ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The command economy is a component of a communist political system, while a free market system exists in capitalist societies.

Detailed explanation-2: -Alternatively, a command economy is organized by a centralized government that owns most, if not all, businesses and where government officials direct all the factors of production. East Germany, North Korea, and the former Soviet Union are all examples of command economies.

Detailed explanation-3: -Communism is an economic system where the group owns the factors of production. The factors of production are labor, entrepreneurship, capital, and land. 1 Although the government doesn’t legally own the labor force, the central planners tell the people where they should work.

Detailed explanation-4: -The production of goods and services under capitalism is based on supply and demand in the general market-known as a market economy-rather than through central planning-known as a planned economy or command economy. The purest form of capitalism is free market or laissez-faire capitalism.

Detailed explanation-5: -The theory of a command economy was defined by Karl Marx in the Communist Manifesto as “common ownership of the means of production, ” and it became a typical characteristic of communist governments.