Private Enterprise V.S Planned (command) Economics

private enterprises :

What It Is Not

•   Private enterprises do not include government organizations or business units that are not  owned by governments. Nevertheless, there are private/public partnerships in which private companies partner together in a business with a government or a government agency.  A private enterprise can be as simple as a employed individual or as large as a multinational corporation.



Definition of 'Centrally Planned Economy'

An economic system in which decisions are made by the state or government rather than by the interaction between consumers and businesses. Unlike a market economy in which production decisions are made by private citizens and business owners.

Example

Assume that the market does not work in the best interest of the people, and that in order for social and national objectives to be met a central authority needs to make decisions. The state can set prices  and determine how much is produced.

There are many disadvantages of planned economies. One of them is  It is almost impossible to plan everything, so when something goes wrong that hasn't been taken into account; the entire system begins to malfunction. Historically, planned economies don't efficiently consider breakdowns of machines or equipment. Planned economies don't handle details tat  well.

Another major problem of a planned economy is the inability of the government  to predict the consumer’s behaviour. Economic planning is conducted with the goal of accomplishing social goals, but it cannot assure that consumers will respond as they expected.

Planned economies haven't been very successful in terms of  long-term economic growth and consumer satisfaction. Those nations that still employ economic planning are generally small and struggling.

Although planned economies have not been very successful, no major nation has a completely private enterprise economy. Instead, they employ a system of government influence of the economy, sometimes called an mixed economic system. These systems are characterized by the use of government influence. The government creates tax policy to affect economic decisions.

While all governments try to influence their economies for a variety of reasons, those attempts have been most successful when they leave the ultimate choices to individual economic enterprises. Planned economies have sometimes been successful in the short term they’ve have managed to accomplish stability .

 In theory a planned economy is much better than a private enterprise economy. This is because it has many things in common with communism.  Like communism, planned economy is perfect in THEORY. The problem with this system is, when you give  so much power to a person  over an n economy he starts to violate  your personal liberties, they become  fringed. That person becomes corrupt.

The best economy is a mixture of both planned economy and private enterprise economy. This is would be perfect because the government would  control certain  aspects of the economy and the private control others. Since there are many people in power corruption is no longer an option. With out corruption an economy of a country would progress.