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Encyclopedia > Planned economy
This article refers to an economy controlled by the state. For the proposed economic system that employes "participatory planning", see participatory economics.

A planned economy or directed economy is an economic system in which the state or government manages the economy.[1] Its most extensive form is referred to as a command economy,[2] centrally planned economy, or command and control economy[3]. In such economies, the state or government controls all major sectors of the economy and formulates all decisions about their use and about the distribution of income,[4] The planners decide what should be produced and direct enterprises to produce those goods.[5] Planned economies are in contrast to unplanned economies, such as a market economy, where production, distribution, pricing, and investment decisions are made by the private owners of the factors of production based upon their own and their customers' interests rather than upon furthering some overarching macroeconomic plan. Less extensive forms of planned economies include those that use indicative planning, in which the state employs "influence, subsidies, grants, and taxes, but does not compel."[6] This latter is sometimes referred to as a "planned market economy."[7] An economic system is a particular set of social institutions which deals with the production, distribution and consumption of goods and services in a particular society. ... For other uses, see State (disambiguation). ... For other uses, see State (disambiguation). ... A market economy (also called a free market economy or a free enterprise economy) is an economic system in which the production and distribution of goods and services take place through the mechanism of free markets (though completley useless to some dumbasses) guided by a free price system. ... Macroeconomics is the study of the entire economy in terms of the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the general behavior of prices. ...


A planned economy may consist of state-owned enterprises, private enterprises directed by the state, or a combination of both. Though "planned economy" and "command economy" are often used as synonyms, some make the distinction that under a command economy, the means of production are publicly owned. That is, a planned economy is "an economic system in which the government controls and regulates production, distribution, prices, etc." [1] but a command economy, while also having this type of regulation, necessarily has substantial public ownership of industry. [2] Therefore, command economies are planned economies, but not necessarily the reverse (example: USA economy during World War II or Nazi Germany's private ownership yet use of the Four Year Plan could construe them as a planned economy in the wide sense, but not necessarily a command economy, while the Soviet Union with public ownership would be a command economy). Motto: (traditional) In God We Trust (official, 1956–present) Anthem: The Star-Spangled Banner Capital Washington, D.C. Largest city New York City Official language(s) None at the federal level; English de facto Government Federal Republic  - President George W. Bush (R)  - Vice President Dick Cheney (R) Independence - Declared - Recognized... Combatants Allied powers: China France Great Britain Soviet Union United States and others Axis powers: Germany Italy Japan and others Commanders Chiang Kai-shek Charles de Gaulle Winston Churchill Joseph Stalin Franklin Roosevelt Adolf Hitler Benito Mussolini Hideki Tōjō Casualties Military dead: 17,000,000 Civilian dead: 33,000... Nazi Germany, or the Third Reich, commonly refers to Germany in the years 1933–1945, when it was under the firm control of the totalitarian and fascist ideology of the Nazi Party, with the Führer Adolf Hitler as dictator. ... The Four Year Plan was a series of alabama hot pokets ( the art of shitting in a womans vigina an then possibly having sex!!!! hard coreeconomic reforms created by the Nazi Party. ...


Important planned economies that existed in the past include the economy of the Soviet Union, which was for a time the world's second-largest economy, China during its Great Leap Forward, and India, prior to its economic reforms in 1991 . Beginning in the 1980s and 1990s, many governments presiding over planned economies began deregulating (or as in the Soviet Union, the system collapsed) and moving toward market-based economies by allowing the private sector to make the pricing, production, and distribution decisions. Although most economies today are market economies or mixed economies (which are partially planned), planned economies exist in some countries such as Cuba, North Korea, and Myanmar.[8] The economy of the Soviet Union was based on a system of state ownership and administrative planning. ... The Great Leap Forward (Simplified Chinese: ; Traditional Chinese: ; Pinyin: ) of the Peoples Republic of China (PRC) was an economic and social plan used from 1958 to 1960 which aimed to use Chinas vast population to rapidly transform mainland China from a primarily agrarian economy dominated by peasant farmers... Year 1991 (MCMXCI) was a common year starting on Tuesday (link will display full calendar) of the Gregorian Calendar. ... A market economy (aka free market economy and free enterprise economy) is an economic system in which the production and distribution of goods and services takes place through the mechanism of free markets guided by a free price system rather than by the state in a planned economy. ... A mixed economy is an economy that contains both private and publically, or state owned (or controlled) enterprises. ... Anthem Kaba Ma Kyei Capital Naypyidaw Largest city Yangon Official languages Burmese Demonym Burmese Government Military junta  -  Chairman of the State Peace and Development Council Than Shwe  -  Prime Minister Soe Win  -  Acting Prime Minister Thein Sein Establishment  -  Bagan 849–1287   -  Taungoo Dynasty 1486–1752   -  Konbaung Dynasty 1752–1885   -  Colonial rule...

Contents

Advantages of economic planning

Socialism  v  d  e 

Supporters of planned economies cast them as a practical measure to ensure the production of necessary goods—one which does not rely on the vagaries of free markets. Religious socialism Key Issues People and organizations Related subjects Socialism refers to a broad array of ideologies and political movements with the goal of a socio-economic system in which property and the distribution of wealth are subject to control by the community. ... Image File history File links This is a lossless scalable vector image. ... Image File history File links This is a lossless scalable vector image. ... African socialism is a belief in sharing economic resources in a traditional African way, as distinct from classical socialism. ... Image File history File links This is a lossless scalable vector image. ... Arab Socialism (ar. ... Image File history File links This is a lossless scalable vector image. ... This article is about the form of society and political movement. ... Image File history File links This is a lossless scalable vector image. ... Developed by Daniel De Leon, Marxism-Deleonism is a form of Marxism. ... Image File history File links This is a lossless scalable vector image. ... Democratic socialism advocates socialism as a basis for the economy and democracy as a governing principle. ... Image File history File links This is a lossless scalable vector image. ... Eco-socialism or Green socialism is an ideology fusing Green movement values with socialism. ... Image File history File links This is a lossless scalable vector image. ... Guild socialism was a British political movement in the 1890s-1920s that wanted to give each local workplace sovereignity. ... Image File history File links This is a lossless scalable vector image. ... Libertarian socialism is a group of political philosophies that aim to create a society without political, economic or social hierarchies - a society in which all violent or coercive institutions would be dissolved, and in their place every person would have free, equal access to tools of information and production, or... Image File history File links This is a lossless scalable vector image. ... Market socialism is a term used to define a number of economic system(s) in which the means of production are owned either by the state or by the workers collectively, however unlike traditional socialism there is market that is directed and guided by socialist planners. ... Image File history File links This is a lossless scalable vector image. ... Flag of the Revolutionary Socialists Revolutionary Socialism is a political ideology based on the work of Karl Marx and Friedrich Engels advocating the revolutionary yet democratic liberation of the Proletariat. ... Image File history File links This is a lossless scalable vector image. ... Social anarchism is a term self-applied by many anarchists of the libertarian socialist thread of anarchism. ... Image File history File links This is a lossless scalable vector image. ... Social democracy is a political ideology emerging in the late 19th and early 20th centuries from supporters of Marxism who believed that the transition to a socialist society could be achieved through democratic evolutionary rather than revolutionary means. ... Image File history File links This is a lossless scalable vector image. ... Market socialism is an attempt by a Soviet-style economy to introduce market elements into its economic system to improve economic growth. ... Image File history File links This is a lossless scalable vector image. ... Utopian socialism is a term used to define the first currents of modern Socialist thought. ... Religious socialism describes socialism that is inspired by religious values, such as Christian socialism or Islamic socialism. ... Image File history File links This is a lossless scalable vector image. ... GP Malalasekara of Sri Lanka wrote about Buddhist socialism in an article published in , 1972. ... Image File history File links This is a lossless scalable vector image. ... Religious socialism Key Issues People and organizations Related subjects Christian socialism generally refers to those on the Christian left whose politics are both Christian and socialist and who see these two things as being interconnected. ... Image File history File links This is a lossless scalable vector image. ... Islamic socialism is a term coined by various Muslim leaders to counter the demand at home for a more spiritual form of socialism. ... Image File history File links This is a lossless scalable vector image. ... Criticisms of socialism range from disagreements over the efficiency of socialist economic and political models, to condemnation of states described by themselves or others as socialist. ... Image File history File links This is a lossless scalable vector image. ... The history of socialism, sometimes termed modern socialism,[1] finds its origins in the French Revolution of 1789 and the changes brought about by the Industrial Revolution, although it has precedents in earlier movements and ideas. ... Image File history File links This is a lossless scalable vector image. ... Socialist economics is a broad, and sometimes controversial, term. ... Image File history File links This is a lossless scalable vector image. ... The term socialist state (or socialist republic, or workers state) can carry one of several different (but related) meanings: Strictly speaking, any real or hypothetical state organized along the principles of socialism may be called a socialist state. ... Image File history File links This is a lossless scalable vector image. ... Since the 19th century, socialist ideas have developed and separated into many different types of socialism. ... Image File history File links This is a lossless scalable vector image. ... The following is a list of self-identified socialists, divided by geographical location. ... Image File history File links This is a lossless scalable vector image. ... The International Workingmens Association (IWA), sometimes called the First International, was an international socialist organization which aimed at uniting a variety of different left-wing political groups and trade union organizations that were based on the working class and class struggle. ... Image File history File links This is a lossless scalable vector image. ... The phrase Second International has two meanings: For the international association of socialist parties of the late 19th century, see Second International (politics) and a successor organization, the Socialist International For one of the Merriam-Webster dictionaries of American English, see Websters New International Dictionary, Second Edition This is... Image File history File links This is a lossless scalable vector image. ... The Comintern (Russian: Коммунистический Интернационал, Kommunisticheskiy Internatsional – Communist International, also known as the Third International) was an international Communist organization founded in March 1919, in the midst of the war communism period (1918-1921), by Vladimir Lenin and the Russian Communist Party (Bolshevik), which intended to fight by all available means, including... Image File history File links This is a lossless scalable vector image. ... For other uses, see Fourth International (disambiguation). ... Image File history File links This is a lossless scalable vector image. ... The official symbol of Socialist International. ... Image File history File links This is a lossless scalable vector image. ... WFDY symbol The World Federation of Democratic Youth is a youth organization, recognized by the United Nations as an international youth non-governmental organization. ... Image File history File links This is a lossless scalable vector image. ... The International Union of Socialist Youth (IUSY) encompasses socialist, social democratic and Labour Party youth organizations from more than 100 states of the world. ... Image File history File links This is a lossless scalable vector image. ... Anarchist redirects here. ... Image File history File links This is a lossless scalable vector image. ... Workers self-management is a form of workplace management in which the employees themselves make decisions on issues like hours, production, scheduling, division of labour etc. ... Image File history File links This is a lossless scalable vector image. ... The South African Police Crush Another Demonstration by the Shack dwellers Movement Abahlali baseMjondolo, 28 September, 2007 Class struggle is the active expression of class conflict looked at from any kind of socialist perspective. ... Image File history File links This is a lossless scalable vector image. ... For other uses, see Democracy (disambiguation) and Democratic Party. ... Image File history File links This is a lossless scalable vector image. ... The dictatorship of the proletariat is a term employed by Karl Marx in his 1875 Critique of the Gotha Program that refers to a transition period between capitalist and communist society in which the state can be nothing but the revolutionary dictatorship of the proletariat. The term refers to a... Image File history File links This is a lossless scalable vector image. ... Egalitarianism (derived from the French word égal, meaning equal or level) is a political doctrine that holds that all people should be treated as equals from birth. ... Image File history File links This is a lossless scalable vector image. ... This article or section does not cite its references or sources. ... Image File history File links This is a lossless scalable vector image. ... Impossibilism is an interpretation of Marxism. ... Image File history File links This is a lossless scalable vector image. ... Internationalism is a political movement which advocates a greater economic and political cooperation between nations for the benefit of all. ... Image File history File links This is a lossless scalable vector image. ... Marxism is both the theory and the political practice (that is, the praxis) derived from the work of Karl Marx and Friedrich Engels. ... Image File history File links This is a lossless scalable vector image. ... A communist revolution is a social revolution inspired by the ideas of Marxism that aims to replace capitalism with communism, normally with socialism (public ownership over the means of production) as an intermediate stage. ... Image File history File links This is a lossless scalable vector image. ... Ideologies Communist internationals Prominent communists Related subjects Communism Portal Socialism in One Country was a thesis put forth by Joseph Stalin in 1924 in the second edition of his Foundations of Leninism, further developed by Nikolai Bukharin in 1925 and adopted as state policy Stalin. ... Image File history File links This is a lossless scalable vector image. ... The Lawrence textile strike (1912), with soldiers surrounding peaceful demonstrators A trade union or labor union is an organization of workers who have banded together to achieve common goals in key areas such as wages, hours, and working conditions, forming a cartel of labour. ... Image File history File links This is a lossless scalable vector image. ... This article discusses utilitarian ethical theory. ... A free market is an idealized market, where all economic decisions and actions by individuals regarding transfer of money, goods, and services are voluntary, and are therefore devoid of coercion and theft (some definitions of coercion are inclusive of theft). Colloquially and loosely, a free market economy is an economy...


Stability

A planned economy can ensure the continuous utilization of all available resources. If isolated and unresponsive to consumer demand, a planned economy does not suffer from a business cycle. Under an ideally administered planned economy, neither unemployment nor idle production facilities should exist beyond minimal levels, and the economy should develop in a stable manner, unimpeded by inflation or recession. The business cycle or economic cycle refers to the fluctuations of economic activity about its long term growth trend. ...


Long-term infrastructure investment can be made without fear of a market downturn (or loss of confidence) leading to abandonment of the project. This is especially where returns are risky (e.g. fusion reactor technology) or where the return is diffuse (e.g. immunization programs or public education). Also try: fusion power This article is about a fictional warship in the game Halo. ... A child being immunized against polio. ... // Public spending on education in 2005 Public education is education mandated for or offered to the children of the general public by the government, whether national, regional, or local, provided by an institution of civil government, and paid for, in whole or in part, by taxes. ...


Conformance to a grand design

While a market economy maximizes wealth by evolution, a planned economy favors design. While evolution tends to lead to a local maximum in aggregate wealth, design is in theory capable of achieving a global maximum. For example, a planned city can be designed for efficient transport, while organically grown cities tend to suffer from traffic congestion. Critics would point out that planned cities will suffer from the same problems as unplanned cities, unless reproduction and population growth is subject to strict control, as in a closed city. Look up evolution in Wiktionary, the free dictionary. ... local optimum is a term in Applied mathematics and Computer Science. ... Polynomial of degree 4, on the right one finds a local optimum, on the left is the global optimum. ... A New town or planned community or planned city is a city, town, or community that was designed from scratch, and grew up more or less following the plan. ... A closed city (town) is a city/town with travel and residency restrictions in the former Soviet Union, or in a CIS country. ...


Meeting collective objectives by individual sacrifice

A planned economy serves collective rather than individual needs: under such a system, rewards, whether wages or perquisites, are to be distributed according to the value that the state ascribes to the service performed. A planned economy eliminates the individual profit motives as the driving force of production and places it in the hands of the state planners to determine what is the appropriate production of different sets of goods. Collective can also refer to the collective pitch flight control in helicopters A collective is a group of people who share or are motivated by at least one common issue or interest, or work together on a specific project(s) to achieve a common objective. ... As commonly used, individual refers to a person or to any specific object in a collection. ...


The government can harness land, labor, and capital to serve the economic objectives of the state. Consumer demand can be restrained in favor of greater capital investment for economic development in a desired pattern. The state can begin building a heavy industry at once in an underdeveloped economy without waiting years for capital to accumulate through the expansion of light industry, and without reliance on external financing. This is what happened in the Soviet Union during the 1930s when the government forced the share of GNP dedicated to private consumption from 80 percent to 50 percent.[9] While there was a significant decline in individual living standards, the state was able to meet some of its "economic objectives."


Comparison with capitalist corporations

Taken as a whole, a centrally planned economy would attempt to substitute a number of firms with a single firm for an entire economy. As such, the stability of a planned economy has implications with the Theory of the firm. After all, most corporations are essentially 'centrally planned economies', aside from some token intra-corporate pricing (not to mention that the politics in some corporations resemble that of the Soviet Politburo). That is, corporations are essentially miniature centrally planned economies and seem to do just fine in a free market. As pointed out by Kenneth Arrow and others, the existence of firms in free markets shows that there is a need for firms in free markets; opponents of planned economies would simply argue that there is no need for a sole firm for the entire economy. The theory of the firm consists of a number of economic theories which describe the nature of the firm (company or corporation), including its behaviour and its relationship with the market. ... Politburo is short for Political Bureau. ... Kenneth Joseph Arrow (born August 23, 1921) is an American economist, joint winner of the Nobel Prize in Economics with John Hicks in 1972, and the youngest person ever to receive this award, at 51. ...


Disadvantages of economic planning

Inefficient resource distribution — surplus and shortage

Critics of planned economies argue that planners cannot detect consumer preferences, shortages, and surpluses with sufficient accuracy and therefore cannot efficiently co-ordinate production (in a market economy, a free price system is intended to serve this purpose). For example, during certain periods in the history of the Soviet Union, shortages were so common that one could wait hours in a queue to buy basic consumer products such as shoes or bread.[10] These shortages were due in part to the central planners deciding, for example, that making tractors was more important than making shoes at that time, or because the commands were not given to supply the shoe factory with the right amount of leather, or because the central planners had not given the shoe factories the incentive to produce the required quantity of shoes of the required quality. This difficulty was first noted by economist Ludwig von Mises, who called it the "economic calculation problem". Economist János Kornai developed this into a shortage economy theory (advocates could claim that shortages were not primarily caused by lack of supply). A free price system or free price mechanism (informally called the price system or the price mechanism) is an economic system where prices are not set by government or a central planning board but by the interchange of supply and demand, with the resulting prices being understood as signals that... Ludwig Heinrich Edler von Mises (September 29, 1881 – October 10, 1973) (pronounced was a notable economist and a major influence on the modern libertarian movement. ... The economic calculation problem is a criticism of socialist economics. ... János Kornai, (1928-), born in Budapest, Hungary, is an economist noted for his criticism of the command economies of Eastern European communist states. ... Polish meat shop in the 1980s. ...


There is also the problem of surpluses. Surpluses indicate a waste of labor and materials that could have been applied to more pressing needs of society. Critics of central planning say that a market economy prevents long-term surpluses because the operation of supply and demand causes the price to sink when supply begins exceeding demand, indicating to producers to stop production or face losses. This frees resources to be applied to satisfy short-term shortages of other commodities, as determined by their rising prices as demand begins exceeding supply. It is argued that this "invisible hand" prevents long-term shortages and surpluses and allows maximum efficiency in satisfying the wants of consumers. Critics argue that since in a planned economy prices are not allowed to float freely, there is no accurate mechanism to determine what is being produced in unnecessarily large amounts and what is being produced in insufficient amounts. They argue that efficiency is best achieved through a market economy where individual producers each make their own production decisions based on their own profit motive. For other uses, see Invisible hand (disambiguation). ...


Cannot determine and prioritize social goods better than the market can

Some who oppose comprehensive planned economies argue that some central planning is justified. In particular, it is possible to create unprofitable but socially useful goods within the context of a market economy. For example, one could produce a new drug by having the government collect taxes and then spend the money for the social good. On the other hand, opponents of such central planning say that "absent the data about priorities conveyed through price signals created by freely acting individuals, [it is questionable] whether determinations about what is socially important can even be made at all."[11] Opponents do not dispute that something useful can be produced if money is expropriated from private businesses and individuals, but their complaint is that "it’s far from certain that those monies could not have been spent better"[11] if individuals were allowed to spend and invest as they wished according to their own wants.


We can see things of value being produced by the state taxing and using those funds to undertake projects which are believed to be social goods, but we cannot see what social goods have not been produced due to wealth taken out of the hands of those who would have invested and spent their money in other ways according to their own goals. These opponents of central planning argue that the only way to determine what society actually wants is by allowing private enterprise to use their resources in competing to meet the needs of consumers, rather those taking resources away and allowing government to direct investment without responding to market signals. According to Tibor R. Machan, "Without a market in which allocations can be made in obedience to the law of supply and demand, it is difficult or impossible to funnel resources with respect to actual human preferences and goals."[11]


If the government in question is democratic, democratically-determined social priorities may be considered legitimate social objectives in which the government is jusitified in intervening in the economy. It must be noted that to date, most if not all countries employing command economies have been dictatorships or oligarchies -- few or none were democracies. Many democratic nations, however, have a mixed economy, where the government intervenes to a certain extent and in certain aspects of the economy, although other aspects of the economy are left to the free market. Benito Mussolini and Adolf Hitler were two of the 20th centurys most notorious dictators. ... Oligarchy is a form of government where most political power effectively rests with a small segment of society (typically the most powerful, whether by wealth, military strength, ruthlessness, or political influence). ... Democracy is a form of government under which the power to alter the laws and structures of government lies, ultimately, with the citizenry. ... A mixed economy is an economic system that incorporates aspects of more than one economic system. ...


Lack of incentive for innovation

Another criticism some make of central planning is that it is less likely to promote innovation than a free market economy. In the latter, inventors can reap huge benefits by patenting new technology, so there is arguably much more incentive to innovate. Conversely a planned economy can deliver vast national resources into research and development if it gets the idea that a particular field is critical to its interests, usually military technology. The Soviet Union's ability to maintain fierce competition versus the United States during the space race and cold war, despite its smaller economy, is an example of this. For a list of key events, see Timeline of space exploration. ... For other uses, see Cold War (disambiguation). ...


Infringement on individual freedoms

The top down structure of a centrally planned economy dictates a hegemonic operating culture - whereas in a free market economy several models of operating can compete simultaneously in a manner similar to organisms in an ecosystem.[citation needed]


Critics also hold that certain types of command economies may require a state which intervenes highly in people's personal lives. For example, if the state directs all employment then one's career options may be more limited. If goods are allocated by the state rather than by a market economy, citizens cannot, for example, move to another location without state permission because they would not be able to acquire food or housing in the new location, as the necessary resources were not preplanned.


Likewise, because of the state's controls over an individual's personal choices, critics contend that central planning intrinsically results in a top-down, dictatorial state where politicians and bureaucrats use the state to achieve their own ends, which are in turn described as the "social" objectives of the state. In essence, critics contend that socialism has nothing to do with the preferences of the individuals that comprise a society, but rather the abstract goals of some group.


This criticism is supported by Rummel's Law which states that the less freedom a people have, the more likely their rulers are to murder them. R. J. Rummel's top three examples of 20th century "Megamurders" were Soviet Russia, People's Republic of China and Nazi Germany, all planned economies with limited individual freedom.[12] Rummels Law states that the less freedom a people have, the more likely their rulers are to murder them. ... To meet Wikipedias quality standards, this article or section may require cleanup. ... State motto: Russian: Пролетарии всех стран, соединяйтесь! Translation: Workers of the world, unite! Capital Moscow Official language Russian Established In the USSR:  - Since  - Until November 7, 1917 December 30, 1922 December 12, 1991 (independence) Area  - Total  - Water (%) Ranked 1st in the USSR 17,075,200 km² 13% Population  - Total   - Density Ranked 1st in the... Nazi Germany, or the Third Reich, commonly refers to Germany in the years 1933–1945, when it was under the firm control of the totalitarian and fascist ideology of the Nazi Party, with the Führer Adolf Hitler as dictator. ...


The Road to Serfdom is a book written by Friedrich Hayek and critical of collectivism, presenting the argument that a central planned economy must ultimately result in tyranny. An idea similar to this is the idea of the iron cage presented even earlier by Max Weber in The Protestant Ethic and the Spirit of Capitalism. The Road to Serfdom is a book written by Friedrich Hayek (recipient of the Nobel Prize in Economics in 1974) and originally published by Routledge Press in March 1944 in the UK and then by the University of Chicago in September 1944. ... Friedrich August von Hayek, CH (May 8, 1899 in Vienna – March 23, 1992 in Freiburg) was an Austrian-born British economist and political philosopher known for his defense of liberal democracy and free-market capitalism against socialist and collectivist thought in the mid-20th century. ... This article needs additional references or sources for verification. ... Iron cage is a concept introduced by Max Weber. ... For the politician, see Max Weber (politician). ... The Protestant Ethic and the Spirit of Capitalism is a book written by Max Weber, a German economist and sociologist in 1904 and 1905 that began as a series of essays. ...


Suppression of Economic Democracy and Self-Management

Centrally planning is also criticized by elements of the radical left. Libertarian socialist economist Robin Hahnel notes that even if central planning overcame its inherent inhibitions of incentives and innovation it would nevertheless be unable to maximize economic democracy and self-management, which he believes are concepts that are more intellectually coherent, consistent and just than mainstream notions of economic freedom. As Hahnel explains, “Combined with a more democratic political system, and redone to closer approximate a best case version, centrally planned economies no doubt would have performed better. But they could never have delivered economic self-management, they would always have been slow to innovate as apathy and frustration took their inevitable toll, and they would always have been susceptible to growing inequities and inefficiencies as the effects of differential economic power grew. Under central planning neither planners, managers, nor workers had incentives to promote the social economic interest. Nor did impending markets for final goods to the planning system enfranchise consumers in meaningful ways. But central planning would have been incompatible with economic democracy even if it had overcome its information and incentive liabilities. And the truth is that it survived as long as it did only because it was propped up by unprecedented totalitarian political power.” [13] A photo of Robin Hahnel Robin Hahnel is a Professor of Economics at American University. ...


Corruption

A planned economy creates social conditions favoring political corruption. Particularly, command economies have been notoriously corrupt. First, centralized decision-making predisposes planners to abuses of power. Second, the inherent inefficiency of plans drawn with insufficient information creates a need for bypassing or subverting the official decision-making process. For example, the Soviet Gosplan could not create plans that were feasible, and other means were used to meet the quotas. A gift economy featuring corruption, blat, developed. The Chinese guanxi is somewhat similar. World map of the Corruption Perceptions Index by Transparency International, which measures the degree to which corruption is perceived to exist among public officials and politicians. High numbers (green) indicate relatively less corruption, whereas lower numbers (red) indicate relatively more corruption. ... A gift economy is an economic system in which goods and services are given without any explicit agreement for immediate or future quid pro quo. ... Blat (Russian: , blat) is a term which appeared in the Soviet Union to denote the use of informal agreements, Party contacts, or black market deals to achieve results or get ahead. ... Guanxi (Traditional Chinese: ; Simplified Chinese: ; pinyin: gūanxi ), describes the basic dynamic in personalised networks of influence. ...


Planned economies and socialism

Main article: Socialist economics

In the 20th century, most planned economies were implemented by states that called themselves socialist. Also, the greatest support for planned economics comes from socialist authors. For these reasons, the notion of a planned economy is often directly associated with socialism. However, they do not entirely overlap. There are branches of socialism such as libertarian socialism, that reject a centralized state, and some of these tendencies reject economic planning as well. Socialist economics is a broad, and sometimes controversial, term. ... Religious socialism Key Issues People and organizations Related subjects Socialism refers to a broad array of ideologies and political movements with the goal of a socio-economic system in which property and the distribution of wealth are subject to control by the community. ... Libertarian socialism is a group of political philosophies that aim to create a society without political, economic or social hierarchies - a society in which all violent or coercive institutions would be dissolved, and in their place every person would have free, equal access to tools of information and production, or...


Furthermore, planned economies are not unique to Communist states. There is a Trotskyist theory of permanent arms economy, put forward by Michael Kidron, which leads on from the contention that war and accompanying industrialisation is a continuing feature of capitalist states and that central planning and other features of the war economy are ever present.[14] This article is about one-party states ruled by Communist Parties. ... Trotskyism is the theory of Marxism as advocated by Leon Trotsky. ... The permanent arms economy is a Marxist theory which seeks to explain the sustained economic growth which occurred in the decades following World War II, especially amongst developed countries. ... Michael Kidron Michael Kidron was a revolutionary thinker and cartographer. ... A factory in Ilmenau (Germany) around 1860 Industrialisation (also spelt Industrialization) or an Industrial Revolution is a process of social and economic change whereby a human group is transformed from a pre-industrial society (an economy where the amount of capital accumulated per capita is low) to an industrial one... War economy is the term used to describe the contingencies undertaken by the modern state to mobilize its economy for war production. ...

See also: State capitalism

There are multiple definitions of the term state capitalism. ...

Transition from a planned economy to a market economy

The shift from a command economy to a market economy has proven to be difficult; in particular, there were no theoretical guides for doing so before the 1990s. One transition from a command economy to a market economy that a few consider successful is that of the People's Republic of China, in which there was a period of some years lasting roughly until the early 1990s during which both the command economy and the market economy coexisted, so that nobody would be much worse off under a mixed economy than a command economy, while some people would be much better off. Gradually, the parts of the economy under the command economy decreased until the mid-1990s when resource allocation was almost completely determined by market mechanisms.


By contrast, the Soviet Union's transition was much more problematic and its successor republics faced a sharp decline in GDP during the early 1990s. While the transition to a market economy proved difficult, many of the post-Soviet states have been experiencing strong, resource-based economic growth in recent years, though the levels vary substantially. However, a majority of the former Soviet Republics have not yet reached pre-collapse levels of economic development. A successor state is a state that takes over from a previously well-established state some or all of the territory and assets. ...


Transition from a market economy to a planned economy

Main article: Corporatism

Historically, corporatism or corporativism (Italian: corporativismo) refers to a political or economic system in which power is given to civic assemblies that represent economic, industrial, agrarian, social, cultural, and professional groups. ...

Government market regulation

Central governments are tempted to solve problems quickly by introducing additional market regulation. Once such regulation is introduced, it is rarely removed, ratcheting towards a gradual increase in government power and a constraint on the mechanism of the free market. Usually, big business has an advantage over small business in a strongly regulated market, because big business can cope with the bureaucracy and small business cannot take advantage of adaptivity. A regulated market is the provision of goods or services that is regulated by a government appointed body. ... A free market is an idealized market, where all economic decisions and actions by individuals regarding transfer of money, goods, and services are voluntary, and are therefore devoid of coercion and theft (some definitions of coercion are inclusive of theft). Colloquially and loosely, a free market economy is an economy... Big Business or big business is a term used to describe large corporations, individually or collectively. ... Mom and pop store redirects here. ... Big Business or big business is a term used to describe large corporations, individually or collectively. ... Mom and pop store redirects here. ...


Franklin D. Roosevelt’s New Deal was an example of market regulation used by the American government in an attempt to escape the Great Depression of the 1930s. FDR redirects here. ... This article is about the policy program of US President Franklin D Roosevelt. ... A regulated market is the provision of goods or services that is regulated by a government appointed body. ... For other uses, see The Great Depression (disambiguation). ...


Corporate monopoly

The process of wealth condensation results in a small number of people controlling large sections of the economy. This article is about the economic term. ... Wealth condensation is a theoretical process by which, in certain conditions, newly-created wealth tends to become concentrated in the possession of already-wealthy individuals or entities. ...


The British East India Company is an example of government-granted monopoly. The British East India Company, sometimes referred to as John Company, was the first joint-stock company (the Dutch East India Company was the first to issue public stock). ... In economics, a government-granted monopoly (also called a de jure monopoly) is a form of coercive monopoly in a government grants exclusive privilege to a private individual or firm to be the sole provider of a good or service; potential competitors are excluded from the market by law, regulation...


American Telephone & Telegraph (formerly Bell Telephone Company), was regarded as a natural monopoly until it was broken up by the U.S. Department of Justice in 1974. This is an example of United States antitrust law being used to discourage centralization of corporate power. AT&T (formerly an abbreviation for American Telephone and Telegraph) Corporation (NYSE: T) is an American telecommunications company. ... In economics, the term natural monopoly is used to refer to two different things. ... The break up of AT&T was initiated in 1974 by the U.S. Department of Justice anti-trust suit against the telephone monopoly. ... The United States Department of Justice (DOJ) is a Cabinet department in the United States government designed to enforce the law and defend the interests of the United States according to the law and to ensure fair and impartial administration of justice for all Americans. ... The Department of Justice building in Washington, D.C. is home to the United States antitrust enforcers United States antitrust law is the body of laws which prohibit anti-competitive behavior (monopoly) and unfair business practices. ...


Amalgamated trade unions

Small trade unions have limited power, especially against larger international corporations. Amalgamation of trade unions leads to an industry-wide group with more bargaining power but less individual interest in any particular worker. Such a union will bargain directly with government on an industry-wide basis and thus create a form of central planning that is distinct from typical (Laissez-faire) capitalism. The Lawrence textile strike (1912), with soldiers surrounding peaceful demonstrators A trade union or labor union is an organization of workers who have banded together to achieve common goals in key areas such as wages, hours, and working conditions, forming a cartel of labour. ... The Lawrence textile strike (1912), with soldiers surrounding peaceful demonstrators A trade union or labor union is an organization of workers who have banded together to achieve common goals in key areas such as wages, hours, and working conditions, forming a cartel of labour. ... The Lawrence textile strike (1912), with soldiers surrounding peaceful demonstrators A trade union or labor union is an organization of workers who have banded together to achieve common goals in key areas such as wages, hours, and working conditions, forming a cartel of labour. ...


Similar economic models

A palace economy may be considered as a subsistence economy augmented with elements of a command economy. A palace economy is a system of economic organisation in which wealth flows out from a central source (the palace), eventually reaching the common people, who have no other source of income. ... Media:Example. ...


Notes

  1. ^ Alec Nove (1987), "planned economy," The New Palgrave: A Dictionary of Economics, v. 3, pp. 879-80.
  2. ^ "Command Economy." Encyclopædia Britannica. 2007. Encyclopædia Britannica Online. 11 June 2007 http://www.britannica.com/eb/article-9024945.
  3. ^ James R. Barth and Gerard Caprio, Jr. China's Changing Financial System: Can It Catch Up With, or Even Drive Growth. Networks Financial Institute. March 2007; Thomas O Bouman and David George Brand. Sustainable Forests: Global Challenges and Local Solutions. Haworth Press 1997 page 91
  4. ^ Myers, Danny. Construction Economics (2004), Spon Press (UK), p. 288
  5. ^ Ollman, Bertell. Market Socialism: The Debate Among Socialists (1997), Routledge (UK), p. 12
  6. ^ Alec Nove (1987), "Planned Economy," The New Palgrave: A Dictionary of Economics, v. 3, p. 879.
  7. ^ John Barkley (1991), Comparative Economics in Transforming World Economy, MIT, p. 10 
  8. ^ von Brabant, Jozef M. The Planned Economies and International Economic Organizations, Cambridge University Press, 1991, p. 16
  9. ^ Paul Kennedy. The Rise and Fall of the Great Powers, page 322-3
  10. ^ www.unc.edu/depts/econ/byrns_web/GreatIdeas/Great_Ideas.DOC
  11. ^ a b c Machan, R. Tibor, Some Skeptical Reflections on Research and Development, Hoover Press
  12. ^ R. J. Rummel, DEKA-MEGAMURDERERS, <http://www.hawaii.edu/powerkills/MEGA.HTM> 
  13. ^ Hahnel, Robin. The ABC’s of Political Economy, Pluto Press, 2002, 262
  14. ^ A Permanent Arms Economy by Michael Kidron, First printed in International Socialism 1:28 (Spring 1967)

Alexander Nove FRSE, FBA (24 November 1915, Saint Petersburg - 15 May 1994, Glasgow) was Professor of Economics at the University of Glasgow and noted authority on Russian/Soviet economic history. ... Alexander Nove FRSE, FBA (24 November 1915, Saint Petersburg - 15 May 1994, Glasgow) was Professor of Economics at the University of Glasgow and noted authority on Russian/Soviet economic history. ...

References

  • Gregory Grossman (1987). "command economy," The New Palgrave: A Dictionary of Economics, v. 1, pp. 494-95.
  • Alec Nove (1987). "planned economy," The New Palgrave: A Dictionary of Economics, v. 3, pp. 879-85.

Alexander Nove FRSE, FBA (24 November 1915, Saint Petersburg - 15 May 1994, Glasgow) was Professor of Economics at the University of Glasgow and noted authority on Russian/Soviet economic history. ...

See also

The economy of the Soviet Union was based on a system of state ownership and administrative planning. ... The Great Leap Forward (Simplified Chinese: ; Traditional Chinese: ; Pinyin: ) of the Peoples Republic of China (PRC) was an economic and social plan used from 1958 to 1960 which aimed to use Chinas vast population to rapidly transform mainland China from a primarily agrarian economy dominated by peasant farmers... Socialist economics is a broad, and sometimes controversial, term. ... Participatory economics, often abbreviated parecon, is a proposed economic system that uses participatory decision making as an economic mechanism to guide the allocation of resources and consumption in a given society. ... Project Cybersyn was a Chilean attempt at real-time computer-controlled planned economy in the years 1970-1973 (during the government of president Salvador Allende). ... This article is about state ownership. ... A mixed economy is an economic system that incorporates aspects of more than one economic system. ... Dirigisme (from the French) (in English also dirigism although per the OED both spellings are used) is an economic term designating an economy where the government exerts strong directive influence. ... A market economy (also called a free market economy or a free enterprise economy) is an economic system in which the production and distribution of goods and services take place through the mechanism of free markets (though completley useless to some dumbasses) guided by a free price system. ... This article pertains to technocracy as a bureaucratic structure. ... The economics of fascism refers to the economic policies implemented by fascist governments. ... The economy of India, when measured in USD exchange-rate terms, is the twelfth largest in the world, with a GDP of US $1. ...

External links


  Results from FactBites:
 
Planned economy information - Search.com (1489 words)
Planned economies implemented by the way of authority, such as the economy of the Soviet Union, have become widely known as command economies.
A planned economy can serve social rather than individual ends: under such a system, rewards, whether wages or perquisites, are to be distributed according to the social value of the service performed.
Pre-modern economies (those existing before the industrial revolution) are more difficult to analyze by today's standards, but a number of them, particularly those of hydraulic empires, may be seen as having been centrally planned as well.
Planned economy - Wikipedia, the free encyclopedia (1492 words)
A planned economy may either consist of state owned enterprises, private enterprises who are directed by the state, or a combination of both.
Important planned economies that existed in the past include the Economy of the Soviet Union, which was for a time the world's second-largest economy.
While the term planned economy usually refers to centrally-planned economies, it may also be used to refer to decentralized systems of planning such as participatory economics.
  More results at FactBites »

 
 

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