planned economy
Also known as central planning, centrally planned economy, central economic planning, command economy
type of economic system
AI overview
A planned economy is an economic system where the government makes major decisions about what goods to produce, how to produce them, and how to distribute them to the public, rather than letting market forces and individual businesses decide. It matters because it represents a fundamentally different approach to organizing economic activity compared to market-based systems, with different trade-offs in terms of efficiency, equality, and individual economic freedom.
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Article
A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, participatory or Soviet-type forms of economic planning. The level of centralization or decentralization in decision-making and participation depends on the specific type of planning mechanism employed.
Socialist states based on the Soviet model have used central planning, although a minority, such as the former Socialist Federal Republic of Yugoslavia, adopted some degree of market socialism. Market abolitionist socialism replaces factor markets with direct calculation as the means to coordinate the activities of the various socially owned economic enterprises that make up the economy. More recent approaches to socialist planning and allocation have come from some economists and computer scientists proposing planning mechanisms based on advances in computer science and information technology.