The centrally planned socialist economy and the market capitalist economy arguably represent two antipodal positions with regards to how economics should be carried out in practice. In sum, the key difference between the two is that the latter commits to the autonomy of the market for economics, whereas the former supports the intervention in the marketplace by some central authority, which, accordingly, attempts to regulate the market.
A comparison between the advantages and disadvantages of each approach helps illustrate the radical difference between the positions. In the case of the planned socialist economy, all economic practice is not an end in itself, but rather a means. Accordingly, the advantage of the centrally planned socialist economy is that it is able to utilize the market for other projects, which can be beneficial to the society as a whole, such as social welfare projects and contributions to education and medical systems as examples. Furthermore, if there are problems in the marketplace, the centrally planned system enables more intervention to counteract financial catastrophe. Of course, a clear weakness of this system is that there are different approaches to central planning. If we being from the outset with a poor plan then the economy itself will falter.
This is one of the advantages of the free market system. It is not controlled by any one central authority, which dictates the marketplace. Accordingly, it allows for more autonomy in economic practice. However, this can have clearly negative effects. For example, economy is now controlled primarily by private interests. This can create radical differences between the “haves” and the “have nots” on a social level. Furthermore, the marketplace can be manipulated by these private interests for personal gain. In this model, the weakness is that the economy is given too much autonomy, which means that those who hold power in the sphere of economy become the dominant social actors, because these private interests have access to the society’s wealth.