Abstract
The concept of a ‘command economy’, a construct in the theory of comparative economic systems, is defined, and its origins, characteristics, and consequences for any society in which it is implemented are explored. The impossibility of the absolute centralization which it requires generates compromises with the market forces it aspires to replace, fostering a symbiotic marketized ‘second economy’ which systematically undermines its foundations. Hence, although initially appearing to be a true alternative to the market economy, a command economy, most nearly realized in the Soviet Union (1930–87), proved to be ultimately non-viable, collapsing under reforms attempting to make it competitive with market systems.
Keywords
- Active vs passive money
- Aggregation
- Balance
- Bounded rationality
- Bureaucracy
- Central planning
- Centralization
- Command economy
- Command mechanism
- Command principle
- Communism
- Complex social economy
- Corruption
- Decentralization
- Discretion
- Gorbachev, M. S.
- Gross output
- Inca production system
- Incentive provision
- Industrialization
- Inequality of income
- Information
- khozraschet
- Labour discipline
- Market mechanism
- Market versus plan
- Micro-balance
- Moneyness
- Mormon economic system
- Neurath, O.
- perestroika
- Price control
- Principal and agent
- Rationing
- Resource allocation
- Second economy
- Sellers’ market
- Shadow economy
- Soft-budget constraint
- Soviet economic reform
- Soviet Union
- Stalin, J.V.
- Suboptimization
- Unit of measure
- Vested interests
- War and economics
- War communism
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Ericson, R.E. (2018). Command Economy. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_170
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DOI: https://doi.org/10.1057/978-1-349-95189-5_170
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