Advantages And Disadvantages Of A Command Economy – Every existing economy runs a certain economic system. Basically there are 3 economic systems which include; A command economy where the central government owns and controls the economy, a free market economy where economic activity is driven by market forces of supply and demand, and a mixed economy which combines aspects of a command economy and a free economy combines. Each of these systems has its own characteristics, advantages and disadvantages when adopted and implemented in society. In this article we will discuss the benefits of a command economy.
A command economy refers to an economic system in which the means of production such as land, capital and factories are owned and controlled by the government. Generally, these economies are centrally planned, so the government decides the amount of production, the allocation of raw materials, how to produce them, and the types of goods and services available to consumers. Command economies usually come from socialism or a form of socialism; Communism.
Advantages And Disadvantages Of A Command Economy
In a command economy, the government limits individual income by setting a ceiling on wages. They also decide which investments and sectors to invest in. This aims to reduce socio-economic differences between individuals and encourage the formation of an egalitarian society with all the advantages of a command economy. Command economies are often criticized for their tendency to stifle innovation and entrepreneurship and their high levels of human rights violations. Although a command economy has its weaknesses, this type of economy has many advantages that we will discuss later.
Economic Systems And Decision Making
Read about: What is one way a command economy affects the lives of every citizen? Advantages of a command economy
One of the advantages of a command economy is the exploitation of industry in a sustainable way. Because the formation and operations of companies are regulated by the government, these companies can operate continuously for long periods of time. Therefore, these ongoing operations are in line with the overall growth and development of the country. The government’s plan to meet fixed quotas on a daily or monthly basis ensures that the industry works consistently to meet the expected quotas in a given period. Challenges such as lack of profit that can lead to bankruptcy or closure of the industry can be overcome.
One of the advantages of a command economy is the flexibility of industry through government regulations. Rather than having fixed industries that specialize in certain areas of production, as is usually found in integrated economies, industries in command economies are more flexible. When a particular project needs to be completed, the entire domestic industry can be easily mobilized so that the project is completed within the specified time. Therefore, industries in this economy easily adapt to changes and maintain a flexible outlook.
The main advantage of a command economy is economic stability which is often a product of price controls and inflation. In a command economy, market forces do not exist and play no role in determining the prices of goods and services. Instead, the government sets the prices of goods and services. Pricing is the process used to make goods and services available and affordable to the public. With this, inflation can also be easily controlled, so that it affects the general economic stability.
Traditional Economy/command Economy: Advantages & Disadvantages.
Price and inflation controls ensure more predictability. Individuals know the exact price they will spend on products and services at any given time, as well as how much they will earn. This predictability helps individuals with budgeting and other financial planning.
Another advantage of a command economy is the efficient mobilization and allocation of resources to produce goods. In a command economy, the means of production are owned and controlled by the government so that resources can be easily mobilized and allocated to increase production efficiency to meet the needs of citizens. By focusing production on meeting social needs, waste can be reduced and surplus available resources can be channeled to other sectors of the economy. If this is done, production levels can be better adjusted to meet social needs at affordable prices while limiting shortages.
A huge advantage of a command economy is the cooperation that exists between industries. All businesses in a command economy can work together according to government direction to achieve the country’s economic goals. Industrial cooperation facilitates the achievement of production goals because products can be produced on a larger scale as all industries actively seek to provide benefits to society. This in turn helps to increase industrial strength, encourage unity among individuals and create more jobs in the economy. Additionally, since all businesses are owned and operated by the government, there are no monopolies. This eliminates constant competition to dominate the market and gain comparative advantage over other industries.
The main advantage of a command economy is that it reduces inequality in society. The unequal distribution of wealth is one of the greatest weaknesses of a free market economy, where wealth is concentrated in the hands of a few capitalists who own and run the industry. In a command economy, inequality is greatly reduced because individuals do not own or control the means of production to obtain personal wealth. Reducing inequality will strengthen the cohesion and unity between individuals in society because everyone is in the same social class as everyone else.
Towards Prosperous Public Goods With Freedom
In addition, the government provides basic needs such as education, food, shelter and health services at free or minimal cost as well as an equal basis for a better quality of life for all citizens, as well as equal access to these essential goods and services. . Emergencies are resolved quickly
Quick response to emergencies is another advantage of the command economy. This is possible because the government can issue guidelines to industry, the public and aid providers, and these guidelines must be followed without delay. This is important to maintain continuity of production and product flow to market, as well as minimize the impact of disasters on production. The central plan can be adjusted so that unaffected areas cover affected areas. In addition, the government can also order increased production of certain important goods in affected communities.
They ensure that emergencies such as floods, earthquakes, epidemics and other types of disasters are dealt with quickly and effectively to minimize their impact on affected individuals, communities and economies. Therefore, emergency response is a large part of the command economy.
In contrast to a free economy where the level of employment is often uncertain due to changes that occur together with changes in the level of demand and supply, a command economy has the advantage of offering a higher level of employment. This was largely due to centralized economic planning, government ownership of industry, and the command economy’s requirement that everyone who could work must work. In most command economies, governments implement plans to acquire large-scale projects such as low-cost housing, dams, roads, bridges, etc. These projects often require a lot of labor to complete, so people always have to work
Command Vs. Market
In addition, people living in command economies often enjoy flexibility in job placement because they can be assigned to work in different industries and in different capacities depending on the needs of the community and the projects that t must be completed by a certain time. Investing in public goods
Another advantage of a command economy is investment in public goods. In a command economy, the provision of adequate social welfare is a primary concern and the production of goods and services is based on social needs and the intrinsic value derived from them, not on the profit motive. This ensures that public goods that would be meaningless in a market economy can be made available to society, regardless of whether their production is profitable or not. Central planners in a command economy can also direct necessary resources to be made available to the public and used to provide public infrastructure and other essential goods and services.
The advantages of a command economy include consistent industrial operations, flexible industrial existence, and efficient procurement, allocation, and production of resources. Additional benefits of a command economy include controlling prices and inflation, cooperation between industries, reduced inequality, faster response to emergencies, higher employment levels, and investment in public goods. These benefits help maintain a society in which all individuals enjoy adequate opportunities for personal development, as well as access to everything necessary to live a decent life.
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Centrally Planned Economy
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