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What are the pros and cons of a planned economy ?

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Quick Answer

Advocates for planned economies say these systems allow for the centralization of decision-making, eliminate problems like monopolization, ensure full employment and prevent market shortages. Opponents point out that allowing only a handful of people to make major decisions for an entire economy prevents quick market corrections, creates an atmosphere ripe for corruption and necessitates increasing control over citizens' lives.

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Full Answer

In a command or planned economy, the government allocates all resources, determining what to produce, when to produce it, what to do with it and how it will be distributed. Most proponents of planned economies advocate for equality, arguing that workers who helped create industries deserve to share equally in the profits. This system has been tried by many nations since at least the French Revolution, and the increasing power of computers to accurately track goods and money have recently made it more attractive to its proponents.

In practice, planned economies on a national scale do not work. Economist Thomas Sowell of the National Review points out that central planning in action has caused, not prevented, food and resource shortages from revolutionary France to modern Cuba, and that accumulated inefficiencies in the system contributed to the collapse of the Soviet Union. Bureaucratic corruption flourishes, and as George Orwell indicated in "Animal Farm," those who control the system become richer in resources than those who are controlled by the system.

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