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Pure Market and Pure Command Economic Systems

The market system is characterized by private ownership of resources – Pure Command Economy

In this system, markets and prices are used for the coordination and direction of economic activity. A market is a place where buyers and sellers come together. It is in this system where each and every participant performs in accordance with his self-interests. The goal of the market is to maximize profits through its own decisions with regard to production and consumption (McConnell and Brue, 2005). In a pure market economy, the government’s role in economic activities is limited to the protection of private properties.

It also fosters and environment conducive to market system operations. Too much economic interference from the government would result in the disturbance of the efficiency in the market system (McConnell and Brue, 2005). The command system, on the other hand, is the alternative to the market system. In that kind of system, the government possesses ownership to most of the property resources. An economic decision is made through a central economic plan. The central planning board is selected by the government.

They are tasked to make all major economic decisions such as utilization of resources, distribution and composition of output, and the organization in production. This system is in direct contrast to the market system, where the government plays a very minimal role (McConnell and Brue, 2005). A system on a pure command economy relies exclusively on the central plan made by the government on the allocation of government-owned property resources. The command system, in its purest form, does not tolerate any private ownership (McConnell and Brue, 2005).

The United States economy is neither pure market nor pure command. As opposed to pure market system

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, the U. S. government plays a substantial role, not only in the protection of private property, but also promotes economic growth and stability. It also produces goods, which cannot be produced by markets alone, and modifies income distribution. As opposed to pure command system, it is very evident that private corporations dominate the U. S. economy.

Reference McConnell, C. R, & Brue, S. L. (2005). Microeconomics. New Jersey: McGraw-Hill Professional

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