Market Economy and Public Sector
What is market economy?
A market economy or free market economy is an economic system in which the production and distribution of goods and services take place through the mechanism of free market guided by a free price system. In a market economy, businessmen and consumer will decide what to produce, how much to produce, what to change customers for their products, what to pay employees. What to consume, how much to consume and at what price- all these are influenced by the pressure of completion, supply and demand. In real world, there is no nation that has a pure market economy.
Public sector:
Public sectors refer to those economic sectors which are controlled, owned and operated by the government.
Problems faced by Public sector in the expansion of Market Economy:-
Public sector carries socialistic characteristics whereas market economy carries capitalistic characteristics. So, obviously conflict arises between market economy and public sector.
Sometimes public sector seems to have certain capitalistic characteristics in a market economy. In such a situation, public sector has to conflict with private sector. As a result, public sector has to sacrifice its socialistic characteristic and social obligations.
The objective of market economy is to maximize profit whereas the objective of public sector is to ensure maximum social welfare. Therefore the existence of market economy limits the scope of public sector in fulfilling its objectives specially when certain goods and services are produced by public sector and the task of distribution is entrusted to market economy.
Dose the Expansion of Market Economy reduces the Scope of Public Sector?
1stly the government makes provision for health, sanitation, education, transport etc. to bring about welfare of the people. In this way, the government acts as a provider. Secondly, the government tries to facilitate the expansion of private sector by creating infrastructural development . Without infrastructure, expansion of private sector is not possible. For example, development of industry with private initiative needs proper transport, communication system power etc. Therefore by providing such infrastructure, the government paves the way of expansion of private sector. Thirdly, the government undertakes regulatory measures so that economic welfare and stability- both are maintained properly. As a government performs the tasks of provider, facilitator and regulator in most of the countries of the world, therefore it can be concluded that the expansion of market economy doesn't reduce the scope of public sector as well as the scope of public finance.
What is market economy?
A market economy or free market economy is an economic system in which the production and distribution of goods and services take place through the mechanism of free market guided by a free price system. In a market economy, businessmen and consumer will decide what to produce, how much to produce, what to change customers for their products, what to pay employees. What to consume, how much to consume and at what price- all these are influenced by the pressure of completion, supply and demand. In real world, there is no nation that has a pure market economy.
Public sector:
Public sectors refer to those economic sectors which are controlled, owned and operated by the government.
Problems faced by Public sector in the expansion of Market Economy:-
Public sector carries socialistic characteristics whereas market economy carries capitalistic characteristics. So, obviously conflict arises between market economy and public sector.
Sometimes public sector seems to have certain capitalistic characteristics in a market economy. In such a situation, public sector has to conflict with private sector. As a result, public sector has to sacrifice its socialistic characteristic and social obligations.
The objective of market economy is to maximize profit whereas the objective of public sector is to ensure maximum social welfare. Therefore the existence of market economy limits the scope of public sector in fulfilling its objectives specially when certain goods and services are produced by public sector and the task of distribution is entrusted to market economy.
Dose the Expansion of Market Economy reduces the Scope of Public Sector?
1stly the government makes provision for health, sanitation, education, transport etc. to bring about welfare of the people. In this way, the government acts as a provider. Secondly, the government tries to facilitate the expansion of private sector by creating infrastructural development . Without infrastructure, expansion of private sector is not possible. For example, development of industry with private initiative needs proper transport, communication system power etc. Therefore by providing such infrastructure, the government paves the way of expansion of private sector. Thirdly, the government undertakes regulatory measures so that economic welfare and stability- both are maintained properly. As a government performs the tasks of provider, facilitator and regulator in most of the countries of the world, therefore it can be concluded that the expansion of market economy doesn't reduce the scope of public sector as well as the scope of public finance.
No comments:
Post a Comment