A command economy, also known as a centrally planned economy, is an economic system in which key economic decisions, including what goods to produce, how to produce them, and for whom to produce, are made by a central authority or government. In a command economy, the government typically owns or controls the means of production, and economic planning is used to allocate resources and coordinate economic activities.

Key characteristics of a command economy include:

1. **Centralized Decision-Making:**
– Economic decisions are made by a central authority, often the government or a central planning board. This authority sets production targets, determines resource allocation, and establishes pricing policies.

2. **Ownership of Means of Production:**
– In a command economy, the government often owns or controls major industries, enterprises, and resources. Private ownership of the means of production is limited or nonexistent.

3. **Economic Planning:**
– Economic planning is a central feature of command economies. The government develops detailed plans outlining production targets, resource allocation, and distribution of goods and services.

4. **Lack of Market Forces:**
– Prices and resource allocation are determined by central planning rather than market forces such as supply and demand. The government sets prices for goods and services, wages, and other economic variables.

5. **Limited Consumer Choice:**
– Consumers typically have limited choices as the government decides what goods and services will be produced. There is often a lack of variety and competition in the marketplace.

6. **Social Goals:**
– Command economies often emphasize social and political goals, such as income equality and the provision of essential services to all citizens. The government may prioritize public welfare over individual choices.

7. **Resource Allocation Based on Plan:**
– Resources are allocated based on the central economic plan rather than through market mechanisms. This can lead to inefficiencies and misallocation of resources.

8. **Stability but Lack of Innovation:**
– Command economies may achieve stability and avoid some economic fluctuations, but they often struggle with innovation and adapting to changing consumer preferences.

Historically, command economies have been associated with socialist or communist ideologies. The Soviet Union under Joseph Stalin, for example, operated a command economy for much of the 20th century. Other examples include the People’s Republic of China during certain periods and other countries with socialist or communist governments.

While command economies can achieve certain goals, they have been criticized for their tendency to stifle individual initiative, limit economic efficiency, and lead to shortages or surpluses of goods. Many countries that once had command economies have transitioned to mixed economies, incorporating elements of both central planning and market mechanisms.