An economic policy is a decision made and implemented by the government in order to achieve a certain goal. The government promotes economic growth by making decisions that encourage business persons and ordinary people to save and invest their money in the production of goods and services.
The Zambian economy has over the years depended on Mining Activities on the Copperbelt and part of North Western Province as the backbone of the economy. With metals prices dropped at the London Metal Exchange in recent years, the government embarked on the diversification programme in order to reduce dependency on Mining as the backbone of the economy.
The diversification programme has been implemented in order to reduce the dependence on Mining. In a bid to remain an economically sound country, Zambia has over the years implored different economic systems and these are chiefly the Socialist System and the Capitalist System.
Socialism teaches that the government should control the economy to ensure fair distribution of wealth. This system is mainly characterized by
The Government has complete control over all economic activity. The Government decides what goods and services are to be produced and fixes the prices and the Government also owns the mines, farms, factories and companies that produce the wealth of the nation. During the Kaunda regime, the UNIP government had adopted the Socialist type of governance called Humanism. This system had the government exercising control over the prices of commodities.
While the Capitalist System is characterized by a free market economy the government does not interfere in economic activities of the people. It does not fix the prices of goods and services. People are free to own property. Those who own property can employ other people to produce goods and services that will give them a profit. This system of government was introduced in Zambia after 1991 by the MMD government of President Fredrick Titus Jacob Chiluba. Liberalization of the economy by the government meant that people who had business were free to price the goods and services they were offering.
Both economic systems are aimed at helping generating wealth for the nation. However, it is worth mentioning that the socialist system is more inclined to wealth for all while the capitalist system is more inclined to individual economic development.
The above economic system have been used in the country and with the escalating prices of essential commodities in the country at the moment, is it right that the government introduces prices control or the government allows the free market economy to continue?