Definition of Command economy:
A command economy is 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 are offered for sale. It also determines investments and incomes. The command economy is a key feature of any communist society. Cuba, North Korea, and the former Soviet Union are examples of countries that have command economies, while China maintained a command economy for decades before transitioning to a mixed economy that features both communistic and capitalistic elements.
Also known as a planned economy, command economies have as their central tenet that government central planners own or control the means of production within a society. Private ownership or land, labor, and capital is either nonexistent or sharply limited to use in support of the central economic plan. In contrast with free market economies, in which the prices of goods and services are set by supply and demand, central plans in a command economy set prices, control production, and limit or entirely prohibit competition within the private sector. In a pure command economy, there is no competition, as the central government owns or controls all business.
An economy in which market mechanisms are replaced by a centralized state authority which coordinates all economic activity through commands, directives and regulations for the purpose of achieving broader socio-economic and political objectives. In a command economy, most forms of output are publicly owned but the state exerts control over production, distribution and prices. For example, Nazi Germany was considered to be a command economy as was the Soviet Union under Stalin.
An economy in which production, investment, prices, and incomes are determined centrally by a government.
How to use Command economy in a sentence?
- Command economies suffer from problems with poor incentives for planners, managers, and workers in state-owned enterprises.
- The Soviet Union utilized a command economy during the Cold War which led to a great deal of friction with the United States of America and other western countries.
- Central planners in a command economy are unable to rationally determine the methods, quantities, proportions, location, and timing of economic activity across an economy without private property or the operation of supply and demand.
- This chapter emphasizes the adjustments made to the economic system during the postwar recovery in response to the Occupation and a return to capitalism from a command economy.
- The United States is a mix economy, and in the past has politically battled centralized governments that have used a command economy instead of a capitalist or free market one.
- A command economy is when government central planners own or control the means of production, and determine the distribution of output.
- The command economy did not allow farmers the freedom to grow as much corn as they wanted; instead, they had to grow as much as the government told them to grow or else they would not be allowed to grow corn again.
- Proponents of command economies argue that they are better for achieving fair distribution and social welfare over private profit.
Meaning of Command economy & Command economy Definition