1. Centrally Planned Economy
Social 9 - Chapter 6

2. Planned Economy (Command Economy)
Economy directed by the government
All means of production (land, labor, capital) are state owned and controlled.
The government makes all economic choices of WHAT to produce, HOW to produce, and WHO receives the products that are produced.

3. Rise of the Planned Economy
People believed that other economic systems were exploiting the working class
Came as a response to the industrial revolution
Some people believed that if the government controlled the economy and chose what should be produced, how and for whom; there would be greater economic equality

4. Elements of a Planned Economy
Cooperation
Public ownership
Equality as incentive
Central planning
A group of economic experts carry out the goals of the government

5. disadvantages advantages Income & wealth more evenly distributed
Little unemployment
Experiences fewer booms and busts in economy
Profits used to expand production
Production of goods and services is planned to meet society’s needs
Consumers receive basic necessities.
Lack of incentive
Lack of technological progress
Bureaucracies (planning creates inflexibility)
Black markets
Loss of individuality
Inefficient and widespread waste of resources.

6. Traditional economy

7. Tradition Economy Roles and economic decisions are defined by custom
Customs and religion determine the WHO, WHAT, and HOW
Examples: Australian Aborigines, Canada’s Inuit, central African Mbuti
India has a caste system which restricts occupational choice (A social class separated from others by distinctions of hereditary rank, profession, or wealth)

8. advantages disadvantages Everyone knows which role to play
There is little uncertainty about WHAT, HOW, and FOR WHOM to produce
Discouragement of new ideas and new ways of thinking
This leads to a lower standard of living than other societies