Winter Is Coming, and The Soviet Cupboard Is Bare – Command Economy Vs. Free Market (Round 1)

http://friedmanseconomy.wordpress.com/2012/09/26/command-economy-vs-free-market-round-1/

  • How is the basic economic problem being handled by the use of coupons? Why might this be less successful than money?
  • Does the article demonstrate the failing of the command or free market based solutions to the basic economic problem?

http://www.businessweek.com/stories/1991-11-03/winter-is-coming-and-the-soviet-cupboard-is-bare

 

In addition to the above below is a link to Mark Johnston’s econfix blog. ┬áThe post highlights the possible negative externalities that have occurred in Berlin with the change in economic systems.

water conservation

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Advantages and Disadvantages – Command Economy Vs. Free Market (Round 2)

http://friedmanseconomy.wordpress.com/2012/10/01/command-economy-vs-free-market-round-2/

Advantages and Disadvantages of a free-market economy

Advantages:

  • Price Mechanism:
  • Self-Adjustment (equilibrium):
  • Human Psychological Aspect:
  • Competition:

Disadvantages:

  • Speculation & Bubble:
  • Undervaluation of Needs:
  • Monopoly & Duopoly:

Advantages and disadvantages of a Command economy:

Advantages:

  • Planned & Greater Predictability:
  • Elimination of Opportunity Cost:
  • Valuation of Services (education, health, etc.):
  • Reduction of Inequality:

Disadvantages:

  • Misallocation of Certain Resources:
  • Lacking Innovation (no choice or variety):
  • Shortages & Surplus
  • Efficiency