What are the basic conditions for the normal operation of the market mechanism?

Planned economy is an economic system with planning as the main resource allocation mode (1). The means of production and various resources are owned by the state or mainly owned by the state, and enterprises are only accessories of the government.

(2) The allocation of resources is carried out through the unified plan of the central government.

(3) The central government decides what to produce, how much to produce and how to produce it. The enterprise or production unit is completely the executor of the plan (1).

(2) Incentive conditions

(3) Priority conditions

Market economy is an economic system with the market as the main way to allocate resources (1). Resource allocation is realized through market mechanism or price mechanism.

(2) Every consumer, producer or operator is independent of each other.

(3) Generally, the government does not directly interfere with the business decisions of enterprises. What to produce, how much to produce and how to produce are all decided by enterprises according to their own business objectives and changes in market prices and market supply and demand.

(4) Market mechanism or price mechanism, like an "invisible hand", is guiding the economic activities of producers, operators and consumers, thus dominating the resource allocation within the social scope (1), and is a standardized market subject.

(2) Perfect market system

(3) Standardized market operation rules

(4) Effective macro-control system