What is prohibited in a command economy? A planned economy or command economy is an economic system characterized by the regulation and making of economic decisions by the government. Within this system, the government has a very large role in controlling the flow of production, distribution, and consumption of goods and services.
Of course, as an economic system that is regulated by the government, there are several things that are prohibited or restricted so that this economic system can run well and be in accordance with its goals. Here are 10 things that are generally prohibited in the command economy:
1. Business activities that are illegal or detrimental to society.
In a planned economic system, business activities that are illegal or detrimental to society such as drug trafficking, prostitution, and illegal gambling are of course prohibited. This is because these activities can cause great harm to society and undermine economic stability.
2. Monopoly or oligopoly in a particular industry.
The government in a command economy limits or prohibits monopoly or oligopoly in certain industries because this can cause prices to become unstable and make consumers miserable. The government is trying to create fair and balanced competition in certain industries in order to create a good economic balance.
3. Sale of goods that are considered luxurious or extravagant.
In the command economy, the sale of goods that are considered luxurious or extravagant, such as luxury cars, expensive jewelry, or well-known brand watches, is restricted or prohibited. This is to reduce the waste of resources and shift the focus of production to the goods needed by society.
4. Import of goods that can be produced independently within the country.
The government also limits or prohibits the import of goods that can be produced independently within the country, because this can endanger domestic production and disrupt the economic balance. The government is trying to reduce dependence on imports and increase domestic production.
5. Excessive use of fossil fuels.
In the command economy, excessive use of fossil fuels is restricted or prohibited, because this can damage the environment and upset the balance of the ecosystem. The government is trying to increase the use of renewable energy and reduce environmental pollution.
6. Unregulated foreign investment.
Foreign investment that is not properly regulated can harm economic stability and cause inflation. Therefore, the government in a command economy limits or regulates foreign investment so as not to disturb economic stability.
7. Unfair or unequal wages between employees.
Unfair or unequal wages between workers can disrupt social and economic stability. Therefore, in the command economy, the government has an important role in determining the minimum wage or standard wage for workers so that there is no large gap between workers. This can also minimize the exploitation of workers.
8. Use of technology that is harmful to the environment.
In the command economy, the use of technology that harms the environment, such as the use of hazardous chemicals or toxic waste, must be limited or prohibited. The government is trying to develop environmentally friendly technologies that do not damage the environment and the balance of the ecosystem.
9. Excessive or unbalanced production.
Excessive or unbalanced production between people’s needs and production can cause stockpiles to build up and lower prices. Therefore, the government in a command economy regulates the production of goods so that it is in balance with the needs of the community to avoid stock buildup and stabilize prices.
10. Irregular or excessive use of natural resources.
Irregular or excessive use of natural resources such as deforestation or unlimited mining can damage the environment and threaten human survival. Therefore, the government in a command economy must regulate the use of natural resources so as not to damage the environment and ensure that natural resources are preserved for future generations.
In conclusion, the command economy has advantages and disadvantages in running its economic system. However, by regulating and prohibiting things that can disrupt the economic and environmental balance, the government can create a healthy and sustainable economic system.