/ / Pros and cons of a market economy: comparative analysis

Pros and cons of a market economy: a comparative analysis

Pros and cons of a market economy - this is the eternal theme of disputes between economists of opposite directions. Let's consider this issue in more detail.

The signs of a market economy are as follows:

- private initiative of the manufacturer in matters"What, for whom and how much to produce", production volumes, price and quality are regulated to a greater degree by market demand and the conditions of competitors, state intervention is minimal;

- market organization of distribution of limited economic benefits;

- The right of private property is the key, it is not contested by the state.

The ability of any person to own capital anduse it at own discretion for profit is an inalienable right of a citizen (that is why the system received the names of capitalism);

- Economic activity of economic entities is regulated directly by the market mechanism of supply and demand.

Market economy in its pure form practically does notoccurs in the modern world. It should be understood, rather, a mixed economy with a minimal state presence and maximum market influence - it is in this system that the pros and cons of the market economy are taken into account as much as possible.

Let's now take a closer look at the pros and cons of a market economy.

Pros of market economy.

  • The main role in this type of economy is played by markets.They determine the degree of success of a particular economic transaction and form the amount of net profit that the business entity receives. They also dictate the proportions of the distribution of limited economic resources between market participants. The indisputable advantage of the market mechanism is that it interests the producer-seller to think about the benefit of the buyer and try to maximally satisfy his needs in order to maximize his profit. If he does not think about it, then his goods will not get the right distribution and will not bring profit, and the more cunning and brisk competitors who foresee this will take his place;
  • From the previous point the following plus followsmarket economy - competition between producers ensures the highest level of the product, otherwise it will simply not be bought. That is why the market economy is the most effective means for the development of technical progress and the stimulation of practically applicable scientific developments;
  • The capitalist economy perfectly cleans the market from unscrupulous producers and unnecessary and obsolete technologies;

Disadvantages of a market economy.

  • No matter how perfect the marketmechanism, it does not protect market participants from abuse, aggressive advertising campaigns and the imposition of not too necessary or harmful goods. That is why it is necessary to combine the advantages of market regulation with state control.
  • Concerned only by his own profitthe manufacturer does not always take into account the consequences of its activities for society as a whole and can not calculate all the consequences - therefore, the sphere of ecology, wages, pricing of essential goods should be regulated with the help of the state
  • The market economy does not always workon state integrity - inevitably generated by it unemployment, social problems and other consequences of competitive struggle can cause a social explosion or undermine state power.

Comparing the pros and cons of a market economy, you canit is easy to arrive at a 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 the accumulation of primary capital. In the future, this type of economy can damage and completely destroy the economic benefits received, as well as cause unrest in the state.

The most advanced economically developed countries in the worldhave long appreciated the advantages and disadvantages of a market economy, and have chosen the most appropriate system for themselves, where state intervention, traditions and all the advantages and disadvantages of a market economy are harmoniously combined.

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