You could say that the centrally planned economy provides more sustainable growth. Mainly because a free market economy is usually fueled by borrowed money and it, in many cases, causes chaotic flunctuations within the economy. With profit expectations it leads to a false sense of financial prosperity. Because the free market economy can never be predicted it is very possible that some unforseen future circumstances may arise and cut profits significantly. It is foolish to make assumptions about the economy. A free market economy is much more volatile. I could go into mroe detail but it would take many pages and I'm sure it has already been done before also with a little bit of initiative you could find this out for yourself.
But the fact remains that there has never been a pure market economy, although the closest example would be the US. I think that a total pure market economy is unfeasible. How could you leave important services such as defence and water to private industry whose only motive is to maximise profits and not to provide the best quality service to its consumers? Furthermore it would be highly idiotic to leave the military and defence in the hands of the private sector, for obvious reasons. Also the privatisation of government responsibilities and infrastructure more often then not leads to private industry having a monopoly in this area. Monopolies diminish consumer sovereignty. This in a majority of cases leads to the exploitation of the consumer. Thus a pure market system is near impossible to implement and would have devastating consequences (such as a backlash from the people). This, however, will not stop it from being attempted.
Under a centrally planned economy there is a high extent of government intervention withing the market. The role of the economy is to allocate the resources in a way that satisfies the maximum number of people's wants. I think that undoubtedly the market is much more successful for achieving this but has some substantial weaknesses. In a market economy the markets themselves decide on what goods and servicees will be produced and how many (depending on demand). In alot of situations this is manipulated by companies in ways which diminish consumer sovereignty (example above, also includes other methods). The rofit motive also plays a good part in all this as it provides an incentive. It would seem that the market economy is more successful in fulfilling the role of the economy. Truth be told, I do not completely understand how the centrally planned economy functions and would seek to learn more, in order to do so I will ask the following questions:
How can the profit motive be implemented withing a communist economy? Surely without it the economy will be performing poorly.
how exactly does the centrally planned economy work (forgive my ignorance)? Does the state conduct surveys or similar to determine what is wanted? If so, how successful can these be? Can a planned economy only function if other countries use the same economic system?
How does trade and taxation work within a Communist state?
Why do centrally planned economies fail? Can these problems be rectified?
What benefits does a centrally planned economy have over a market economy (apart from sustainable growth)?
What economic system is most successful is achieving its role?
What benefits/disadvantagees does a centrally planned economy have over a market economy with high levels of government interference?
Likewise, what benefits/disadvantagees does a market economy have over a market economy with high levels of government interference?
Is a centrally planned economy the only economy that a communist state can have? If not, why was it chosen during the communist era?
One significant thorn to this free market ideology is the rise of China. As you all know China tops the world in manufacturing cheap products, this is making US and European maunfacturing firms unable to compete. This in turn lead to most companies shifting their manufacturing to China where wage rates are vastly lower. The tarriffs on Chinese exports have now been lifted significantly cheapened the Chinese products in the US market. With cheaper Chinese products being available it has lead to more and more American companies importing Chinese goods. This increases the US's Current Account Deficit, to offset this China is acquiring more and more assets on the US mainland. Because the Chinese dollar is at a fixed exchange rate to the US dollar this is likely to continue. It has angered the American government and they have suggested that they may impose tarrifs on Chinese imports (this is going against the free market ideology).
My questions are as follows:
Is it possible for the US to impose these tarriffs even though its in violation of the WTO? What other strategies can the US employ to resolve the China situation?
What are the future implications of China's growth on the US?
What is likely to occur within China itself?
What do you see occurring in the near future as the China situation develops?
Is China's development sustainable?
How is the emergence of other Asian nations (India, Vietnam) going to impact this situation?
How is this likely to affect US and European businesses? Will it force them out of the market?
Can you provide any more information on this topic and explain it in further detail to me?
I have more questions about the previous two matters but I will ask them at a later stage.
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There are intermittant small peasant revolts occuring in China now. The government kicks people off land for development even tho families have lived in the spot for centuries. They often don't provide a place for the people to go. Who knows how much they can do this before crap hits the fan. Plus most of this land is used for farming. China has to feed 1.3+ billion people. If they make more money with the land using it for non-farm purposes then they can import food. But what is global warming going to do to global food production and therefore prices. Too many unpredictable variables. The hurricane season is startine early in the Atlantic. What other surprises does the future hold?
If the 3 Gorges dam project bombs we can probably expect serious political and economic crises in China. China has earthquakes. What will be the effect of the weight of all that water on a seismically active area? I will bet there is no way of calculating that ahead of time.
Is China's development sustainable?
No. Nothing is sustainable forever so how long will it be sustainable? If it goes 5 more years at the current rate I would be somewhat surprised.
Dal Timgar
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