centrally planned economy


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Related to centrally planned economy: mixed economy

centrally planned economy

or

command economy

or

collectivism

a method of organizing the economy to produce goods and services. Under this ECONOMIC SYSTEM, economic decision-making is centralized in the hands of the state with collective ownership of the means of production, (except labour). It is the state that decides what goods and services are to be produced in accordance with its centralized NATIONAL PLAN. Resources are allocated between producing units, and final outputs between customers by the use of physical quotas.

The main rationale underlying state ownership of industry is the view that the collective ownership of the means of production ‘by the people for the people’ is preferable to a situation in which the ownership of the means of production is in the hands of the ‘capitalist class'who are able to exploit their élite position to the detriment of the populace at large. State control of industry enables the economy as a whole to be organized in accordance with some central plan, which by interlocking and synchronizing the input-output requirements of industry is able to secure an efficient allocation of productive resources. Critics of state-owned economic systems argue, however, that in practice they tend to be ‘captured and corrupted’ by powerful state officials, and that their top-heavy bureaucratic structures result in a highly inefficient organization of production and insensitivity to what customers actually want. See PRIVATE-ENTERPRISE ECONOMY, MIXED ECONOMY, NATIONALIZATION, COMMUNISM.

References in periodicals archive ?
The centrally planned economy has a unique and locally saddlepath stable steady-state equilibrium with positive long-run growth,
In a sense, these reforms legitimized what was already occurring following the collapse of the centrally planned economy.
In the same manner as in the case of the market economy, the following system of equations which characterizes the dynamics of the centrally planned economy are obtained:
North Korea is certainly not the first centrally planned economy to confront domestic food shortages.
When you look at the competition, you see Singapore, which has done very well but is still a centrally planned economy," he said.
The region straddles the old Silk Road route, and as part of the Soviet Empire its resources had been developed to satisfy the needs of a centrally planned economy.
The former centrally planned economy placed the emphasis of economic policy virtually entirely on production, with the provision of an adequate distribution system completely neglected.
But no, it's becoming clearer that no centrally planned economy can succeed for very long.
9) Similarly, in a centrally planned economy, should we use some adjusted factor cost prices as the benchmark or use shadow prices based on input-output tables?
The lone exception appears to have been the Czech Republic, whose transformation from a centrally planned economy to a market-oriented one has been accomplished with substantially lower levels of unemployment than were seen in other Eastern European nations.
Restructuring was intended to improve the efficiency of the existing system through fine-tuning that would allow limited market forces to operate within an otherwise centrally planned economy.
It is the first to examine the demand for money in a centrally planned economy using cross-section data which tests variables other than income and interest rates.

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