Unformatted text preview: ets working in conjunction, we also
grasp a deeper meaning of freedom from a social
perspective as well. Incentives - The system encourages skill
acquisition, hard work, and innovation.
Freedom - The market system emphasizes
personal freedom. Chapter 2 30 Learning Objective 2-4 Slide
31 Although we had a precursory view of command
systems earlier in this section, we didn’t talk much
about their recent demise in global popularity. It would
be beneficial to take a few moments and do so at this
juncture. The Demise of the Command Systems
Command economic systems in the Soviet
Union, eastern Europe, and China (prior to
market reforms) failed. Why? The command systems in China and the former Soviet
Union have taken definitive steps toward becoming
market systems in the not so distant past.
There are reasons for these transitions. Command
systems encounter considerable problems over time.
The challenges of coordination are daunting and the
lack of automated incentives amplifies similar issues. • The Coordination Problem
• The Incentive Problem Ch...
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