Command System
In command systems, economic behaviour is determined by some central authority, which makes most of the necessary decisions on what to produce, how to produce it, and who gets it. Such economies are characterized by the centralization of decision making. The coordination among individual decisions is given by some central administrative ordering patterns. Because centralized decision makes usually lay down elaborate and complex plans for the behavior that they wish to impose, the terms command economy and centrally planned economy are usually used synonymously. The sheer quantity of data required for central planning of an entire economy is enormous, and the task of analyzing it to produce a fully integrated plan can hardly be exaggerated. Moreover, the plan must be a rolling process, continually changing to take account not only of current data but also of future trends in labour supplies, technological developments, and people’s tasted for various goods and services. Doing so involves the planners in forecasting. This is a notoriously difficult business, not least because of the unavailability of all essential, accurate, and up-to-date information. Two decades ago over one-third of the world’s population lived in countries that relied heavily on central planning to deal with the basic economic questions. Today the number of such countries is small. Even in countries where the planning is the officially dominant system, as in China, increasing amounts of market determination are being quietly permitted.
|
