In a command economy, the government plays a central role in answering the basic economic questions: what to produce, how to produce, and for whom to produce. Here’s how each of these questions is addressed:
What to Produce
The government decides which goods and services are needed by the society. This decision is often based on the overall economic plan, which aims to meet the needs of the population. For example, the government might prioritize the production of essential goods like food, housing, and healthcare over luxury items.
How to Produce
The government also determines the methods and resources used in production. This includes deciding which industries will receive funding, what technologies will be employed, and how labor will be allocated. The goal is to ensure that production is efficient and aligns with the national economic objectives.
For Whom to Produce
In a command economy, the distribution of goods and services is controlled by the government. The aim is to ensure that all members of society have access to basic necessities. This often involves setting prices and wages, as well as implementing rationing systems to distribute goods fairly.
Overall, in a command economy, the government’s decisions are driven by the goal of achieving social and economic equality, rather than by market forces or individual preferences.