BibTeX
@MISC{Ericson06commandeconomy,
author = {Richard E. Ericson},
title = {Command Economy},
year = {2006}
}
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Abstract
A command economy is one in which the coordination of economic activity, so essential to the viability and functioning of a complex social economy 1, is undertaken through administrative means — commands, directives, targets and regulations — rather than by a market mechanism. Economic agents in a command economy, and in particular production organizations, operate primarily by virtue of specific directives from higher authority in an administrative/political hierarchy, i.e. under the ‘command principle’. Thus the life-cycle and activity of enterprises and firms, their production of output and employment of resources, adjustment to disturbances, and the coordination between them, are primarily governed by decisions taken by superior organs responsible for managing those units ’ role in the economic system. One of the most distinctive features of such an economy is the setting of the firm’s production targets by higher directive, often in fine detail. The administrative means used include planning, material balances, quotas, rationing, technical coefficients, budgetary controls and limits, price and wage controls, and other techniques aimed at limiting the discretion of subordinate operational units/firms. The command principle strives to fully and effectively replace the operation of market forces in the key industrial and developmental sectors of the economy, and render the remaining (peripheral) markets manipulable and subordinate
Keyphrases
command economy particular production organization complex social economy command principle distinctive feature material balance administrative mean subordinate operational unit firm market mechanism administrative political hierarchy budgetary control command principle strives economic system specific directive economic activity market force unit role production target wage control administrative mean command developmental sector technical coefficient fine detail economic agent superior organ
