Is there a better alternative to a market system?

Question

what are the advantages/disadvantages of a market system, is there a better alternative?

Answer 1

Yes an economy that is directed is better IF:

The planner is not self interested

The planner truly knows everyone's preferences for goods

The planner truly knows cost structures

The planner knows what the future hold

Basically if the planner is God then a directed economy is better than market economy

Answer 2

well it has been proven that mixed economic system is the best one...

having both private and state ownership in an economy is like having best of both the worlds...

having a private sector would mean that investment is encouraged and new businesses would set leading to an increase in the productive capacity and also economic growth...

on the other hand, if government exists as well consumers would not be exploited and even public goods would be offered which private businesses would not produce...

Answer 3

In most circumstance the answer is clearly no.  It can in fact be proven that allowing free market trading of goods and services provides the highest best social welfare for all parties involved in most well understood circumstances.  In most cases where markets are not superior, private investors have developed alternatives such as banking, insurance and brokerage as an alternative to a market system.  Banking, insurance and brokerage can only exist in a system of persistent market failure.  They are the solution to it.  In addition, government can play a vital role in the economy where no private solutions to market failures or externalities exist.

The student loan market is an example of where private solutions are necessarily inferior to a government solution.  Student loans existed before the government entered into the market, but provided well below the efficient level of loans and at a higher price than the government could provide.  The government was able to use its creditworthiness to borrow from the public at very low prices and extend credit to individuals who were individually not credit worthy, but collectively credit worthy based on their future potential.  The innate variability in outcomes makes the market too costly for financial institutions to participate without governmental guarantees.  Should a group of students graduate at the beginning of a recession, repayment will fail en masse, and you could see banking losses too large to justify bank participation, if you engage in the activity to a large scale.  It also makes credit subject to bankruptcy and no new graduate has an income so they are a prime candidate to avoid the debt.  Government can avoid that problem while private lenders cannot.

The other role of government is to manage undesirable societal results from private action, such as pollution control.  It can place market rules into the system that permit a restricted market to work, whereas a free market would make each person slightly worse off than if the restricted market was allowed to operate.

Answer 4

As of now, NO!!!