What is the difference between a market economy and a centralized economy?

Justice rarely triumphs in the world, and a centralized planned economy with the idea of ​​equitable distribution of wealth gradually disappears. The market economy has won a clear victory, on the economic map of the world there are two small states with the still centralized economy.

Find two differences

Economists and politicians offer dozens of signs of how a market economy differs from a centralized one, and the majority converges in only two points.

In countries with market economies, the main form of ownership is private and the regulation of social production takes place according to market laws — supply and demand. A centralized (planned) economy implies regulation from a single center, and the main means of production are in the hands of the state. You can probably still take it on faith that in one case the goal is fair distribution, in the other - efficient production.Of course, a comparison of centralized and market economies is only possible theoretically, in most developed countries planning is used, and state participation in business is far from uncommon.

Which economy is friendlier to people

Vietnamese poster

At one time, we all decided together that the “savage grin of capitalism” is “vile slander and slander” and it is much better to live under capitalism both for the country and for the people. However, more and more often, polls in the former socialist countries show that people have begun to appreciate the more positive qualities of a centralized economy — social security and relatively low stratification of the population by income. In countries with market economies, only very rich countries can afford good social security, although they do it much more efficiently than in the best years, states with centralized economies could. What distinguishes a market economy from a centralized in relation to the population can also be seen in the availability of education and health care. In one case, it is guaranteed, although sometimes very formally, in the other, the availability of training and treatment strongly depends on the level of income.

Market economy forever?

In its pure form, the experiment to build a centralized economy did not end with the collapse of the Soviet Union or China’s market reforms, and more recently, when the last strongholds of socialism - Cuba and North Korea - began to carry out economic reforms. In 2010, Cuba began to introduce market elements into the economy, declaring that this was not a return to capitalism, but strengthening of socialism, North Korea did not announce anything, but was simply carrying out reforms to decentralize the economy and introduce elements of a market economy along the Chinese model.

Happy worker

At the same time, Finland, while Canada and Switzerland had also intended, introduced the payment of unconditional income of 800 euros, which is issued to each resident of the country. This is almost communism. Almost consolidated forecast of the future: digital technologies will effectively plan production and consumption, each will receive an unconditional income sufficient to meet basic needs. For most people, there will be a centralized economy. Want more - welcome to the market.

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