Pros and cons of a market economy: A Comparative Analysis

Pros and cons of a market economy - is the eternal theme of debate among economists opposite directions.Consider this question in more detail.

Signs of a market economy following:

- private initiative manufacturer in question "what to whom and how much to produce", production, price and quality controls are more market demand and competition conditions, government intervention is minimal;

- the organization of the market allocation of scarce economic goods;

- the right to private property is a key, it is not disputed by the State.

possibility of any person to own capital and use it at their own discretion to make a profit is an inalienable right of a citizen (which is why the system has received the name of capitalism);

- economic activity of economic entities directly regulated market mechanism of supply and demand.

market economy in its pure form is almost not found in today's world.Under it should be understood, rather, a mixed economy with a minimal presence of the state and maximum market impact - in this system, the pros and cons of a market economy are taken into account as much as possible.

Let us now consider in more detail the pros and cons of a market economy.

Pros market economy.

  • major role in the economy of this type of play markets.They determine the degree of luck that a business transaction and form the sum of the net profit earned by the business entity.They also dictate the proportion of allocation of scarce economic resources between market participants.The undeniable advantage of the market mechanism is that it interests the producer-seller to think about the benefits of the customer and try to satisfy their needs in order to maximize their profits.If he does not think about it, it will not get the desired product distribution and will not be profitable, but more cunning and lively competition, predusmotrevshie it will take its place;
  • from the preceding paragraph implies the following plus a market economy - competition between manufacturers ensures the highest level of the goods, otherwise it simply will not buy.That is why the market economy is the most effective means for the development of technological progress and promote scientific research practically applicable;
  • capitalist economy perfectly cleanses the market of unscrupulous manufacturers and unnecessary and outdated technologies;

market failures.

  • matter how perfect the market mechanism does not seem, it does not protect market participants from abuse, aggressive advertising campaigns and not too imposing desired or harmful goods.It is therefore necessary to combine the advantages of market regulation with government control.
  • Concerned only their own profit the manufacturer does not always take into account the impact of their activities on society as a whole and can not calculate all the consequences - so the scope of the environment, wages, pricing of essential commodities must be regulated by the state
  • market economy does not always act firming onstate integrity - it inevitably generates unemployment, social problems and other consequences of competition can cause a social explosion or undermine state power.

comparing the pros and cons of a market economy, it is easy to come to the logical conclusion that the market economy in its pure form without elements of planning and proper state regulation is good only at the stage of economic development and accumulation of primary capital.In the future, this type of economy can hurt, and completely destroy the economic benefits received and cause unrest in the country.

most advanced economically developed countries have long appreciated the advantages and disadvantages of the market economy, and have chosen for themselves the most appropriate system, where state intervention in harmony, tradition and the pros and cons of a market economy.