Planned Economy
A planned economy (計劃經濟) means carrying out the state's economic activities under government initiative. The government plans and decides the allocation of resources needed for production and the distribution of products.
Soviet Planned Economy
The planned economy has considerable significance in that it exerted a profound influence not only on Japan through Manchukuo, but also on the economic policies of North and South Korea, Taiwan, and further afield China and Southeast Asia. Today no country runs on a purely planned economy, but nevertheless most countries adopt a planned economy, at least in part.
One of the byproducts of the planned economy is the development of mathematical economics. Soviet mathematicians such as Aleksandr Lyapunov and Leonid Kantorovich devised sophisticated mathematical-economic methods for drawing up economic plans. They attempted to formulate economic plans using computers, which in turn influenced the development of computer science.
Advantages
- The scale of the economy can be grown rapidly.
- Unemployment is low or nonexistent.
- It is less affected by, or unaffected by, economic crises.
- The distribution of wealth is easier than in a market economy.
Disadvantages
- The state is by no means omniscient or omnipotent.
- Central authorities are less efficient than market actors.
- Sectors for which the state feels no need develop slowly.
During the nuclear weapons/space development race with the United States, it could not even supply clothes to its own citizens.
Misunderstandings
Occasionally, state-led economic development policies in capitalist countries are mistaken for planned economies, and some even call this socialism. In fact, a socialist planned economy and the controlled economy of a capitalist country (state capitalism) have quite a few differences.
As the concept of a planned economy itself is a term created and attempted in the Soviet Union, a planned economy allocates periodic plans across nearly all parts of the economic sphere—construction of economic units, domestic demand, trade, production, consumption, etc.—and is subject to multiple controls not simply by the state but by the party and local soviets. In contrast, the controlled economies implemented in countries such as South Korea, India, Egypt, and Singapore merely have policy names like "N-year plans"; in fact, they are close to an economic structure with strengthened government intervention within a market economy, and even direct industrial planning is nothing more than jointly managing management with the government on the basis of privately owned capital. Therefore, they cannot be definitively called planned economies.
Topics: -e economic system,market economy
Opposite: market economy
Category: Wiki/Economy