1. Centrally Planned Economies

2. What is a Centrally Planned Economy?
In a centrally planned economy:
The government owns both land and capital.
The government decides the three economic questions:
What to produce
How much to produce
But, How much to charge (This one is different)
Centrally Planned Economies are classified as Socialist and Communist

3. Socialism
Socialism is a social and political philosophy based on the belief that democratic means should be used to distribute wealth evenly throughout a society.
Real equality can only be achieved when political equality is combined with economic equality.
Economic equality only happens when the public controls the centers for economic power.

4. Real equality can only be achieved when political equality is combined with economic equality.
Economic equality only happens when the public controls the centers for economic power.
These nations may claim to be democratic but need a high degree of centrally planning to work.

5. Communism
Communism is a political system characterized by a centrally planned economy with all economic and political power resting in the hands of the government.

6. In theory Communism works
After a violent revolution to create a communist state:
Ruled by a single leader
Try to build a national power by using the best of the factors of production
Communism promises equality for everyone

7. The Former Soviet Union
The former Soviet Union used three factors to create a national powerhouse:
Agriculture
Industry
Consumers

8. Soviet Agriculture In the Soviet Union:
The government created large state-owned farms and collectives for most of the country’s agricultural production.

9. Soviet Industry
Soviet planners favored heavy-industry production (such as steel and machinery), over the production of consumer goods.

10. Soviet Consumers
Consumer goods in the Soviet Union were scarce and usually of poor quality.

11. Problems of a Centrally Planned Economy
Centrally planned economies face problems of poor-quality goods, shortages, and diminishing production.
A lack of competition due do equality causes this