What is a 'Centrally Planned Economy'?

A centrally planned economy is an economic system in which decisions are made by a single authority rather than many market participants. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Term of the Day | Words to Know Centrally Planned Economy A centrally planned economy, also known as a command economy, is an economic system in which a central authority, such as a government, makes economic decisions regarding the manufacturing and the distribution of products. Centrally planned economies are different from market economies, in which such decisions are traditionally made by businesses and consumers. The production of goods and services in command economies is often done by state-owned enterprises, which are government owned companies. In centrally planned economies, which are sometimes referred to as "command economies", prices are controlled by bureaucrats. Read More » Related to "Centrally Planned Economy" Market Economy vs. Command Economy: What's the Difference? A market economy operates through a price system, with the market setting rates, while in a command economy, governments control the resources and determine activity. Read More » Production in Command Economies In command economies, a hallmark of communist states, production of goods and services is controlled by the government. Read More » What is the difference between Communism and Socialism? Communism and socialism are umbrella terms referring to left-wing schools of economic thought that oppose capitalism. Read More » SPONSORED BY INVESCO The Complete Guide to ETFs ETFs are becoming increasingly popular and soaring to new heights among investors. Invesco's insights can help you determine if these investment vehicles are right for you. Learn More » Related Definitions State-Owned Enterprise A state-owned enterprise (SOE) can be either wholly or partially owned by a government and is typically earmarked to participate in commercial activities. Read More » Market Economy A market economy is a system in which economic decisions and pricing are guided by the interactions of citizens and businesses. Read More » Mixed Economic System A mixed economic system is one that features characteristics of both capitalism and socialism. Read More » Invisible Hand The invisible hand is a metaphor for how, in a free market economy, self-interested individuals can promote the general benefit of society at large. Read More » CONNECT WITH INVESTOPEDIA Email sent to: mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here. 114 West 41st St, floor 8 New York NY 10036 © 2020, Investopedia, LLC, All Rights Reserved | Privacy Policy