What Is the Goal of a Command Economic System?
Explore the core strategic and social aspirations that define the purpose of command economic systems.
A command economic system, also known as a planned economy, operates under the control of a central government authority. This authority makes all decisions regarding the production, distribution, and consumption of goods and services. The government determines what is produced, in what quantities, and how resources are allocated, unlike market-driven systems. The state typically owns the means of production, overseeing economic activities to achieve national objectives.
Directed Economic Development
A primary objective of a command economic system is to achieve rapid economic transformations. Central planning allows direct resource allocation toward state priorities, such as heavy industry, large-scale infrastructure, or military expansion. This centralized control enables a government to mobilize resources, directing capital, labor, and raw materials to targeted sectors without market influence.
Historical examples, like the Soviet Union’s Five-Year Plans, demonstrate how a command economy can shift an agrarian society towards industrialization at an accelerated pace. The government sets production goals for enterprises and allots raw materials, ensuring industries receive necessary inputs. This top-down approach aims to bypass slower, organic growth patterns of market economies, facilitating swift changes in economic structure to align with national development strategies.
Social Equity and Welfare
Another goal of a command economy is to reduce economic inequality and provide for general welfare. These systems aim to distribute resources and opportunities more evenly, often by controlling prices and ensuring access to essential goods and services. By setting fixed prices for basic necessities, the government can theoretically make these items universally affordable, regardless of income.
Command economies also minimize wealth disparities by controlling wages and ensuring access to public services like healthcare and education, often at little direct cost. The aim is to create a more egalitarian society where basic needs are met for all citizens, fostering collective well-being over individual profit motives. This focus on social welfare guides resource allocation to prioritize societal needs.
Economic Stability and Full Employment
Command economic systems also aim to eliminate economic fluctuations, such as recessions or inflation, and ensure full employment. Central planning attempts to prevent unemployment by directly assigning jobs and managing production to match labor supply with demand. The government, as the primary employer, can theoretically ensure near-zero unemployment by allocating labor across sectors as determined by the central plan.
The aim is to create a stable economic environment free from boom-and-bust cycles often associated with market economies. By controlling prices and supply, the central authority maintains steady economic growth and avoids volatility. This oversight of production and employment levels provides a predictable economic environment, where job security and price stability are maintained through government directives.