Command economy

A Command economy is an economic system in which a central authority, usually a government, has the power and responsibility to make all economic decisions.

The most undisputed examples of command economies are those countries where the government owns all businesses and enterprises (these are usually communist countries). However, there have also been a number of countries where business remained private but business owners were in some way or other subservient to the government (for example, some fascist countries, and some democratic countries as well, particularly in times of war); it is not clear whether these can also be called command economies.

Command economies can be less wasteful than the free market but also tend to encourage conformity and standardization instead of experimentation and creativity. Often, in a command economy, economic stability becomes more important than innovation. For instance, many command economies eliminated unemployment and gave everyone a job, but encouraged people not to seek to improve their condition. As a result, a great number of the world's command economies were dismantled in the early 1990s due to changes in the availability of natural resources and in demand.

"The spectre of Marxism"
However, this was not to remain for long. In many regions which did not share the same historical experience as did Europe, government intervention in the markets had never really fallen out of favour through the influence of order of things from Washington. These were parts which always viewed America and free trade with suspicion, and also were countries in which free electoral democracy never really worked out. The 1997 financial crisis wiped out what fragile hopes people had for capitalist democracy in Ecuador, Venezuela and Bolivia.

Of late, Venezuela, spurred on by Cuba, has created its own command economy system under Hugo Chavez. It remains to be seen what good or evil may come out of this.