Name the seven main disadvantages of a command economy. Give at least on example of each of these disadvantages.

1. Societal needs might be ignored.

In a command economy, the needs of the society are often ignored for its betterment. For workers, they will not be given a choice on where they can move or where they can work.

2. Freedom is restricted.

This type of economy normally tied to communism, which means that it also puts full control in the hands of the government alone and takes away the freedom of the people. Citizens cannot choose their career paths based on their interests and skills and interests, but rather based on what the authority forces them to do. All work is aligned with needs at a time, and the public do not have the full freedom of choice. Due to this downside of a command economy, people would mostly become discontented.

3. Innovative developments might be hindered.

While a free market do encourage innovation and change, a command economy does otherwise. Since the government in power is controlling the market, innovation is not a priority or not encouraged at all. This is due to the fact that this economic system controls all aspects of production and does not allow people to make it better. This would lead to a workforce that is not that motivated to create higher-quality services or products.

4. No competition is offered.

Market competition is a primary force of improvement, but it is not found in a command economy. After all, the government is the one owning all the industries. Plus, it does not encourage competition, and actually, it even tries to eliminate it. You would not certainly see the benefits of competition in countries implementing this economic system.

5. Black markets would explode.

Because the government put restrictions on many products and services, such offerings may not be available. Consequently, they will be offered on the black market.

6. There might emerge some export problems.

Because it is difficult for the government in control to determine which products and prices will perform well on the international market, exportation can become problematic.

7. Unbalanced amounts of goods would be experienced.

It is difficult for the government to obtain updated information about consumer needs, so rationing is a way of life in most cases. After all, some items are mass produced, while others are simply not enough to support economic needs.

8. The authority might misplace incentives.

Take note that the central government monitors and regulates the supply and prices, rather than planners and other market forces, and decides on the products and services that are going to be produced and distributed. This would result to rewards not reaching to the individuals that deserve them.

9. Coordination can be difficult or even impossible.

Because there are no planners who coordinate economic decisions on production, consumption and trade for the entire country, efficient coordination is deemed impossible. Demand and supply can even be mismatched, and products can even fall on a shortage. Other issues are imbalance among food, transportation facilities and electronic devices.