Command Economy

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Command Economy

Command Economy

Thesis Statement

At its totalitarian extreme, the state sets to have complete control of the economy, a command economy, an attempt to run society like an army. Consequently, command economies are marked by waste, overproduction of what nobody wants, and shortages, underproduction of what people need.


Generally speaking, there have been three types of economies: barter economies, command economies, and market economies. All three have been mechanisms for the exchange of goods and services. Barter economies were the first types of economies and still abound. They may exist in the industrial world when people trade goods or services in any number of ways. Or they may exist in the Third World, for example, when people gather honey in a forest in India to trade for meat hunted in the same forest (Miller, 2006). Command economies are economies in which the government directs the manufacture and/or the distribution of goods and services.

Modern wartime economies have usually been command economies. In modern times, socialist and Communist economies have been economies that have sought to establish economic justice by their power to control the production, distribution, and consumption of goods and services and by means of “equitable” distribution of what is produced (Le, 2007). However, all too often, socialist and Communist economies have been unsuccessful in producing goods and services as well as achieving their moral principle of equality of distribution. This moral failure has often been due to directing the production of luxuries to political forces (Elster, 2006).


Libertarians like Ludwig von Mises and Friedrich von Hayek highlighted the inefficiencies of command economies, the absence of incentives to innovate or work harder, and the absence of a price mechanism that indicates to producers that there is more or less demand through higher or lower prices, respectively.

The concentration of power in any single institution is bound to lead, given human nature, to inefficiency, waste, and corruption at best and tyranny at worst (Arnold, 2008).

Market socialism is something of a compromise between the authoritarian excesses of a command economy and the cold injustices of an entirely free market. The historical genesis of market socialist ideals is the period of the late Cold War. Radical critics in both the west and the former communist world searched for models that rejected the worst features of capitalism—waste, greed and exploitation in the workplace and the marketplace—while retaining the attractive elements of relative economic prosperity, freedom, and consumer choice (Miller, ...
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