Diane Costagliola is a researcher, librarian, teacher, and has published articles on private finance, buying a home, and foreclosures.
Diane Costagliola is a researcher, librarian, teacher, and has published articles on private finance, buying a home, and foreclosures.
John Maynard Keynes, an English economist, believed that natural market economies were not well equipped to respond to recessions and advocated government intervention in business cycles.
In a market economy, prices are set by the decisions of consumers and producers, each acting in their self-interest. The profit motive and competition between businesses provide an incentive for producers to deliver the most desirable, cost-effective products at the best price.
The type of economy can also influence a country’s political landscape. Milton Friedman argued that command economies were vulnerable to authoritarian regimes because economic freedom is strongly related to political freedom.
A blended economy combines the elements of a market economy and a command economy, in which the government intervenes in the market to prevent shortages and solve economic problems.
A command economy allows the government to mobilize a country’s resources to achieve social objectives that would be difficult to achieve through market outlets alone. In times of war or crisis, many governments would likely resort to elements of a command economy, such as rationing or price controls, to maintain social stability. For example, during the COVID-19 pandemic, the US government ordered pharmaceutical corporations to begin mass producing Covid tests and vaccines, at a volume unattainable by purely market-driven players.
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International Monetary Fund. “What is capitalism?”
Boston University. The Power of Capital: An Introduction to Class, Domination and Conflict”, pages 9-10.
International Monetary Fund. “What is Keynesian economics?”
Public service broadcasting. “Milton Friedman”.
University of Alabama at Birmingham: The Implications of an Abusive Command Economy for North Korea’s Rural People. “
The economist. “Cubans approve of small and medium-sized businesses. ”
Hoover Institution. “The Future of Capitalism”.