Command Economy Facts: Characteristics, Benefits, And Other Trivia! | Kidadl


Command Economy Facts: Characteristics, Benefits, And Other Trivia!

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Read these Tokyo facts to learn all about the Japanese capital.

Command economy was introduced mainly to monitor the country's economic system so that resources are in deficit.

A command economy is the vice versa of a free-market economy in which private markets maintain the production and supply of goods and services. It is created to eliminate the over-taxation of goods and services.

The Command economy was introduced by the Soviet Union and some other countries of Communism from the Soviet Union federation.

Because of their incapability to handle the economy's demand, the fall of the communist political system began in those regions in the year 1990–91. While all the countries accepted the change of market forces, North Korea is the only economy that stood by and did not corporate with the government's demand.

The Central planners should have always been aware of the change in market forces and trends. Still, in the command economy, it was difficult for the government to cope with the behavior of the fluctuating economy. The other type of economy is the mixed economy, in which publicly-owned enterprises regulate production and economic activities.

Although the command economy had some pros, it created difficulties in the international community and even worsened the situation. There were times when people found illegal ways or the black market to satisfy their needs and resources.

This is rather created in the social welfare of the economy. In this ruling political system, the major decisions, for example, allocating resources like labor capital man force, were controlled by the government. Government is the only source that allows resources according to the central demand.

Keep scrolling down to learn more about command economy.

Characteristics Of A Command Economy

One of the main characteristics of the command economy is that the government has control over the market economy, which sets the demand for resources and the national economy under the observation of the central planners. The command economy also had success stories sometimes. For example, after the First World War and the Russian Civilian War, the Soviet nation was devastated, and even the nation ran into huge unemployment. But with the command economy, it had become easier for the government to rescue the market economy from crisis.

Unlike the mixed economy, the government has all the right to impose laws and taxes before implementing the economic strategy in the command economy. The central planners are the people who have all the commands to decide the allocations of the national budget and also to make sure that it is being distributed among all the crises equally.

With the cooperation of the central government and the public, the country can avoid poverty, unemployment, and all other national crises, at-least to some extent. However, it is not possible if the industrial response towards the government plan stands still or is negative.

Despite the failed economy, the Command economy still managed to regain control over the Soviet Union and Cuba between the '20s and '30s. The Soviet Union made a drastic development in very rapid economic expansion within no time.

The main drawback of the command economy is that the government gains all power of attorney over the industries and daily transit regulations remain a monopoly market. The rules like antitrust laws are imposed to prohibit total monopolistic control,

The government owns the command over the resources, such as the country's industries that manage goods and services. It is a kind of monopoly market rule that decides market prices and produces the same to the public.

It may also provide customers with some necessities, including health care, housing, and education, in the same manner.

One of the best examples of highly followed command economy systems is North Korea which imposes rules on an individual's income.

Benefits Of Command Economy

Some of the advantages of the command economy are discussed below:

Industrial welfare means industrial power is uplifted. The command economy would do anything that helps encourage the Industries in order to achieve economic growth,

Unlike the market economy, in the command economy, the government has the grip of deciding the nation's price and market factors. Hence, there is no space for competition, which eventually reduces the concept of monopoly.

The finished goods and market prices are calibrated so that it meets the demand of the needs and resources of the people nationwide. Though it has limited choices compared with other markets, It still avoids the poverty of resources in the country.

Society and government are countered in these types of economic systems. They can merge the public with the government's understanding of improvising economic growth, which creates harmony between these two factors.

There is always an alternate solution that responds to internal conflicts and rivalries. And also, social welfare is given the utmost significance.

Command Economy Vs. Other Types of Economies

There are four types of economic systems in general, such as:

A traditional economy

A market economy

A command economy

A mixed economy

Market economies and command economies occupy two important places in economic activity. The only disturbance is seen in the division of labor, or factors of production, and the price factors. Whereas activity in a market economy, the budget is not planned. It is not controlled by any central planners but is intended to supply goods and services. Countries like the US, England, and Japan are examples of these markets.

On the other hand, a planned economy is quite the opposite of a mixed economy. Here the government owns most of the control. The chief planners and the financial analysts direct all the factors of production. China, North Korea, and the former Soviet Union are the indicators of the command economies. But there is always a mix and match of the economies seen over the world markets.

Even the United States, which follows the secularist economy, has used the concept of command economies, such as directing materials to war efforts during World War II.

Generally, this type of economy also controls the political and social vision. As Milton Friedman confessed, command economies have partnered with the higher authorities that limit self peace, and market economies tend to be more democratic in the matter of total freedom.

One of the Command economy facts is that it decides the people's workspace and income.


What are three facts about the command economy?

The three facts about the command economy are:

A command economy is an economy the government owns almost all resources and predicts the business.

The government also operates the public incomes and also decides their workspace

The government's main aim is not to earn profits but to prioritize the social welfare of the citizens.

What is the command economy known for?

The command economy, also called a planned economy commands the central government by gaining the power and attorney on the goods and services and owns the position of supplying production. Private ownership of land and capital is strictly limited in these cases.

Who has a command economy?

Command economies were seen in the parts of the Soviet Union and the communist countries of the Eastern allies. It is an opponent of the Communist political system.

Which nation has a command economy?

Some of the command economy nations are:

North Korea, Belarus, Libya, Iran, Cuba, and Russia.

What is prohibited in the command economy?

The private ownership of industries and financial affairs is prohibited in the command economy.

How does a mixed market economy differ from a command economy?

The government controls the production in a command economy, and in a mixed economy, the command is partly owned by the government and partly as secularism. The mixed economic system is the system that includes no government and is mainly determined by the law of goods.

What was Joseph Stalin's goal in creating a command economy?

Joseph's Stalin goal in creating a command economy was to produce more capitalist nations. And that is when the concept of a command economy is decided to take over.

Which is the best definition of a command economy?

A planned economy is a type of economy where the investments of land, money, and property and the production and supply of goods occur according to the allocation of plans set by the central planners, who the government again appoints.

Written By
Sridevi Tolety

<p>With a Master's degree in clinical research from Manipal University and a PG Diploma in journalism from Bharatiya Vidya Bhavan, Sridevi has cultivated her passion for writing across various domains. She has authored a wide range of articles, blogs, travelogues, creative content, and short stories that have been published in leading magazines, newspapers, and websites. Sridevi is fluent in four languages and enjoys spending her spare time with loved ones. Her hobbies include reading, traveling, cooking, painting, and listening to music.</p>

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