Please name 2 or 3 things that traditional economies and command economies have in common?

Asked on by twinkisly20

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rareynolds's profile pic

rareynolds | (Level 2) Associate Educator

Posted on

A traditional economy is one where the production and distribution of goods is based on custom and cultural traditions. A command economy is one where the means of production are owned collectively, and decisions about what to produce and how goods are distributed are made by a centralized authority. There are several similarities:

  • Neither economy is based on "market forces" as we understand them today. That is, the ultimate authority in each system is something other than the consumer. In fact, it could be argued that neither economy recognizes "consumers" per se.
  • Each economy is rigid in kinds of goods or work that is permissible. In a traditional economy, culture determines that only certain kinds of goods can be produced; in a command economy, the centralized authority determines production. In each case, individual economic production is outlawed or subordinated to the collective will.
  • Each economy posits a particular kind of social order, in which cultural identity or political imperative is more important than individual freedom. 

I think the main thing these two economic models share is the uncoupling of desire from production. Simply put, in each case the things that are made are not (necessarily) what people want. In the traditional economy, production is tied to cultural identity; in the command economy, production is tied to a collectivist vision of progress. 

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

Command economies and traditional economies are quite different in the most important ways.  In a command economy, a powerful government tells people how to answer the fundamental economic questions.  In a traditional economy, government has no role in this process and people simply base their decisions on what has always been done.  These are very different systems.  However, there are at least two similarities that we could identify between these two.

In both cases, there is (or at least can be) a need for trade.  In other words, people are not completely self-sufficient in either type of economy.  They do not make everything they need and therefore they have to get things from other people. 

The second similarity is that neither system uses market forces to answer the fundamental economic questions.  Neither of these is a modern economy in which the choices that consumers make determine what things will be made, how they will be made, and who will acquire them.  These are systems that use non-market processes to determine the answers to these questions.

These similarities may not be as important as the differences between these two systems, but they are similarities that  we can identify between command and traditional economies. 

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