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Planned Economy
A Planned Economy or Command Economy is an economy primarily driven by the local government which chooses how much production an industry should perform. Given the myopic views of most governments, planned economies often resulted in production shortfalls and excesses, leading to general frustration of populaces where planned economies existed, such as most Communist countries prior to the 1980s.
359 Questions
Does a planned economy provide equality of wealth?
That would depend completely on the kind of economy being planned. Some plans/ideas for economies, such as those of the Venus Project, do emphasise equality of wealth. Other planned economies, as seen with many communist systems historically, do not provide equality of wealth.
What are the negative effects of turning from a planned economy into a market economy?
In a planned economy, many workers may have been employed in industries that produced more goods or services than were needed. In moving to a market economy, those workers may be displaced and need retraining to find new employment. In some cases, whole industries which produced inferior products or had inefficient cost structures may find that their products are not competitive in a market-based economy, causing massive dislocation of workers.
Corporate management may not be equipped to handle the transition, either. In a planned economy, operational planning is simple, because the production quotas are known in advance. Having little experience in quickly adjusting their operations to meet fluctuating demand, managers may not be prepared to make rapid and accurate changes to their operations. Sales departments may be completely inadequate to handle the competitive environment and staff with marketing skills may be non-existent.
All of those things can cause the organizations which were built under the planned economy to be non-competitive and ultimately fail. In time, they are replaced by new companies which are far more efficient and adapted to the competitive environment, but that process cannot occur without the destruction of the old, unprofitable organizations. This process of "creative destruction" can cause social and political reactions, some of which may prolong the transition and make it more difficult for everyone.
Is Haiti a free market economy or a command economy?
Yes, Haiti is a command economy. A command economy is when the government controls the economy and you are guaranteed a job. However, with a command economy, you cannot open your own business.
Why did Communist governments use a command economic system for many years?
In an attempt to create a society in which everyone was equal.
Did Karl Marx argued that society should have a centrally planned economy?
To put it simply, no. The Communist Mannifesto and personal writings do not seem to argue that society should have a centrally planned economy.
Actually, the closest thing that he discusses about this subject is with guilds. A guild is an organisation of professional individuals; carpenters, shoe-makers, masons, bankers, etc. Individuals joined them to have collective power and from there they would agree how much should be produced, how it must be produced, who is excluded and included in the guild. A sort of planned economy if you will. It was a profession that could be passed down from generation to generation.
Marx did not have a positive view of guilds because in his mind they created inefficiency and did not allow capitalism to fully develop or continue improving Man's progress. Guilds constrained the advancement of capitalism. We could therefore believe that he did not believe there should be a centrally planned economy. It is not much but it probably is the closest thing you can get.
This question might often get confused because when he speaks of a central power he is referring to mid-19th century Germany when there was no State of Germany, only German cities/provinces/states. Marx is proposing a Unified German State, not a centrally planned economy nor for a state to impose a centrally planned economy.
Compare the three economy questions to command economy market economy and traditional economy?
- traditional economy: resources are allocated based on custom and tradition
- mixed economy:resources are allcoated based on mixed informtion given.
- command economy: resources are allocated by the government or other central authority
- market economy: resources are allocated by individuals
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