Basis

The term planned economy describes a kind of managing, with which is in advance determined, which summed up needs within the planning restaurant unit to exist or is to be expected, what for the covering of these needs at expenditures (production, etc.) it is necessary and like these are meaningfully organized. The planned economy stands thereby contrary to the free-market economy in which different participants in the economy without previous tuning produce goods with the goal of exchanging these on a market without the need for a property is determined exactly. In the case of the free-market economy thus no requirement planning takes place, but the control is made by the mechanisms of the market.

Demarcation

The term planned economy is falsely used often as synonym for the economic system of the central administration economy of socialist states, although this represents only one form of the planned economy. Due to east west conflict handling is often ideologically affected with the planned economy.

Problematic also the demarcation is to the free-market economy, since in many states with free market economic system elements of the planned economy exist, which the mechanisms of the market set repealed, so that none exists "„pure "“free-market economy. In the European Union states e.g. in the form of subsidies for agriculture and mining industry.

History of the planned economy

Because of the efficiency advantage of functioning planning - e.g. of Platon in its state drafts, of Thomas Morus alias Thomas More in its Utopia, of Jean Jacques Rousseau in its on articles of association which are based state drafts or of Karl Marx with its drafts of a communist society only suggested (by it) -, also larger societies/states or the "“world company"” as a whole planned-economy to organize, thus also their common need was suggested again and again determining production and the organization and allocation of the whole in advance whereby this advance planning either (for instance with Karl Marx) a common act of all society participants or however (for instance with Platon) the task of national institutions and/or particularly responsible person persons to be should.

Measured variables of the planned economy

Means of production

Trailers marxism see the main condition for a planned economy in the joint property at means of production, since individual owners of means of production stand in the conflict with their economic Eigeninterressen.

System of government

The planned economy is not bound to a system of government, however individual systems of government favour the choice of the planned economy as joint economic system, as well as development into a central or decentralized planned economy. For the planned economy communities are favourable in those a high measure of agreement between the members over the economic and political development exist and in which the standard of living are to a large extent identical. Also the existence of an influential authority increases the occurrence that planned economy with ascending state ratio exists more favorable conditions:

• Anarchokapitalismus planned economy not possibly
• Liberalism/Neoliberalismus
• Mercantilism
• Keynesianismus
• Free economy
• Socialism
• Direct democracy/communism conditions for ideal

Economic development

Two conditions can be regarded as particularly favourable:

Particularly low Entwicklungsstufe (developing countries)

Due to the concentration on few goods (e.g. food, furniture, clothes) these can be offered by efficient planning independently of fluctuations of the market. Since few goods are produced, a small number at measured variables facilitates planning. The lack of complex goods is insignificant, since with priority basic needs are to be secured.

Particularly high Entwicklungsstufe

Due to the small scarceness of goods the planned economy can secure a fair distribution of the goods. Artificial Verknappungen by free market acting of individual restaurant subjects is avoided.

Foreign policy

Since a planned economy for the import and export of goods with the foreign country are dependent on prognosticatable quantities, free market disturbances affect such as speculations with goods the planned economy negatively. A foreign trade with likewise planned-economy organized countries to constant quantity definitions is more favorable. In the case of conflicts states organize their wartime economy often planned-economy, since a free market for weapons causes a high Gleichgewichtspreis, which produces high public expenditures required and/or a lack of weapons.

Value storage means

The planned economy does not need compellingly value storage means for example in the form of money, since no compelling necessity exists for an exchange of goods. The distribution of goods can take place alone via a regular dispatching or via the free use of the goods.

Forms of the planned economy

Central administration economy (central planned economy)

A typical example of a central administered economic system was the central administration economy of the USSR and other states of so-called material socialism. Substantial characteristics of the economy of these states were the nationalization of most means of production (with exception of the majority of the agricultural effective area), the central controlling of the restaurant process, the definition of prices and wages and stable Aussenhandelsmonopol.Obgleich this economic system on an ideology Marxist Leninistic calling were based, carried out the central administration economy instead of the marxschen common planning of free society subjects a nationally institutionalized control by special functionaries, in accordance with their special interests (expansion of production and competitive power on the world market - to the safety device of the own privileges). Thus the results of planning were distorted and did not correspond not to the needs of the population.

See also major item central administration economy.

Decentralized planned economy

In a decentralized planned economy the responsibility for the requirement planning is appropriate solely responsible with each individual restaurant unit. This need is co-ordinated with the other restaurant units, which specify so their production.

Such a advance planning of need and production finds completely naturally both in "“before-civilized"” societies (kinships, village communities,"…) and in the interior relationship actually each enterprise instead of; the latter, because an internal unplanned exchange (thus an internal free-market economy) would lead to production products and services more numerously in the long run not inquired, while at the same time on a covering lacking of actual need would be to be counted - evenly because of missing common planning. A functioning planning increases thus the efficiency of managing.

Pro and cons of the planned economy

Preface: In practice not all advantages and/or disadvantages must arise to a planned economy.

Advantages for the majority of the population

Efficiency of managing

The economy is organized in such a way that the needs of the majority of the population, under it also the need after possibility for employment with appropriate remuneration are satisfied. Primarily such goods are produced, for which a politically weighted need was determined; existing means of production are better used. Technical developments are coordinated, minimized Parallel-Entwicklungen.

Reliability

By planning also in economical yardstick the quantity of a property in the future the available is well-known.

Distribution of goods

The distribution of the goods can be determined by planning. The attention of a multiplicity at criteria is possible (economicalally, socially, politically etc.). Thus e.g. the purposeful creation of means of production or the development of a certain region or a city is well controllable, in addition, the supply the public interest serving goods and/or goods of the basic need.

Disadvantages

Criticism at planned-economy concepts came among other things from Ludwig von Mises.

Articles in category "Planned economy"

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