|
A planned economy is an economic system in which decisions about the production, allocation and consumption of goods and services are planned ahead of time, usually in a centralized fashion, though some proposed systems favour decentralized planning. [1][2][3]
Planned economies implemented by the way of authority, such as those in Stalinist countries such as the Soviet Union, have become widely known as command economies. Although most economies today are market economies or mixed economies, planned economies exist in some countries such as Cuba and North Korea. Stalinism is a brand of political theory, and the political and economic system named after Joseph Stalin, who implemented it in the Soviet Union. ...
A planned economy is an economic system in which economic decisions are made by centralized planners, who determine what sorts of goods and services to produce, and how they are to be priced and allocated. ...
A market economy (aka free market economy and free enterprise economy) is an economic system in which the production and distribution of goods and services takes place through the mechanism of free markets guided by a free price system rather than by the state in a planned economy. ...
A mixed economy is an economy that contains both private and publically, or state owned (or controlled) enterprises. ...
Support for centrally planned economies
Supporters of planned economies cast them as a practical measure to ensure the production of necessary goods—one which does not rely on the vagaries of free markets. A free market is an idealized market, where all economic decisions and actions by individuals regarding transfer of money, goods, and services are voluntary, and are therefore devoid of coercion and theft (some definitions of coercion are inclusive of theft). Colloquially and loosely, a free market economy is an economy...
- The government can harness land, labor, and capital to serve the economic objectives of the state (which, in turn, may be decided by the people through a democratic process). Consumer demand can be restrained in favor of greater capital investment for economic development in a desired pattern. The state can begin building a heavy industry at once in an underdeveloped economy without waiting years for capital to accumulate through the expansion of light industry, and without reliance on external financing.
- A planned economy can maximize the continuous utilization of all available resources. This means that planned economies do not suffer from a business cycle. Under a planned economy, neither unemployment nor idle production facilities should exist beyond minimal levels, and the economy should develop in a stable manner, unimpeded by inflation or recession.
- A planned economy can serve social rather than individual ends: under such a system, rewards, whether wages or perquisites, are to be distributed according to the social value of the service performed. A planned economy eliminates the dependence of production on individual profit motives, which may not in themselves provide for all society's needs.
Taken as a whole, a centrally planned economy would attempt to substitute a number of firms with a single firm for an entire economy. As such, the stability of a planned economy has implications with the Theory of the firm. After all, most corporations are essentially 'centrally planned economies', aside from some token intra-corporate pricing (not to mention that the politics in some corporations resemble that of the Soviet Politburo). That is, corporations are essentially miniature centrally planned economies and seem to do just fine in a free market. As pointed out by Kenneth Arrow and others, the existence of firms in free markets shows that there is a need for firms in free markets; opponents of planned economies would simply argue that there is no need for a sole firm for the entire economy. Democracy (from Greek δημοκÏατία (demokratia), δημος (demos) the common people + κÏατειν (kratein) to rule + the suffix ία (ia), literally the common people rule) is a form of government where the population of a society controls the government. ...
An abstract business cycle The business cycle or economic cycle refers to the ups and downs seen somewhat simultaneously in most parts of an economy. ...
The theory of the firm consists of a number of economic theories which describe the nature of the firm (company or corporation), including its behaviour and its relationship with the market. ...
Kenneth Arrow Kenneth Joseph Arrow (born August 23, 1921) is an American economist, winner of the Bank of Sweden Prize in Economic Sciences in 1972. ...
Objections to centrally planned economies Critics of command economy argue that planners cannot detect demand with sufficient accuracy (in a market economy, price signals serve this purpose). For example, during certain periods in the history of the Soviet Union, shortages were so common that one could wait hours in a queue to buy basic consumer products such as shoes or bread. These shortages were due in part to the central planners deciding, for example, that making tractors was more important than making shoes at that time, or because the commands were not given to supply the shoe factory with the right amount of leather, or because the central planners had not given the shoe factories the incentive to produce the required quantity of shoes of the required quality. This difficulty was first noted by economist Ludwig von Mises, who called it the "economic calculation problem". Economist János Kornai developed this into a shortage economy theory. Ludwig Heinrich Edler von Mises (September 29, 1881 - October 10, 1973), was a notable economist and social philosopher. ...
The economic calculation problem is a criticism of socialist economics. ...
János Kornai, (1928-), born in Budapest, Hungary, is an economist noted for his criticism of the command economies of Eastern European communist states. ...
Polish meat shop in the 1980s. ...
Critics also argue that the claimed advantages of the latter are in fact achievable by state intervention within the framework of market economy as well. In particular, it is possible to create unprofitable but socially useful goods within the context of a market economy. For example, one could produce a new drug by having the government collect taxes and then spend the money for the social good. It is also claimed that market economies allow societies to evaluate the cost of social goods and choose rationally between different alternatives.
Critics also point out that certain types of command economies may require a state which intervenes highly in people's personal lives. For example, if the state directs all employment then one's career options may be more limited. If goods are allocated by the state rather than by a market economy, citizens cannot, for example, move to another location without state permission because they would not be able to acquire food or housing in the new location, since those were not preplanned for (however, advocates of planned economy may point out that a market economy does not guarantee the existence of food and housing at the new location either).
Planned economies and socialism Main article: Socialist economics To meet Wikipedias quality standards, this article or section may require cleanup. ...
In the 20th century, most planned economies were implemented by states that called themselves socialist. Also, the greatest support for planned economics comes from socialist authors. For these reasons, the notion of a planned economy is often directly associated with socialism. However, they do not entirely overlap. There are branches of socialism such as libertarian socialism, that reject a centralized state, and some of these tendencies reject economic planning as well. Socialism is a social and economic system (or the political philosophy advocating such a system) in which the economic means of production are owned and controlled collectively by the people. ...
Libertarian socialism is any one of a group of political philosophies dedicated to opposing coercive forms of authority and social hierarchy, in particular the institutions of capitalism and the State. ...
Furthermore, planned economies are not unique to socialist states. Socialism is concerned above all with achieving some degree of equality of wealth between members of society, but a planned economy, as such, does not necessarily imply an egalitarian distribution of wealth. Some authors have argued that elements of centralized economic planning exist in various modern non-socialist systems, such as the mixed economies of liberal democracies (widely seen as being capitalist countries) and the economies of fascist nations. Pre-modern economies (those existing before the industrial revolution) are more difficult to analyze by today's standards, but a number of them, particularly those of hydraulic empires, may be seen as having been centrally planned as well. A mixed economy is an economy that combines capitalism and socialism [1]. Some sources prefer the use of command economy over socialism in defining a mixed economy (see external links below). ...
This article or section does not cite its references or sources. ...
To meet Wikipedias quality standards, this article or section may require cleanup. ...
A Watt steam engine in Madrid. ...
A hydraulic empire (also known as a hydraulic despotism or a water monopoly empire) arises through the need for flood control and irrigation, which requires central coordination and gives rise to a specialized bureaucracy. ...
There is a Trotskyist theory of the permanent arms economy, put forward by Michael Kidron, which leads on from the contention that war and accompanying industrialisation is a continuing feature of capitalist states and that central planning and other features of the war economy are ever present. [1] Trotskyism is the theory of Marxism as advocated by Leon Trotsky. ...
The permanent arms economy is a Marxist theory which seeks to explain the sustained economic growth which occurred in the decades following World War II, especially amongst developed countries. ...
Michael Kidron Michael Kidron was a revolutionary thinker and cartographer. ...
Industrialisation or an industrial revolution (in general, with lowercase letters) is a process of social and economic change whereby a human society is transformed from a pre-industrial (an economy where the amount of capital accumulated is low) to an industrial state (see Pre-industrial society). ...
War economy is the term used to describe the contingencies undertaken by the modern state to mobilize its economy for war production. ...
Transition from a planned economy to a market economy The shift from a command economy to a market economy has proven to be difficult; in particular, there were no theoretical guides for doing so before the 1990s. One transition from a command economy to a market economy that is widely considered to be successful is that of the People's Republic of China, in which there was a period of some years lasting roughly until the early 1990s during which both the command economy and the market economy coexisted, so that nobody would be much worse off under a mixed economy than a command economy, while some people would be much better off. Gradually, the parts of the economy under the command economy decreased until the mid-1990s when resource allocation was almost completely determined by market mechanisms.
By contrast, the Soviet Union's transition was much more problematic and its successor republics faced a sharp decline in GDP during the early 1990s. While the situation has since improved, these countries have yet to generate the high rate of sustained economic growth that China has. A successor state is a state that takes over from a previously well-established state some or all of the territory and assets. ...
Similar economic models A palace economy may be considered as a subsistence economy augmented with elements of command economy. A palace economy is a system of economic organisation in which wealth flows out from a central source (the palace), eventually reaching the common people, who have no other source of income. ...
Media:Example. ...
See also The economy of the Soviet Union was based on a system of state ownership and administrative planning. ...
To meet Wikipedias quality standards, this article or section may require cleanup. ...
Participatory economics, often abbreviated parecon, is a proposed economic system that uses participatory decision making as a economic mechanism to guide the allocation of resources and consumption in a given society. ...
Project Cybersyn was a Chilean attempt at real-time computer-controlled planned economy in the years 1970-1973 (during the government of president Salvador Allende). ...
Public ownership (also called government ownership or state ownership) is government ownership of any asset, industry, or corporation at any level, national, regional or local (municipal). ...
A mixed economy is an economy that combines capitalism and socialism [1]. Some sources prefer the use of command economy over socialism in defining a mixed economy (see external links below). ...
Dirigisme (from the French) (in English also dirigism although per the OED both spellings are used) is an economic term designating an economy where the government exerts strong directive influence. ...
A market economy (aka free market economy and free enterprise economy) is an economic system in which the production and distribution of goods and services takes place through the mechanism of free markets guided by a free price system rather than by the state in a planned economy. ...
References - ^ A Permanent Arms Economy by Michael Kidron, First printed in International Socialism 1:28 (Spring 1967)
- An article against "The myth of the permanent arms economy"
|
Feeds |
Contact