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Command economy

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You can force poor beggars in factories to produce more products, but a farmer can't force the land to produce. He can't preach Marx to the weather so that it rains at the right time. And in the whole of Russia the sun has never been known for as much as one day to listen to the economics of the late Joseph Stalin.
—Leonard Wibberley, The Mouse that Roared

A command economy, or "planned economy" refers to an economic model in which the government instructs factories and farms what goods to produce and how much of them, and usually also sets the prices of goods in the marketplace, and often features total or near-total nationalization of industry and labour. This is in contrast to a demand economy or market economy, in which each individual is, at least theoretically,[1] free to name their own terms when it comes to production and/or trade.

The command economy model is best known for two things - firstly, for being employed by many communist regimes in the 20th century, and secondly, for generally blowing up in their faces before too long.

In this capacity, the command model has been the subject of heavy criticism from both sides of the political spectrum: right-wingers criticized it for destroying free enterprise and traditional values, while left-wingers criticized it because the centralized hierarchical structure of a command economy goes against not only Karl Marx's original vision of stateless "pure communism," but also the ideal of economic equality for all.

The command economy model has never been promoted by mainstream economists in the Western world, and it is generally recognized today in the Western world as being a woefully inefficient and counterproductive way of managing an economy, with the dispute now being between doctrinaire free-marketeers and promoters of government intervention or a "mixed economy." The two major countries with command economies, China and the Soviet Union, both began dismantling them in the 1980s, although the former is still nominally communist. The latter no longer exists, in part due to their beloved command economy going completely haywire on them.[2]


[edit] Examples

[edit] Historical examples of command economies

  • The Soviet Union (USSR), and its many satellites, before the collapse. Wasn't doing too hot.[2]
  • The People's Republic of China, which had a planned economy until the late 1970s, when Mao Zedong died. Wasn't doing too hot, either.[3] Since giving up its planned economy, however, China's economy has come close to double-digit economic growth rates, though still at the cost of terrible pollution and appalling working conditions in its semi-privatized factories (not that working conditions were so much better before industrialization) due to the inability of the government to effectively legislate, enforce, and/or give a fuck about the environment.
  • Iraq, from the ascension of Saddam Hussein to his overthrow in 2003. Naomi Klein noted in her book The Shock Doctrine that privatization of state-owned industries was done in an intentionally harsh manner, causing unrest when many of the newly unemployed men became militants. Doing way better since ceasing to be a command economy.[4]
  • Libya, while a Third International Theory[wp] command economy under the dictatorship of Gaddafi, is no longer considered a command economy.[5] In 2013, the World Bank[wp] officially defined it as an "Upper Middle Income Economy".[6]
  • Laos was at one point a command economy, though it underwent market reforms in the 80s (not exactly yesterday), receives loans from the IMF et. al., with commercial tourism racing to the front as the fastest-growing industry. The economy of Laos is no longer a command economy whatsoever, and has generally picked up enormously since dropping the command model.[7]
  • Vietnam, which - like Laos - underwent market reforms in the 80s towards a so-called Socialist-oriented market economy[wp]; the motivating force being an unwillingness for the nation to go belly-up economically just in exchange for staying loyal to the Soviet-type command economy[wp].[8]
  • Myanmar (Burma), whose ruling general once made the currency divisible by nine because he was told by his seer it was "lucky", causing chaos,[9] was a command economy up to 2011.[10] And what a sight it was! The so-called Burmese Way to Socialism[wp] was one of the worst fails in the history of command economies, quite literally single-handedly[11][12] bankrupting the nation into one of the poorest and most squalid in the entire world.[13]

[edit] Modern examples of command economies

  • Belarus, lone holdout of the former Soviet republics due to its lumbering Stalin-esque dictatorship. Not doing too hot.[14]
  • Cuba, although certain market reforms have been made in recent years, such as letting people become independent contractors (e.g. plumbers) as they can earn more going to consumers directly this way (before Cubans sometimes waited years to get their toilet fixed, which often ended up just being a replacement). The government has also discovered this income can be taxed, so generating more revenue.[15]
  • North Korea, a known basket case, is currently the only entirely planned economy (excluding the black market which they all have).

[edit] Examples that don't really count

  • Saudi Arabia, whose oil findings - a random feature of geography - is the source of the vast majority of its considerable national wealth, technically has a command economy. However, considering the massive oil findings, it must be argued that almost any economic system that would allow exploitation and export of the nation's oil would be very, very hard to bankrupt - meaning that, as far as economies successful by virtue of them being command economies goes, Saudi Arabia is useless as an example. Furthermore, Saudi Arabia is a so-called "unitary Islamic absolute monarchy"[16] that never had any notable influence from Marxist thought, having been a monarchy with a simple subsistence economy until the big oil bucks started rolling in during the mid-20th century, making it the nightmare of liberals and socialists alike - a filthy rich nation which, aside from the wealth, is politically entirely pre-enlightenment.[17]
  • The United States (and essentially every industrial economy on the planet) during World War II were not command economies, but war economies[wp], which are vastly different from command economies. Further, the US war economy more closely resembled military keynesianism[wp] than anything else.

[edit] Footnotes

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