Planned economy

A planned economy is a type of economic system where investment, production and the allocation of capital goods take place according to economy-wide economic and production plans. A planned economy may use centralized, decentralized or participatory forms of economic planning.[1][2] Planned economies contrast with unplanned economies, specifically market economies, where autonomous firms operating in markets make decisions about production, distribution, pricing and investment. Market economies that use indicative planning are sometimes referred to as planned market economies.

A command economy or administrative command economy describes a country using Soviet-type economic planning which was characteristic of the former Soviet Union and Eastern Bloc before most of these countries converted to market economies. These terms highlight the central role of hierarchical administration and public ownership of production in guiding the allocation of resources in these economic systems.[3][4][5] In command economies, important allocation decisions are made by government authorities and are imposed by law.[6]

Central planning has been used in the majority of countries adopting socialism including those based on the Soviet model, though a minority have adopted some degree of market socialism, such as the Socialist Federal Republic of Yugoslavia. Non-market socialism replaces factor markets with direct calculation as the means to coordinate the activities of the various socially owned economic enterprises that make up the economy.[7][8][9] More recent approaches to socialist planning and allocation have come from some economists and computer scientists proposing planning mechanisms based on advances in computer science and information technology.[10]

Planned versus command economies

Planned economies contrast with command economies. A planned economy is "an economic system in which the government controls and regulates production, distribution, prices, etc."[11] whereas a command economy necessarily has substantial public ownership of industry while also having this type of regulation.[12]

Most of a command economy is organized in a top-down administrative model by a central authority, where decisions regarding investment and production output requirements are decided upon at the top in the chain of command, with little input from lower levels. Advocates of economic planning have sometimes been staunch critics of these command economies. For example, Leon Trotsky believed that those at the top of the chain of command, regardless of their intellectual capacity, operated without the input and participation of the millions of people who participate in the economy and who understand/respond to local conditions and changes in the economy, and therefore would be unable to effectively coordinate all economic activity.[13]

Although historians have associated planned economies with Marxist–Leninist states and the Soviet economic model, some argue that the Soviet economic model did not actually constitute a planned economy in that a comprehensive and binding plan did not guide production and investment, therefore the further distinction of an administrative command economy emerged as a more accurate designation for the economic system that existed in the former Soviet Union and Eastern Bloc, highlighting the role of centralized hierarchical decision-making in the absence of popular control over the economy.[14] The possibility of a digital planned economy was explored in Chile between 1971 and 1973 with the development of Project Cybersyn and by Alexander Kharkevich, head of the Department of Technical Physics in Kiev in 1962.[15][16]

Another key point is that command economies are inherently authoritarian whereas economic planning in general can be either participatory and democratic or authoritarian. Indicative planning is a form of planning in market economies that directs the economy through incentive-based methods. Economic planning can be practiced in a decentralized manner through different government authorities. For example, in some predominately market-oriented and mixed economies the state utilizes economic planning in strategic industries, such as the aerospace industry. Mixed economies usually employ macroeconomic planning while micro-economic affairs are left to the market and price system.

Note too the utilization of dirigisme, or government direction of the economy through non-coercive means, as practiced in France and in Great Britain after World War II. The Swedish government planned public-housing models in a similar fashion as urban planning in a project called Million Programme, implemented from 1965 to 1974.


In the Hellenistic and post-Hellenistic world, "compulsory state planning was the most characteristic trade condition for the Egyptian countryside, for Hellenistic India, and to a lesser degree the more barbaric regions of the Seleucid, the Pergamenian, the southern Arabian, and the Parthian empires [...]".[17]

One view of mercantilism sees it as a planned economy.[18]

Scholars have argued that the Incan economy was a flexible type of command economy, centered around the movement and utilization of labor instead of goods.[19]

The Soviet-style planned economy started with war communism (1918–1921). The Soviet government founded Gosplan in 1921, but the period of the New Economic Policy intervened before regular five-year plans started in 1928.

Advantages of economic planning

The government can harness land, labours and capital to serve the economic objectives of the state. Consumer demand can be restrained in favor of greater capital investment for economic development in a desired pattern. In international comparisons, state-socialist nations compared favorably with capitalist nations in health indicators such as infant mortality and life expectancy.[20] The state can begin building a heavy industry at once in an underdeveloped economy without waiting years for capital to accumulate through the expansion of light industry and without reliance on external financing. This is what happened in the Soviet Union during the 1930s when the government forced the share of gross national income dedicated to private consumption from eighty percent to fifty percent.[21] As a result, the Soviet Union experienced massive growth in heavy industry, with a concurrent massive contraction of its agricultural sector, in both relative and absolute terms.

Disadvantages of economic planning

Inefficient resource distribution: surplus and shortage

Critics of planned economies argue that planners cannot detect consumer preferences, shortages and surpluses with sufficient accuracy and therefore cannot efficiently co-ordinate production (in a market economy, a free price system is intended to serve this purpose). This difficulty was notably written about by economists Ludwig von Mises and Friedrich Hayek, who referred to subtly distinct aspects of the problem as the economic calculation problem[22] and local knowledge problem,[23] respectively. Whereas the former stressed the theoretical underpinnings of a market economy to subjective value theory while attacking the labor theory of value, the latter argued that the only way to satisfy individuals who have a constantly changing hierarchy of needs and are the only ones to possess their particular individual's circumstances is by allowing those with the most knowledge of their needs to have it in their power to use their resources in a competing marketplace to meet the needs of the most consumers most efficiently. This phenomenon is recognized as spontaneous order. Additionally, misallocation of resources would naturally ensue by redirecting capital away from individuals with direct knowledge and circumventing it into markets where a coercive monopoly influences behavior, ignoring market signals. According to Tibor R. Machan: "Without a market in which allocations can be made in obedience to the law of supply and demand, it is difficult or impossible to funnel resources with respect to actual human preferences and goals".[24]

Suppression of economic democracy and self-management

Economist Robin Hahnel, who supports participatory economics, a form of a form of socialist decentralized planned economy, notes that even if central planning overcame its inherent inhibitions of incentives and innovation, it would nevertheless be unable to maximize economic democracy and self-management, which he believes are concepts that are more intellectually coherent, consistent and just than mainstream notions of economic freedom.[25] Furthermore, Hahnel states:

Combined with a more democratic political system, and redone to closer approximate a best case version, centrally planned economies no doubt would have performed better. But they could never have delivered economic self-management, they would always have been slow to innovate as apathy and frustration took their inevitable toll, and they would always have been susceptible to growing inequities and inefficiencies as the effects of differential economic power grew. Under central planning neither planners, managers, nor workers had incentives to promote the social economic interest. Nor did impeding markets for final goods to the planning system enfranchise consumers in meaningful ways. But central planning would have been incompatible with economic democracy even if it had overcome its information and incentive liabilities. And the truth is that it survived as long as it did only because it was propped up by unprecedented totalitarian political power.[25]

Economic instability

Studies of administrative command economies of the Eastern Bloc in the 1950s and 1960s by both American and Eastern European economists found that contrary to the expectations of both groups they showed greater fluctuations in output than market economies during the same period.[26]

Relationship with socialism

While socialism is not equivalent to economic planning or to the concept of a planned economy, an influential conception of socialism involves the replacement of capital markets with some form of economic planning in order to achieve ex-ante coordination of the economy. The goal of such an economic system would be to achieve conscious control over the economy by the population, specifically so that the use of the surplus product is controlled by the producers.[27] The specific forms of planning proposed for socialism and their feasibility are subjects of the socialist calculation debate.

Computational economic planning

In their book Towards a New Socialism (1993), the computer scientist Paul Cockshott from the University of Glasgow and the economist Allin Cottrell from the Wake Forest University claim to demonstrate how a democratically planned economy built on modern computer technology is possible and drives the thesis that it would be both economically more stable than the free market economies and also morally desirable.

When the development of computer technology was still its early stages in 1971, the socialist Allende administration of Chile launched Project Cybersyn to install a telex machine in every corporation and organisation in the economy for the communication of economic data between firms and the government. The data was also fed into a computer simulated economy for forecasting. A control room was built for realtime observation and management of the overall economy. The prototype-stage of the project showed promise when it was used to redirect supplies around a trucker's strike,[28] but after CIA-backed Augusto Pinochet led a coup in 1973 that established a military dictatorship under his rule the program was abolished and Pinochet moved Chile towards a more liberalized market economy.

Fictional portrayals of planned economies

The 1888 novel Looking Backward by Edward Bellamy depicts a fictional planned economy in a United States around the year 2000 which has become a socialist utopia.

The World State in Aldous Huxley's Brave New World and Airstrip One in George Orwell's Nineteen Eighty-Four are both fictional examples of command economies, albeit with diametrically opposed aims. The former is a consumer economy designed to engender productivity while the latter is a shortage economy designed as an agent of totalitarian social control. Airstrip One is organised by the euphemistically named Ministry of Plenty.

Other literary portrayals of planned economies were Yevgeny Zamyatin's We which was an influence on Orwell's work. Like Nineteen Eighty-Four, Ayn Rand's dystopian story Anthem was also an artistic portrayal of a command economy that was influenced by We. The difference is that it was a primitivist planned economy as opposed to the advanced technology of We or Brave New World.

See also

Case studies (Soviet-type economies)
Case studies (mixed-market economies)


  1. ^ Alec Nove (1987). "Planned Economy". The New Palgrave: A Dictionary of Economics. vol. 3. p. 879.
  2. ^ Devine, Pat (26 July 2010). Democracy and Economic Planning. Polity. ISBN 978-0745634791.
  3. ^ Zimbalist, Sherman and Brown, Andrew, Howard J. and Stuart (October 1988). Comparing Economic Systems: A Political-Economic Approach. Harcourt College Pub. p. 4. ISBN 978-0-15-512403-5. Almost all industry in the Soviet Union is government owned and all production is directed, in theory, by a central plan (though in practice much is left for local discretion and much happens that is unplanned or not under government control).
  4. ^ Wilhelm, John Howard (1985). "The Soviet Union Has an Administered, Not a Planned, Economy". Soviet Studies. 37 (1): 118–30. doi:10.1080/09668138508411571.
  5. ^ Ellman, Michael (2007). "The Rise and Fall of Socialist Planning". In Estrin, Saul; Kołodko, Grzegorz W.; Uvalić, Milica (eds.). Transition and Beyond: Essays in Honour of Mario Nuti. New York: Palgrave Macmillan. p. 22. ISBN 0-230-54697-8. In the USSR in the late 1980s the system was normally referred to as the 'administrative-command' economy. What was fundamental to this system was not the plan but the role of administrative hierarchies at all levels of decision making; the absence of control over decision making by the population [...].
  6. ^ Rosser, Mariana V.; Rosser, J. Barkley (23 July 2003). Comparative Economics in a Transforming World Economy. MIT Press. p. 7. ISBN 978-0-262-18234-8. In a command economy the most important allocation decisions are made by government authorities and are imposed by law.
  7. ^ Prychito, David L. (31 July 2002). Markets, Planning, and Democracy: Essays After the Collapse of Communism. Edward Elgar Publishing. p. 72. ISBN 978-1840645194. Traditional socialism strives to plan all economic activities comprehensively, both within and between enterprises. As such, it seeks to integrate the economic activities of society (the coordination of socially owned property) into a single coherent plan, rather than to rely upon the spontaneous or anarchic ordering of the market system to coordinate plans.
  8. ^ Mandel, Ernest (1986). "In Defence of Socialist Planning" (PDF). New Left Review. 159: 5–37. Planning is not equivalent to 'perfect' allocation of resources, nor 'scientific' allocation, nor even 'more humane' allocation. It simply means 'direct' allocation, ex ante. As such, it is the opposite of market allocation, which is ex post.
  9. ^ Ellman, Michael (31 March 1989). Socialist Planning. Cambridge University Press. p. 327. ISBN 978-0521358668. '[S]ocialist planning', in the original sense of a national economy which replaced market relationships by direct calculation and direct product exchange, has nowhere been established [...].
  10. ^ Cottrell, Allin; Cockshott, W. Paul (1993). Towards a New Socialism. Nottingham, England: Spokesman. Retrieved 28 February 2017.
  11. ^ "Planned economy". Unabridged (v. 1.1). Random House, Inc. Retrieved 11 May 2008).
  12. ^ "Command economy". Merriam-Webster Online Dictionary. Retrieved 11 May 2008.
  13. ^ Trotsky, Leon. Writings 1932–33. p. 96.
  14. ^ Ellman, Michael (2007). "The Rise and Fall of Socialist Planning". In Estrin, Saul; Kołodko, Grzegorz W.; Uvalić, Milica (eds.). Transition and Beyond: Essays in Honour of Mario Nuti. New York: Palgrave Macmillan. p. 22. ISBN 0-230-54697-8. Realization of these facts led in the 1970s and 1980s to the development of new terms to describe what had previously been (and still were in United Nations publications) referred to as the 'centrally planned economies'. In the USSR in the late 1980s the system was normally referred to as the 'administrative-command' economy. What was fundamental to this system was not the plan but the role of administrative hierarchies at all levels of decision making; the absence of control over decision making by the population [...].
  15. ^ "Machine of communism. Why the USSR did not create the Internet".
  16. ^ Kharkevich, Aleksandr Aleksandrovich (1973). Theory of information. The identification of the images. Selected works in three volumes. Volume 3. Information and technology: Moscow: Publishing House "Nauka", 1973. - Academy of Sciences of the USSR. Institute of information transmission problems. p. 524.
  17. ^ Heichelheim, Friedrich Moritz (1970) [1949]. "Commerce, Greek and Roman". In Hammond, Nicholas G. L.; Scullard, H. H. (eds.). The Oxford Classical Dictionary (2 ed.). Oxford: Oxford University Press. p. 274. ISBN 0198691173.
  18. ^ Blaug, Mark, ed. (1991). The Early mercantilists: Thomas Mun (1571-1641), Edward Misselden (1608-1634), Gerard de Malynes (1586-1623). Pioneers in economics. E. Elgar Pub. Co. p. 136. Retrieved 7 September 2018. To this approach belongs at least in part an attempt to view mercantilism as economic dirigee, a planned economy with national economic objectives — 'wealth', 'plenty' or simply 'welfare' within the framework of the nation and at the expense of other nations.
  19. ^ La Lone, Darrell E. "The Inca as a Nonmarket Economy: Supply on Command versus Supply and Demand". p. 292. Retrieved 17 December 2018.
  20. ^ Michael Ellman (2014). Socialist Planning. Cambridge University Press. p. 372. ISBN 1107427320.
  21. ^ Kennedy, Paul (1987). The Rise and Fall of the Great Powers. New York: Random House. pp. 322–3. ISBN 0-394-54674-1.
  22. ^ Von Mises, Ludwig (1990). Economic calculation in the Socialist Commonwealth (PDF). Ludwig von Mises Institute. Retrieved 8 September 2008.
  23. ^ Hayek, Friedrich A. (1945). "The Use of Knowledge". American Economic Review. XXXV: 4. pp. 519-30.
  24. ^ Machan, R. Tibor (2002). "Some Skeptical Reflections on Research and Development". Liberty and Research and Development: Science Funding in a Free Society (PDF). Hoover Press. ISBN 0-8179-2942-8.
  25. ^ a b Hahnel, Robin (2002). The ABC's of Political Economy. London: Pluto Press. p. 262. ISBN 0-7453-1858-4.
  26. ^ Zielinski, J. G. (1973). Economic Reforms in Polish Industry. New York: Oxford University Press. ISBN 0-19-215323-4.
  27. ^ Feinstein, C. H. (1975). Socialism, Capitalism and Economic Growth: Essays Presented to Maurice Dobb. Cambridge University Press. p. 174. ISBN 0-521-29007-4. We have presented the view that planning and market mechanisms are instruments that can be used both in socialist and non-socialist societies. [...] It was important to explode the primitive identification of central planning and socialism and to stress the instrumental character of planning.
  28. ^ Eden Medina (2006). "Designing Freedom, Regulating a Nation: Socialist Cybernetics in Allende's Chile". J. Lat. Am. Stud. Cambridge University Press (38): 571–606. doi:10.1017/S0022216X06001179.
  29. ^ Crittenden, Ann. "The Cuban Economy: How It Works". Retrieved 29 June 2018.

Further reading

  • Ellman, Michael (2014). Socialist Planning. Cambridge University Press. 3rd edition. ISBN 1107427320.
  • Grossman, Gregory (1987): "Command economy". The New Palgrave: A Dictionary of Economics. vol. 1. pp. 494–95.
  • Landauer, Carl (1947). Theory of National Economic Planning. University of California Press. Berkeley and Los Angeles. 2nd edition.
  • Nove, Alec (1987). "Planned economy". The New Palgrave: A Dictionary of Economics. vol. 3. pp. 879–85.
  • Myant, Martin; Drahokoupil, Jan (2010), Transition Economies: Political Economy in Russia, Eastern Europe, and Central Asia, Wiley-Blackwell, ISBN 978-0-470-59619-7.
  • Cox, Robin (2005). "The Economic Calculation controversy: unravelling of a myth".
  • Devine, Pat (2010). Democracy and Economic Planning. Polity. ISBN 978-0745634791.
  • Mandel, Ernest (1986). In Defence of Socialist Planning. New Left Review. 159.

External links

Decentralized planning (economics)

A decentralized-planned economy or decentrally-planned economy (occasionally called horizontally-planned economy due to its horizontalism) is a type of planned economy in which the investment and allocation of consumer and capital goods is explicated accordingly to an economy-wide plan built and operatively coordinated through a distributed network of disparate economic agents or even production units itself. Decentralized planning is usually held in contrast to centralized planning, in particular the Soviet Union's command economy, where economic information is aggregated and used to formulate a plan for production, investment and resource allocation by a single central authority. Decentralized planning can take shape both in the context of a mixed economy as well as in a post-capitalist economic system.

This form of economic planning implies some process of democratic and participatory decision-making within the economy and within firms itself in the form of industrial democracy. Computer-based forms of democratic economic planning and coordination between economic enterprises have also been proposed by various computer scientists and radical economists. Proponents present decentralized and participatory economic planning as an alternative to market socialism for a post-capitalist society.Decentralized-planning has been proposed as a basis for socialism and has been variously advocated by democratic socialists, council communists and anarchists who advocate a non-market form of socialism, in total rejection of Soviet-type central economic planning. Some writers such as Robin Cox have argued that decentralized planning allows for a spontaneously self-regulating system of stock control (relying solely on calculation in kind) to come about and that in turn decisively overcomes the objections raised by the economic calculation argument that any large scale economy must necessarily resort to a system of market prices.

Die Wende

Die Wende (German pronunciation: [diː ˈvɛndə], "The Turn" or "The Turnaround") is a German term that has come to signify the complete process of change from the rule of the Socialist Unity Party of Germany and a centrally planned economy to the revival of parliamentary democracy and a market economy in the German Democratic Republic (also known as East Germany or the GDR) around 1989 and 1990. It encompasses several processes and events which later have become synonymous with the overall process. These processes and events are:

the Peaceful Revolution during the presidency of Soviet leader Mikhail Gorbachev, a time of massive protest and demonstrations (Montagsdemonstrationen – "Monday demonstrations" and Alexanderplatz demonstration) against the political system of the GDR and for civil and human rights in late 1989.

the fall of the Berlin Wall on 9 November 1989 following a press conference held by the Politbüro during which Günter Schabowski announced the introduction of unconditional travelling permissions, which was very unusual after four decades of severe travelling restrictions and intended to tone down the protesters but instead because of Schabowski's unclear and ambiguous wording led to an onrush of people willing to leave the country and the accidental opening of the border checkpoints at the same night.

the transition to democracy in East Germany following the Peaceful Revolution, leading to the only truly democratic elections to the Volkskammer of the GDR on 18 March 1990.

the process of German reunification leading to the Einigungsvertrag (Treaty of Unification) on 31 August 1990, the Treaty on the Final Settlement with Respect to Germany on 12 September 1990 and finally the joining of the five re-established East German Länder to the Federal Republic of Germany.In hindsight, the German word Wende (meaning "The Turn") then took on a new meaning; the phrase seit der Wende, literally "since the change", means "since reunification" or "since the Wall fell". This period is marked by West German aid to East Germany, a total reaching an estimated $775 billion over 10 years. To some extent, Germany is still in the midst of the Nachwendezeit (post-Wende period): differences between East and West still exist, and a process of "inner reunification" is not yet finished.

This fundamental change has marked the reunification of Germany. The term was first used publicly in East Germany on 18 October 1989 in a speech by interim GDR leader Egon Krenz (the term having been used on the cover of influential West German news magazine Der Spiegel two days previously). Whilst it initially referred to the end of the old East German government, die Wende has become synonymous with the fall of the Wall and of East Germany, and indeed of the entire Iron Curtain and Eastern Bloc state socialism.

East Asian model of capitalism

The East Asian model (sometimes known as state-sponsored capitalism) is an economic system where the government invests in certain sectors of the economy in order to stimulate the growth of new (or specific) industries in the private sector. It generally refers to the model of development pursued in East Asian economies such as Hong Kong, Macau, Japan, South Korea and Taiwan. It has also been used to classify the contemporary economic system in Mainland China since the Deng Xiaoping's economic reforms during the late 1970s.Key aspects of the East Asian model include state control of finance, direct support for state-owned enterprises in strategic sectors of the economy or the creation of privately owned national champions, high dependence on the export market for growth and a high rate of savings. It is similar to dirigisme.

This economic system differs from a centrally planned economy, where the national government would mobilize its own resources to create the needed industries which would themselves end up being state-owned and operated. East Asian model of capitalism refers to the high rate of savings and investments, high educational standards, assiduity and export-oriented policy.

Economic planning

Economic planning is a mechanism for the allocation of resources between and within organizations which is held in contrast to the market mechanism. As an allocation mechanism for socialism, economic planning replaces factor markets with a direct allocation of resources within a single or interconnected group of socially owned organizations.There are various forms of economic planning. The level of centralization in the decision-making depends on the specific type of planning mechanism employed. As such, one can distinguish between centralized planning and decentralized planning. An economy primarily based on planning is referred to as a planned economy. In a centrally planned economy, the allocation of resources is determined by a comprehensive plan of production which specifies output requirements. Planning may also take the form of directive planning or indicative planning.

A distinction can be made between physical planning (as in pure socialism) and financial planning (as practiced by governments and private firms in capitalism). Physical planning involves economic planning and coordination conducted in terms of disaggregated physical units whereas financial planning involves plans formulated in terms of financial units.

Five-year plans for the national economy of the Soviet Union

The five-year plans for the development of the national economy of the Soviet Union (USSR) (Russian: Пятиле́тние пла́ны разви́тия наро́дного хозя́йства СССР, Pjatiletnije plany razvitiya narodnogo khozyaystva SSSR) consisted of a series of nationwide centralized economic plans in the Soviet Union, beginning in the late 1920s. The Soviet state planning committee Gosplan developed these plans based on the theory of the productive forces that formed part of the ideology of the Communist Party for development of the Soviet economy. Fulfilling the current plan became the watchword of Soviet bureaucracy.

Most other communist states, including the People's Republic of China, adopted a similar method of planning. Nazi Germany, despite its extreme anti-communism, emulated the practice in its four-year plan (1936–1939) designed by the Nazi Party to bring Germany to war-readiness. Although the Republic of Indonesia under Suharto is known for its anti-communist purge,

his government also adopted the same method of planning. This series of five-year plans in Indonesia was termed REPELITA (Rencana Pembangunan Lima Tahun); plans I to VI ran from 1969 to 1998.Several Soviet five-year plans did not take up the full period of time assigned to them: some were pronounced successfully completed earlier than expected, while others failed and were abandoned. Altogether, Gosplan launched thirteen five-year plans. The initial five-year plans aimed to achieve rapid industrialization of the Soviet Union and thus placed a major focus on heavy industry. The first one, accepted in 1928 for the period from 1929 to 1933, finished one year early. The last five-year plan, for the period from 1991 to 1995, was not completed, since the Soviet Union dissolved in 1991.


Khozraschyot (Russian: хозрасчёт, IPA: [ˌxozrɐˈɕːɵt]; short for хозяйственный расчёт khozyaystvennyy raschyot, "economic accounting") was an attempt to simulate the capitalist concepts of profit and profit center into the planned economy of the Soviet Union.

The term has often been translated as cost accounting, a term more typically used for a management approach in a free market economy. It has also been conflated with other notions of self-financing (самофинансирование; samofinansirovanie), self-reevaluation (самоокупаемость; samo-okupaemost'), and self-management (самоуправление; samoupravlenie) introduced in the 1980s.

As defined in the Soviet Encyclopedic Dictionary:

khozraschyot is a method of the planned running of an economic unit (i.e., of a business, in Western terms) based on the confrontation of the expenses incurred in production with the production output, on the compensation of expenses with the income.

Khozraschyot introduced the necessity in accountability and profitability as well as the motivation in thrifty expenditures.

List of companies of Albania

Albania's transition from a socialist centrally planned economy to a capitalist mixed economy has been largely successful. "Formal non-agricultural employment in the private sector more than doubled between 1999 and 2013," notes the World Bank, with much of this expansion powered by foreign investment.For further information on the types of business entities in this country and their abbreviations, see Business entities in Albania.

Market economy

A market economy is an economic system in which the decisions regarding investment, production and distribution are guided by the price signals created by the forces of supply and demand. The major characteristic of a market economy is the existence of factor markets that play a dominant role in the allocation of capital and the factors of production.Market economies range from minimally regulated free market and laissez-faire systems where state activity is restricted to providing public goods and services and safeguarding private ownership, to interventionist forms where the government plays an active role in correcting market failures and promoting social welfare. State-directed or dirigist economies are those where the state plays a directive role in guiding the overall development of the market through industrial policies or indicative planning—which guides yet does not substitute the market for economic planning—a form sometimes referred to as a mixed economy.Market economies are contrasted with planned economies where investment and production decisions are embodied in an integrated economy-wide economic plan. In a planned economy, economic planning is the principal allocation mechanism between firms rather than markets, with the economy’s means of production being owned and operated by a single organizational body. It is this


OGAS (Russian: Общегосударственная автоматизированная система учёта и обработки информации, "ОГАС", "National Automated System for Computation and Information Processing") was a Soviet project to create a nationwide information network. The project began in 1962 but was denied necessary funding in 1970. It was one of a series of attempts to create a nationwide network analogous to what became the Internet, all of which failed.

The primary architect of OGAS was Viktor Glushkov. A previous proposal for a national computer network to improve central planning, Anatoly Kitov's Economic Automated Management System, had been rejected in 1959 because of concerns in the military that they would be required to share information with civilian planners. Glushkov proposed OGAS in 1962 as a three-tier network with a computer centre in Moscow, up to 200 midlevel centres in other major cities, and up to 20,000 local terminals in economically significant locations, communicating in real time using the existing telephone infrastructure. The structure would also permit any terminal to communicate with any other. Glushkov further proposed using the system to move the Soviet Union towards a moneyless economy, using the system for electronic payments. The project failed because Glushkov's request for funding on 1 October 1970 was turned down. The 24th Communist Party Congress in 1971 was to have authorised implementation of the plan, but ultimately endorsed only expansion of local information management systems. Glushkov subsequently pursued another network plan, EGSVT, which was also underfunded and not carried out. Soviet network plans failed while the American ARPANET succeeded.

The OGAS proposal was resented by some liberals as excessive central control, but failed primarily because of bureaucratic infighting: it was under the auspices of the Central Statistical Administration and as such fell afoul of Vasily Garbuzov, who saw a threat to his Ministry of Finance. When EGSVT failed, the next attempt (SOFE) was done in 1964 by Nikolay Fedorenko, who attempted to build an information network that could be used in economic planning in Soviet Union's planned economy. The project was successful at a micro-level but did not spread into wide use.

Regina Manifesto

The Regina Manifesto was the programme of the Co-operative Commonwealth Federation (CCF) and was adopted at the first national convention of the CCF held in Regina, Saskatchewan, in 1933. The primary goal of the Regina Manifesto was to eradicate the system of capitalism and replace it with a planned socialist economy. The CCF was a Canadian democratic socialist party founded in 1932 by farmers, workers, and socialist groups against the backdrop of the Great Depression.

The manifesto was largely written by members of the League for Social Reconstruction, particularly Frank Underhill and F. R. Scott, and called for "a planned and socialized economy in which our natural resources and principal means of production and distribution are owned, controlled and operated by the people". Specifically it called for the nationalization of transportation, communications, electrical power and other services. It called for a planned economy and a national banking system that would be "removed from the control of private profit-seeking interests." It advocated the ability to organize in trade unions and called for a National Labour Code "to secure for the worker maximum income and leisure, insurance covering illness, accident, old age, and unemployment." The Regina Manifesto proposed social service programs such as publicly funded health care, supported peace, promoted co-operative enterprises and vowed that "No C.C.F. Government will rest content until it has eradicated capitalism and put into operation the full programme of socialized planning which will lead to the establishment in Canada of the Cooperative Commonwealth."

The Regina Manifesto remained the CCF's official programme until 1956 when, in the face of the strong anti-communist sentiment of the Cold War, it was replaced by the more moderate Winnipeg Declaration which substituted Keynesian economics for socialist remedies.

Sali Kelmendi

Sali Kelmendi (31 May 1947-07 February 2015) Was an engineer and a politician. One of the founders of the Democratic Party of Albania in 1990, Sali Kelmendi is the first democratically elected mayor of Tirana in the democratic elections of July 1992.

During the years 1992-1996, over 90% of enterprises and 100% of homes were denationalized. Also a lot of work was done in the housing of the politically persecuted people. Thus, he contributed in the Tirana's transformation from a centrally planned economy to a market oriented system.

Sali Kelmendi suffered a heart attack on 7 February 2015.

Shenyang Jianzhu University

Shenyang Jianzhu University (Chinese: 沈阳建筑大学; pinyin: Shěnyáng Jiànzhú Dàxué) is a university in Shenyang, Liaoning, China under the provincial government.

Socialist-oriented market economy

The socialist-oriented market economy (Vietnamese: Kinh tế thị trường theo định hướng xã hội chủ nghĩa) is the official title given to the current economic system in the Socialist Republic of Vietnam. It is described as a multi-sectoral market economy where the state sector plays the decisive role in directing economic development, with the eventual long-term goal of developing socialism.The socialist-oriented market economy is a product of the Đổi Mới economic reforms which led to the replacement of the centrally planned economy with a market-based mixed economy based on the predominance of state-owned industry. These reforms were undertaken to allow Vietnam to integrate with the global market economy. The term "socialist-oriented" is used to highlight the fact that Vietnam has not yet achieved socialism and is in the process of building the basis for a future socialist system. The economic model is similar to the socialist market economy employed in the People's Republic of China.

Socialist economics

Socialist economics comprises the economic theories, practices, and norms of hypothetical and existing socialist economic systems.

A socialist economic system is characterised by social ownership and operation of the means of production that may take the form of autonomous cooperatives or direct public ownership wherein production is carried out directly for use. Socialist systems that utilize markets for allocating inputs and capital goods among economic units are designated market socialism. When planning is utilized, the economic system is designated as a socialist planned economy. Non-market forms of socialism usually include a system of accounting based on calculation-in-kind to value resources and goods.The term "socialist economics" may also be applied to the analysis of former and existing economic systems that were implemented in socialist states, such as in the works of Hungarian economist János Kornai.Socialist economics has been associated with different schools of economic thought. Marxian economics provided a foundation for socialism based on analysis of capitalism, while neoclassical economics and evolutionary economics provided comprehensive models of socialism. During the 20th century, proposals and models for both planned economies and market socialism were based heavily on neoclassical economics or a synthesis of neoclassical economics with Marxian or institutional economics.

Socialist market economy

The socialist market economy (SME) is the economic system and model of economic development employed in the People's Republic of China. The system is based on the predominance of public ownership and state-owned enterprises within a market economy. The term "socialist market economy" was first used during the 14th National Congress of the Communist Party of China in 1992 to describe the goal of China's economic reforms. Originating in the Chinese economic reforms initiated in 1978 that integrated China into the global market economy, the socialist market economy represents a preliminary or "primary stage" of developing socialism. Despite this, many Western commentators have described the system as a form of state capitalism.

State ownership

State ownership (also called public ownership and government ownership) is the ownership of an industry, asset, or enterprise by the state or a public body representing a community as opposed to an individual or private party. Public ownership specifically refers to industries selling goods and services to consumers and differs from public goods and government services financed out of a government’s general budget. Public ownership can take place at the national, regional, local, or municipal levels of government; or can refer to non-governmental public ownership vested in autonomous public enterprises. Public ownership is one of the three major forms of property ownership, differentiated from private, collective/cooperative, and common ownership.In market-based economies, state-owned assets are often managed and operated as joint-stock corporations with a government owning all or a controlling stake of the company's shares. This form is often referred to as a state-owned enterprise. A state-owned enterprise might variously operate as a not-for-profit corporation, as it may not be required to generate a profit; as a commercial enterprise in competitive sectors; or as a natural monopoly. Governments may also use the profitable entities they own to support the general budget. The creation of a state-owned enterprise from other forms of public property is called corporatization.

In Soviet-type economies, state property was the dominant form of industry as property. The state held a monopoly on land and natural resources, and enterprises operated under the legal framework of a nominally planned economy, and thus according to different criteria than enterprises in market and mixed economies.

Nationalization is a process of transferring private or municipal assets to a central government or state entity. Municipalization is the process of transferring private or state assets to a municipal government.

The Use of Knowledge in Society

"The Use of Knowledge in Society" is a scholarly article written by economist Friedrich Hayek, first published in the September 1945 issue of The American Economic Review.Written (along with The Meaning of Competition) as a rebuttal to fellow economist Oskar R. Lange and his endorsement of a planned economy, it was included among the twelve essays in Hayek's 1948 compendium Individualism and Economic Order.


Venta (pronunciation ) is a small city in Lithuania in the Akmenė district municipality. According to 2005 data there are 3,221 people living in Venta. It is situated along the Venta River, Kuršėnai-Mažeikiai highway, and a railroad connecting Mažeikiai with Šiauliai (the train station is called Akmenė). This makes Venta better situated than Naujoji Akmenė, the capital of the district.

The town grew after World War II together with a lime factory which later produced bricks. At its peak the factory employed about 1,000 people. The city was formed when Bauskas and Purviai villages were joined in 1966. After the 1990 declaration of independence, the factory faced severe financial difficulties while shifting from planned economy to free market. The factory's departments were made into separate companies. Some went bankrupt and their buildings were destroyed; others were privatized. In 1999 a public company, "Naujasis kalcitas" (English: The New Calcite; the only manufacturer of quicklime in Lithuania, supplying 50-55% of the domestic market) purchased and reconstructed a remaining lime burning technology line with rotary kiln. Recently a new heating facility using natural gas was built to provide heat for the city.

Why Socialism?

"Why Socialism?" is an article written by Albert Einstein in May 1949 that appeared in the first issue of the socialist journal Monthly Review.

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