Command Economy
A command economy is an economic system in which a central authority, such as a government, makes all economic decisions. This type of economy is also known as a centrally planned economy. In a command economy, the government decides what goods and services will be produced, how they will be produced, and how they will be distributed. The government also sets prices and wages, and controls the flow of money in the economy.
History of Command Economy
The concept of a command economy has been around since the early days of civilization. Ancient societies such as the Roman Empire and the Chinese dynasties used command economies to control the production and distribution of goods and services. In the modern era, command economies were adopted by many countries in the 20th century, including the Soviet Union, China, and Cuba. These countries used command economies to rapidly industrialize and modernize their economies.
Comparison of Command Economy and Market Economy
| Command Economy | Market Economy |
|---|---|
| Prices and wages are set by the government | Prices and wages are determined by supply and demand |
| Government makes all economic decisions | Individuals and businesses make economic decisions |
| Little to no competition | High competition |
| Little to no economic freedom | High economic freedom |
Summary
A command economy is an economic system in which a central authority, such as a government, makes all economic decisions. This type of economy is also known as a centrally planned economy. In a command economy, the government decides what goods and services will be produced, how they will be produced, and how they will be distributed. For more information about command economies, visit websites such as Investopedia, The Balance, and The Economist.
See Also
- Market Economy
- Mixed Economy
- Socialism
- Capitalism
- Supply and Demand
- Price Controls
- Monetary Policy
- Fiscal Policy
- Economic Growth
- Economic Development
