| Revision as of 06:27, 15 November 2005 edit10lbs of potatoes (talk | contribs)81 editsm just small spelling...otherwise, this is an excellent edit← Previous edit | Revision as of 06:52, 15 November 2005 edit undo172 (talk | contribs)24,875 edits de-merged. "command economy" is a typology developed to criticize planned economies. The bulk of the material belongs on the planned economy article.Next edit → | ||
| Line 1: | Line 1: | ||
| In a '''command economy''', the government determines production levels and sets prices. This is said to be advantageous because it prevents unscrupulous investors from taking advantage of consumers. ] advocates such as ] have criticized the '''command economy''' on the grounds that centralized planning ignores the ] and is therefore ineffective. In a similar manner, the idea of a '''command economy''' has been criticized because of inherently large ] associated with costs of distribution. A good example is the ] which suffered many shortages and inefficiencies due to beaurocratic oversight and neglect. This idea may be attributed to ] who predicted the downfall of the ] because of insurmountable ]. | |||
| A '''command economy''' is an ] where most economic activity is determined by the state. | |||
| ==See also== | |||
| It is an extreme example of a ], where the plan encompasses the whole economy. | |||
| ⚫ | *] | ||
| Examples of command economies include ], ] and ]. They are generally instituted by ]. | |||
| == Support for command economies == | |||
| Command economies have no ], no ] and find it easy to contain ]. some socialist theorists believe that a ] implies a command economy. On this socialist view, the political control of a command economy by the workers is vastly preferable to the control of the economy and the workers by ]. | |||
| Furthermore, the command economy has the same advantages potential advantages as a ]: capital and labour can be put to best use, investment can be structered and consumption deferred | |||
| As a whole, a command economy would attempt to substitute a number of firms with a single firm for an entire economy: the whole economy relates the same way that parts of a ] do within capitalism. | |||
| ==Objections to command economies == | |||
| Critics of command economy argue that planners cannot detect demand with sufficient accuracy. In a market economy, ] signals serve this purpose. Economist ] critiques command economies with this rationale. A common example is the ] where shortages caused long queues for basic consumer products such as shoes or bread. These shortages were due in part to central planners allocating resources to produce goods that they considered a higher priority. This difficulty was first noted by economist ], who called it the "]". Economist ] developed this into a ] theory. | |||
| Critics of the command economy also claim that modern ] shows the way for governments to correct many of the problems with market economies while retaining a market structure. | |||
| Critics also point out that command economies may require a state which intervenes highly in people's personal lives. For example, if the state directs all employment then one's career options may be more limited. If goods are allocated by the state rather than by a market economy, citizens cannot, for example, move to another location without state permission because they would not be able to acquire food or housing in the new location, since those were not preplanned for (however, advocates of planned economy may point out that a market economy does not guarantee the existence of food and housing at the new location either). | |||
| See: | |||
| ⚫ | * |
||
| *] | |||
Revision as of 06:52, 15 November 2005
In a command economy, the government determines production levels and sets prices. This is said to be advantageous because it prevents unscrupulous investors from taking advantage of consumers. Free market advocates such as Milton Friedman have criticized the command economy on the grounds that centralized planning ignores the price signal and is therefore ineffective. In a similar manner, the idea of a command economy has been criticized because of inherently large transaction costs associated with costs of distribution. A good example is the Soviet Union which suffered many shortages and inefficiencies due to beaurocratic oversight and neglect. This idea may be attributed to Ronald Coase who predicted the downfall of the Soviet Union because of insurmountable transaction costs.