Are Markets Better?

The controlled market economy means that the country is being centrally planned. Organisations are run in the public interest and profit is not a motivating factor. The government bureaucracy means that everybody has a task to do to help everyone. Critics of communism say it would be impossible for a communist society to plan its own economy. In their view, in a Soviet-style planned economy prices can send the wrong signals to consumers and planners, resulting in decisions that don't reflect the choices they would make if they knew the actual costs and competing demands for those resources. No one has an incentive to work hard and there is no innovation, the consumer has no say in what is produced.

In the long run, it was clear that the controlled, centrally planned economies couldn’t raise the standards of living of its people. Such as people living in Eastern Europe noticed that the Western Europeans were economically developing rapidly while they were staying the same. Eastern Germans could literally see the difference on the Television that the Western German’s standard of living was much much higher. This frustrated the communist citizens who began to rebel against the communist leaders. Ideology was weakening and coercion had to be put in place by these leaders. But eventually President Gorbachov of the Soviet Union led the move to abandon force. As he did so the communist parties of each country gradually weakened and died out.

Communists say in a communist regime, people are all equal to each
other no matter how educated that person is, in the eyes of the government.
For example a Surgeon who is very well educated is equal in status with a
peasant farmer because in communism their is no such thing as lower class,
middle class and upper class. Eliminating economic boundaries which
separate people, benefits the whole society because then we eliminate the
have and have not, as a circumstance it eliminates crime.

Secondly in a Communist economic system people are never unemployed
because the government owns the means of production. Meaning the
governments owns all the factories and stores because there is no private
owner ship in a Communist system. Communism is an internally stable economic system, in that those that participate benefit and those that don't are culled - creating an incentive to participate. It requires common goals and agreed upon rules/laws to allocate responsibilities and resources. If successful, this leads to a spirit of sharing builds stronger social communities, creating a more stable economy. Due to their sense of cooperation, healthy communistic systems are very efficient at distributing resources within their localized areas - particularly in times of need.

These countries did not find the change from closed market economy to free market economy very easy. The invisible hand wasn’t apparent for years and people lived without market forces and the transition process was painful. Because they had been communist  for a very long time large numbers of state-owned businesses were unable to compete with western enterprises because they lacked the experience of finding and implementing efficient production methods. This caused many to fold. Although many of the emerging economies suffered at first from the change to market economy status, there has been some recovery in the more recent years. Standards of living are rising in Eastern Europe, although the distribution of  income is much wider now than under the old regimes. Because there was so much demand a lot of businesses had good opportunites to capitalise on this and make enourmous profits. But some could only just survive. Russia and some of the other states of the former soviet union were having more difficulty. The absence of several systems including business law meant that at the time of the transition was very difficult. In a free, controlled market business is conducted in a reliable way because they are used to it. A poor legal system like the one in Russia makes business very risky.

In conclusion, it can be determined that the concept of "the invisible hand" has a definite place in society. In many aspects of the economy, the free market system will naturally benefit society. When a buyer and seller interact for their mutual gain, the society as a whole benefits. However, there are clear situations in which the free market system would be inefficient or can even fail without some intervention by a governing body. A command economy is the opposite of a "laissez-faire" system where there is a great deal of government intervention. This form of economy fails to take advantage of the beneficial natural market forces and thus, could ultimately fail also. This can be seen in history with the downfall of Russia being one example. How much intervention is necessary and if the Government is taking the right steps is outside the scope of this discussion, but these decisions will play a key role in determining the level of success that an economy or society enjoys.