You are here: Home » Economics » The Advantages and Disadvantages of Traditional, Command and Market Economies

The Advantages and Disadvantages of Traditional, Command and Market Economies

An article on the advantages and disadvantages of the three most common economies in the world.

In the world of today there are three major types of economies. Traditional economies are dictated by tradition, customs, and, to a large extent, religion. As time goes on this type of economy is becoming more and more scarce. Command economies, such as the former Soviet Union, North Korea, and Cuba, have a central government that controls just about everything in the society.

The third and final major economy is the market economy. This is a mostly free economy, where the central government is weak and the businesses do as they please to make a profit. Each of these economies have many positive and negative aspects.

Traditional Economy

One of the few advantages existing in a traditional economy is that the roles of individuals are clearly defined. Every member of the society knows exactly what they are to do and most don’t have any complaints about it. There are also many disadvantages to this type of society. These societies are often very slow to change and when new technologies are introduced, these ideas and techniques are discouraged.

Command Economy

Command economies have many advantages to it. One advantage is that equality is focused on. The government tries to eliminate all private property and distribute its good equally. If done correctly no one is in poverty and no one is wealthier than another. Social services are also emphasized in this type of economy. The government will provide equal health care, education opportunities, and make sure all people are fed.

A third advantage to this type of economy is that it is capable of rapid change for major problems. The government owns the companies, so if production needs need to be shifted into a different area, the government is capable of doing it rather quickly.

A final major advantage of command economies is that they are very stable. Command economies will never have sudden depressions. Although command economies may seem like a utopian form of economics, they also have many disadvantages. In command economies there is very little freedom. The individual usually doesn’t have the opportunity to decide what they want to do for a career, and they have no control over the goods they receive. Another major problem is that there is little reason for innovations, hard work, or quality of the work.

Since no one makes more money than everyone else, the people feel like there is no reason to work hard. A third disadvantage is that there is little focus on consumer wants. Finally, when it comes to minor day-to-day changes, the government has a hard time cooping with them.

Market Economies

In recent years, market economies have been coming more and more popular. Three major examples of market economies are The United States, Japan, and France. One major advantage is that market economies can adjust to change easily. If there is a demand for one thing, companies have the ability to change what they produce instead of having to go through too much government protocol first. Rational self interest in market economies are also encouraged. People have the ability to make as much money as they can and do what is in their best interest.

Another positive to market economies is that the government tries to stay out of the way of businesses. Although the government sets certain standards businesses must follow, for the most part businesses can do as they please, allowing them to produce what they want, how they want. A fourth advantage to the market economy is that there is a great variety of goods and services for consumers. If there is a demand for a good or service, the demand will almost always be met in a market economy.

Although there are a lot of positives to market economies, there are also many negatives that go along with it too. One major problem with this type of economy is that it doesn’t always provide the basic needs to everyone in the society. The weak, sick, disabled, and old sometimes have trouble providing for themselves and often slip into poverty.

Another problem is that it becomes hard for a government with so many private businesses to provide adequate defense, education, and health care to its people. A third disadvantage to this type of economy is that there is uncertainty in the business world. One company could easily be forced out of business causing all of its employees to become unemployed and lose their means of income.

The final major disadvantage is that occasionally there are market failures. This can cause some companies to become way to powerful and become a monopoly. If the government doesn’t step in, the monopoly can take advantage of the consumers and charge ridiculously high prices.

Conclusion

Each of these types of economies has it’s own unique positives and negatives. It may seem like one economic system is better than another, but it all depends on what the viewer deems important.

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User Comments
  1. weedle

    On October 10, 2007 at 8:01 pm


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  8. prity

    On June 15, 2008 at 4:56 pm


    is market economy is bad or good?

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  10. renicia

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  13. Jeff Romain

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  41. Kole

    On December 2, 2008 at 8:39 pm


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    On December 5, 2008 at 7:34 am


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  50. akslfjoifjd

    On December 15, 2008 at 10:16 pm


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  51. c

    On January 2, 2009 at 12:07 pm


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    limited environmental damage
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  54. Sarah is dumb

    On January 9, 2009 at 2:27 pm


    You guys are dumb

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    On January 9, 2009 at 2:28 pm


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  56. bob

    On January 19, 2009 at 12:34 pm


    GO COMMAND ECONOMY!!!

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    On February 2, 2009 at 6:42 pm


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  58. jackiechan_eben@hotmail.com

    On February 2, 2009 at 6:44 pm


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    On February 5, 2009 at 7:35 am


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  60. aman

    On February 7, 2009 at 3:23 am


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    On February 8, 2009 at 6:55 am


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    On February 15, 2009 at 6:27 pm


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    On February 26, 2009 at 5:17 pm


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    On February 26, 2009 at 6:59 pm


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    On March 2, 2009 at 6:55 pm


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    On March 30, 2009 at 7:35 pm


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    On April 4, 2009 at 2:51 am


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  69. bubbles

    On April 8, 2009 at 12:58 pm


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    On April 12, 2009 at 11:01 pm


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    On April 26, 2009 at 6:58 pm


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    On April 26, 2009 at 7:03 pm


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    On April 29, 2009 at 12:17 pm


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    On April 29, 2009 at 12:19 pm


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    On April 29, 2009 at 12:19 pm


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    On April 29, 2009 at 12:21 pm


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    On June 4, 2009 at 2:43 am


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  81. Metalheads 101

    On September 5, 2009 at 9:28 am


    yo this helped…thanks man

  82. jkrlmnop

    On September 6, 2009 at 12:42 pm


    thanks alot

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    On September 28, 2009 at 9:24 pm


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  84. tom

    On October 9, 2009 at 12:02 am


    thz for this it is great work

  85. alaka

    On October 19, 2009 at 6:52 pm


    thank you very much for your help

  86. Pops Jr.

    On October 28, 2009 at 10:43 pm


    hey thank you for the understanding it helped me with my essay. you are a LIFE SAVER…

  87. Pops Jr.

    On October 28, 2009 at 10:46 pm


    … i got my essay done and it helped me A LOT but i have no idea how to cite this work b/c there is no author.
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  88. natalie

    On January 13, 2010 at 1:06 am


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  90. Rob S.

    On February 22, 2010 at 5:30 pm


    “Command economies have many advantages”? Really. “A positive is that equality is focused upon.” So we are judging their intentions rather than results. If done correctly, no one is in poverty? That is the standard line. Marxism is a good idea, if only it would be put into practice correctly. Nonsense. Command economies are based on force. They always result in shortages of necessities, and few luxuries, not that anyone would be able to afford them. “Although command economies may seem like a utopian form of economics…” Sure. but only to those who have ignored the course of history.

  91. ankur Shahi

    On April 19, 2010 at 8:16 pm


    thaanks sooooo much! really helped

  92. Crystal Melody

    On May 17, 2010 at 5:02 pm


    Thanks
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  93. babyangel

    On May 17, 2010 at 5:08 pm


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  94. CommandEconomySucks

    On May 25, 2010 at 9:37 pm


    In the part about the command economy, the \\\”advantages\\\” and disadvantages are blurred. In the same paragraph, it talks about the third \\\”advantage\\\”, and begins on the disadvantages a sentence later. On paper, the command economy sounds like a great idea. But we all know from a) the study of history and b) from personal experiences, that man has a tendency to want to grow his power, which is what happens in every command economy. There never will be a rule of the proletariat. It will never work. That\\\’s a fact.

    And no thanks babyangel.
    I don’t want herpes

  95. Sexy Beast From Kentucky

    On August 27, 2010 at 1:46 pm


    i wanna party and i havce nothing better to do with my time then to just sit heres

  96. Sarah

    On August 31, 2010 at 9:53 pm


    Too bad it doesnt have mixed economy

  97. Dumb Ass

    On January 12, 2011 at 8:57 pm


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  98. HellboundHackers

    On January 28, 2011 at 3:18 pm


    document.bgcolor=”#C2B280″

  99. asdf

    On January 28, 2011 at 3:22 pm


  100. dancer97

    On January 30, 2011 at 5:06 pm


    This helped so much on my homework!!!!!! Thx so much, yeahhhhhhh!

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    On March 8, 2011 at 5:21 pm


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  102. LANA

    On March 8, 2011 at 5:29 pm


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    On March 24, 2011 at 2:41 pm


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    On September 26, 2011 at 11:34 am


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  105. Daniel Hess

    On November 7, 2011 at 1:28 pm


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  106. Jerry

    On January 10, 2012 at 8:22 pm


    Really helpful :)

  107. 누구게

    On April 9, 2012 at 2:44 am


    지랄똥싸네

  108. On April 9, 2012 at 2:51 am


    여기가무슨쳇방도아니고사람들왜이러케말이많아??!!

  109. 음....

    On April 9, 2012 at 2:55 am


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  110. Yours

    On April 10, 2012 at 8:35 am


    You are wrong command economy has no advantages and is bad for the world!!!!!!!!!!!!

  111. idk

    On August 23, 2012 at 11:15 am


    thanks it helped alot

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