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The term planned economy is used most often to refer to a centrally-planned economy (aka command economy), which is a system where the state controls the factors of production and makes all decisions about their use and about the distribution of income.[1]In a centrally-planned economy, the planners decide what should be produced and directs enterprises to produce those goods.[2] A planned economy is usually contrasted with a market economy, where production, distribution, and pricing decisions are made by the private owners of the factors of production and influenced by market forces. An autarky is an economy that does no trade with the outside world, or an ecosystem not affected by influences from its outside, and relies entirely on its own resources. ...
Dual economy is the existence of two separate economic systems within one region; common in the less developed countries, where one system is geared to local needs and another to the global export market. ...
A gift economy is an economic system in which the prevalent mode of exchange is for goods and services to be given without explicit agreement upon a quid pro quo, or the concept of a favor for a favor in the Latin language. ...
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 public, or state owned (or controlled) enterprises. ...
An open economy is an economy in which people, including businesses, can trade in goods and services with other people and businesses in the international community at large. ...
Participatory economics, often abbreviated parecon, is a proposed economic system that uses participatory decision making as an economic mechanism to guide the allocation of resources and consumption in a given society. ...
The underground economy consists of all trade that occurs without detection by government so that commerce and income are not taxed. ...
Anglo-Saxon capitalism (so called because it is largely practiced in English speaking countries such as Australia, the UK and the United States) is a capitalist macroeconomic model in which levels of regulation and taxes are low, and the quality of state services and social indicators are weak. ...
The American School also known as National System in politics, policy and philosophy represents three different yet related things. ...
It has been suggested that this article or section be merged with World economy. ...
In anthropology, the hunter-gatherer way of life is that led by certain societies of the Neolithic Era based on the exploitation of wild plants and animals. ...
Information economy is a loosely defined term to characterize an economy with increased role of informational activities and information industry. ...
The term, originated by the Organization for Economic Cooperation and Development (OECD), describes nations of the Third World that have enjoyed rapid economic growth and can be described as middle-income countries. ...
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. ...
This article is in need of attention. ...
The Social market economy was the German and Austrian economic model during the Cold War era. ...
A transition economy is an economy which is changing from a planned economy to a free market. ...
For other uses, see Capitalism (disambiguation). ...
Historically, corporatism or corporativism (Italian corporativismo) is a political system in which legislative power is given to civic assemblies that represent economic, industrial, agrarian, and professional groups. ...
Natural economy refers to a type of economy in which money is not used in the transfer of resources among people. ...
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A token economy is a system of behavior modification based on the principles of operant conditioning. ...
Image File history File links Portal. ...
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. ...
The supply and demand model describes how prices vary as a result of a balance between product availability at each price (supply) and the desires of those with purchasing power at each price (demand). ...
Centrally-planned economies, such as the economy of the former Soviet Union, are alternately called command economies, because what will be produced and in what quantities is "commanded" by the government; businesses themselves are not free to make their own production decisions. Although most economies today are market economies or mixed economies, planned economies exist in some countries such as Cuba and North Korea. Beginning in the latter part of the 20th century and into the 21st, many governments presiding over planned economies began deregulating and moving toward market based economies by allowing market forces to determine pricing, distribution, and production. 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. ...
The term usually refers to centrally-planned economies but may also be used to refer to decentralized systems of planning such as participatory economics. [1] [2] [3]. Participatory economics, often abbreviated parecon, is a proposed economic system that uses participatory decision making as an economic mechanism to guide the allocation of resources and consumption in a given society. ...
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.
- Consumers do not need money to express their economic demands, but may do so through democratic councils (sometimes called workers councils or soviets) to decide and implement democratic decisions about the economy. [4]
- 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.
- While a market economy maximises wealth by evolution, a planned economy favours design. While evolution tends to lead to a local maximum in aggregate wealth, design is in theory capable of achieving a global maximum. For example, a planned city can be designed for efficient transport, while organically grown cities tend to suffer from traffic congestion.
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 is, literally, rule by the people (from the Greek demos, people, and kratos, rule). The methods by which this rule is exercised, and indeed the composition of the people are central to various definitions of democracy, but the general principle is that of majority rule. ...
The business cycle or economic cycle refers to the ups and downs seen somewhat simultaneously in most parts of an economy. ...
Look up evolution in Wiktionary, the free dictionary. ...
Design, usually considered in the context of the applied arts, engineering, architecture, and other such creative endeavours, is used as both a noun and a verb. ...
local optimum is a term in Applied mathematics and Computer Science. ...
Polynomial of degree 4, on the right one finds a local optimum, on the left is the global optimum. ...
A New town or planned community or planned city is a city, town, or community that was designed from scratch, and grew up more or less following the plan. ...
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 consumer preferences, shortages, and surpluses with sufficient accuracy and therefore can not efficiently co-ordinate production (in a market economy, a free price system is intended to 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 (advocates could claim that shortages where not primarily caused by lack of supply, but hoarding by consumers afraid of future price changes; this was especially the case in the late Soviet Union). A free price system (informally called the price system or the price mechanism) is an economic system where prices are not set by government but by the interchange of supply and demand, with the resulting prices being understood as signals that are communicated between producers and consumers which serve to...
Ludwig von Mises Ludwig Heinrich Edler von Mises (September 29, 1881 – October 10, 1973) was a notable economist and a major influence on the modern libertarian movement. ...
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. ...
Some who oppose planned economies argue that intervention is justified in some cases. 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. However, supporters of market systems argue that government cannot know what drugs are the most important to produce and that the only way to determine this by allowing consumer demand to determine the course of investment. Those drugs that society wants the most will have the most profit potential because society is willing to pay higher prices for them. Supports of market-driven investment argue that the government to taking money away from the private sector to invest in the projects of its choice takes funds away from being applied to what consumers actually want. This causes inefficiency by causing a mismatch between what consumers want the most and what is being produced or invested in. It is 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, as the necessary resources were not preplanned (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 refers to a broad array of doctrines or political movements that envisage a socio-economic system in which property and the distribution of wealth are subject to social control. ...
Libertarian socialism is any one of a group of political philosophies dedicated to the abolition of property by restoring direct control of production and resources to the working class. ...
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 contains both private and public, or state owned (or controlled) enterprises. ...
This article or section is missing references or citation of sources. ...
Fascism is a radical political ideology that combines elements of corporatism, authoritarianism, nationalism, militarism, anti-anarchism, anti-communism and anti-liberalism. ...
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. [3] 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, industrialization 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 transition to a market economy proved difficult, many of the post-Soviet states have been experiencing strong, resource-based economic growth in recent years, though the levels vary substantially. However a majority of the former Soviet Republics have not yet reached pre-collapse levels of economic development. 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 an 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 contains both private and public, or state owned (or controlled) enterprises. ...
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. ...
Technocracy can refer to: A bureaucratic technocracy, or a government run by the highly educated. ...
Economic fascism is an economic system, originated in the 1920s and 1930s in fascist regimes, where private ownership of the means of production is permitted but heavily regulated, as government plans the economy by implementing policies that are held to be in the best interest of the nation...
References - ^ Myers, Danny. Construction Economics (2004), Spon Press (UK), p. 288
- ^ Ollman, Bertell. Market Socialism: The Debate Among Socialists (1997), Routledge (UK), p. 12
- ^ 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"
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