Command-based economy

A command-based economy, often synonymous with a command economy, is a system where a central government wields control over production levels and establishes prices for goods and services, with most industries falling under public ownership.

Global economic systems range between a pure free market and an extreme command economy. In a command economy, the government takes a proactive role in planning and regulating the production of goods and services, determining what to produce, how much, and at what prices for the market.

Key characteristics of command-based economies include the government’s central creation of economic plans for various sectors and regions, the allocation of the nation’s resources in an optimal manner, and the government’s determination of production and prices. State ownership and control extend to businesses in finance, utilities, and the automotive industries, with government policies geared toward implementing centralised economic plans.

Advantages of a command-based economy encompass a societal focus on social welfare and equity over profiteering, very low unemployment rates, and the prevention of monopolies by private businesses in vital industries like health and energy.

However, disadvantages include common gluts and shortages due to fixed prices and production quantities, inefficient pricing of goods concerning supply and demand, and a lack of responsiveness to customer preferences.