Think about living in a world where you do not choose your career path, the products you are able to purchase or even the opportunities you can pursue but a central authority does. This is the truth about a command economy, a system whereby the government decides what to produce, who to produce it and how goods and services are to be distributed.
Although this model is supposed to make things stable and equal, it is usually at the cost of individual freedom. In this article, we address the question: what is one way a command economy affects the lives of private citizens?
Daily Life Under Central Planning
One tangible and everyday effect of a command economy on citizens is the limited choice of goods available to them, since those in charge of the planning process decide what to produce-leaving citizens with little or even one-dimensional choices. In state owned stores, people could only get basic necessities such as soap, flour or apples, but specialty goods or brand variety were a luxury.
Daily living in such regimes was characterized by inefficiency and frustration. Citizens were used to waiting in long lines, and strict bureaucracy- citizens could wait hours to purchase necessary products or enroll in consumer goods such as appliances or housing. As an example, in the Soviet Union, the process of getting durable goods like refrigerators was accompanied by waiting lists that might be months and even years long and the actual process of picking them up might be bureaucratic.
A short historical anecdote is similar: shoppers in Soviet-era Armenia remembered that stores, when they had anything at all, might only have one brand of toothpaste or moisturizer–the government was the brand.
How Central Planning Limits Economic Autonomy
The core value of a command economy is that the government directly controls all production, pricing, job placement, and the allocation of resources. In contrast to market systems, where decisions about supply and demand determine economic decisions, planned economies give this authority to bureaucratic organizations that determine what is produced and how much, what prices are charged, and to whom they are assigned.
Consequently, citizens in such systems are not free to make most meaningful economic decisions. They do not have a choice in pursuing a career, starting a business, or following market opportunities, the state makes those decisions, usually in line with the macroeconomic agenda rather than personal ambitions. The inhibition of individual entrepreneurship is frequently supported not only by policy, but also by the presence of bureaucratic obstacles and legal barriers.
This system suppresses personal freedom, crushes professional mobility and kills individual drive. Citizens have no incentive to excel, innovate or take entrepreneurial risks without market-driven incentives, such as higher wages or profit potential. This leads to a subsequent loss of productivity and creativity that is buried under a rigid system that is obsessed with fulfilling quotas rather than actual human needs.
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What is One Way a Command Economy Affects the Lives of Private Citizens?
The obvious impact that a command economy has on the life of a common citizen is the loss of consumer choice and personal liberties. In these systems, government planners control all the factors of economic activity -what is produced, how it is distributed, who gets it and at what price.
This has led to a situation whereby citizens are faced with fewer product choices in stores since authorities tend to focus production based on strategic interests as opposed to the demands of the people. Jobs and wages are usually allocated in a standard manner by the state and this further restricts the capability of individuals to choose occupations depending on personal interests or entrepreneurial aspirations.
Such centralized control can be too stifling of innovation and self-expression, and can lead to citizens learning to fit in systems instead of creating them. In other instances, this process even leads to the emergence of black markets, informal networks in which individuals pursue the goods or liberties unavailable to them in the formal economy.
Essentially, a command economy limits individual liberty in that it restricts individual decision making to the demands of centralized planning.
Final Word
Understanding the dynamics of a command economy helps answer the question: what is one way a command economy affects the lives of private citizens? It mostly restricts individual economic liberty, since the government is in charge of the production, prices and job allocations, leaving individuals with less options. Such limitations can dampen motivation, inhibit innovation and foster dependency on state-provision of goods and services, which are fundamental in the way people live.
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