Advantages and Disadvantages of Command Economy

Advantages and Disadvantages of Command Economy


Are you familiar with command economy? If not, this is the perfect time for you to have an apparent and better understanding about the above mentioned topic as well as determine the advantages and disadvantages that are associated with command economy. When you hear this term, what is the first thing that comes into your mind? Well, the term “Command economy” can be defined as a kind of government authority where most of the economic plans and decisions are being held.

The plans and decisions are being implemented in a form of directives, regulations and laws. There are also businesses that follow the hiring and production targets instead of freely and individually responding to the well known laws of demand and supply. The main concept of command economy is creatively designed and developed by the Viennese economist to manage the hyperinflation.

The term “command economy” originated from Germany and it usually utilized to easily describe Nazi economy. In order for you to be familiar with command economy, here are some of the advantages and disadvantages of it that you should know and learn more about:

The Advantages of Command Economy

• With the use of command economy, you can create centrally planned decisions that have the potential to mobilize the economic resources effectively and quickly.

• The command economy also has the ability to execute salient massive projects, attain significant social goals and create industrial resources and power.

• You can also override the self interest of every individual; subjugate the general and welfare population to reach the societal goal in just a short period of time.

• According to researches, the command economy is also great for transforming the vision of a certain country that includes Cuba, China and Russia. In this way, a certain country can easily rebuild their economy after the World War 2.

The Disadvantages of Command Economy

• With the existence of command economy, there is a great chance that the societal needs will mow down. The best example of this is the workers wherein their own needs are being ignored by the command economy.

• The leaders that are associated with the command economy weaken the support especially when it comes to planning and central authority.

• Instead of progressing in their respective field, command economy is not fulfilling their duties to produce enough supplies to meet the needs of their workers.

• Most of the inner planners don’t get enough information to determine the needs of their consumers and this is one of the reasons why they find hard time and difficulty to meet their demands.

• Command economy is not good particularly when it comes to stimulating innovation since most of the businesses are more focused on directives and they are being discouraged to create autonomous decisions.

• Command economy also encounters trouble in their global market exports and prices. There are also various sectors that find hard time to coordinate with one another and they can determine the needs of foreign countries.

The main goal of command economy is to come up with five year plan to generate economic growth, make use of scarce resources and increase production. However, they need to come up with political system that is centrally planned.