briefly explain why socialist economic systems thwarted mark

briefly explain why socialist economic systems thwarted market forces?

Solution

Social economy is an economy in which factors of production are owned socially rather than any individual. Production under social economy is done for directly use rather than for resale. Land, labor and capital are not owned by a single firm or individual under social economy. In social economy, responsibility of production of goods and services is in the hands of group of people.

Market forces is the economic factor which affects the demand, supply, price and availability of goods and services. Market forces plays very crucial role in the real economy as it affects price of commodities.

Under social economic systems, aim of producing product is not to earn profit as done by capitalist firms. Capitalist firms produce goods with a main motive of earning profit while social economic system produce goods for the welfare of an economy.

Since aim of socialist economic system is maximisation of welfare then market forces does not affect much in the production of goods and services. Price under socialist economy is determined collectively. So, price of commodity is reasonable under social economy so that every individual can consume it.

Demand and supply factors mostly get affected under capitalist economy where an individual determine price of commodity keeping in view its profit. Profit earned under capitalist economy is higher as they produce only for profit.

Socialist economy also earns profit but very minimal. There main objective is to increase the standard of living of public rather than earning only profit.

Therefore, market force does not work effective in social economic system as it does in capitalist economy. Social economy does not allow market forces to play efficiently.