The Advantages and Disadvantages of a Command Economy or Free Market Economy

Authors Avatar

                Reena Gandesha 12.1

                Economics- Mr Fenn

The Advantages and Disadvantages of a Command Economy or Free Market Economy

There are many aspects and views how the government should control the economy and how much involvement they should have in the economy. In the UK we have a mixed economy which is when the government take control on various factors of the economy such as education, the National Health Service, and many others.

        Countries such as Cuba, North Korea, and China have command economies which are economies based on the government controlling the activities of the economy and allocating resources. For China this has proved to be a very successful method as China has one of the fastest growing economies in the world at present. The main advantages of a command economy is that services and goods provided are for the benefit of community and not to make profit and also these services or goods are accessible to anyone. Consumers benefit largely from a command economy as they have fixed prices and as it is all government run, it is operated securely, which is very reassuring to the public as they know they will not be deceived when buying good or services. Another advantage is having a low unemployment rate as the government can provide jobs which will increase GDP along with taxation revenue.

Join now!

        However, there are also disadvantages to this type of economy, the major one is that there will be no competition as everything is government owned and competition is known to lower prices and increase quality of goods and services produced, therefore meaning there will much less advance products in the economy compared to a free market economy. Workers will also have no motivation as they will be on fixed salaries which are very unlikely to be changed, therefore they will have less to work for. Also there will be a limited choice as only certain things will be produced and ...

This is a preview of the whole essay

Here's what a star student thought of this essay

The essay is structured well, offering a balanced argument and then a justified judgement. There are a few slips in sentence structure such as "a significant divided" but for the most part spelling, punctuation and grammar are strong. I would've preferred if the first person wasn't used in the conclusion, but used sophisticated phrases such as "it is clear that" or "it could be argued".

The discussion and analysis in this essay is good. The advantages to the consumers are mentioned for a command economy, however I would've added that there is less income inequality. This is due to a central allocation. A key word which this essay has missed out is "incentive". Whenever I talk about command economies, I mention that there is no incentive to train for a skilled-job, or incentive for a firm to become more efficient. This then lends itself to an evaluative comment about free market economies which are led by incentives, and so are productively more efficient. I think there needs to be some discussion of international trade here. There are very few economies which could supply everything domestically, so trade is important. In a command economy, goods are often of lower quality and so will struggle to trade internationally.

This essay responds well to the question, offering an insight into free market and command economies and posing the limitations and benefits of each. I liked how a real-life example of each type was picked, however there is debate over whether China is now a command economy. Picking a country such as North Korea would've been a better choice.