Discussion of the Relative Merits of the Two System

Advantages of economic planning[edit]

Advantages of Centrally planned economy : 

The government can harness land, labor, and capital to serve the economic objectives of the state (which, in turn, may be decided by a plurality of the people through a democratic process). Consumer demand can be restrained in favor of greater capital investment for economic development in a desired pattern. The state can begin building a heavy industry at once in an underdeveloped economy without waiting years for capital to accumulate through the expansion of light industry, and without reliance on external financing. 

Consumers do not need money to express their economic demands; they may participate in democratic decision-making bodies (such as workers' councils or soviets) to voice their opinions and make decisions about the economy. [3] 

A planned economy can serve social rather than individual needs: under such a system, rewards, whether wages or perquisites, are to be distributed according to the social value of the service performed. A planned economy eliminates the dependence of production on individual profit motives, which may not in themselves provide for all society's needs. 

While a market economy maximises wealth by evolution, a planned economy favors design. While evolution tends to lead to a local maximum in aggregate wealth, design is in theory capable of achieving a global maximum. For example, a planned city can be designed for efficient transport, while organically grown cities tend to suffer from traffic congestion. 

Taken as a whole, a centrally planned economy would attempt to substitute a number of firms with a single firm for an entire economy. As such, the stability of a planned economy has implications with the Theory of the firm. After all, most corporations are essentially 'centrally planned economies', aside from some token intra-corporate pricing (not to mention that the politics in some corporations resemble that of the Soviet Politburo). That...