A planned economy is an economic system in which decisions regarding production and investment are embodied in a plan formulated by a central authority, usually by a public body such as a government agency. Although a planned economy may be based on either centralized or decentralized forms of economic planning, it usually refers to a centrally planned economy. Central planning aims to improve productivity and coordination by enabling planners to take advantage of better information achieved through the consolidation of economic resources when making decisions regarding investment and the allocation of economic inputs.
Planned economies are usually categorized as a particular variant of socialism, and have historically been supported by and implemented by Marxist-Leninist socialist states. Analysts argue that Soviet-type central planning did not actually constitute a planned economy in that a comprehensive and binding plan did not guide production and investment; therefore the portmanteau administrative command economy emerged as more accurate designation for the economic system that existed in the former Soviet Union and Eastern bloc, highlighting the role of centralized hierarchical administrative decision-making in the absence of popular and democratic oversight as the essential coordinating feature of these economies.
In some cases, the most extensive form of a planned economy is referred to as a command economy, or command and control economy. In such economies, central economic planning directs all major sectors of the economy and formulates decisions about the use of economic inputs and the means of production. In a centrally-planned economy, planners would decide what would be produced and would direct lower-level enterprises and ministries to produce those goods in accordance with democratically-determined national and social objectives. Implementation of this form of economy is sometimes called "planification".
Planned economies are held in contrast to unplanned economies, such as the market economy and proposed self-managed economy, where production, distribution, pricing, and investment decisions are made by autonomous firms based upon their individual interests rather than upon a macroeconomic plan. Less extensive forms of planned economies include those that use indicative planning as components of a market-based or mixed economy, in which the state employs "influence, subsidies, grants, and taxes, but does not compel." This latter is sometimes referred to as a "planned market economy". In some instances, the term planned economy has been used to refer to national economic development plans and state-directed investment in market economies.
Beginning in the 1980s and 1990s, many governments presiding over planned economies began a process of marketization (or as in the Soviet Union, the system collapsed), moving toward market-based economies by allowing individual enterprises to make the decisions regarding management and pricing, granting autonomy to state enterprises, and ultimately expanding the scope of the private sector through privatization. Although most economies today are market-based mixed economies (which are partially planned), fully planned economies of the Soviet-type continue to exist in Cuba, North Korea and Laos.
Read more about Planisme: Economic Planning Versus Command Economies, Relationship With Socialist Economics, Transition From A Planned Economy To A Market Economy, Advantages of Economic Planning, Fictional Portrayals of Planned Economies, See Also, Further Reading
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... Depression, a group of right-wing members, led by Henri de Man in Belgium, founder of planisme, and in France Marcel Déat, Pierre Renaudel, René Belin, the "neo-Turks" of the Radical-Social ... Instead, influenced by Henri de Man's planisme, they promoted a "constructive revolution" headed by the state and technocrats, through economic planification ... a revisionist work closely influenced by Henri de Man's planisme ...