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.
