2. Command Economy Chapter 2 Section 3

3. Basic Definition & Characteristics Chief Characteristic: High level of government involvement in the economy Centrally planned Economy/Command Economy – Economic system – Government makes all the decisions on the 3 economic questions

4. Command Economies oppose – Private property – Free-market pricing – Competition – Consumer choice NO CONSUMER SOVEREIGNTY!!!

5. Socialism NOT a single economic system Describes wide range of economic & political systems Based on belief that wealth should be evenly distributed (economic equity)

6. Some socialism coexists with free- market ‘Market Socialism’ Government uses powers of taxation to redistribute wealth & provide extensive services Some industry owned by government, some privately owned

7. Communism Centralized government owns all resources No free-market! Key aspect: Authoritarian Government (political)

8. Karl Marx Communist Manifesto All conflict is social class conflict Capitalist class will gain ownership of all resources Proletariat (workers) will be exploited Rich get richer, poor get poorer

9. Proletariat rise up in bloody revolution Capitalists overthrown Communist party redistribute wealth evenly Classless society will result

10. Soviet Union (USSR)

11. Questions: page 37 1.Who was Joseph Stalin? 2.What did the Soviets allocate all their factors of production to? 3.Why? 4.What was the effect of the decision to favor heavy industry? USSR

12. 5.What were farmers forced to do? 6.What was the result? 7.What contributed to the fall of the USSR?

13. China

14. 8.In the 1950’s what did the Chinese government do to many peasants? 9.What was the result? 10.How did the government react to the results? 11.What new policies were instituted in the 1970’s?

15. Disadvantages of Centrally Planned Economies 12.Describe/define each disadvantage of Command Economies. a)Economic Efficiency b)Economic Freedom c)Economic Growth d)Economic Equity e)Additional Goals

16. 13.What have the disadvantages of Command Economies/Centrally Planned Economies led leaders in many countries to do?