📖 generic · 12th TN - English Medium · ECONOMICS · Page 250question

Planning · Part 5

Chapter 12: Chapter 11 · ECONOMICS

advance calculations Price mechanism provides for the automatic adjustment among price, demand and supply in a Laissez Faire economy. The producers and consumers adjust their supply and demand based on price changes. There is no such mechanism in a planned economy. Advance calculations in a precise manner are impossible to make decisions regarding the consumption and production.

It is also very difficult to put the calculations into practice under planning. Excess supply and excess demand can also happen in the market oriented economy. Infact it has happened in many capitalistic economies, including the US. The arguments against planning are mostly concerned with centralized and totalitarian planning.

The democratic planning, planning by inducement and decentralized planning especially under mixed economies give equal role for private sector and public sector. Planned economy appears to be more efficient operationally than a market economy. So the question is not one of plan or no plan but one of the type of plan. The right mix of market mechanism and state intervention in right proportion will promise accelerated economic growth accompanied by stability and social justice.

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