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When you hear this term, what is the first thing that comes into your mind? Well, the term "Command economy” can be defined as a kind of government authority where most of the economic plans and decisions are being held.

The Facts

The command economy also has the ability to execute salient massive projects, attain significant social goals and create industrial resources and power.

• You can also override the self interest of every individual; subjugate the general and welfare population to reach the societal goal in just a short period of time.

• According to researches, the command economy is also great for transforming the vision of a certain country that includes Cuba, China and Russia. In this way, a certain country can easily rebuild their economy after the World War 2.


A command economy often gets a bad reputation because it is controlled by the government. Giving the government this type of power is not often seen as a god thing, but there are some strengths to the command economy system.

1. Better Mobilization of Resources
Due to the unique makeup of the command economy all production is done most effectively and efficiently. This means that all resources are also mobilized on the largest scale possible. Making sure that progress is fast is one of the goals of a command economy that pays off.

2. No Monopoly
In a command economy it is impossible for a monopoly to rule the economy. This is because it is the government that regulates all the forces of the market. No one provider has this type of control to set the market and rule aside from the government in power. Monopolies can form in other economies, but they are not present in the command economy.

3. Social Welfare Made a Priority
It should also be noted that in a command economy the social welfare of the public is made a major concern. Making sure that maximum social welfare takes place is one of the overriding goals of this economy. There is a sense of community that is bred due to the lack of income inequality. Production and benefit is taken on by the society as a whole and less divisions form as a result.

Command Economy


Although there are some positive aspects of a command economy, it should be understood that not everything is seen as a strength. There are a variety of weaknesses to a command economy.

1. Less Innovation
A free market encourages innovation and change, but a command market does not reward this type of unique thought. Since the government is control it does not encourage innovation or make it a priority. This is due to the fact that the government controls all aspects of production and leaves no room for people to make it better. This leads to a workforce that is much less motivated and not striving to get a higher quality of products or services.

2. Restriction of Freedom
It is no surprise that this type of economic system is tied to communist countries. A command economy takes the freedoms away from the people and puts the control in the hands of the government alone. You do not choose your career based on your interests or skills, but based on what the government forces you to do. All jobs are aligned with needs at that time and you have little freedom of choice. This is a major downside to a command economy that can lead to citizens that are not content.

3. No Competition
Competition on the market is what often makes it better, but there is little competition in a command market. Since the government owns all the industries, it does not encourage competition and actually works to eliminate it. The benefits that can be gained from competition are not seen in a command economy.

Economic School of Thought: Economic Systems Showdown


CONCLUSIONnderstanding a command economy is a bit complex. This type of economy is dependent on the government. This means that the government in power of a command economy is responsible for the regulation of not only supplies, but also prices. The government then gets full control of the product or services that are made available to the public. The market is not determined by other forces, it is solely set by the government. All aspects of production pertaining to products and services is overseen by the government including variable like how, when and where. This type of economy is often also referred to as a centrally planned economy. This is due to the fact that the government as full control of all decisions.