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Politico's October 24, 2022 China’s strongman is here to stay. And weaker than he looks. includes the following quote:

“Xi Jinping has made it clear that his preference is a command economy ... very much focused on control and secrecy,” said Dexter Roberts, a senior fellow in the Atlantic Council’s Asia Security Initiative and an expert on Chinese economic policy.

which caused me to look up the term "command economy". While it does not have its own Wikipedia page, Planned economy; Command economy tries to differentiate the two. Briefly and incompletely, my understanding is that a command economy has at least the appearance of a private sector who's job is (in part) to follow commands, and does not exclude the same kind of central planning of a planned economy. So far I see it as a distinction without a difference that matters, but I'm willing to be reeducated (in this regard).

EconomicsHelp.org's Command economy seems to disagree with Politico's quote of Roberts:

China has also made the transition from a command economy to a mixed economy – though politically the country still remains communist.

Either way, for comparison, to educate myself, I'd like to ask:

Question: Are there any examples of modern, stable "command economies"?

Definition of terms for the purpose of this question:

  • "modern" means 20th or 21st century
  • "stable" means around long enough that we can see how well it worked.
  • "command economy" I've added links to two descriptions of what this is, but if you would like to cite a source with a more authoritative or educational description that would be great!

Why Politics SE and not History SE?:

  1. I'm asking this order to better understand what a modern planned economy is and how to view China's current and near-future system through this lens. China's and Xi Jinping's political future are inexorably linked to the ways in which they do or don't control the economy.
  2. See answers to and comments on the History meta question How is History SE not like Skeptics SE?
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    They don't necessarily disagree. China's economy currently is not a command economy, but Xi may look favorably back on the days before Deng's reforms.
    – Obie 2.0
    Commented Oct 26, 2022 at 3:39
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    Command economies are frequent for most countries during times of war (e.g. the US during WWII was a command economy). I think you are looking to compare to a planned economy because clearly command economies work if their plan is to win a war.
    – uberhaxed
    Commented Oct 26, 2022 at 18:40
  • @uberhaxed that's a really interesting point, thanks! Please consider expanding that into an answer post.
    – uhoh
    Commented Oct 27, 2022 at 1:07

1 Answer 1

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TL;DR

Near synonym for command economy would be centrally planed economy as technically just 'planned economy' is more of an umbrella term, although colloquially when people talk about planned economy they just shorten the centrally planned economy.

An example of an economy satisfying all 3 requirements is North Korea. It has both been around for some time. It satisfies academic definitions of command economy. It is modern example as it still exists in 21st century.

However, one has to be careful about Chinese doublespeak. Chinese officials claim China is socialist country, yet even an economics undergraduate student would be easily able to classify China as mixed but predominantly market economy, and their economy would not satisfy the definitions of socialism in authoritative sources. Hence its unclear how much you can take what Xi Jinping is saying at face value. It might all be doublespeak.

Full Answer

An authoritative* definition of command economy is (see Ericson 2007):

A command economy is one in which the coordination of economic activity, essential to the viability and functioning of a complex social economy, is undertaken through administrative means – commands, directives, targets and regulations – rather than by a market mechanism A complex social economy is one involving multiple significant interdependencies among economic agents, including significant division of labour and exchange among production units, rendering the viability of any unit dependent on proper coordination with, and functioning of, many others.

Economic agents in a command economy, and in particular production organizations, operate primarily by virtue of specific directives from higher authority in an administrative/political hierarchy, that is, under the ‘command principle’. Thus the life cycle and activity of enterprises and firms, their production of output and employment of resources, adjustment to disturbances, and the coordination between them are primarily governed by decisions taken by superior organs responsible for managing those units’ roles in the economic system. One of the most distinctive features of such an economy is the setting of the firm’s production targets by higher directive, often in fine detail. The administrative means used include planning, material balances, quotas, rationing, technical coefficients, budgetary controls and limits, price and wage controls, and other techniques aimed at limiting the discretion of subordinate operational units/firms. The command principle strives to fully and effectively replace the operation of market forces in the key industrial and developmental sectors of the economy, and render the remaining (peripheral) markets manipulable and subordinate to political direction. Thus the command principle is likely to clash with the operation of market forces, yet a command economy may nonetheless contain and rely on the market mechanism in some of its sectors and areas, for example, influencing labour allocation, or stimulating small-scale private production of some consumables.

An authoritative* definition of planned economy (Nove 1987):

Its economy that predominantly relies on

deliberate actions of public authorities, primarily the state

The distinction here is that a 'planned economy' is an umbrella term that may include range of things ranging from

indicative planning, when the state uses influence, subsidies, grants, taxes, but does not compel

to Soviet style central planning known also as

‘directive planning’ or command planning. The authorities issue binding instructions to subordinate management, telling it what goods and services to provide, from whom to obtain the required inputs, and, as we shall see, much else besides

Centrally planed economy is pretty much synonym for command economy (see Ericson 2007), but planed economy itself is more of an umbrella term. This being said when people usually say 'planned economy' they colloquially refer to 'centrally planned economy' (at least that is my experience from various conferences, universities etc).

Question: Are there any examples of modern, stable "command economies"?

Yes there is an example. North Korea.

  • it is a command economy following the authoritative academic definition.
  • it is stable. Your definition of stable is bit vague, but I would say North Korea was around long enough "that we can see how well it worked"
  • it is modern, in a sense it does exist in 21st century.

Why Politics SE and not History SE?:

Why not Economics.SE? This seems to be an economics question.



* both of the sources are also entries in the Palgrave Dictionary of Economics which is considered to be the most academic and accurate dictionary of economics. However, note its not classic dictionary it is a reference to articles that use widely established definitions or discuss how definition change within profession.

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    There is reportedly some non-centrally-planned economic activity in North Korea, including both a tolerated unofficial/black market (involving significant smuggling), and occasional tries at allowing non-state-controlled businesses. Other surviving communist states Laos and Vietnam now have economies comprising some planning, some free enterprise, and subsistence farming. A state with no private economic activity is rare, although some e.g. the Soviet Union have tried to ban it at different times.
    – Stuart F
    Commented Oct 27, 2022 at 10:52
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    @StuartF but the definition still applies. If you read carefully the definition it says that the definition requires economy to rely primarily i.e. not necessarily completely on this mode of economic organization. You are completely right there are some private markets tolerated in North Korea, yet that is completely fine using the authoritative academic definition, as this definition only requires this to be the primary but not sole mode of organizing economic activity. Of course there is no country ever in recorded history which would use 100% of any form of econ organization but
    – 1muflon1
    Commented Oct 27, 2022 at 12:08
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    academic definitions take that into account by talking about primary or predominant mode of economic organization (when using categorical level of measurement), otherwise you could never categorize any country (see the second paragraph of first definition, and first paragraph of second carefully)
    – 1muflon1
    Commented Oct 27, 2022 at 12:10

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