A socialist economy is based on some form of social ownership, which includes varieties of public ownership and independent cooperatives,

over the means of production, wherein production is carried out to directly produce use-value sometimes, but not always, coordinated througheconomic planning and a [1][2] system of accounting based on calculation-in-kind or a direct measure oflabor-time. The term socialist economics may also be applied to analysis of former and existing economic systems [3] that call themselves "socialist", such as the works of Hungarian economist Jnos Kornai. Socialist economics have been associated with different schools of economic thought, most notably Marxian economics, institutional economics, evolutionary economics and neoclassical economics. Early socialism, like Ricardian socialism, was based on classical economics. During the 20th century, proposals and models for planned economies and market socialism were based heavily on neoclassical economics or a synthesis of neoclassical economics with Marxian or institutional economics.

ECONOMIC SYSTEMS Economic system is a way of organizing therelationship among individuals, firms andgovernment to make choices on the basiceconomic questions. The three basic economic problems ( what to produce, how to produce and for whom to produce )are solved dependingon theeconomicsystemchosenbythesociety. Basically, there are fourtypesof economic systemwhich have beenpracticed, namely; i. Capitalist economysystem ii. Socialisteconomysystem iii. Mixed economysystem

MARKETSYSTEMSOLVEBASIC ECONOMICPROBLEM i. Whattoproduce? . In this economic system, production depends onthe goods demanded by the consumer. . An entrepreneur will only produce goods andservices where there is demand from consumer inorder to gain higher profit. ii. Howtoproduce? . Depends on the techniques of production whetherto use labor intensive, capital intensive orcombination of both techniques. . Cheapest method of production will be adaptednot only to maximize profit but also to achieve
A socialist economy is based on some form of social ownership, which includes varieties of public ownership and independent cooperatives, over the means of production, wherein production is carried out to directly produce use-value sometimes, but not always, coordinated througheconomic planning and a [1][2] system of accounting based on calculation-in-kind or a direct measure oflabor-time. The term socialist economics may also be applied to analysis of former and existing economic systems [3] that call themselves "socialist", such as the works of Hungarian economist Jnos Kornai. Socialist economics have been associated with different schools of economic thought, most notably Marxian economics, institutional economics, evolutionary economics and neoclassical economics. Early socialism, like Ricardian socialism, was based on classical economics. During the 20th century, proposals and models for planned economies and market socialism were based heavily on neoclassical economics or a synthesis of neoclassical economics with Marxian or institutional economics.

Charateristic Less importance of price mechanism . Marketforces are less importantin this economicsystem. . Pricesarefixed bythe governmentand notdetermined bytheforcesof demand and supply. . Privateprofitsare notallowedandpublic interestis emphasized. iv. Central control and ownership . Government intervenes inallaspectof economicactivities includingproduction,consumption anddistribution of goods and services.

SYSTEM:DISA NTA DVA GES i. Lack of incentives and initiatives byindividuals . There is absence of profit motive in individuals. . Thus, this will lead to economic inefficiency since jobs are provided by the government andindividualsarenotmotivated to work harder. ii. Loss of economic freedom of consumers . There is no choice given to consumer and theyaccept whateverthe publicenterpriseproduce. . Since withthe limited numberof privatee n t e r r i s e s t h e r e a r e l i m i t e v a r i e t o f SYSTEM:DISA NTA DVA GES iii. Absence of competition . Sincethere are limited private enterpriseexist inthismarketsystem,there wil be less R&Dactivities occurs. . Thus, quality of products will be low since thereisno competition. iv. Waste of economic resources .

Government mightproduce goodsand servicesthat arenot requiredbythepeople suchasmilitaryequipments. . This will lead to overproduction of certain goodsandunderproductionof certainothergoods.

SYSTEMSOLVE BASICECONOMIC PROBLEM i. Whattoproduce? . Inthiseconomicsystem,planningauthorities decideswhat toproduce. . The Central Planning Authority will collect detailedstatistics on the resourcesavailabilityandfixup withnational priorities. ii. Howtoproduce? . The Central Planning Authority will also decides onwhattechniquesto be used in theproduction of goodsand services. . The choice is between traditional or moderntechniques.