled, and old sometimes have trouble providing for
themselves and often slip into poverty.
Another problem is that it becomes hard for a government with
so many private businesses to provide adequate defense,
education, and health care to its people. A third disadvantage to
this type of economy is that there is uncertainty in the business
world. One company could easily be forced out of business
causing all of its employees to become unemployed and lose
their means of income.
The final major disadvantage is that occasionally there are market
failures. This can cause some companies to become way to
powerful and become a monopoly. If the government doesn’t
step in, the monopoly can take advantage of the consumers and
charge ridiculously high prices.

Conclusion

Each of these types of economies has its own unique positives
and negatives. It may seem like one economic system is better
than another, but it all depends on what the viewer deems important.