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what is prohibited in a command economy select two answers

what is prohibited in a command economy select two answers

2 min read 05-02-2025
what is prohibited in a command economy select two answers

What's Off-Limits? Exploring Prohibitions in Command Economies

Command economies, where the government dictates production and distribution, present a stark contrast to free-market systems. Understanding what's prohibited is key to grasping their inherent limitations. While the specifics can vary between countries and time periods, certain actions consistently face restrictions. This article explores two key prohibitions, drawing inspiration from the insightful question-and-answer format found on CrosswordFiend (though attributing specific questions is impossible without direct quotes, the core concepts are informed by their style).

Prohibition 1: Private Ownership of the Means of Production

The Core Concept: In a pure command economy, private ownership of businesses, land, and resources is severely curtailed or outright banned. The government holds ultimate control over these "means of production."

CrosswordFiend Inspired Insight: Imagine a clue like "What a command economy prohibits regarding factories?" The answer, of course, is PRIVATE OWNERSHIP.

Analysis and Examples: This isn't merely about restricting individual wealth; it's about centralizing control. Instead of individual entrepreneurs deciding what to produce, the state planning committee sets production targets. This eliminates competition, theoretically allowing for coordinated economic development. However, it also stifles innovation and individual initiative.

Consider the Soviet Union. Private farms were largely eliminated in favor of collective farms, managed by the state. While aiming for efficiency and resource allocation, this resulted in shortages and inefficiencies due to lack of incentive for individual farmers. The absence of private ownership meant less individual investment and experimentation with farming techniques.

Prohibition 2: Free Market Pricing and Competition

The Core Concept: Prices are not determined by supply and demand but are instead set by the government. Competition, a cornerstone of free markets, is suppressed or non-existent as the state controls the production and distribution of goods.

CrosswordFiend Inspired Insight: A potential clue could be "Opposite of free market forces in a command economy." The answer here would be STATE CONTROL (of pricing).

Analysis and Examples: Government-set prices can lead to several issues. If prices are artificially low, shortages can emerge as demand exceeds supply. Conversely, artificially high prices can lead to consumer dissatisfaction and resentment. The absence of competition means consumers lack alternatives and are essentially reliant on the state for goods and services.

Think of the rationing systems common in many command economies. This is a direct result of the government's inability to accurately predict and meet consumer demand through centrally planned pricing. The lack of competition prevents businesses from improving quality or lowering costs to attract customers, resulting in less innovation and lower overall quality of goods and services.

Conclusion: The prohibitions against private ownership and free market mechanisms are fundamental characteristics of command economies. While proponents argue these systems allow for centralized planning and resource allocation, historical evidence demonstrates that stifling individual initiative and competition often leads to economic inefficiency, shortages, and a lack of responsiveness to consumer needs. Understanding these limitations is crucial for evaluating the strengths and weaknesses of various economic systems.

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