Planned economy
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A planned economy or directed economy
is an economic system in which the govern-
ment or workers’ councils manages the eco-
nomy.[1] It is an economic system in which
the central government makes all decisions
on the production and consumption of goods
and services.[2] Its most extensive form is re-
ferred to as a command economy,[3] cent-
rally planned economy, or command and
control economy[4].
In such economies,
central economic planning by the state or
government is so extensive that it controls all
major sectors of the economy and formulates
all decisions about their use and about the
distribution of income.[5] The planners decide
what
should be produced and direct
enterprises
to produce
those goods.[6]
Planned economies are in contrast to un-
planned economies, such as a market eco-
nomy, where production, distribution, pri-
cing, and investment decisions are made by
the private owners of the factors of produc-
tion based upon their own interests rather
than upon furthering some overarching mac-
roeconomic plan. Less extensive forms of
planned economies include those that use in-
dicative planning, in which the state employs
"influence, subsidies, grants, and taxes, but
does not compel."[7] This latter is sometimes
referred to as a "planned market eco-
nomy".[8]
A planned economy may consist of state-
owned enterprises, private enterprises