Written by the Fiveable Content Team • Last updated September 2025
Written by the Fiveable Content Team • Last updated September 2025
Definition
A command economy is an economic system where the government makes all decisions regarding the production and distribution of goods and services. It dictates what is produced, in what amount, and sets prices for goods and services.
Related terms
Central Planning: The process by which a central authority (usually the government) makes decisions about the economy's direction and allocation of resources.
Market Economy: An economic system where supply and demand from consumers determine what is produced and at what prices, with minimal government intervention.
A political and economic theory advocating for means of production, distribution, and exchange to be owned or regulated by the community as a whole, often implemented through a command economy structure