How Does a Socialist Government With a Command Economy Manage Its Economy?

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How does a socialist government with a command economy manage its economy?

  • The government lets producers set wages for workers.
  • The government owns all homes and other forms of housing.
  • The government allows consumers to make their own choices.
  • The government controls factories and other forms of production.

Answer: The government controls factories and other forms of production.


A socialist government with a command economy controls the factories along with the other forms of production.

The Socialist regimes, which are known for their command economies, dominate all businesses and production in the country. All activities are under the supervision of government authorities, who have a policy of self-sustainability as their priority. That is frequently creating significant issues.

Understanding Command Economy

The three countries that have command economies are Cuba, North Korea, and the former Soviet Union. China kept a command economy until 1978 when it began its transition to a mixed economy that mixes communist and capitalist features. The current arrangement has been labeled as a socialist market economy by experts.

A command economy, also known as a planned economy, necessitates that the country’s central government own and control the means of production.

The idea that people would have far more control over their own lives if they owned the land and capital is deeply lacking in most cases. Within the private sector, central planners dictate prices, output levels, and competition restrictions. There is no private sector under a pure command economy since the national government owns or regulates all businesses.

In a command economy, government officials dictate the country’s economic goals, such as how and when to promote economic growth, how to distribute resources, and so on. This is frequently done through a multi-year plan.

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