Market economies and command economies occupy two polar extremes in the organization of economic activity. A command economy is an economy in which the government has the power over the financial management of the country.. There are benefits and drawbacks to command economy structures. If done correctly no one is in poverty and no one is wealthier than another. It doesn't rely on the laws of supply and demand that operate in a market economy. At least partly for this reason, many advancements in medicine and technology have come from countries with free market economies, such as the United States and Japan. It does not have a room for monopoly. All types of economic systems have advantages and disadvantages but all were created with the intent to do good more than harm. 3. 2. Pros of Command Economy are: Limit the monopolizing: Command economy make it difficult for a monopoly to rule the market, as the major forces are controlled and regulated by the government.Though monopoly can exist in all the other type of economies, but not in the command economy. Complete Control to Government: In this economy Government takes all decisions and people have to follow these decisions. For instance, Cuba, North … They also may be slower to respond – or even completely nonresponsive – to consumer needs or changing tastes. 3. Unlike the invisible hand of the free market, which cannot be manipulated by a single company or individual, a command economy government can set wages and job openings to create the unemployment rate and wage distribution that it sees fit. List of Cons of a Command Economy. Production in command economies is notoriously inefficient as the government feels no pressure from competitors or price-conscious consumers to cut costs or streamline operations. Disadvantages 1. As a result, some manufacturers might not be able to supply enough products if they were allowed to produce goods that are much less in quantity than what the … 3. By using this site, you agree to the Terms of Use and Privacy Policy. This has has both advantages and disadvantages when compared to a free market economy. The Disadvantages of Command Economy • With the existence of command economy, there is a great chance that the societal needs will mow down. With a central authority chosen by the government to dictate on the number of goods to be produced and prices manufacturers can ask for, it will be hard for suppliers of staple products to control the market. This system often fails due to political corruption, not the inherent weaknesses in the economic system. The black market explodes in a command economy. Virgin Galactic shares climb as FAA indicates next spaceflight test set for Saturday. Market economy is one of the three ways in which a society can organize its economic system, the other being a command economy and a mixed economy. The Advantages of a Command Economy Less Inequality . Disadvantages: Market Economy Command Economy. Black market broke out in the command economy. Businesses can find the highest quality worker that will perform duties with the lowest pay in the worst possible working conditions. Private enterprise does not exist in a command economy. Command economy is (rightly) despised by many people because: It makes the human being a cog in the giant economic machine by infringing on his personal liberty, culture, likes and dislikes to assign him a robotic role from which he can’t escape. All rights reserved. 1. Whose interests are these economic systems protecting? Another disadvantage of planned economy is that it would lead to incentives being misplaced. 2. Efficiency. 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Because the government controls the means of production in a command economy, it determines who works where and for how much pay. Under … Disadvantages of a command economy include: Command economies breed governments which limit the rights of individuals to pursue their personal financial goals. When this happens, the quality of goods will remain as it is. In a command system, the government determines what goods are sold, how much of them, and what they will cost. 2. The most popular proponent of the market economy is Adam Smith, who famously coined the concept of ‘the invisible hard’ which refers to the force that automatically allocates resources to production based on the demand and supply. The Disadvantages of a Command Economy. No advantages … 1. A market economy is the opposite of a command or centrally planned economy. Please click this link to view samples of our professional work witten by our professional essay writers. The issue this economy type must face is a lack of available resources. Societal needs might be ignored. A command economy also ignores the customs that guide a traditional economy. Actually Prevents Economic Growth Since there is no surplus in production, and private businesses have zero control over sales or production, the growth of the economy is actually placed at a stand still. An Overview In a command economy, the government determines what is produced, how it is produced, and how it is distributed.