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A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized , decentralized , participatory or Soviet-type forms of economic planning .
Economic analysts have argued that the economy of the Soviet Union actually represented an administrative or command economy as opposed to a planned economy because planning did not play an operational role in the allocation of resources among productive units in the economy since in actuality the main allocation mechanism was a system of ...
The New Economic Policy (1921–1928) was a short period of economic pragmatism in the Soviet economics, introduced by Lenin in response to widely observed shortcomings of the War Communism system following the 1917 revolution. NEP, however, was criticized as reactionary and reversed by Stalin, who returned to total economic planning.
A centrally planned economy combines public ownership of the means of production with centralized state planning. This model is usually associated with the Soviet-type command economy. In a centrally planned economy, decisions regarding the quantity of goods and services to be produced are planned in advance by a planning agency.
Thus, a three-class view of the economy (capitalists, coordinators, and workers) is stressed, in contrast to the traditional two-class view of Marxism. The coordinator class, emphasized in parecon, refers to those who have a monopoly on empowering skills and knowledge, and corresponds to the doctors, lawyers, managers, engineers, and other ...
In Marxist theory, the state is "the institution of organised violence which is used by the ruling class of a country to maintain the conditions of its rule. Thus, it is only in a society which is divided between hostile social classes that the state exists". [15] The state is seen as a mechanism dominated by the interests of the ruling class.
The design of self-regulating control systems for a real-time planned economy was explored by economist Oskar Lange, cyberneticist Viktor Glushkov, and other Soviet cyberneticists during the 1960s. By the time information technology was developed enough to enable feasible economic planning based on computers, the Soviet Union and eastern bloc ...
The Lange Model is in practice a type of centrally planned economy and not a type of market socialism. The Lange model has never been implemented anywhere, not even in Oskar Lange's home country, Poland, where Soviet-type economic planning was imposed after World War II, precluding experimentation with Lange-style economy. [2]