Fundamental differences between the theoretical operations of free market and planned economies.

Free Market Economy: A market economy is a realized social system based on the division of labour in which the prices of goods and services are determined in a free price system set by supply and demand. This is often contrasted with a planned economy, in which a central government determines the price of goods and services using a fixed price system. Market economies are contrasted with mixed economy where the price system is not entirely free but under some government control that is not extensive enough to constitute a planned economy. In the real world, market economies do not exist in pure form, as societies and governments regulate them to varying degrees rather than allow self-regulation by market forces. The term free-market economy is sometimes used synonymously with market economy, but, this does not preclude an economy from having social attributes opposed.

Role of Government

1. Controlling monetary and fiscal policies
2. Provide public services, such as education, health, security
3. Prevent businesses from domination the market and restrict the power of trade unions 
4. Prepare and maintain state properties

Planned Economy: A planned economy or directed economy is an economic system in which the government or workers' councils manage the economy. Its most extensive form is referred to as a command economy, centrally planned economy, or command and control economy. In such economies, the state or government controls all major sectors of the economy and formulates all decisions about their use and about the distribution of income, much like a communist state. The planners decide what should be produced and direct enterprises to produce those goods. Planned economies are in contrast to unplanned economies, such as a market economy, where production, distribution, pricing, and investment decisions are made by the private owners of the factors of production based upon their own and their customers' interests rather than upon furthering some overarching macroeconomic plan. Less extensive forms of planned economies include those that use indicative planning, in which the state employs "influence, subsidies, grants and taxes, but does not compel. This latter is sometimes referred to as a "planned market economy."

Role of Government

1. Make the major decisions regarding economic
2. Plan, organize and coordinate the process of all productions