This was explained many years ago by the famous Scottish poet, Robbert Burns, who wrote, the best laid plans of mice and men gang aft agley, or in the English translation, often go astray.
We live in a world in which seven billion people are all making their own plans. It is virtually impossible to get everybody to go along with any given plan, even in a more limited area such as a single country or a single city.
The USSR used to make economic plans based on the ideal that everybody would work together for the common good. But it turned out, not too many people wanted to do that, and they preferred to work selfishly for their own personal good.
jgjjeajojeio
jgjjeajojeio
Centrally planned economies can only be successful if they are incredibly small. Imagine A single group in America trying to control all the prices in the countless markets - it would simply not be possible. Therefore, most centrally planned economies eventually turn into some sort of free market economy. When prices are determined by the give and take of supply and demand, they are much easier to maintain.
the most extreme example of a centrally planned economy are china,hongkong,cua and north korea
I don't quite understand your question, isn't the definition of a centrally-planned economy one in which the government plans the economy? I imagine that in most centrally planned economic schemes the government would either determine the prices or set a cap for essential goods.
jgjjeajojeio
jgjjeajojeio
Centrally planned economies can only be successful if they are incredibly small. Imagine A single group in America trying to control all the prices in the countless markets - it would simply not be possible. Therefore, most centrally planned economies eventually turn into some sort of free market economy. When prices are determined by the give and take of supply and demand, they are much easier to maintain.
North Korea is the most centrally planned economy in the world. Most others allow for *some* degree of private trade. Some other less centrally planned economies are: - China - Russia - Cuba
the most extreme example of a centrally planned economy are china,hongkong,cua and north korea
I don't quite understand your question, isn't the definition of a centrally-planned economy one in which the government plans the economy? I imagine that in most centrally planned economic schemes the government would either determine the prices or set a cap for essential goods.
Communism and Socialism
A government is involved in central planning because most governments are the center of social and legal planning for the countries they represent. The United States is an example of a government that centrally plans many aspects of the country.
While most developed nations today could be classified as having mixed economies, they are often said to have market economies because they allow market forces to drive most of their activities, typically engaging in government.
Centrally Planned Economy
Sweden. The government is in complete control of everything, and they pay a lot of taxes, which results in them having universal health care. Unlike Canada, Sweden pays for university, day care, ect.
Central Planning: A centrally planned economy relies on a party in power to decide what resources should be allocated to various demands as they see fit.Free Market: A free market economy relies on prices to determine where demand should be filled and to what extent.Because of these differences, an economy that is centrally planned is usually inefficient in their allocation of resources to each market. They decide beforehand which areas will get resources, restricting the supply and setting a price with no knowledge about the consumer's choice.A free market is much more adaptable, using price as a communicator, supply, demand and price interact to form equilibriums that satisfy market clearing outcomes. This system is much more efficient in that the people who value the goods most are able to get them. This is the idea, it doesn't always work perfectly.