Command Economies

Command Economies

Basic Features

i)             Collective ownership of resources:  All productive resources in the form of land, factories etc are collectively owned by the government which is the representative of the society. Few productive resources may be left in private ownership but their contribution to total production is negligible.

ii)           Collective Use of Resources:  All productive activities are undertaken by the government as a representative of the community. The use of few resources may be left to individuals.

iii)         Welfare Motives:  The productive activities are guided by the welfare motive and not by the profit motive. A commodity needed by the community is produced in the required quantity irrespective of the profit or loss made in its production.

iv)          Complete Control by the Government: All Activities relating to the production and the distribution of goods and services are completely controlled by the government. The people have no freedom of production and restrictive freedom of occupation and even of consumption.

v)            Administered Prices: The prices of different goods and services are fixed by the government under the expert advice of the planning authority. The price may cover / may not cover the cost of production.