Centrally planned economy

Examples of Centrally planned economy in the following topics:

• Differences Between Centrally Planned and Market Economies

  • The key difference between centrally planned and market economies is the degree of individual autonomy.
  • While there are many different variations of national economies, the two dominant economic coordination mechanisms are centrally planned and market based.
  • Since most peoples' needs are provided for in a centrally planned economy, compensation is primarily morally based.
  • Planned economies have several advantages.
  • Lenin, is an example of a country that tried to establish a pure centrally planned economy.

• Mixed Economies

  • A mixed economy is a system that embraces elements of centrally planned and free market systems.
  • A mixed economy is a system that embraces elements of centrally planned and free market systems.
  • Most modern economies are mixed, including the United States and Cuba.
  • However, to mitigate the negative influence that a pure market economy has on fairness and distribution, the government strongly influences the economy through direct intervention in a mixed economy.
  • Generally, individuals in mixed economies are able to:

• Socialism

  • In one example of socialism, the Soviet Union, state ownership was combined with central planning.
  • Centralized planning is an alternative to allowing the market (supply and demand) to determine prices and production.
  • The central planning board would distribute a "social dividend" to ensure reasonable income equality.
  • Socialists inspired by the Soviet model of economic development have advocated the creation of centrally planned economies directed by a state that owns all the means of production.
  • Through centralized planning, it determines what should be produced then dictates production quotas to the factories and workers.

• A Mixed Economy: The Role of the Market

  • The United States is said to have a mixed economy because privately owned businesses and government both play important roles.
  • Such a system is called a market economy.
  • A socialist economy, in contrast, is characterized by more government ownership and central planning.
  • In this mixed economy, individuals can help guide the economy not only through the choices they make as consumers but through the votes they cast for officials who shape economic policy.
  • The U.S. economy has changed in other ways as well.

• Economic Systems

  • Examples of centrally planned systems are communist countries, such as North Korea and Cuba.
  • Most other countries today are free market economies, with some aspects of a planned system (such as government owned and allocated healthcare).
  • Central planning by the government dictates which goods or services are produced, how they are produced, and who will receive them.
  • In practice, pure communism is practically nonexistent today, and only a few countries (notably North Korea and Cuba) operate under rigid, centrally planned economic systems.
  • Central planning allocates the goods and services produced by government-run industries and tries to ensure that the resulting wealth is distributed equally.

• The Effect of Restrictive Monetary Policy

  • By decreasing the amount of money in the economy, the central bank discourages private consumption.
  • The private agents will then adjust their long-term strategies accordingly, such as by putting plans to expand their operations on hold.
  • The central bank can issue debt in exchange for cash.
  • This results in less cash being in the economy.
  • By increasing the reserve requirement, less money is made available to the economy at large.

• Socialism and Planned Economies

  • A planned economy is a type of economy consisting of a mixture of public ownership of the means of production and the coordination of production and distribution through state planning.
  • Economic planning in socialism takes a different form than economic planning in capitalist mixed economies.
  • In socialism, planning refers to production of use-value directly (planning of production), while in capitalist mixed economies, planning refers to the design of capital accumulation in order to stabilize or increase the efficiency of its process.
  • Enrico Barone provided a comprehensive theoretical framework for a planned socialist economy.
  • The command economy is distinguished from economic planning.

• The Effect of Expansionary Monetary Policy

  • This is done by increasing the money supply available in the economy.
  • By increasing the amount of money in the economy, the central bank encourages private consumption.
  • The private agents will then adjust their long-term plans accordingly, such as by taking out loans to invest in their business.
  • A central bank can enact an expansionary monetary policy several ways.
  • By decreasing the reserve requirement, more money is made available to the economy at large.

• Mixed Economies

  • A Mixed Economy exhibits characteristics of both market and planned economies, with private and state sectors providing direction.
  • A mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies.
  • Subsequently, some mixed economies have expanded in scope to include a role for indicative economic planning and/or large public enterprise sectors.
  • Economies ranging from the United States to Cuba have been termed mixed economies.
  • Outline the plan behind and what governments provide in a mixed economy

• The Disadvantages of Socialism

  • Austrian school economists, such as Friedrich Hayek and Ludwig Von Mises, have argued that the elimination of private ownership of the means of production would inevitably create worse economic conditions for the general populace than those that would be found in market economies.
  • Economic liberals and pro-capitalist libertarians see private ownership of the means of production and the market exchange as natural entities or moral rights which are central to their conceptions of freedom and liberty.
  • They, therefore, perceive public ownership of the means of production, cooperatives and economic planning as infringements upon liberty.
  • Economists of the Austrian school argue that socialist systems based on economic planning are unfeasible because they lack the information to perform economic calculations in the first place, due to a lack of price signals and a free-price system, which they argue are required for rational economic calculation.
  • Evaluate how key components of socialism, such as state ownership of the means of production and the centralization of capital, can be disadvantageous to an economy