Advantages and Disadvantages of Command Economy

Command economy is known as the business atmosphere wherein both price and supply are regulated by the government. This economy is being used in many communist countries. Even people are attracted in this economy because they can depend on the government in supplying enough goods and keeping the price down.

The Top 4 Advantages of Command Economy

1. Adjusting the Production Rate and Availability of Completed Goods
In command economy, it is possible to adjust the production rate that meets the exact demands of the population. Although the choices may not actually be varied as compared to other economies, this only shows that the chances for shortages to occur will only be kept short.

Assuming the government entity monitors and oversees the distribution of goods, they are after predicting the fall and rise of demand. This only means that raw materials or items are used efficiently. The production costs are also kept at bay.

2. Using Production in Controlling the Entire Course of the Economy
The production may either be increased or decreased on specific regions. This is better especially if the needs of the people arise that further stabilize the economic situations of the people in the areas. When the production is used for their best advantage, they can enjoy a high standard and better living for different communities.

3. Responding Easily on Emergency and Internal Disaster
As per the command and central authority, they can easily increase the production in most facilities that are not affected by calamity or disaster. This is one of the essential ways to maintain the continued flow of products or goods in the marketplace. Apart from it, the increase of production on certain goods can be done. This helps the communities in overcoming disasters.

4. Informs the Government About the Needs and Demands of People
The production effort can be arranged to meet the needs of people. The costs can be kept at a minimum rate. In fact, many countries are using this model with some of the measures in reducing the potential abuse for the citizens and government. The measures are followed for the people to benefit more from this arrangement.

The Top 2 Disadvantages of Command Economy

1. A Failure on Coordination
In command economy, planners try their best in coordinating their economic decisions pertaining on investment, trade, production and consumption of consumers and producers in the entire country. This is deemed impossible to be done with efficiency. Goods even fall on shortages and even a mismatch occur on demands and needs of people and product provisions. Other issues cannot be completely resolved by planners. For instance, there was a shortage on transportation facilities and food but a good supply of television sets.

2. Misplaced Incentives
Price and supply are regulated and monitored by the central government, instead of the government planners and market forces. They also decide on the services and goods to be produced and distributed. Thus, this does not bring the rewards that a person demands.