Q:

What are characteristics of a command economy?

A:

A command economy is one in which the government is the chief agent in all major economic actions. The government goes as far as to determine what is to be made, how much is made, how it is distributed and how it is transformed into services the public can use. In many instances, even prices are set by the government.

A command economy, also called a planned or centrally planned economy, is one where the government relays top-down directives to the sites of production and exchange. Some of the classic examples of command economies are communist economies, particularly the Marxist-Leninist model used in the former Soviet Union. A command economy is different from a market economy in that the presence of private enterprise and free-market forces are either extremely limited or completely nonexistent.

Proponents of command economies argue that this top-down model is instrumental in preventing abusive monopolies and risks to market stability. Furthermore, such government control is said to create possibilities for distributive justice, where everyone has access to the same grade and quantity of goods and services. Finally, proponents argue that command economies can better regulate the job market, thus preventing problematic levels of unemployment.

Opponents of command economies argue that central planning stifles creativity and limits the range of responses a society can apply reflexively to its own diverse needs. Additionally, opponents claim that in limiting individual and private industry, command economies generate significant impairments to free speech and, ultimately, to human rights. As command economies necessarily build bureaucracies, opponents also say that command economies inevitably become bogged down by distant functionaries and red tape that slow the system and cause it to atrophy.


Is this answer helpful?

Similar Questions

  • Q:

    What are the advantages and disadvantages of a command economy?

    A:

    A command economy can be advantageous by eliminating unemployment but can also be a disadvantage by producing unnecessary products. A command economy is when the government owns all or most aspects of the economy. The government chooses what goods and services to provide.

    Full Answer >
    Filed Under:
  • Q:

    What are characteristics of a planned economy?

    A:

    A planned or command economy is one in which major functions, such as production and distribution of goods, are controlled by the government. In a planned economy, the government owns some or all production facilities and decides what to produce and how goods are priced. This is in contrast to a market economy, where production and distribution are decided by market forces with little or no government intervention.

    Full Answer >
    Filed Under:
  • Q:

    What is the difference between a command and a market economy?

    A:

    The government has more authority in a command economy, while private citizens and companies have more influence in a market economy, according to Infoplease from Pearson Education. The government directs the types and levels of production in a command market. Private producers choose the amount of goods to supply the market in a market economy.

    Full Answer >
    Filed Under:
  • Q:

    What countries have a command economy?

    A:

    As of 2014, Iran, Cuba, China and North Korea have command economies. In a command or planned economy, a central government authority formulates economic decisions, and the government implements each plan through legislation, directives and regulations. Suppressing free-market forces allows governments to reach specific societal objectives.

    Full Answer >
    Filed Under:

Explore