The term "command economy" refers to an economy where the government determines what goods should be produced, how much of them should be produced and the price these goods should have. This is quivalent to saying that the government controls the whole economy. This is a common feature of communist regimes. On the other hand, a market economy is one where most aspects of the economy are determined by market pressures, and by the law of supply and demand. However, most market economies still have some level of government involvement.
Some of the ways in which people benefit from an economy that moves away from a command economy is that a market economy usually has more variety of products. This is because people are more interested to enter the market, as any product can become extremely successful if it is popular among customers. Moreover, this usually helps the problem of prices as the availability of options often provides similar items at many different price points. Finally, another benefit is the fact that, because market economies encourage competition, businesses that are inefficient usually fail, allowing better businesses to rise.
Adam SchillerMoving from a command economy to a free market
A planned economy or as it more frequently know, a command economy is an economy run by the state. The government controls, the type of goods/services being made then allocates them, they have complete control over all resources. Command economies are not consumer driven, supply and demand don’t factor in, instead the government is responsible for providing service/goods that increase overall public wealth. This does mean however that the economy is working on the basis that everyone will pull their weight, individual gain does not come into a command economy, it’s all about the good of the nation. Command economies typically have more control over their people, allocating them jobs not truly based on skill level and everyone’s pay is relatively the same, this equates to a fierier more equal economy. A strong sense of Nationalism is what holds a command economy together, everyone working together to fulfil the common goals of the nation, as all businesses are nationalised everyone works for the state, which brings them together as a nation.
Madison was deeply worried that political parties would tear the country apart and make the country a weaker place by dividing it into groups as opposed to being united as one country.
