centrally planned economy

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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 ?
Second, a key feature of a planned economy is the high degree of monopoly power in production.
On democratic reforms, Akharbach recalled that "Morocco has neither experienced the one-party system nor the planned economy.
1) A central question in this paper is whether countries in transition from a centrally planned economy and Communist polity are particularly vulnerable to a resource curse due to their fragile and changing institutions and to their inexperience with policy-making in a market-based economy.
This was almost as if they were acting in a planned economy, " said Joaquin Almunia, Commission VP in charge of Competition.
Kim Jong-il is struggling to stabilize his regime and hold its system together and has been focusing on securing resources from the outside while maintaining a planned economy," he said.
Gaidar was vilified by the public for the hardships caused by his policy to move Russia from the Soviet planned economy to the free market economy.
Chinaese Deputy Minister of Commerce Ma Xiuhong said both sides were conscious of the solid progress China had made in transitioning from a planned economy to a market-oriented one in the past 30 years.
Alexei Kudrin, Russia's foreign minister, on Thursday described Belarus' planned economy and stiff control of its currency as a "meaningless policy" and said the country was taking a "parasitic" attitude towards Russia.
In some ways it is a greater crisis than in the 1930s, because the globalisation of the economy was not then as far advanced as it is today, and the crisis did not affect the planned economy of the Soviet Union.
After the People's Republic of China was established in 1949, the Chinese government developed several systems for planning and managing the operations of organizations under a planned economy.
embassy in Beijing notes that although China is moving away from a planned economy towards a free market, "there are still policies in place that distort market prices for agriculture goods and provide various types of price and income support.
Two prestigious organizations, The International Monetary Fund (IMF) and the Oxford Business Group, a London based consultancy, say that Syria is beginning to move away from a centralized, planned economy toward a market economy.

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