Central planning fails from "summary" of Capitalism and Freedom by Milton Friedman
Central planning fails to achieve an efficient allocation of resources. The basic economic problem is one of scarcity and choice. There are limits to what can be produced, and there are limits to what individuals can consume. The central planner faces the impossible task of determining the preferences of each individual and making decisions on their behalf. In a market economy, individuals make decisions based on their own preferences and values. They have the incentive to use resources efficiently because they bear the costs of their choices. Central planning also fails to provide incentives for innovation and technological progress. In a centrally planned economy, there is no competition to drive firms to improve their products and processes. Without the profit motive, there is little incentive for firms to invest in research and development. As a result, technological progress is slow, and econom...
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