Q:

What are the advantages and disadvantages of a command economy?

A:

Quick Answer

A command economy can be advantageous by eliminating unemployment but can also be a disadvantage by producing unnecessary products. A command economy is when the government owns all or most aspects of the economy. The government chooses what goods and services to provide.

Continue Reading

Full Answer

Besides eliminating unemployment, a command economy can also equalize the business playing field by eradicating monopolies. Since the government owns all businesses, a single company cannot control a market. Command economies can also provide basic goods and services to all citizens, since everyone is a worker earning a form of payment. These economies are fairer on a humanitarian scale since the focus is on the welfare of the people, rather than corporations.

Although the benefits of a command economy seem great on paper, they quickly fall apart in real governments. The Soviet Union would often manufacture outdated or useless products as the government wrongly chose the correct demand of the supply. Without being beholden to consumers, command economies do not have to improve products, which lowers overall quality of life. The biggest disadvantage of command economies is that they restrict personal freedoms and liberties. Since the government has to control the economy and keep people happy, they have to restrict the kind of information and freedom of speech allowed in the country to keep the command economy functioning.

Learn more about Economics

Related Questions

Explore