What is a market economy? What is a planned economy? Can you give me an example? thank you

China's planned economy system was established at the end of the First Five-Year Plan. With the smooth progress of the three major transformations, the socialist planned economic system based on public ownership of the means of production has been gradually established. Its basic feature is a high degree of centralization and unification, and the state regulates economic operation by administrative means. At the beginning of the Republic of China, it played an important role in concentrating manpower, material resources and financial resources on national key construction, promoting the overfulfilment of the first five-year plan and ensuring market stability and people's basic needs. However, the planned economy also has its shortcomings. Most importantly, under the planned economy system, the production plan and sales price of various commodities are uniformly formulated by the central government, which affects people's enthusiasm for production, restricts the development of productive forces, leads to a serious shortage of commodity supply and brings great inconvenience to people's lives.

In the course of economic principles, we have discussed the mechanism of the market. Under the condition of market economy, the circulation of resources is regulated by price. The market is like an invisible hand, which determines the price through the relationship between supply and demand, and finally realizes market equilibrium and social efficiency maximization. For the planned economy, in order to maximize social efficiency, a decision-maker needs to master the information of all consumers and producers in the market, and then work out a price, which is the market price affected by market supply and demand, but this is impossible. In addition, under the condition of market economy, the market encourages competition and promotes innovation, which can make the means of production flow to economically efficient departments, enterprises and regions, realize the rational allocation of social resources and accelerate economic development; On the contrary, under the condition of planned economy, enterprises have no incentive to innovate, because the market is in short supply and there is no need for innovation, which has delayed economic development.

However, the market economy also has great shortcomings, not only because of its blindness, spontaneity and lag, but also because it can't achieve social equity under the market economy and is easy to cause social unrest. Planned economy can alleviate these weaknesses accordingly.

Comrade Xiaoping once said that "poverty is not socialism". In order to achieve the same prosperity, China allowed some people to get rich first. With the development of China, the traditional planned economy is increasingly constraining the development of China's productive forces, and liberating and developing the productive forces is the goal of our party. In this case, effectively combining the advantages of planned economy and market economy and taking the road of socialist market economy should be the most suitable for China's national conditions.

However, there are many modes for the combination of planned economy and market economy, which mode is the most suitable? The current economic operation practice has repeatedly proved that the modern market economy, which is regulated by macro-plan and the market mechanism plays a fundamental role, has higher resource allocation efficiency than the single planned economy and the economic system based on the planned economy. Therefore, Comrade Xiaoping has repeatedly stressed that the system our country is engaged in is a system that combines planning with the market, not a system that only engaged in planning in the past, nor a system based on a planned economy. The scientific solution of this problem has laid a foundation for the establishment of a socialist market economic system in China.

If we have a market economy, is it still socialism?

This issue is now being discussed by many people in China. It seems that many people say that China is now capitalism under the guise of socialism. Because now it seems that private ownership has occupied a large proportion, coupled with the restructuring of state-owned enterprises, it seems that the wave of private ownership economy is surging. Broadly speaking, the question is, can socialism be a market economy?

Why do you ask such a question? There are still some historical reasons. * * * Marx and Engels, the pioneer of capitalism, once predicted that socialism has no commodity currency and market category, but in practice, the market economy has never been implemented. Therefore, people mistakenly believe that the market economy is only related to the capitalist social form, and the misleading propaganda of some bourgeois scholars has made this concept more deeply rooted. In fact, market economy belongs to the category of commodity economy and is the product of the highly developed stage of commodity economy. Besides the general conditions of commodity economy, the most important condition of market economy is socialized mass production. Because socialized mass production is the foundation of capitalism and socialism, market economy, as the product of modern human civilization, must exist in two social forms.

However, the socialist market economy is different from the capitalist market economy, so we need to compare the differences between the capitalist market economy and ours.

Indeed, the socialist market economy contains contents that reflect the general laws of modern market economy, including the operating laws of microeconomics, macroeconomics and international economy, and also has the same characteristics as modern market economy. However, compared with the capitalist market economy, the advantages of ownership form, production purpose and macro-control are different (see the table below). This also shows that the socialist market economy is different from the capitalist market economy. It strictly follows the essence of socialism and serves the economic development of China. Adhering to and constantly improving the socialist market economic system will be our unswerving principle and policy.

Capitalist market economy and socialist market economy

The form of ownership is based on private ownership and public ownership of the means of production.

Capitalists who aim at production maximize surplus value and realize social prosperity.

The advantages of macro-control are hard to realize, and the capitalist's production is blind. Countries prone to economic crisis can effectively realize macro-control and avoid economic and financial crisis.