- By Shreya Challa,11A

A command economy is another term for a planned economy, an economy in which production, investment, prices, incomes, etc. are decided by a central body, the government. Examples of planned economies include Cuba, the former Soviet Union and North Korea, though most economies are not completely planned.

Before the socialist revolution of 1959, Cuba was a large importer of cars and telephones, and President Batista oversaw most of the sugarcane economy; Cuba was a one-crop economy growing sugarcane. A third of the population lived in poverty and most were unhappy with the political climate. After the 1959 revolution, led by Fidel Castro and Che Guevara, Cuba's economy became relatively stable under the communist government. The Cuban people depend on the government for goods and services.

There are, as always, disadvantages and advantages to being a command economy. In a command economy, there is less inequality as the government controls production and distribution of goods and services, as well as employment. There are typically low unemployment levels and the common good is a priority over making a profit, unlike in market economies, where the distribution of goods and services is controlled by forces of demand and supply. As in most command economies, healthcare is free. However, Cubans are almost entirely dependent on the government for goods and services. Innovation may be inhibited (as there is no profit motive). Poverty is still widespread.

Cuba's new president, Miguel Diaz-Canel, has promised to modernize the economy and make the government more responsive to the people. One of his first tasks was to unify the country's byzantine dual-currency system, but this could cause inflation. The small number of jobs not under the government's control has increased. In short, the economy is slowly moving towards a more market-oriented system.

Many 'transition economies', as they are called, such as Russia, Poland, and Hungary, however, face rising unemployment, lack of infrastructure and entrepreneurial skills, as well as rampant corruption and inequality. Cuba, like most transition economies, faces these problems as well.

Inflation
Inflation may occur as the government does not have much control over spending anymore. Fiscal and monetary policy to control this may also be less efficient compared to if they were used in a fully planned economy.

Unemployment
Unemployment may also increase as the government's main aim is public welfare but the private sector's main aim is profit. As the government's market share drops, people may be unemployed as the private sector will not employ people if they are not needed or are inefficient, preferring to use capital, such as machinery, instead.
Civil unrest
In the private sector, people may be forbidden from joining trade unions, so industrial unrest may be low. On the other hand, there may be higher civil unrest (and crime) because of higher rates of unemployment.
International relations
Initially, the private sector may also have issues with international relations including exports and imports, as the government was the main body dealing with trade beforehand. Over time, however, international relation will depend more the production efficiency of Cuban firms.

Lower welfare benefits
In a transitional economy, the government would have lower taxes (due to tax evasion, for example) and revenue. As a result, welfare benefits, and spending on public and merit goods, which are necessary for public welfare and economic development, may decrease, reducing standards of living. Less people will be employed by the government as well.
Lower output
Because of lower revenue, the government may not be able to subsidise startups and new firms, which will be common. As a result, output may be low, and unemployment may increase further.
Infrastructure
Physical infrastructure may improve in some aspects because of more private firms and spending on construction, for example. However since they government's market share has fallen, non-physical infrastructure (such as planning for the future) may not improve.
While Cuba's transition from a command economy to a mixed economy will have some complications, such as lower output, lack of infrastructure and unemployment, these problems may be temporary, and the shift to a mixed economy may benefit the economy and the country in the long run, leading to increased consumer choice, higher wages and a more efficient use of resources.