What are the advantages and disadvantages of a command economy?

Answer 1

The fundamental disadvantage of a centrally planned economy is that local conditions, which often vary from one place to another (and can change rapidly), cannot be accounted for at the highest levels of planning. Another serious disadvantage is the cost incurred by such an economy's numerous executive agencies and administrators.

Answer 2

The advantages are: The welfare of all citizens is the primary goal of the economic system

Wasteful competition is avoided

wages are controlled by the state there is no industrial unrest.( such as strike action)

There is greater emphasis on the quantity of life (health, education, elimination of poverty, moral direction) than on the quantity of production(output) in the country.

Disadvantages: NO freedom of choice for producers or consumers

Lack of incentives for workers result in low morale efficiency. Managers are also not motivated.

The system is too rigid to adjust when changes occur, this can result in shortages.

Advantages: Free health care, education

Disadvantages: Government set prices on goods and sets wages. people get paid even if they don't do there job EX: you could sit at a restaurant for an hour and not get served (poor service and rude employees)

Answer 3

There are many advantages to a free market economy. They range from the moral issues to the practical issues. We will deal mainly with the practical ones.

-Unprecedented innovation. Free markets are wrought with inventions and the capital to research them. Countries classified as having a free market have been responsible for the vast majority of inventions since the 19th century.

-Very high income mobility. This means that under a free market system it is easier to move around income brackets. This is not to say it is easy, it is just easier to become rich or poor when you're left to your own devices as opposed to a controlled economy where resources are allocated by the government.

-Massive increases in efficiency and productivity. This happens from the survival of the fittest aspect of free markets. Firms that have higher costs than others (by producing inefficiently) will go out of business as those that are more efficient prosper. Thus, firms are always looking for cheaper ways to do things (this drives costs and prices down, etc etc)

-A much higher GDP. Free market-leaning countries have higher GDPs than command market-leaning economies. This is because they produce more.

-Very productive tax system. Due to the huge wealth level, it is easy to collect taxes. For example, it is easier to get taxes from a very rich person than from a person who barely has enough money to eat. This large amount of tax revenue results in:

-More money spent on social programs. Free market nations generally spend more or have more efficient social programs. For example, the police and firefighting technologies in America and Europe far surpass those of China or many Arab states.

Answer:

1 unprovision of merit goods like education,health,housing...
so the poor will be deprived of the merit goods. In this way the rich becomes richer and the poor becomes poorer.
2 Non provision of public goods(bus stop,garden,street lighting,army,police,fire services)
important requirements for public goods not provided since it is not profitable to produce as consumers are not directly willing to pay for them.
3 over consumption of demerit goods(drugs,cigarettes,alcohol)
if consumers have a preference for these goods, then they will be provided given that they are profitable to produce.
4 social cost ignored
private firm ignore negative externalities(air,water and noise pollution,road conditions.)
5wastage of resources
6social injustice
7 economic instability

--

In every category 1-7 above, countries which are furthest from a free market economy perform worse in those categories than those closer to free markets. A stark and apt comparison is North and South Korea which up until the 1950s had the exact same history, yet now are completely divergent where the South Koreans excel in every one of the above 7 categories compared to the North. It's very clear now empirically that individuals that live in countries that reject the free market are much worse off in every respect than those who live in freer societies with stronger capital markets.

Answer 4

• advantages: 1) individual freedom and incentive to work. 2) high consumer goods. 3)factors of production.

• disadvantages: 1) dose not provide enogh public good defense, universal education, or health care. 2) huge competition. 3)producing harmful products 4) lead to unemployment.

Answer 5

In a command economy, the government provides everything to the citizens equally. But the citizens have a lack of choice of what to do with their businesses and economic choices.