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existed
ever
since
the
beginning
of
humankind,
a
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faced
by
rich
and
poor,
and
a
problem
confronting
both
individuals
and
societies.

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Economic planning

Economic planning is a mechanism for economic coordination contrasted with the market mechanism. There are various types of planning procedures and ways of conducting economic planning. As a coordinating mechanism for socialism and an alternative to the market, planning is defined as a direct allocation of resources and is contrasted with the indirect allocation of the market.The level of centralization in decision-making in planning depends on the specific type of planning mechanism employed. As such, one can distinguish between centralized planning and decentralized planning. An economy primarily based on central planning is referred to as a planned economy. In a centrally planned economy the allocation of resources is determined by a comprehensive plan of production which specifies output requirements. Planning may also take the form of directive planning or indicative planning.Most modern economies are mixed economies incorporating various degrees of markets and planning.A distinction can be made between physical planning (as in pure socialism) and financial planning (as practiced by governments and private firms in capitalism). Physical planning involves economic planning and coordination conducted in terms of disaggregated physical units; whereas financial planning involves plans formulated in terms of financial units.
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