Advantages And Disadvantages Of Economic Systems

Economics System Essay
By: Noah Suarez Economics is a way for people to decide how to make the best use of scarce resources. A lot of societies have citizens that have needs and wants but there are not always going to be unlimited resources to satisfy them. The goals of societies are to have efficiency, stability, growth, security, equity, and individual freedoms. Many societies today find that a mixed economy is the best strategy to fulfill the goals of society. Although, people may say that command economies and pure market economies are better economic systems to address economic needs, they carry weaknesses which a mixed market economy can fix. The best economic system is a mixed market economy. A command economy is when the …show more content…
In a command economy the disadvantages are that there is little to no individual freedom and efficiency. In a command economy people cannot pursue their self-interest as the government provides them with everything and even jobs so they lose the incentive to work hard which decreases efficiency. However, in a mixed market economy people are able to have private property, free enterprise, and self-interest which can help them strive to get rich and be able to spend money which goes back into the economy. This also helps contribute to efficiency since people are able to own their own things and work for things they want, this helps them have an incentive to work harder to get more money so they are able to get the things they need and want. In a pure the disadvantages are that people don’t receive security and that there is no equity. Since there is no government regulation, monopolies can form and destroy competition which can eliminate any small businesses that go against the monopolistic power. Then the outcome of this is unequal distribution of wealth. In a mixed market economy we are able to have government help in the regulation of the economy which can eliminate monopolies from forming and are able to stabilize the uneven distribution of wealth with taxes on the rich and helping the needy. In a pure market economy people aren’t given any security …show more content…
People may also say that a pure market economy is more effective that a mixed market economy as competition is what helps the economy grow and that people’s self-interest can sustain the economy. Yet if we look at a command economy, people lose individual freedom and the incentive to work hard which results in a loss of efficiency. In a pure market economy monopolies can form and destroy competition because there is no government to break these monopolies. Since there is no government involvement in businesses for pure market economies then workers don’t have security if they get injured and there wouldn’t be public goods such as roads, dams, and etc. as they are not profitable. A mixed market economy works best as it gives people freedom which was restricted in the command economy and it has limited government involvement in the economy which was not present in the pure market economy. A mixed market economy is the most effective economic