Marketing Economic Systems
3.1 The concept of central planning entails having a common source of power such as the government controlling the markets and trading activities in a country. In such a situation, the government has an upper hand in production, distribution and the prices of goods, as well as, services such that the free markets are abolished. In the traditional capitalism markets, there were no regulatory bodies and the government had little enforcement on the issue hence traders were responsible for determining the fate of the markets (Smith, 1776).
The communist regime in the Soviet Union were driven by their own personal desires as they wanted the central planners to give up their powers to them so that government could have more control on the market. Constantly, the decree by Soviet government at that time to reduce the prices of goods made natives to avoid government manufactured products which were lowly priced for the highly priced black market goods. This further indicates that the communism regime did not care much about the welfare of merchants who acted under the government but rather their greed caused the failure (Smith, 1776).
The current economic reforms of Russia have not been brought about by the central market economic system that was present in the country during the communism regime. This is because the transition of Russia from communism to capitalist has been coupled by various problems such as lack of prior experience in market capitalism. However, to some extent the regime contributed to changes towards market systems especially with current privatization of major property such that control of the market has been shifted to the private owners of various enterprises (Smith, 1776).
3.2 The indicative planning was first incorporated in France to determine the bottle necks that were present in the country after World War II. Both countries Japan and France established the system to identify shortages and oversupply of investment opportunities in the country such that the market was controlled by a sole power. The other similarity of establishing the policy was to eliminate imperfect information about the economies which was an obstacle to increasing the economic performance. Sweden experienced advanced levels of initiating indicative planning which was inclined towards establishing a country which had more of privately owned enterprises hence building the economy at a faster rate. Similarly, the government had developed a system which catered for the citizens at all stages of live hence enlarging the scope of the economy so as to meet the welfare of citizens (Keynes, 1935).
While indicative planning does not engage mandatory planning activities for the private and public sectors, the Keynesian economic policy indicates that although the private sector is significant in maintaining the economy, the public sector should have an upper hand on the country’s economy. However, indicative planning can be compatible with the continuous transformation of the Keynesian policy which has been incorporated in major countries. This is equal to maintaining a stable level of unemployment while at the same time ensuring that the overall economy of the country has been kept as per (Keynes, 1935).
References
Keynes, J. M. (1935), the general theory of employment, interest and money. Hampshire: Palgrave Macmillan
Smith, A. (1776), The Wealth of Nations. Random House Inc.
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