Economic Structure

Free Market Economies

Most modern economies are free market economies with some planning.
In a free market the means of production are owned by private hands such as individuals or enterprises.
Capitalism is the ownership of means of production are owned by private groups.
Free market pricing and wages are based off of supply and demand.
Wages are the price for labor and thus decided by the market as well.
This is why medical doctors are paid a lot because its a job that requires lots of training and education meaning that few people can attain such positions which have a lot of demand.
A fast food worker gets paid far less in comparison as it requires little training and has a relatively low demand.
Free markets are based on competition where demand controls what is produced.
In theory a free market would mean that there would be no shortages or surplus supply.
However, this is different in real life.

Planned economies are when the government decides how the market should function.
The means of production are owned by the government or state.
Having the means of the production owned by the government is called socialism.
In a planned economy there is collective ownership.
The state decides what, when and how much of it is produced.
The government decides instead of supply and demand.
Prices and wages are set by the government.
Command economies are terms that describe economies when the government intervenes in the market a lot.
Command economies can have a free market to some extent, although heavily controlled by the government.
Historically, all planned economies have failed.
They tend to be very corrupt and often have large black markets that are independent of the planned economy.
For example the USSR, North Korea.

Full free markets or full planned markets both cannot function properly.
This is why most modern economies are mixed economies.
The means of production aren't owned by the government but the government uses central planning.
Central planning agencies can influence the means of production.
Mixed economies have both private and public sectors.
Some states can lean more to planned or free market economies.

Monopolies can form and lead to exploitation without any supervision.
There can be a demand for demerit goods that have a negative impact on society such as narcotics and weapons.
Similarly there can be a lackluster demand for beneficial goods and services such as education and healthcare, leading them to undeveloped and thus very expensive.
For example people won't pay for healthcare when not needed, leading it to be too expensive due to lack of supply when it is necessary.

Planned economies can easily become corrupt, leading to mass exploitation of citizens.
When all decisions are in the hands of the government (a very small group compared to the free market that controls the means of production in a free economy) they can often make wrong or harmful decisions.
The government can control the means of production and pricing in a way that has a negative impact on people.
The government can have different aims compared to the rest of the population.