√ Definition of Command Economy System, Characteristics, Objectives, and Examples
Definition of Command Economy System, Characteristics, Purpose, and Examples - On this occasion About Knowledgewill discuss about the Command Economy System. Which in this discussion explains the meaning of the command economy system, its characteristics, objectives and examples briefly and clearly. For more details, please refer to the article regarding the understanding of the following command system.
Definition of Command Economy System, Characteristics, Purpose, and Examples
The command economy system is a system in the economy of a state or government that has control fully to all activities or economic activities that take place and are related to the market in the country the.
This system is often also called a centralized/socialist (guided) economic system, where all resources, both capital and production, are controlled by the government. Besides that, the government has full control in regulating the amount of services or goods in circulation, the price of goods or the value of goods, how to predict or others. This means that individuals or private parties do not have significant power in the market.
Purpose of the Command Economy System
The purpose of the command economy system is to use all the labor contained in economy and minimize the occurrence of disguised unemployment or people who work only a few hours just. This can eliminate unemployment and make the distribution of income easier to adjust to what is expected.
Characteristics of the Command Economy System
In order to more easily understand this commando economic system, it is necessary to pay attention to several characteristics or characteristics, including:
- The government is fully responsible for the wheels of the economy;
- The government has supreme power in the economic system;
- Private parties or individuals do not have a significant role in the market;
- The government becomes the owner of all capital and means of production, while the people are only users;
- The government regulates and determines the types of goods and services that must be produced and the public cannot create their own creations;
- The government makes rules for the economic system and the people involved in it to comply with these rules;
- Private parties do not have the right to carry out activities or economic activities.
Advantages and Disadvantages of a Command Economy System
The following are some of the advantages and disadvantages of using a command economy system, including:
Advantages of the Command Economy System
- The government can also easily carry out and control production, distribution and consumption activities in society;
- It is easy for the government to supervise and control the prices of goods and services in the market;
- The government can easily control economic problems such as inflation, unemployment and others;
- The economic condition of a country tends to be more stable;
- Social gaps in society can be minimized;
- The government can achieve equal distribution of income for its citizens;
- Countries with this command economy rarely experience economic crises.
Disadvantages of the Command Economy System
- The market system is greatly affected by the quality of its government;
- The government for this system does not recognize individual rights;
- The government tends to monopolize all kinds of things related to the economy so that it can harm its citizens;
- Countries that adhere to this command economy system generally have slow economic growth;
- The government also inhibits the creativity, initiative and creation of the community so that the community is motivated to move forward;
- Many kinds of goods are needed but not available in the market.
Examples of Countries Using a Centralized Economic System
In general, countries that use a centralized economic system are countries that have communism and socialism. The following are some countries that use a command economy system, including:
- Vietnamese
- Cuba
- North Korea
- People's Republic of China
Thus the explanation about Definition of Command Economy System, Characteristics, Purpose, and Examples, hopefully it can be useful and add to your insight.
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