Capitalism, planned economies and the concept of supply and demand

Abstract

Capitalism is characterized by a private enterprise system contrary to a planned economy which is based on the collective or governmental ownership by the means of production, that is to say that all the enterprises in the country are public. Capitalism is theoretically based on a pure and perfect competition whereas in a planned economy there is no competition because enterprises are monopolistic, since owned by the state. In a capitalist scheme, businesses make investments expecting profits.