Command Economy

A command economy is a type of economic system in which the government or a central authority controls the production, distribution, and pricing of goods and services within a country. In this system, the government makes all the economic decisions, including what to produce, how much to produce, and for whom to produce. This means that the government owns and operates the means of production, such as factories and farms, and determines the allocation of resources.

Key Characteristics of a Command Economy

Central Planning: The government creates detailed plans for the production and distribution of goods and services, often through a central planning agency.
State Ownership: The government owns and controls major industries, infrastructure, and resources, and may even manage small businesses and individual enterprises.
Resource Allocation: The government determines how resources, such as labor, capital, and land, are allocated to different sectors of the economy.
Price Controls: The government sets prices for goods and services, as well as wages and rents, based on its economic plans and objectives.
Minimal consumer choice: Consumers have limited options in terms of what they can buy, as the government decides which goods and services will be produced and made available.
Limited competition: The government may restrict or eliminate competition among producers, as it aims to achieve its economic goals through centralized control.

Advantages and Disadvantages of Command Economy

There are several advantages and disadvantages associated with a command economy

Advantages:

Centralized decision-making can lead to rapid implementation of economic policies and programs.
Potential for reducing economic inequality and ensuring a more equal distribution of resources.
Government can prioritize the production of essential goods and services, such as healthcare and education.

Disadvantages:

Lack of incentives for innovation and entrepreneurship, which can stifle economic growth and progress.
Potential for inefficiency and waste, as central planners may not always allocate resources effectively.
Restriction of individual freedom and choice, as the government exerts significant control over economic activities.

Study Guide: Understanding Command Economy

Here are some key questions and topics to consider when studying the concept of a command economy:

What role does the government play in a command economy?
How does resource allocation differ in a command economy compared to a market economy?
What are the potential benefits and drawbacks of a command economy for a country's population?
Compare and contrast the command economy with other economic systems, such as a market economy and a mixed economy.
Discuss real-world examples of countries that have implemented a command economy and analyze their economic performance.
Examine the impact of technological advancements and globalization on the viability of a command economy.

By exploring these questions and topics, you can gain a comprehensive understanding of the concept of a command economy and its implications for society and the economy.

◂Social Studies Worksheets and Study Guides Eighth Grade. Economics

The resources above cover the following skills:

National Curriculum Standards for Social Studies (NCSS)

PRODUCTION, DISTRIBUTION, AND CONSUMPTION

SOCIAL STUDIES PROGRAMS SHOULD INCLUDE EXPERIENCES THAT PROVIDE FOR THE STUDY OF HOW PEOPLE ORGANIZE FOR THE PRODUCTION, DISTRIBUTION, AND CONSUMPTION OF GOODS AND SERVICES.

KNOWLEDGE - Learners will understand:

Individuals, government, and society experience scarcity because human wants and needs exceed what can be produced from available resources.

The economic choices that people make have both present and future consequences.

Economic incentives affect people's behavior and may be regulated by rules or laws.

That banks and other financial institutions channel funds from savers to borrowers and investors.

The economic gains that result from specialization and exchange as well as the trade offs.

How markets bring buyers and sellers together to exchange goods and services.

How goods and services are allocated in a market economy through the influence of prices on decisions about production and consumption.

PROCESSES - Learners will be able to:

Compare their own economic decisions with those of others, and consider the wider consequences of those decisions for groups, communities, the nation, and beyond.

Describe the role that financial institutions play among savers, borrowers, and investors.

Gather and analyze data on economic issues, and use critical thinking in making recommendations on economic policies.

GLOBAL CONNECTIONS

SOCIAL STUDIES PROGRAMS SHOULD INCLUDE EXPERIENCES THAT PROVIDE FOR THE STUDY OF GLOBAL CONNECTIONS AND INTERDEPENDENCE.

KNOWLEDGE - Learners will understand:

Global connections have existed in the past and increased rapidly in current times.

PROCESSES - Learners will be able to:

Ask and find answers to questions about the ways in which people and societies are connected globally today and were connected in the past.

National Standards for Civics and Government (NSCG)

What are the foundations of the American political system? What is the American idea of constitutional government?

The American idea of constitutional government. Students should be able to explain the essential ideas of American constitutional government. To achieve this standard, students should be able to

Explain how the following provisions of the United States Constitution give government the power it needs to fulfill the purposes for which it was established

Delegated or enumerated powers, e.g., to lay and collect taxes, to make treaties, to decide cases and controversies between two or more states (Articles I, II & III)

How does the government established by the constitution embody the purposes, values, and principles of American democracy? How are power and responsibility distributed, shared, and limited in the government established by the United States Constitution?

Sharing of powers between the national and state governments. Students should be able to explain how and why powers are distributed and shared between national and state governments in the federal system. To achieve this standard, students should be able to

Describe how some powers are shared between the national and state governments, e.g., power to tax, borrow money, regulate voting

How does the government established by the constitution embody the purposes, values, and principles of American democracy? What does the national government do?

Financing government through taxation. Students should be able to explain the necessity of taxes and the purposes for which taxes are used. To achieve this standard, students should be able to

Explain why taxation is necessary to pay for government

Identify provisions of the United States Constitution that authorize the national government to collect taxes, i.e., Article One, Sections 7 and 8; Sixteenth Amendment

Identify major sources of revenue for the national government, e.g., individual income taxes, social insurance receipts (Social Security and Medicare), borrowing, taxes on corporations and businesses, estate and excise taxes, tariffs on foreign goods

Identify major uses of tax revenues received by the national government, e.g., direct payment to individuals (Social Security, Medicaid, Medicare, Aid to Families with Dependent Children), national defense, interest on the federal debt, interstate highways

How does the government established by the constitution embody the purposes, values, and principles of American democracy? How are state and local governments organized and what do they do?

Organization and responsibilities of state and local governments. Students should be able to describe the organization and major responsibilities of state and local governments. To achieve this standard, students should be able to

Identify major sources of revenue for state and local governments, e.g., property, sales, and income taxes; fees and licenses; taxes on corporations and businesses; borrowing

How does the government established by the constitution embody the purposes, values, and principles of American democracy? How does the American political system provide for choice and opportunities for participation?

Associations and groups. Students should be able to explain how interest groups, unions, and professional organizations provide opportunities for citizens to participate in the political process. To achieve this standard, students should be able to

Describe the historical roles of prominent associations and groups in local, state, or national politics, e.g., abolitionists, suffragists, labor unions, agricultural organizations, civil rights groups, religious organizations

What are the roles of the citizen in American democracy? What are the rights of citizens?

Economic rights. Students should be able to evaluate, take, and defend positions on issues involving economic rights. To achieve this standard, students should be able to

Identify important economic rights, e.g., the right to own property, choose one's work, change employment, join a labor union, establish a business

Explain the importance to the individual and to society of such economic rights as the right to

Join labor unions and professional associations

Establish and operate a business

National Content Standards in Economics (NCSE)

Scarcity

Students will understand that productive resources are limited. Therefore, people cannot have all the goods and services they want; as a result, they must choose some things and give up others. Students will be able to use this knowledge to identify what they gain and what they give up when they make choices.

At the completion of Grade 8, students will know the Grade 4 benchmarks for this standard, and also that:

Scarcity is the condition of not being able to have all of the goods and services that one wants. It exists because human wants for goods and services exceed the quantity of goods and services that can be produced using all available resources. Scarcity is experienced by individuals, governments, and societies.

At the completion of Grade 8, students will know the Grade 4 benchmarks for this standard, and also that:

Making good choices should involve trading off the expected value of one opportunity against the expected value of its best alternative.

The choices people make have both present and future consequences.

The evaluation of choices and opportunity costs is subjective; such evaluations differ across individuals and societies.

Decision Making

Students will understand that effective decision making requires comparing the additional costs of alternatives with the additional benefits. Many choices involve doing a little more or a little less of something: few choices are “all or nothing” decisions. Students will be able to use this knowledge to make effective decisions as consumers, producers, savers, investors, and citizens.

At the completion of Grade 8, students will know the Grade 4 benchmarks for this standard, and also that:

To determine the best level of consumption of a product, people must compare the additional benefits with the additional costs of consuming a little more or a little less.

At the completion of Grade 8, students will know the Grade 4 benchmarks for this standard, and also that:

Marginal benefit is the change in total benefit resulting from an action. Marginal cost is the change in total cost resulting from an action.

As long as the marginal benefit of an activity exceeds the marginal cost, people are better off doing more of it; if the marginal cost exceeds the marginal benefit, they are better off doing less of it.

Many people have a tendency to be impatient, choosing immediate consumption over saving for the future.

Allocation

Students will understand that different methods can be used to allocate goods and services. People acting individually or collectively must choose which methods to use to allocate different kinds of goods and services. Students will be able to use this knowledge to evaluate different methods of allocating goods and services, by comparing the benefits to the costs of each method.

At the completion of Grade 8, students will know the Grade 4 benchmarks for this standard, and also that:

Scarcity requires the use of some distribution method to allocate goods, services, and resources, whether the method is selected explicitly or not.

At the completion of Grade 8, students will know the Grade 4 benchmarks for this standard, and also that:

There are essential differences between a market economy, in which allocations result from individuals making decisions as buyers and sellers, and a command economy, in which resources are allocated according to central authority.

National economies vary in the extent to which they rely on government directives (central planning) and signals (prices) from private markets to allocate scarce goods, services, and productive resources.

As consumers, people use resources in different ways to satisfy different wants. Productive resources can be used in different ways to produce different goods and services.

At the completion of Grade 8, students will use this knowledge to:

List the resources used to produce some item and identify other items that could have been made from these resources. Repeat the exercise for household production.

Incentives

Students will understand that people usually respond predictably to positive and negative incentives. Students will be able to use this knowledge to identify incentives that affect people’s behavior and explain how incentives affect their own behavior.

At the completion of Grade 8, students will know the Grade 4 benchmarks for this standard, and also that:

Responses to incentives are usually predictable because people normally pursue their self-interest or deviate from their self-interest in consistent ways.

At the completion of Grade 8, students will know the Grade 4 benchmarks for this standard, and also that:

Changes in incentives usually cause people to change their behavior in predictable ways.

Incentives can be monetary or non-monetary, or both.

Specialization

Students will understand that when individuals, regions, and nations specialize in what they can produce at the lowest cost and then trade with others, both production and consumption increase. Students will be able to use this knowledge to explain how they can benefit themselves and others by developing special skills and strengths.

At the completion of Grade 8, students will know the Grade 4 benchmarks for this standard, and also that:

Like trade among individuals within one country, international trade promotes specialization and division of labor and increases the productivity of labor, output and consumption.

As a result of growing international economic interdependence, economic conditions and policies in one nation increasingly affect economic conditions and policies in other nations.

At the completion of Grade 8, students will use this knowledge to:

Explain how the process of specialization and division of labor results in increased productivity of labor, output, and overall consumption.

Markets and Prices

Students will understand that a market exists when buyers and sellers interact. This interaction determines market prices and thereby allocates scarce goods and services. Students will be able to use this knowledge to identify markets in which they have participated as a buyer and as a seller and describe how the interaction of all buyers and sellers influences prices. Also, predict how prices change when there is either a shortage or surplus of the product available.

At the completion of Grade 8, students will use this knowledge to:

Identify examples of products for which the price fell because sellers did not sell all they had produced at the initial price; identify examples of other products for which the price rose because consumers wanted to buy more than producers were producing at the initial price.

Institutions

Students will understand that institutions evolve and are created to help individuals and groups accomplish their goals. Banks, labor unions, markets, corporations, legal systems, and not-for-profit organizations are examples of important institutions. A different kind of institution, clearly defined and enforced property rights, is essential to a market economy. Students will be able to use this knowledge to describe the roles of various economic institutions and explain the importance of property rights in a market economy.

At the completion of Grade 8, students will know the Grade 4 benchmarks for this standard, and also that:

Banks and other financial institutions channel funds from savers to borrowers and investors.

Labor unions have influenced laws created in market economies and, through the process of collective bargaining with employers, labor unions represent some workers in negotiations involving wages, fringe benefits, and work rules.

Money and Inflation

Students will understand that money makes it easier to trade, borrow, save, invest, and compare the value of goods and services. The amount of money in the economy affects the overall price level. Inflation is an increase in the overall price level that reduces the value of money. Students will be able to use this knowledge to explain how their lives would be more difficult in a world with no money, or in a world where money sharply lost its value.

At the completion of Grade 8, students will know the Grade 4 benchmarks for this standard, and also that:

As a store of value, money makes it easier for people to save and defer consumption until the future.

At the completion of Grade 8, students will know the Grade 4 benchmarks for this standard, and also that:

As a unit of account, money is used to compare the market value of different goods and services.

Money encourages specialization by decreasing the costs of exchange.

Entrepreneurship

Students will understand that entrepreneurs take on the calculated risk of starting new businesses, either by embarking on new ventures similar to existing ones or by introducing new innovations. Entrepreneurial innovation is an important source of economic growth. Students will be able to use this knowledge to identify the risks and potential returns to entrepreneurship, as well as the skills necessary to engage in it. Understand the importance of entrepreneurship and innovation to economic growth, and how public policies affect incentives for and, consequently, the success of entrepreneurship in the United States.

At the completion of Grade 8, students will know the Grade 4 benchmarks for this standard, and also that:

Entrepreneurs compare the expected benefits of entering a new enterprise with the expected costs.

At the completion of Grade 8, students will know the Grade 4 benchmarks for this standard, and also that:

Entrepreneurs organize resources to produce goods and services because they expect to earn profits.

Entrepreneurs (as well as other sellers) earn profits when the revenues they receive from selling the products they sell are greater than the costs of production.

Entrepreneurs (as well as other sellers) incur losses when the revenues they receive from selling the products they sell do not cover the costs of production.

In addition to profits, entrepreneurs respond to other incentives, including the opportunity to be their own boss, the chance to achieve recognition, and the satisfaction of creating new products or improving existing ones. In addition to financial losses, other disincentives to which entrepreneurs respond include the responsibility, long hours, and stress of running a business.

Role of Government and Market Failure

Students will understand that there is an economic role for government in a market economy whenever the benefits of a government policy outweigh its costs. Governments often provide for national defense, address environmental concerns, define and protect property rights, and attempt to make markets more competitive. Most government policies also have direct or indirect effects on people’s incomes. Students will be able to use this knowledge to identify and evaluate the benefits and costs of alternative public policies, and assess who enjoys the benefits and who bears the costs.

At the completion of Grade 8, students will know the Grade 4 benchmarks for this standard, and also that:

Most federal government tax revenue comes from personal income and payroll taxes. Payments to Social Security recipients, the costs of national defense and homeland security, medical expenditures (such as Medicare), transfers to state and local governments, and interest payments on the national debt constitute the bulk of federal government spending.

At the completion of Grade 8, students will use this knowledge to:

Compare the various sources of state and local revenues and various categories of state and local expenditures in their state and community with those of the U.S. federal government.

National Center for History in Schools (NCHS)

United States History Content Standards

Era 10: Contemporary United States (1968 to the present)

Economic, social, and cultural developments in contemporary United States.

The student understands economic patterns since 1968.

World History Content Standards

Era 9: The 20th Century Since 1945: Promises and Paradoxes

The search for community, stability, and peace in an interdependent world.

The student understands how increasing economic interdependence has transformed human society.

Major global trends since World War II.

The student understands major global trends since World War II.