Features of command economies

Have a little read: ... Essay In this essay I will discuss the features of command economies such as those which used to exist in Eastern Europe before 1989 and why they wanted to change their command economies into a market economies, and what has the transition delivered. It is first necessary to make a few general points about this particular economic system. A command economy is one in which the fundamental economic questions-what, how, and for whom to produce, are answered by reference to state determined priorities rather than the interaction of supply and demand in the market place. Such systems were introduced in eastern Europe in the period from the end of the Second World War until 1989, and all of these are in the process of transition to more market orientated systems, with varying degrees of determination and success. Command systems are also to be found in China and other parts of East Asia, Cuba, and some African countries. In a command economy, the land and capital is owned by the state. Because the central ownership thought they will maximize the collective good use of that land. The output of products is controlled by the state. Production and supposedly consumption are to plan for far into the future. The motive for production is not profit but maximum social welfare. In the East, success meant not the maximization of production but the achievement of the planned target. The resource is allocated by the state with absence of market forces. All the members should have the same opportunity to share in the wealth and produce of the land. Everyone has the same right to a defined "minimum" standard of living. Since the government allocates the resource, the income of people is not essential. It has a relatively narrow distribution of income. Planners attempt to provide all citizens with a basic standard of living. There is limited choice of goods because the motive for production is maximum social welfare. They just produce the essential goods for living. Secondly, I will discuss the problem caused by the command economies. Compare with Western Europe, the command economies failed to deliver following: 1. A high standard of living and quality of life 2. Technical progress 3. Quality goods and consumer choice 4. Environmental protection 5. Life expectancy comparable to the west 6. Incentives to efficiency Because a simple motive of production, government was satisfied with the equality of people's living. Their quality of life