Wht were the de merits of centralised planning
Answers
Under a centrally planned economy the government makes decisions for the economy, instead of interacting between businesses and consumers.There are certain demerits of centralised planning such as:
1. It is believed to be an inefficient mode in distributing resources.
This economic system shows that planners are not being able to accurately foresee shortages, surpluses and consumer preferences, which leads to inefficient allocatation of resources . As a result in some areas experiences abundance of goods that cannot be sold and other areas suffer from shortages.
2. This system may go against some people’s rights as consumers.
Some believe that this system lead to dissent among citizens, as their basic right of free will is being challenged.
3. It suppresses economic freedom.
It is seen that a centrally planned economy can stifle economic freedom. Citizens have no urge to take entrepreneurial risks as under this system the central planners suppress the profit motive by considering decisions from entrepreneurs and transferring them to the state .