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A free market is a market economy based on supply and demand with little or no government control A command economy is a system where the government, rather than the free market, determines what goods should be produced, how much should be produced and the price at which the goods will be offered for sale A mixed economic system allows a level of private economic freedom in the use of capital, but also allows for governments to interfere in economic activities in order to achieve social aims Adam Smith is often known as the world's first freemarket capitalist. The Invisible Hand- Adam Smith assumed that consumers choose for the lowest price, and that entrepreneurs choose for the highest rate of profit. He asserted that by thus making their excess or insufficient demand known through market prices, consumers "directed" entrepreneurs' investment money to the most profitable industry. Leading to the maximisation of human economic wellbeing as a aim. “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Friedrich von Hayek received the Nobel Prize in Economic Sciences (jointly) in 1974 for his pioneering work in the theory of money and economic fluctuations and for a analysis of the interdependence of economic, social and institutional phenomena. “I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.” Marxism is an understanding of the nature of social relationships which you are expected to evaluate. Recognise that it has strengths and weakness as a tool of understanding of our culture. “The bourgeoisie is just as necessary a precondition for the socialist revolution as is the proletariat itself.” Competition between firms will lead to firms wanting to produce as efficiently as they want prices to be as low as possible so that consumers will want to buy from them Goods, which are being demanded by consumers will be produced, and those that are not in demand will be dropped A greater variety in goods for consumers People have incentives to produce and work hard Consumers may choose to buy goods that are not so good for them at the expense of goods/services which they should be buying. Society suffers as whole in these circumstances as workers become less productive. As profit is the incentive for firms, they may try to reduce their costs in an underhand or unethical manner by polluting the environment, exploiting workers Goods and services that are not profitable will not be produced and result in market failure Command economies enable the government to overcome market failure, inequality and create a society that maximises social welfare rather than maximises profit. Command economies can prevent mass unemployment, often a feature of capitalist economies. Command economies could produce goods which benefit society and ensure everyone has access to basic necessities. Command economies help to increase equality by reducing the wealth gap. The needs of the society are often ignored for the betterment of the economy. Workers are not given options on where they can be employed or where they can move The black market explodes in a command economy. Due to the governmental restrictions, good and services that are not offered in the command economy begin being offered on the black market The amounts of goods being produced are not balanced. One item will be mass produced whereas another will not have enough to support the economic needs The needs of the consumers are often not obtained, so rationing can then become a way of life within a command economy. Exporting goods becomes problematic because it is difficult for the controlling entity to determine which products and prices will be most successful within the global market In mixed market systems most of the decisions are made by market forces as the market is highly efficient at quickly responding to consumer preferences yet the state regulates the market to try and attempt to prevent market failure. The state also makes decisions on behalf of society such as military spending, public education and public healthcare.