A planned economy or as it more frequently know, a command economy is an
economy run by the state. The government controls, the type of goods/services being
made then allocates them, they have complete control over all resources. Command
economies are not consumer driven, supply and demand don’t factor in, instead the
government is responsible for providing service/goods that increase overall public
wealth. This does mean however that the economy is working on the basis that
everyone will pull their weight, individual gain does not come into a command
economy, it’s all about the good of the nation. Command economies typically have
more control over their people, allocating them jobs not truly based on skill level and
everyone’s pay is relatively the same, this equates to a fierier more equal economy. A
strong sense of Nationalism is what holds a command economy together, everyone
working together to fulfil the common goals of the nation, as all businesses are
nationalised everyone works for the state, which brings them together as a nation.
The term "command economy" refers to an economy where the government determines what goods should be produced, how much of them should be produced and the price these goods should have. This is quivalent to saying that the government controls the whole economy. This is a common feature of communist regimes. On the other hand, a market economy is one where most aspects of the economy are determined by market pressures, and by the law of supply and demand. However, most market economies still have some level of government involvement.
Some of the ways in which people benefit from an economy that moves away from a command economy is that a market economy usually has more variety of products. This is because people are more interested to enter the market, as any product can become extremely successful if it is popular among customers. Moreover, this usually helps the problem of prices as the availability of options often provides similar items at many different price points. Finally, another benefit is the fact that, because market economies encourage competition, businesses that are inefficient usually fail, allowing better businesses to rise.
