The Importance of Planned Economy

A planned economy is one where the government or state has total control over every aspect of the economy from obtaining and allocating resources to production, prices and distribution. This type of economy can have a stabilizing effect because there are no fluctuations, but there are negative implications too, such as not being able to move with the times and not being able to handle any changes. This form of dictatorship also has no concern for the consumer: Everything is what it is, and if someone does not like it, there is no point voting with their feet and taking their custom elsewhere like they would do in a free or mixed economy, because nothing changes.

Free markets and mixed economies mean that the consumer is king, or queen, because they are able to control where they spend their dollar, and if they don’t like the product or the service that they are getting they can complain, and if that doesn’t resolve the issue, they go somewhere else. This means that producers of goods and services are bound to try and please the consumer because their success depends upon it.

There are some who argue that marketing pressures have gone a long way in removing individual choice because we are all subliminally controlled by advertising almost as strongly as being controlled by the dictates of a planned economy. This is open to debate, but ultimately the consumer still does have a choice of what he or she buys, and therefore is king or queen.

A joint venture partner from a planned economy would have great difficulty understanding this notion because it is totally alien to the system of economy that they espouse.