command economy

command economy
Economic system in which the means of production are publicly owned and economic activity is controlled by a central authority.

Central planners determine the assortment of goods to be produced, allocate raw materials, fix quotas for each enterprise, and set prices. Most communist countries have had command economies; capitalist countries may also adopt such a system during national emergencies (e.g., wartime) in order to mobilize resources quickly. See also capitalism; communism.

* * *

      economic system in which the means of production are publicly owned and economic activity is controlled by a central authority that assigns quantitative production goals and allots raw materials to productive enterprises. In such a system, determining the proportion of total product used for investment rather than consumption becomes a centrally made political decision. After this decision has been made, the central planners work out the assortment of goods to be produced and the quotas for each enterprise. Consumers may influence the planners' decisions indirectly if the planners take into consideration the surpluses and shortages that have developed in the market. The only direct choice made by consumers, however, is among the commodities already produced.

      Prices are also set by the central planners, but they do not serve, as in a market economy, as signals to producers of goods to increase or decrease production. Instead, they are used mainly as instruments of the central planners in their efforts to reconcile the total demand for consumer goods with the supply available, allowing also for revenues to the state.

      The central authority in a command economy assigns production goals in terms of physical units and allocates physical quantities of raw materials to enterprises. The process for a large economy with millions of products is extremely complex and has encountered a number of difficulties in practice.

      Central planning of this kind is not without apparent advantages, however, since it enables a government to mobilize resources quickly on a national scale during wartime or some other national emergency. But the costs of centralized policies are real and quite high. Moreover, it is often the case that much of the burden of these costs is shifted away from the government. One example is the military draft (conscription), which largely shifts the cost of mobilizing troops from the government to the draftees, who could be employed at a higher rate of pay elsewhere.

* * *


Universalium. 2010.

Игры ⚽ Нужно сделать НИР?

Look at other dictionaries:

  • command economy — ➔ economy1 * * * command economy UK US noun [C] (also controlled economy) ECONOMICS ► an economic system in which the government controls the type, supply, and price of the goods that are produced: »There is massive support for a shift from the… …   Financial and business terms

  • command economy — noun An economy in which all means of creating wealth and business activities are controlled by government rather than market forces • • • Main Entry: ↑command * * * comˌmand eˈconomy 7 [command economy] noun = ↑ …   Useful english dictionary

  • command economy — command economies N COUNT In a command economy, business activities and the use of resources are decided by the government, and not by market forces. ...the Czech Republic s transition from a command economy to a market system. Syn: planned… …   English dictionary

  • command economy — UK / US noun [countable] Word forms command economy : singular command economy plural command economies economics an economic system in which the government controls business and the supply of goods in a country • See: market economy …   English dictionary

  • Command Economy — A system where the government, rather than the free market, determines what goods should be produced, how much should be produced and the price at which the goods will be offered for sale. The command economy is a key feature of any communist… …   Investment dictionary

  • command economy — Not to be confused with its associated feature the planned economy, the paradigm case is the neo Stalinist, centrally directed, state owned economy of the Soviet Union. A continuum can be elaborated, within which communist economic systems can be …   Dictionary of sociology

  • command economy — An economy in which the government determines industrial output, the *prices of products and services, and the allocation of economic resources. In a command economy, market forces are subdued or eliminated in favor of national economic planning …   Auditor's dictionary

  • command economy — command′ econ omy n. an economic system that relies primarily on a central authority, as in China and Cuba • Etymology: 1980–85 …   From formal English to slang

  • command economy — planned economy An economy in which the activities of firms and the allocation of productive resources is determined by government direction rather than market forces …   Big dictionary of business and management

  • command economy — com,mand e conomy noun count an economic system in which the government controls business and the supply of goods in a country ─ compare MARKET ECONOMY …   Usage of the words and phrases in modern English

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”