Planned and Market Economies Based on the Notion of the Social Division of Labor

Comparison of Planned and Market Economies Based on the Notion of the Social Division of Labor
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Comparison of Planned and Market Economies Based on the Notion of the Social Division of Labor
As we know it today, the market is a relatively new phenomenon in the history of humanity. After the onset of the capitalist industrial revolution in Britain, people began to find most of the products they needed in the marketplace. A market is, therefore, an economic mechanism through which people acquire means of survival. While capitalist states have favored free-market economies, some states have tried to establish a centralized market economy. Based on the social division of labor, a market economy is far more effective than a planned or centralized economy. Based on this premise, the current paper will look at some differences between planned and market economies. The first section will look at the similarities, while the second section will focus on the differences. It is based on these differences that the premise will be supported.
Similarities Between Planned and Market Economies
The social division of labor provides the first basis on which the two economies are similar. The first similarity is that the social division of labor in any market is neither planned nor predicted. People are not forced by the government or external power to pursue a particular career. Instead, people choose what to study and what to pursue as part of their career development. Therefore, in both cases, people are not restricted on what to study or what to pursue. This similarity can be detrimental or beneficial depending on the economy's outlook, particularly for market economies. In any case, the social division of labor shares an element of contradiction with the planned market in that there is freedom, but only to the extent of what people can choose to pursue. After, what and how they produce is not in their hands. Based on this example, it is vital to understand the differences between the two economies.
Differences Between Planned and Market Economies
In centrally planned economies, the government owns all the means of production. These include raw materials, machinery, and factories. There is no private ownership of land or property, and therefore, people must depend on the government for jobs tha...