Unit 5 Command and market economies

WARMING-UP

Work in pairs. Answer the following questions:

1. What can people control?

2. Do you control anybody or anything? Do you feel responsible?

3. What is more difficult for you to manage other people or to be subordinated?

PRE-READING

1. Answer the following questions:

1. Are economic problems the same in different communities?

2. What does the government control in the country?

3. What are the rights and duties of citizens?

2. Complete these definitions with the words below:

A. An economic and political system in which individual owners of capital are free to dispose of it as they please.	1. free enterprise economy
B. An economic system with much government control in which the means of production are collectively owned and everybody is equal	2. capitalism
C. An economic system in which businesses compete for profit without much government control	3. planned economy

3. Read the text and check your answers.

All communities have to deal with the same basic economic problem. They have limited amount of land, labour and capital. The authorities cannot produce enough goods or services to satisfy all the people’s wants. So they have to decide how to use these limited resources. Different countries use different methods to deal with these problems. The market economy dominates in capitalist economic system, while the command economy prevails in socialist countries.

In the market economy individuals have the right to own, control and dispose of land, buildings, machinery and other natural and manufactured factors of production. This feature determines the capitalist system. Individuals are free to set up a new business venture, firms are free to decide what to produce and consumers are free to spend their income as they wish.

The market economy is often described as a free enterprise economy, where the word free means “free from government control”. The government has very few economic functions in such an economic system.

One of the most important features of the command economic system is central planning. The central authority has complete power to organize the whole economic effort of the nation. It decides what goods and services to produce, how to distribute them and what prices to charge for these goods. The government also controls the nation’s economic resources. The government decides how to control land, labour and capital. It is responsible for the economy and is therefore concerned with quality and quantity. In addition, the state provides most of the services which the citizens require.

Another feature of the command economy is public ownership of the means of production. The state owns the land and all types of capital. Private property is usually limited to personal possessions, although small businesses are sometimes privately owned, and farm workers are often allowed to own small plots of land and sell them.

PRACTICE