Command Economies

Does total state provision effectively provide for society?

A planned or command market is fully controlled by a country’s government, with the state deciding which products are made and how much. This allows them to control prices to ensure they remain fair and prevents large companies from rising into power. It also means that anyone who wants to work can get a job, as the state controls the entire process, so employment is available in many different sectors. Workers will not have to compete with other candidates as they will be automatically allocated with a job. This dramatically reduces unemployment but could cause unhappiness if someone is assigned a job that they do not enjoy.

Furthermore, having no competition means no incentive to improve quality, so products often end up inadequate and take too long to manufacture. Efficiency is also an issue because there is no significant profit created and no reason to cut costs, resulting in prolonged and wasteful processes. As the government pumps in all funding, the budgets for different sectors varies heavily depending on the country’s priorities. If they were particularly aggressive, then too much could be spent on the military and weapons development and could lead to the neglect of other consumer goods like clothing, cars and even food. One example of a command economy is the USSR, which followed a planned economy before it became Russia. At the time, the USSR was heavily engaged in military action, ranging from WW1 to the Cold War, and so vast amounts of funding supported army and weaponry development, rising to 20% of total Soviet GDP[1], leading to the general public lacking variety in clothing, furniture, etc., and whatever they did have was poor quality.

This can be seen clearly with the Trabant car, provided for East Germans under Soviet control between 1957-1990. It was the only type of car available, had little room, was prone to breaking down, and was overall a terrible car. It also had an average waiting time of 10 years due to the earlier slow, inefficient processes that usually accompany planned markets. It highlights how a command economy can fall apart, as with the case of the USSR. However, controlling the market and preventing the rise of privately-owned companies can prevent monopolies or oligopolies from forming, which prevents price gouging and accompanying impacts from harming consumers.



One response to “Command Economies”

  1. avatar

    A very thought provoking article

    Liked by 1 person

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