I. Pre-reading task

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II. Read the text to fulfil the tasks

1. Planned (Command) Economy.It was believed in earlier centuries that a Government should confine itself to defense, law and order, and should not interfere with the economic life of the nation. As the economic problems became very pressing, this view came to be discarded, and Governments start guiding the economic activities of the countries concerned. By the end of the first quarter of the twentieth century, Russia took the lead in announcing a Five Year Plan, according to which all the available resources of the country were brought under state control, and the maximum possible of them were directed towards investments. For a period of five years, investments progressed in a planned and systematic manner, and when the period was over, another Five Year Plan was prepared.

Preparing a plan is not so difficult as implementing it. An expert staff must look after the smooth implementation of the plan. If we need trained engineers for town planning, we should also realize the need for having experts in economic planning. Moreover, economic planning once adopted, becomes a more or less permanent feature. The first plan is usually followed by a second; the second by a third; and so on. On account of this, it is essential that every Government which undertakes planned economy should establish a permanent National Planning Service for administering the plan.

2. The essence of planning.Planning is a very complicated matter, as it involves problems of tremendous magnitude, affecting several aspects of economic life. In order that the plan may work smoothly and according to calculated schedules, the planning authorities must make a comprehensive programme and follow a definite policy in every sphere. Price level must be stabilized in order to save the calculations from being upset. For achieving this end, the Government must follow a flexible monetary policy. Foreign trade also must be properly controlled so that it may not disturb economic activities at home. Peace must be maintained among the labourers and employers in order to avoid strikes.

The Government is also required formulating its policy regarding the control which it should exercise over private investments, foreign capital, and the movement of factors of production from occupation to occupation in the country. All these complicated matters require careful deliberation, and clear policy must be followed regarding each of these problems in order that the plan may work smoothly.

3. Mixed Economies.What most distinguishes command economies from market economies is the role of government and the ownership of the means of production. We have seen that in command economies factories, farms, stores, and other productive resources are government owned, have also noted that the economic questions of What, How, and Who are answered by government planners. In contrast, market economies look to the decisions of individual buyers and sellers to answer the same questions, and the means of production are privately owned. Government plays a relatively minor part in this model.

There are, however, some objections to existing "pure" market economies in the world today. While we can say that markets account for most economic decisions in the USA, government has been playing an everwidening and important role. For example, 50 years ago, government purchased 15 percent of all American goods and services. It now purchases 20 percent. This blend of market forces and government participation has led economists to describe the USA's economic system and those of most other democratic countries as mixed economies.

Recent changes in the economies of Russia, China, and certain other countries, have served to bring elements of the market into those command economies. As the number of privately owned businesses has increased, economists have begun to refer to those nations as having "mixed economies."

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