Disadvantages Of Economic System

Introduction
This assignment conducts an analysis of the four main types of the economic systems:
1. The Command Economy
2. The Traditional Economy
3. The Market Economy
4. The Mixed Economy

All countries or societies have their own economic system. This enables them to provide for the needs and wants of the economy.

According ti Blecher( 2010 :17), an economic system is the method that every society uses to answer the four basic economic questions – what to produce, how to produce, for whom to produce and where to produce.

We will critically discuss each economic system and also analyse their advantages and disadvantages.

The Command Economy

Overview
Fourie and Mohr conclude that in the command economic system the participants are instructed what to produce and how to produce it by a central authority. They also determine how the output is distributed, because the economy is governed and coordinated by the central authority. ( Fourie and Mohr 2008 : 27)
Here the economic decisions are made by the government where the people have limited influence over how the basic economic questions are answered.

Examples
There are a few command economies in the world right now. North Korea and Cuba are both examples of those. The Soviet Union is one government that made major economic decisions and had directed the State Planning Commission in nearly every aspect of the Soviet economy

Advantages and disadvantages
Advantages Disadvantages
• It can change direction drastically in a short time
• Emphasises on heavy industry and industrial growth rather than production of consumer goods
• Health and public services available at little cost • Its not designed to me...

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...efore we call it the mixed economy.
Here resources can be owned by individuals or even the state according to Blech. The democratic society where the government is elected to carry out the interests of the people so that all can benefit

Examples
South Africa is one of an example of a mixed economic system. The United States is also one of the best examples where there is a combination of the three economic systems.

Advantages and disadvantages
Advantages Disadvantages
• The government gives provision of the essential services
• The private sector is encouraged for profits
• Competition enables the prices to remain low
• There is consumer choice
• Inefficient business behaviour is controlled • Heavy taxes reduces incentives to work
• Less efficient than Private sector
• Excessive control over businesses activity can add costs and discourage enterprise

Conclusion