Why Do Countries Turn to Command Economies?
Command Economies: Inefficiencies and Advantages
This section discusses the concept of a command economy, its inefficiencies, and advantages.
What is a Command Economy?
- Command economies operate in direct contrast with market economies.
- They go against private property, free market pricing, competition, and consumer choice.
- Central authority guides the factors of production with little input from the people.
Inefficiencies of Command Economies
- Government fixes wages leading to lack of incentive for workers to work faster or produce more.
- Enormous bureaucracy needed to make economic decisions can harm efficiency.
- Sacrifice individual liberties in the name of societal goals.
Advantages of Command Economies
- Goal is more economic equality. Goods and services would be distributed more equitably.
- Big infrastructure projects, national defense, healthcare, and education are often taken on by central authorities because no entity in a free market is willing or able to take these on themselves.
- Can provide jobs for anyone who wants one.
Why Are Command Economies Still Appealing?
- Autocratic leaders have an easier time controlling society when they can completely control the economy.
- North Korea is arguably the only country in the world that currently has a fully centrally-planned economy. However, there is still massive economic inequality there due to government corruption.
Historical Examples of Failed Command Economies
This section discusses historical examples of failed command economies.
The Soviet Union
- Largely possessed a command economy which ultimately failed.
Conclusion
This section concludes that nearly every country on the planet has some sort of mixed economy.