Command Economy Pros and Cons


Command economy is a corporate atmosphere where the government is the one regulating the price and supply of goods. This type of economy is mostly used in some communist countries. Many people are being attracted to this type of economy because they believe that the government can keep the price of goods down and supply them with their needed items.

A command economy happens once the government controls the entire aspects of the economic production and the economy. In this type of economy, the government is the one deciding about the products or goods to be produced, how to produce them, and how to distribute them.

Although this type of economy has been supported by many people, it has also been a center of criticisms in various places. Will the execution of this economy type benefit a country?



The Pros of Command Economy

Here are some of the advantages of having the government control all aspects of the economy.

Important at mobilizing economic resources. A centrally planned economy is great when it comes to mobilizing the resources of the company effectively and quickly on a large scale. Companies have the ability to execute even massive projects, attain their goals and establish industrial power. They can also subjugate the general population’s welfare and override self-interest.

Can prevent monopoly power abuse. Command economies have the ability to prevent the abuse of monopoly power. It also allows the government to effectively overcome inequality, market failure and establish a society that will maximize the welfare of people instead of maximizing profit.

Ensures the Realization of well-defined long-term goals. One of the primary features of command economy is actually a central planning authority. The state creates a planning authority in order to effectively carry out plans of long year duration. This is essential to formulate well-defined goals and effectively achieve them.



The Cons of Command Economy

Here are a few of the many disadvantages of command economy that you should take note of.

Have problems producing the right exports. One of the main disadvantages of centrally planned or command communities is that they are having troubles producing appropriate exports at prices in global market. It is not easy for different planning factors to harmonize or coordinate with each others.

Difficulty in obtaining information about the needs of consumers. Rather than leading to efficacy, many command economies mostly product not enough or too much of one thing. This is mainly because it is not easy for central planners to obtain up-to-date information about the needs of their consumers. This is usually the fact behind their inability to respond to the needs of their customers.

Treat to liberty and democracy. Command economies are creating a highly powerful government which is limiting individual rights in order to pursue economic goals. This will create an environment where governments will extend their control over the other areas in the lives of people.

Will it benefit your country or allow the government to have a control over the entire aspects of the business market? Debates about a command economy are unending – how do you feel about it?