A command economy is where a central authority makes decisions about goods and services produced and available to consumers. Benefits include adjusting production to meet demand, stabilizing the economy, and responding quickly to emergencies. It remains a viable model in some nations, but potential for abuse exists.
A command economy is a situation where some kind of central authority makes major decisions regarding the type of goods and services produced and made available to consumers within a given geographic location. Sometimes known as a centrally planned economy, this approach is seen as an alternative to a free corporate market, where private and public companies can be formed and launched at any time and compete freely in the market. While there are critics of this particular type of approach, there are certain benefits of a command economy that make strategy a viable option.
One of the major benefits of a command economy is that the rate of production and the availability of finished products can be adjusted to meet the needs of the population. While the selection may not be as diverse as in other types of economies, this does mean that the possibility of shortages resulting in the accumulation of unwanted goods in warehouses is minimized. Assuming that the government agency that oversees the production and distribution of the goods in question is accurately predicting the rise and fall of demand, this means that raw materials are used more efficiently and that production costs can also be kept reasonable.
Another of the many benefits of a command economy is the ability to use manufacturing to control the course of the nation’s economy at large. Production may be increased or decreased in some regions depending on the need to stabilize the economic situations in those areas. When put to good use, this also means that the standard of living for various communities can be maintained.
The main benefits of a command economy also include the ability to respond very quickly to some sort of domestic disaster or other type of emergency. The central authority can ramp up production rapidly in unaffected facilities as a means of keeping goods flowing to market. At the same time, it is also possible to increase the production of certain goods that will help communities overcome disasters more efficiently.
While those who believe that a free enterprise system is inherently superior debate all the usual benefits of a command economy, this type of planned economy remains a viable model in a number of nations around the world. Taking into account the possibility of abuses by those who control the economy, the model can be very effective when the central authority is well informed about the needs of the population and is able to organize production efforts to meet those needs, even keeping costs to a minimum. It is not unusual for nations that use a command economy model to put in place at least some measures that help reduce some of the potential for abuse and allow both the government and citizens at large to benefit from the arrangement.
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