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“ ” You can force poor beggars in factories to produce more products, but a farmer can't force the land to produce. He can't preach You can force poor beggars in factories to produce more products, but a farmer can't force the land to produce. He can't preach Marx to the weather so that it rains at the right time. And in the whole of Russia the sun has never been known for as much as one day to listen to the economics of the late Joseph Stalin —Leonard Wibberley, The Mouse that Roared

A command economy (also known as a planned economy) refers to an economic model in which a central authority coerces at gunpoint informs farms, factories, schools and companies:

Which and how many goods, services and professionals to produce

and goods, services and professionals to produce Where to distribute these and who may partake

to distribute these and may partake Deciding their set price and value semi-arbitrarily (e.g. 'by decree')

In order for these processes to even be doable on a national scale, far-reaching central control is needed — typically, featuring the total control of industry, education and labour, alongside invention of the internal machinations required to ensure top-down compliance from every individual cog in the machine person in the system.

This, in stark contrast to the spectrum of demand economies (also known as "market" economies), in which each individual is theoretically[note 1] — free to name his or her own terms when it comes to production and trade.

Midas or madness? [ edit ]

“ ” Planning is not equivalent to 'perfect' allocation of resources, nor 'scientific' allocation, nor even ‘more humane’ allocation. It simply means ‘direct’ allocation, ex ante. As such, it is the opposite of market allocation, which is ex post. —Ernest Mandel, In Defence of Socialist Planning[1]

The command economy model is best known for two things:

Being attempted by a number of Communist regimes during the 20th century Eventually stagnating their economy and hindering the country's development

In this capacity, the command model has repeatedly been the subject of heavy criticism from all sides of the political spectrum (with the exception of enthusiastic authoritarians, on both sides of the horseshoe). Wingnuts criticize it mainly for gutting free enterprise and traditional values, while moonbats typically protest that the centralized hierarchy inherent to command economies not only goes against Karl Marx's original vision of 'stateless communism', but also clashes powerfully with a range of cherished socialist ideals.[note 2] People and institutions ranging across the political spectrum have expressed vehement skepticism towards the Stalinist-reeking concept of overtly signing away all functions of economic self-determination to a distant clique of politically untouchable 'experts'.

Outside the context of initial industrial development and acute periods of war, the command economy model has never been promoted by mainstream economists outside of totalitarian dictatorships , it having achieved a certain 'general recognition' for being woefully inefficient — to the point of being counterproductive — in the management of any peacetime economy. Rather, current disputes in macroeconomics lie widely between doctrinaire free-marketeers and promoters of government intervention (i.e., of a "mixed economy" ) — a discussion far removed from the fantastical realm of 'great leaps' and 'five-year plans'.

Historically, two major countries to feature command economies were China and the Soviet Union, respectively. While demonstrably capable of garnering results in the short term[note 3] — a feature held in common with a number of non-command economies — both experiments were ultimately wrought with the loss of social mobility, wild fluctuations in the availability of goods and services, the formation of black markets utterly dwarfing their western 'Prohibition era' counterparts, state-sponsored pseudoscience, famines (both intentional and otherwise), unprecedented environmental devastation, unchecked human error and general ideological insanity.

By the late 1970's, sheer necessity increasingly drove both nations to overhaul their respective economies. While the former, China, is still nominally communist, its economy has diverged dramatically from the introverted 'self-reliance' implied by the old ideals (instead, expanding powerfully into global free market trade). The latter, Soviet Union, no longer exists — in part, as a result of its much more 'ideologically pure' command economy going completely haywire on them for that reason. Exemplifying the sunk cost fallacy, more than a decade of continuous 'life support' proved inconsequential in compensating for the systemic flaws endemic to command economies.[2]

Examples [ edit ]

Historical examples of command economies [ edit ]

Modern examples of command economies [ edit ]

Belarus, lone holdout of the former Soviet republics due to its lumbering Stalin-esque dictatorship. Not doing too hot. [16]

Cuba, never really got off the ground due to major economic sanctions from the US, [17] and had to mostly rely on trade with the USSR. Certain market reforms have been made in recent years, such as letting people become independent contractors (e.g. plumbers) as they can earn more going to consumers directly this way. The Cuban government has also learned a lesson from the many boons of mixed economies — that income from (comparatively free) enterprise can be supported and taxed, thus effectively generating more revenue for state and individual. [18] Due to ridiculous rationing and wage-fixing by the government, many highly-trained professionals make more doing jobs like driving cabs than they ever could with their official jobs. [19]

and had to mostly rely on trade with the USSR. Certain market reforms have been made in recent years, such as letting people become independent contractors (e.g. plumbers) as they can earn more going to consumers directly this way. The Cuban government has also learned a lesson from the many boons of mixed economies — that income from (comparatively free) enterprise can be supported and taxed, thus effectively generating more revenue for state individual. Due to ridiculous rationing and wage-fixing by the government, many highly-trained professionals make more doing jobs like than they ever could with their official jobs. North Korea, a known basket case, is (despite tenuous and minor reforms in 2015) still aptly described as a "rigid centrally planned economy"[20] — ignoring the rampant black market trading (which the criminal government actually takes part in operating[21]), which includes participation in the international drug trade, the counterfeiting of foreign goods and currencies, human trafficking and illegal arms trading (often with other state-terrorist regimes).[22] Probably the purest incarnation of a textbook command economy operating today — go figure.

Examples that don't really count [ edit ]

Saudi Arabia, whose oil findings — a random jackpot feature of its geography — is the source of the vast majority of its considerable national wealth, technically has a command economy. However, considering the nation's massive oil findings, it should be pointed out that basically any concievable economic system which would allow exploitation and export of the nation's oil would be very, very hard to bankrupt. In other words, as far as economies successful by virtue of them being command economies goes, Saudi Arabia is quite useless as an example. Either way, Saudi Arabia is defined as a "unitary Islamic absolute monarchy" [23] which never received any notable influence from Marxist thought, having been a typical monarchy living off a primitive subsistence economy until the big oil dollars started rolling in (ca mid-20th century), making Saudi Arabia the living nightmare of liberals and leftists alike — a filthy rich nation which, aside from its wealth, politically remains entirely pre-enlightenment. [24]

feature of its geography — is the source of the vast majority of its considerable national wealth, technically has a command economy. However, considering the nation's massive oil findings, it should be pointed out that concievable economic system which would allow exploitation and export of the nation's oil would be to bankrupt. In other words, as far as economies successful goes, Saudi Arabia is quite useless as an example. Either way, Saudi Arabia is defined as a "unitary Islamic absolute monarchy" which never received any notable influence from Marxist thought, having been a typical monarchy living off a primitive subsistence economy the big oil dollars started rolling in (ca mid-20th century), making Saudi Arabia the living nightmare of liberals and leftists alike — a nation which, aside from its wealth, politically remains entirely pre-enlightenment. The historical United States (and essentially every industrialized economy on the planet) during World War II were not command economies, but war economies , which vary substantially from command economies. Furthermore, the US war economy more closely resembled military keynesianism than anything else. [note 4]

, which vary substantially from command economies. Furthermore, the US war economy more closely resembled than anything else. Dirigiste economies, like post-war France, while having extensive economic planning and a large government enterprise sector, do also have extensive private sectors and a still substantial private initiative, which allows for deviation of the government's plans.

economies, like post-war France, while having extensive economic planning and a large government enterprise sector, also have extensive private sectors and a still substantial private initiative, which allows for deviation of the government's plans. Major companies — particularly multinationals, those holding a monopoly, or one of the few members of an oligopoly — wisely plan ahead and try to impose their prices and levels of demand on the market, instead of letting them arise "naturally" on the "free market". Naturally, this isn't really the same as operating like a command economy at all, because — aside from not relating to a nation-state, but rather to a market niche — instead of unelected Soviet goons, God-fearing capitalist goons are at the helm of those companies! And as we all know, anyone could succeed at becoming a capitalist pig .

Notes [ edit ]

↑ Noting that the "free market", faithfully thrust upon the real world , tends to only produce greater freedom of economic action for the rich, powerful, and politically connected — and woe to those who'd form labor unions then! ↑ every socialist conception of localized 'bottom-up' self-organization; many Noteworthy socialist ideals made null and void in command economies include: the right not to be reduced to a 'cog in the machine' ; practicallysocialist conception of localized 'bottom-up' self-organization; many communalist principles (e.g. democratic rotation of communal offices); the 'withering away of the state'; internationalist and pacifist sentiment (e.g. the right to not participate in arms manufacture) ↑ Just as undertaking a stickup robbery 'actually works' in terms of certainly being able to produce short-term results — though, just at the expense of the long-term. ↑ Not coincidentally, armaments industries are actually one of the few things that command economies are actually really good at, which is how the USSR was able to keep up being a military superpower into the late-80s and North Korea is able to have a nuclear arsenal despite otherwise being a total basket case. This is less useful, however, if you don’t intend to wage (or be preparing to wage) total war all the time.