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Advantages and Disadvantages of Command Economy or Planned Economy
http://www.reportbd.com/articles/930/1/Advantages-and-Disadvantages-of-Command-Economy-or-Planned-Economy/Page1.html
Super Admin

 
By Super Admin
Published on 2 February 2012
 
Advantages and Disadvantages of Command Economy or Planned Economy.

Advantages and Disadvantages of Command Economy or Planned Economy
Command Economy

Advantages:
  • The govt. can make a more equal distribution of income
  • Because this type of economy is planned out by governmental agencies, it can take into account the resources available and attempt to utilize them to their fullest potential
  • The govt. determines what goods are produced and can prevent production of goods such as cigarettes and alcohol
  • Greater stability as because a planned economy is fully controlled by the government, it is less subject to inflation and downturn than other types of economies
  • Citizen Morale- When a planned economy is used to benefit citizens equally and to provide necessary resources to all, it can increase morale among citizens. It can also decrease individual competition for resources and benefits.

Disadvantages:
  • It is very difficult to obtain such huge amount of information
  • No real incentive for individuals to be innovative. Goods are of poor quality since there is a lack of profit motive.
  • Lack of competition and profit motive can lead to allocative and productive efficiency
  • Corruption may take place among the government officials
  • There is no choice for the customers as the government only produces necessities rather than luxuries.