Question

Explain the arguments for and against economic planning

Answer 1

Answer:

(i) Loss of Economic Freedom:

The utmost objection leveled against planned economy is that there is loss of economic freedom. Planning cannot be successful until strict regulation is not imposed and duly controlled by the State.

In this way, there is loss of individual initiative and loss of consumers sovereignty. Freedom to choose occupation is also limited. Thus, planning limits individual freedom severely. Prof. Hayek goes to the extent of saying that planning is road to serfdom and leading to a regimented and cruel society.

ii) Planning Leads to Chaos:

Centrally planned economy is a mudded economy as it is incapable of pursuing rational economic activity. In the opinion of many critics, rational allocation of resources will not be possible. Under planning automatic guidance on price mechanism is not easily available. As a result there will be confusion and chaos in production.

(iii) Not Automatic:

The centrally planned economies generally hinder the automatic process of an economy and make it extremely rigid for nothing. Some economists hold the view that planning leads too much standardization and lacks in variety which robs life of colours.

Answer 2

Economic planning is very important and has been successful in many countries. It entails a number of factors that are necessary for economic development of the country. There are some factors which play against the planning of the economy.

Explanation:

Advantages of Economic planning

• There is optimum use of resources and they are used for the benefit of the society
• Effective planning leads to faster development of the economy and economic stability in the system
• Economic planning leads better distribution of income and wealth  and a balanced growth of the economy

Disadvantages of Economic planning

• The main argument against planning of the economy is the level of inefficiencies in the system
• No proper resource distribution and there is a lot wastage of resources
• There are not many choices available for the end users and also there is a restriction of human rights

To know more about economic planning

What is Economic planning ? Explain impart of Economic planning in economic growth of India.

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