Free Trade V.S. Command Economy Essay -- Economics

Free Trade V.S. Command Economy =============================== Introduction: Politicians, countries and ideologies from all over the world have for years been torn between what they should follow and believe. Countries quarrel over which policies should be adopted and what, how, for whom have been the economist's fundamental question. Adam Smith preached for market economies often referring to "the invisible hand" Karl Marx preached for command economies often referring to "The proletariat will over run the capitalist class" These two men have substantially shaped the way countries have decided to run their economies. Not forgetting the names of a great deal of other Their works were published in volumes, therefore I will not attempt to integrate any of their work in this project, but instead I will refer to some of their ideologies. One would think that these two men were totally different from each other, but in actual fact they are very similar. They both wanted to change the way their societies ran things.  · Resource allocation  · Resource ownership  · Type of incentives  · Level of government decision making The 2 major economic systems are market and Marxist: The first is Capitalism: an economic system characterised by private ownership of the factors of production, market allocation of resources, use of economic incentives, decentralised decision making. E.g.(the US adopts an economic system very much similar to the one above but does have some forms of state intervention like the Defence) The second is planned socialism: an economic system characterised by state ownership of the factors of production, the use of moral, resource allocation and economic plan and central... ... thus queues for staple food were lengthening and demand was soaring. For most commodities supply had dropped because inter-trading with the USSR had also ceased. These ex-communist countries were each specialised in supply certain resources (i.e. iron, coalà ¢Ã¢â€š ¬Ã‚ ¦) but after the break of control from Moscow this was no longer possible. The transition in 1991 was less difficult for Poland because they already used market forces in agriculture. The USSR succeeded in sending the first man in space during communist rule In Russia investment and business were failing to settle because of the old bureaucratic system still in place, as the example goes (Its hard to teach an old dog new tricks). Another example of failure was that of Military expenditure, production fell, as well as space research, the two earlier accounting for 20% of the GDP in the USSR.