Answer to Question #915 in Macroeconomics for FRANK KORDIE

Question

What are the advantages and disadvantages of socialist economy?

Answer 1

Advantages: proclamation of the equality, theoretically, the organization of manufacturing must meet the social needs;state control of productivity and profit; setting limits of the product cost don't allow unreasonably high monopoly prices for goods;government can affect manufacturing quality.
Disadvantages: government centralized ownership and control of all manufacturing branches;total nationalization of each manufacturing object is impossible in real situation; prices are not controlled by demand and supply analysis, once established by central planning board, could remain unchanged while demand is shifting.