From ancient Egypt to the Soviet Union, examples of command economies can be found all around the world. This unique economic system has its own set of advantages and disadvantages, with its characteristics set it apart from other systems. To learn about communism versus a command economy, the advantages and disadvantages of a command economy, and more, keep going!
Explore our app and discover over 50 million learning materials for free.
Lerne mit deinen Freunden und bleibe auf dem richtigen Kurs mit deinen persönlichen Lernstatistiken
Jetzt kostenlos anmeldenNie wieder prokastinieren mit unseren Lernerinnerungen.
Jetzt kostenlos anmeldenFrom ancient Egypt to the Soviet Union, examples of command economies can be found all around the world. This unique economic system has its own set of advantages and disadvantages, with its characteristics set it apart from other systems. To learn about communism versus a command economy, the advantages and disadvantages of a command economy, and more, keep going!
An economic system is a way a society organizes the production, distribution, and consumption of goods and services. In a command economy, also known as a planned economy, the government makes all of the economic decisions. The aim of a command economy is to promote social welfare and fair distribution of goods.
A command economy is an economic system in which the government makes all the economic decisions regarding the production, distribution, and consumption of goods and services. The government owns and controls all the resources and means of production and also determines the prices and quantity of goods and services to be produced and distributed.
To learn more about different types of economic systems check out our explanations on Mixed Economy and Market Economy
In a command economy, the government can ensure that all essential goods and services are distributed fairly to all citizens, regardless of their income or social status. For instance, if there is a shortage of food in the market, the government can intervene and distribute food equally among the population.
In general, a command economy has the following characteristics:
The main difference between communism and a command economy is that communism is a broader political ideology that encompasses economic, social, and political aspects, whereas a command economy is just an economic system. In a communist system, the people control not only the economy but also the political and social aspects of society.
Communism is an economic system in which individuals do not own land, industries, or machinery. These items are instead owned by the government or the entire community, and everyone shares the riches they generate.
While a command economy is a component of the communist system, it is possible to have a command economy that is not based on communist ideology. Some authoritarian governments have implemented command economies without embracing communism. For example, the Old Kingdom of Egypt in 2200 BC and the Incan empire in the 1500s both had some type of a command economy which are recognized as the oldest known use of these types of economies.
Having said that, a command economy has both benefits and drawbacks. We'll take a look at some of these next.
Disadvantages of a command economy include:
The pros and cons of the command economy can be summarized in the table below:
Strengths of a command economy | Weaknesses of a command economy |
|
|
To summarize, a command economy has the advantage of centralized control, promoting social welfare and eliminating market failures. However, it also has significant disadvantages, such as a lack of incentives for innovation and entrepreneurship, inefficient resource allocation, corruption, and lack of consumer choice. Overall, while a command economy can lead to social equality and stability, it often comes at the cost of economic efficiency and individual freedom
It is important to note that there is no country in the world that has a pure command economy. Similarly, there is no country that has a purely free market system. Most economies today exist on a spectrum between these two extremes, with varying degrees of government intervention and the free market. While some countries may have a greater degree of government control over the economy, such as China or Cuba, there are still elements of market competition and private enterprise at work. Likewise, even in countries with relatively free markets, such as the United States, there are still regulations and government policies in place that affect the economy.
Examples of command economy countries include Cuba, China, Vietnam, Laos and North Korea.
China
China is a good example of a country with a command economy. In the late 1950s, Mao Zedong's policies, like the Great Leap Forward, failed to address economic challenges, leading to famine and economic decline. Despite this setback, China continued to develop in the following decades, investing in education and infrastructure, leading to significant improvements in literacy rates and poverty reduction. In the 1980s, China implemented market-oriented reforms that enabled it to become one of the fastest-growing economies in the world.
Cuba
One example of a country with a command economy is Cuba, which has been under communist rule since the Cuban Revolution in 1959. Despite a US embargo and other challenges, Cuba has made significant strides in reducing poverty and achieving high levels of literacy and healthcare access. However, the country has also faced criticism for limiting political freedoms and human rights abuses.
Vietnam
Similarly to China, Vietnam has implemented command economy policies in the past, but has since moved towards a more market-oriented approach. Despite this shift, the government still plays a significant role in the economy and has implemented policies to reduce poverty and improve social welfare. Like China, Vietnam has also faced criticism for its lack of political freedom.
China, Vietnam, Laos, Cuba, and North Korea.
A command economy is an economic system in which the government makes all the economic decisions regarding the production, distribution, and consumption of goods and services.
The characteristics of a command economy include:
The difference between a command economy and communism is that communism is a broader political ideology that encompasses economic, social, and political aspects, whereas a command economy is solely an economic system.
An example of a country with a command economy is Cuba, which is under communist rule since the 1959 revolution, has made progress in reducing poverty and improving healthcare and literacy despite facing a US embargo and other obstacles, but has also been criticized for its human rights abuses and limited political freedoms.
Yes, China has a command economy with some elements of a market economy.
One of the elements of a command economy that is also used in a mixed economy is the provision of economic services to citizens by the government.
Not necessarily; a command economy as an economic system can exist under different political systems, including socialism and authoritarianism, not just communism.
What's a command economy?
A command economy is a type of political economy in which a centralized governing body determines the allowable levels of output and the amounts that may be demanded for products and services.
What's a market economy?
A market economy is a type of economic system in which two forces, supply and demand, govern the creation of products and services.
What are the characteristics of a command economy?
_______ are abundant in command economies.
Monopolies
What's a monopoly?
A monopoly is when there is a single seller that dominates the market.
Define communism
Communism is an economic system in which individuals do not own land, industries, or machinery. These items are instead owned by the government or the entire community and everyone is expected to share the riches they generate.
Already have an account? Log in
Open in AppThe first learning app that truly has everything you need to ace your exams in one place
Sign up to highlight and take notes. It’s 100% free.
Save explanations to your personalised space and access them anytime, anywhere!
Sign up with Email Sign up with AppleBy signing up, you agree to the Terms and Conditions and the Privacy Policy of StudySmarter.
Already have an account? Log in
Already have an account? Log in
The first learning app that truly has everything you need to ace your exams in one place
Already have an account? Log in