Economics Command Economy Questions Medium
In a command economy, economic planning plays a central role in determining the allocation of resources, production targets, and distribution of goods and services. The government or a central planning authority exercises significant control over the economy, making decisions on what to produce, how much to produce, and how resources should be allocated.
The main objective of economic planning in a command economy is to achieve specific economic and social goals set by the government. These goals often include promoting industrialization, ensuring employment, reducing income inequality, and achieving self-sufficiency in key sectors.
Economic planning involves creating detailed production plans, setting targets for different industries, and coordinating the activities of various economic units. The government determines the production quotas for each industry, specifying the quantity and quality of goods and services to be produced. It also decides the allocation of resources, such as labor, capital, and raw materials, to different sectors based on the priorities set by the government.
Additionally, economic planning in a command economy involves price setting and distribution mechanisms. The government determines the prices of goods and services, often using a cost-based approach rather than relying on market forces. It also controls the distribution channels, ensuring that goods and services are distributed according to the government's priorities and social needs.
Overall, economic planning in a command economy aims to achieve a planned and coordinated approach to economic development, with the government playing a dominant role in decision-making. However, it is important to note that command economies have faced criticism for their lack of efficiency, innovation, and responsiveness to consumer preferences compared to market economies.