A Command economy is great & simple but you shouldn’t be unaware of the disadvantages of a command economy. Because in any economy there are two terms profit and loss. Therfore, you can not focus only on the profits, but you should also need to understand the causes of the loss as well. So, the command economy is an economic system in which the means of production are publicly owned and economic activities are controlled by a central authority. Without wasting too much time let’s jump on the disadvantages of a command economy.
What Are The Disadvantages Of A Command Economy?
The disadvantages of a command economy will reveal the negative side of this. Let’s see the disadvantages,
- Freedom is restricted
- Societal needs might be ignored
- No competition is offered
- The black market would explode
- The authority might misplace incentives
Disadvantages Of A Command Economy
Let me explain what is a major disadvantages of a command economy in detail.
Freedom Is Restricted
When freedom is restricted in any economy, then the chances of growth getting lowered. And same happens in the command economy, it normally tied to communism, which means that it also puts full control in the hands of the government alone.
Societal Needs Might Be Ignored
Do you know? The needs of society are often ignored for its betterment in the command economy. For workers, they will not be given a choice on where they can move or where they can work.
No Competition Is Offered
As you all know, market competition is the primary force of improvement and growth, but it is not found in a command economy. After all, the government is the one owning all the industries, so, no chance of competition. Also, it does not encourage competition, and actually, it even tries to eliminate it.
Black Market Would Explode
One of the main disadvantages of economies like the command economy is that the government put restrictions on many products and services, and such offerings may not be available.
The Authority Might Misplace Incentives
It is sad but true that, the central government monitors and regulates the supply and prices, rather than planners and other market forces, and decides on the products and services that are going to be produced and distributed. And hence, the individuals do not get the rewards that they deserve.
Characteristics Of Command Economy
So these are the disadvantages of a command economy. The command economy has various characteristics. Let’s understand the characteristics of command economy.
- A central economic plan is created by the government
- The government owns monopoly businesses
- The priorities settled for the production of all goods and services due to the central plan
- All resources are allocated by the central government according to the central plan
After knowing the disadvantages and characteristics of the command economy you should know about the advantages of a command economy.
Advantages Of Command Economy
Well, the advantages of a command economy are
- Industrial power is boosted
- Monopolizing is not allowed
- Society and the government are streamlined
- Social welfare is seen as a priority
- There exists an easy response to internal disasters and emergencies
Now, you know about what are the advantages and disadvantages of a command economy in detail.
Everything has its disadvantages on Disadvantagess you will get to know more.
This article has given you enough information regarding the advantages and disadvantages of a command economy. And it tells us, whether the command economy is full of advantages but never ignores its disadvantages as well. It is difficult to understand the whole economy in a single article but by going through the pros and cons of a command economy, you can have a good idea of how it does for a certain country and eventually, come up with an informed decision on whether it is good or bad for society. So, this is all about the disadvantages of a command economy.
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What are four disadvantages of a command economy