Editing Planned economy (section)

{{short description|Type of economic system based on planning}}
{{Use American English|date=October 2023}}
{{economic systems sidebar|by coordination}}
{{socialism sidebar|models}}
A '''planned economy''' is a type of [[economic system]] where [[Investment (macroeconomics)|investment]], [[Production (economics)|production]] and the allocation of [[capital good]]s takes place according to economy-wide economic plans and production plans. A planned economy may use [[Central planning|centralized]], [[Decentralized planning|decentralized]], [[Participatory economics|participatory]] or [[Soviet-type economic planning|Soviet-type]] forms of [[economic planning]].<ref>[[Alec Nove]] (1987). "Planned Economy". ''[[The New Palgrave: A Dictionary of Economics]]''. vol. 3. p. 879.</ref><ref>{{cite book|last=Devine|first=Pat|title=Democracy and Economic Planning|publisher=Polity|date=2010|isbn=978-0745634791}}</ref> The level of [[centralization]] or [[decentralization]] in decision-making and participation depends on the specific type of planning mechanism employed.<ref>{{cite book|last1=Gregory|first1=Paul R.|last2=Stuart|first2=Robert C.|year=2003|title=Comparing Economic Systems in the Twenty-First Century|location=Boston|publisher=Houghton Mifflin|isbn=978-0-618-26181-9|pages=23–24}}</ref>

[[List of non-communist socialist states|Socialist states]] based on the Soviet model have used central planning, although a minority such as the former [[Socialist Federal Republic of Yugoslavia]] have adopted some degree of [[market socialism]]. [[Market abolitionist]] socialism replaces [[factor market]]s with direct calculation as the means to coordinate the activities of the various [[socially owned]] economic enterprises that make up the economy.<ref>{{cite book|last=Prychito|first=David L.|title=Markets, Planning, and Democracy: Essays After the Collapse of Communism|publisher=Edward Elgar Publishing|date=2002|isbn=978-1840645194|page=72|quote=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.}}</ref><ref name=":0">{{cite journal|title= In Defence of Socialist Planning|last= Mandel|first=Ernest|year=1986|journal=New Left Review|volume=159|pages=5–37|url=http://www.ernestmandel.org/en/works/pdf/Mandel%20socialist%20planning.pdf |archive-url=https://web.archive.org/web/20080516205246/http://www.ernestmandel.org/en/works/pdf/Mandel%20socialist%20planning.pdf |archive-date=2008-05-16 |url-status=live|quote=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''.}}</ref><ref>{{cite book|last=Ellman|first=Michael|title= Socialist Planning|publisher=Cambridge University Press|date= 1989|isbn=978-0521358668|page=327|quote='[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 [...].}}</ref> 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.<ref name=":1" />

Planned economies contrast with [[unplanned economies]], specifically [[market economies]], where autonomous firms operating in [[Market (economics)|market]]s make decisions about production, distribution, pricing and investment. Market economies that use [[indicative planning]] are variously referred to as [[planned market economies]], [[mixed economies]] and [[mixed market economies]]. A [[command economy]] follows an [[administrative-command system]] and uses Soviet-type economic planning which was characteristic of the former [[Soviet Union]] and [[Eastern Bloc]] before most of these countries converted to market economies. This highlights the central role of hierarchical administration and public ownership of production in guiding the allocation of resources in these economic systems.<ref>{{cite book|title=Comparing Economic Systems: A Political-Economic Approach|last=Zimbalist, Sherman and Brown|first=Andrew, Howard J. and Stuart|date= 1988|publisher=Harcourt College Pub|isbn= 978-0-15-512403-5|page=[https://archive.org/details/comparingeconomi0000zimb_q8i6/page/4 4]|quote= 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).|url=https://archive.org/details/comparingeconomi0000zimb_q8i6/page/4}}</ref><ref name="The Soviet Union Has an Administered, Not a Planned, Economy, 1985">{{cite journal|last= Wilhelm|first=John Howard|year=1985|title=The Soviet Union Has an Administered, Not a Planned, Economy|journal= [[Europe-Asia Studies|Soviet Studies]]|volume=37|issue=1|pages=118–130|doi=10.1080/09668138508411571}}</ref><ref>{{cite book|title=Transition and Beyond: Essays in Honour of Mario Nuti|last= Ellman|first=Michael|publisher=Palgrave Macmillan|year=2007|isbn=978-0-230-54697-4|editor1-last=Estrin|editor1-first=Saul|location=New York|page=22|chapter=The Rise and Fall of Socialist Planning|quote=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 [...].|editor2-last= Kołodko|editor2-first=Grzegorz W.|editor3-last=Uvalić|editor3-first=Milica}}</ref>