Before discussing the specifics of both planned economics and Laissez-faire economics, let's first clarify the main definitions of each.
What is Planned Economics?
Planned economy and command economy are often used interchangeably, as a planned economy is sometimes referred to as a command economy. In this system, the government is responsible for making decisions regarding the production and distribution of goods.
What is Laissez-faire Economics?
In Laissez-faire Economics, the government's role is limited to protecting national borders, safeguarding private property rights, ensuring personal freedom, and providing public goods. This economic theory is founded on the belief that self-competition is the most effective regulator of the economy, making government intervention unnecessary.
Difference between a planned economy and Laissez-faire economics
In a planned economy, the government takes an active role, whereas, in Laissez-faire economics, there is no government intervention. Laissez-faire economists are free to operate independently.