Laissez-faire economy Literally from the French: “allow [them] to do.” An economy in which individual people and firms pursue their own self-interest without any central direction or regulation.
Command economy An economy in which a central government either directly or indirectly sets output targets,incomes, and prices.
There are no purely planned economies and no pure laissezfaire economies; all economies are mixed. Individual enterprise, independent choice, and relatively free markets exist in centrally planned economies; there is significant government involvement in market economies such as that of the United States.
One of the great debates in economics revolves around the tension between the advantages of free, unregulated markets and the desire for government involvement in the economy. Free markets produce what people want, and competition forces firms to adopt efficient production techniques. The need for government intervention arises because free markets are characterized by inefficiencies and an unequal distribution
of income, and experience regular periods of inflation and unemployment.