Centrally Planned Economies Defined

Economic Definitions

1. Centrally Planned
Economies
What are they?

2. The Goals of a Free Market Economy
Living in America, it may be difficult to fully grasp the
workings of a Centrally Planned Economy.
Under this economic configuration:
The three Key Economic Questions are answered by
the Central Government, and not by the inter-relation
between the Consumers and the Producers.
The Central Government controls the Production
Factors of Land, Labor, and Capital, thus allowing it to
make all decisions without meaningful opposition.
The Central Government prioritizes its needs with little
regard to the desires of individual citizens.

3. Communism v. Socialism
Governments operating in such a manner are
often referred to as either Communist or
Socialist.
There are distinct differences between the
two.

4. Communism
Dictionary.com defines
Communism as: a system of
social organization in which
all economic and social
activity is controlled by a
totalitarian state dominated
by a single and self-
perpetuating political party.
In essence, under
Communism, the Central
Government uses force, or
threat of force, to ensure its
dominance of the Economy.

5. Socialism
Socialism, in contrast, is
defined, again by
Dictionary.com, as: a theory
or system of social
organization that advocates
the vesting of the ownership
and control of the means of
production and distribution,
of capital, land, etc., in the
community as a whole.
Socialism is implemented
democratically as opposed
to by force.