You are on page 1of 15




Command Economy

is where a central government makes all

economic decisions.
is a system where the government that
determines what goods should be
produced, how much should be produced
and the price at which the goods are
offered for sale.
Command Economy

The government or a collective owns the land

and the means of production. It doesn't rely on
the laws of supply and demand that operate in
a market economy.

A key feature of any communist society.

Free-Market Economy Command Economy

the government does not

intervene in the workings
there is no competition, as
of the market by setting
the central government
prices, limiting production
controls all business
or hampering competition
within the private sector
5 Characteristics
1. The government creates a central economic plan.
2. The government allocates all
resources according to the central plan.
3. The central plan sets the priorities for
the production of all goods and services.
4. The government owns monopoly businesses.
5. The government creates laws, regulations, and
directives to enforce the central plan.
Advantages Disadvantages
Planned economies can Rapid mobilization often means
quickly mobilize economic command economies mow down
resources on a large scale. They can other societal needs.
execute massive projects, create Struggle to produce the right
industrial power, and meet social exports at global market prices.
goals. Discourage innovation.
Command economies can wholly
transform societies to conform to
the government's vision.
a populist economic and political system in which the
means of production operate under public political
ownership, sometimes called common ownership.
All legal production and distribution decisions are
made by the ruling class.

All legal production and distribution decisions are

made by the ruling class.

Socialism developed as an objection to liberal

individualism and capitalism. Under early capitalist
economies during the 17th and 18th centuries, western
European countries experienced compound economic
growth and industrial production for the first time. Some
individuals and families escaped poverty faster than
others, creating income inequality and other social

The most famous early socialist thinkers were

Robert Owen, Henri de Saint-Simon, Karl Marx and
Vladimir Lenin. It was primarily Lenin who expounded
on the ideas of earlier socialists and helped bring
socialist planning to the national level after the
Bolshevik Revolution in Russia during 1917.
Breaking down Socialism

Prominent historical examples of socialist countries

include the Soviet Union and Nazi Germany. Today's
examples include Cuba, Venezuela and China.

Due to its practical challenges and poor track record,

socialism is sometimes referred to as a utopian or
post-scarcity system, although modern adherents
believe it could work if only properly implemented.
A political and economic ideology based on communal
ownership and the absence of class.
can be thought of as capitalism's opposite, says that in
a capitalist society, the proletariat is exploited by the
the proletariat - the class of wage earners, especially those who
earn their living by manual labor or who are dependent for support
on daily or casual employment
the bourgeois - a member of the middle class; a person whose
political, economic, and social opinions are believed to be
determined mainly by concern for property values and conventional
While based on a Utopian ideal of equality and
abundance, as expressed by the popular slogan,
"From each according to his ability, to each according to
his need,communism in practice has only existed under
authoritarian government and has been the source of
millions of human rights violations and deaths.
Breaking down

One of the fundamental problems with communism is

the knowledge problem, which describes how, without a
price system, central planners cannot accurately
determine what goods and services should be produced
or in what quantities. Useless surpluses and
devastating shortages are the result.

Communism is often considered to be a twentieth

century political experiment that officially failed in the
late 1980s and early 1990s with the fall of the Berlin
Wall and the collapse of the Soviet Union.