How is the market different from the economy?

The difference between a planned and a market economy

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Planned economy


Counter term to Market economy. In the Planned economy all data are collected by government agencies planning enable.
With this data, future developments should be calculated in such a way that they can be deliberately and effectively (according to Targets) can be controlled. Planned economy is only possible if a state has the necessary power to enforce it; so it remains unclear whether a democratic state with constantly changing majority relationships really is planned economy can work.

The Planned economy faces four problems:
1. How is it correct? different Branches of production depend on each other
2. How does it adjust production to the future needs of the population?
3. How does she motivate the working people so that Targets to be met
4. How does it prevent excessive Planning management (Bureaucratization)
Previous attempts one Total planned economy have failed.
Market economy
The market was the most important institution of capitalism.
The term Market economy today competes with the term capitalism and is intended to emphasize that an economy that satisfies the needs of society is a Market economy have to be.
Market economy is the economic term for a state of the economy in which the course of the economic process is largely determined by individual economic plans (consumption, production, investment plans); their coordination is regulated by the am free Market according to supply and demand forming prices (price mechanism).
One of state interventions completely free market economy corresponded to the ideas of early liberalism whose conviction of a "pre-stabilized harmony of the national economy" has not been confirmed by economic development.
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When using this document please cite it as: "The difference between planned and market economy", https://e-haushaben.de/Hauslösungen/D1468-Marktwirtschaft-Der-Unt real-von-Plan-und-Marktwirtschaft.php, accessed 20.05.2021 10:05

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