7:23 there was another problem. The people didn't just have no interest in making the goods better but it was frowned upon. In the ussr there was a story how some ingeneer created a better process for metal processing and he offered it to the leaders of his factory and he was scolded for it! He was told "do you even understand what you are offering? Using this type of process will diminish the time we need to spend on the work and it contradicts the plan! According to the plan we need to work exactly X hours a year and you just want to change the plan! Forget about it!"
Also worker ownership and cooperative management. Capitalist tutorials tend to be very narrow in scope. That's what you get when capitalism turns into a religion. I had high hopes for this series and then this guy pretends it's just either private ownership or the government. What a disappointment.
@@greensquare6235 wdym, the guy specifically mentioned command economy's, which involve central planning and are the more centralized versions of socialism, whereas Yugoslavia with it's worker collectives was a more decentralized socialism, but this guy didn't mention socialism or capitalism specifically he was talking about command vs market economics
Acctually USSR had competion in economy, like if you director of a factory and your factory produce something better then other, you can get more orders and be better paid, of course it depends on government you have.
but prices were controlled by the state, not by corporations, and when our prices are always the same with our competitors, then there is no sense to compete
Once technology advances enough, a car could become a representation of any design a person wants. Imagine a profile page with it's own style, when you get in a car you could have it looking like your own personal style. But even then a car isn't really about making a statement, it's about getting from a to b. But the point of styling is to keep the world interesting. Never a dull moment. We should be working on technology that can be the style a person wants on demand. This would not affect the hardware or software. Imagine lego blocks with motors, on a tiny scale. That can be formed in a pattern we like. The style we choose would be up to us. Now with vehicles it could just be the windows styles and so on. How much it can change would depend on how much that hindered the practicality of that object. So people would have the freedom of style without having to pay for a completely new object. Long term even the hardware could be recycled and turned in to a better version of it's self. More efficient, by taking the materials used and reforming them, and melting the metals individually and reshaping them. With software updates this already happens all the time. Point being if everything was working as a collective and sharing new updates, then the world would progress in a way that every human got the latest and best technology. Given sometimes new materials would be needed, but that would be the only time in which a person would need something new. The rest of the time 3d printers and methods would be available in which everyone could have any design they wanted, and then select how it is to look or even hoe stringy and soft something is. This could be done with layering. Like how fabric is woven. But point being the aim would be to allow everyone to have something by creating a device which could re-make the part made. Kind of like how the human body heals it's self, but instead it could break it's self down and build in to a totally new style and feel.
@@kylanaveros8998 What has this got to do with my comment? Do you think a Command Economy is a good idea? Do you think I am talking about a Command Economy?
@@kylanaveros8998 I'm talking more about a Circle Economy, and creating a system that uses sustainable materials, you create a system based on modern technology, in which everyone had 3D printers or a local large 3D printer, and those printers run on sustainable materials to print out the latest technology. You create a system to simply share out the designs, as if you learn about shapes and materials, how light refracts, most of what is in trees or plants can be used for most things and a machine just has to know how to transform it into the right shape or material. So most products people need can be designed on a computer, once most people learn how to do this, they can build anything, then have it printed, and the computer can formulate how to build it if it needs piecing together. Even in the future, another bot machine could piece it together for people. A database of all designs people do could be available, which people rate and categories, so people can look at certain styles. When it comes to new innovations it's a bit different, lets say we're talking about medicine or hardware, that starts getting more complex. But the principle would be that if someone figures something out, everyone would have access to that instantly and this would be printable from any printer. Whether that is a bit of a pipe dream, because you have to limit people to what is available sustainably. Well I don't know, but I think it's possible. As for how this would affect the economy. It would mean money isn't needed for goods, as you created a sustainable economy and machines which distribute everything. The reason people would work is to do new advancements and get what they need to do what they aim to do. So basically if there is no reason to progress then progress will not be done. The aim is to give people the time to do what they want to do, rather then having to earn money to then do what they want to do, all while being ethical and sustainable, and looking after life on the planet. But maybe when I wrote this originally I was being too optimistic?
The Soviet Union is actually a bad example of command economies, since they were forced to transition from market to command economies, and existed in a globalised world were market economies were the norm. They they never worked properly, and failed. Better examples of command economies are the monarchies of the ancient world, notably the Hittites, the Assyrians, and most importantly, Ancient Egypt. This highly organised command economy lasted for thousands of years, international trade flourished, and made Egypt the wealthiest and most powerful civilisation of the ancient world before the Bronze Age Collapse.
Difference between poverty and inequality. If no one was starving or unable to work in a market economy, the US wouldn't have those social safety nets, even if the inequality was bigger than it currently is. If everyone was richer, but the rich were richerer, there'd be no social safety nets, so it's a little inaccurate to say that the US has such systems due to extreme inequality.
@@kylanaveros8998 There are a few ways to do it. More than a few, actually. For example, you could have government dictate who works where by investigating peoples' needs and their abilities (not my favourite). Or, with all the resources available in a first world country, you could have people tell gov't what they want to do, and chances are there will be enough people doing all the things that need doing, even if plenty aren't working by the sheer number and variety of people out there. Etc. The constant across all of these ways of doing it is that a single, well-coordinated (ideally) entity is distributing the resources to the various "businesses", whether they use them for providing a service (like a truck for a delivery service), or for assembling a product (like metal for a car manufacturer), or direct distribution to the public (like produce for a grocery store), and ideally, this distribution would be the most utilitarian; optimizing quality of life for the public. Right now, distribution of metal is determined more by profitability than by what yields the greatest quality of life, and while these metrics do have some correlation, perhaps even significant, they are not 1 to 1. Meaning there's room for improvement.
This video is the perfect illustration for the prior video about Economic Models. The Command/Market economy is itself a MODEL : a simplified version of the real world. In this case, it is simplified to a fault and made bad assumptions, as said in the last video, about what communism looks like by applying the Command model. Communist States (USSR, Cuba, modern China and Vietnam, Laos...) or philosophers/economists (Marx, Engels, Lenin...) never called for equality in allocating products to the people. In fact, allocating ressources was not their direct concern. When it comes to models, what's funny is that when China, when transitioning from classic socialism to socialism w/ Chinese characteristics (mixed economy w/ CCP control), they were actually able to test their new model in Southern China. When Deng Xiaoping saw that it actually worked quite well, the new model was applied to the entire country, leading to the "moderately prosperous", as they say, nation that it is today.
The most glaring issue with the Command/marked economy is the innovation fallacy. The USSR was literally the first nation to conquer space. Huge innovations were made. The problem lied in their unability to transform the gigantic breakthroughs in science into consumer products. The fact that you can, in a so-called command economy, have at your disposal the resources of the State, and a policy that promotes human progress and glorifies pioneers, that allows you to work without the constraint of competition that cripples collaboration and solidarity is a big motivation for work.
The incentive to improve cars in a command economy is that there is less environmental damage, faster transport of goods and workers, etc. Everything functions more efficiently. A command economy government would be wise to invest in R&D.
@@Attalic why did you respond to this 4 minutes later? speed run times, also i didnt even watch the video i just know that hes coping as per the tankie quota.
The globalized market is proving the assumptions at the core of market economies to be quite wrong and the whole idea that "competition" will lead to innovation and cheaper and more advanced goods is falling apart. Money is power and the more money you have the more the chances that you can get even more money. This is at the heart of consolidation that has been happening in the world economy in the past thirty years where big companies are getting bigger and bigger and because that means more power they don't let any competition to form, either buying and dissolving the competition at an early stage or drowning it out in public sphere through advertisement or outright not letting it operate (a la Amazon, threatening publishers who sell their books on other platforms). Everywhere you look in market economies, you see more and more consolidation of industries and monopolies forming instead of competition. And these monopolies in many cases are stronger than many governments and they are inherently authoritarian structures since there's no democratic representation a la a parliament or democratically elected president or executive branch or an independent judiciary. Because of these consolidations, the capitalist class, CEOs, CFOs, etc. are increasing their share of the profits as can be seen in increases in upper managerial class incomes as opposed to the rate of increase in workers income. Most economies in the world before 1980s were despite what they claimed closer to command economies. Corporations could not get as big as they get now because of anti-trust laws, governments had the power to break them up. Governments were very powerful in dealing with corporations but starting from 1980s the Chicago school, as described here as "capitalism", took over and limited the power of governments, giving more freedoms to corporations and advertising this as a democratic move, but governments ideally at least to a certain extent represent people, while corporations represent special interests, so taking power away from governments and giving them to corporations may be advertised as giving freedom to people but what it actually amounts to is taking power from people at large and giving it to the capitalist class, a group which doesn't need to answer to anyone in a democratic way. This development which is sometimes called market fundamentalism has caused huge instability in world economy, in which recessions have doubled in speed, leaving millions in dire conditions every decade in a accelerating cycle, while enriching very few; and in terms of management of resources this system also has been proven to have an abysmal track record, for instance in terms of food, the amount of food produced in the world is enough to feed the whole population of the earth three times over but billions are grappling with starvation. In communist economies when countries faced famine and starvation, the command economy was blamed for it and deaths caused from it. This is easy to do since the command economy claims to be centrally planning the economy so for the layperson it is easy to justify seeing the command economy as the cause of the things that's happening in an economy, be it famine and starvation or on the other hand success in feeding people. But when it comes to market economies, although they principally claim it to be a better way of managing the economy, through a sleight of hand, the negative consequences of the system are shifted always elsewhere because they claim that no one is planning this, so a starvation in market economies is always blamed on some other factor but all the successes are claimed as the result of market economy. But a market economy is a way of managing resources, so if the management of resources is failing as badly as it is doing now in our global market economy, the blame is on the "unplanned" short-term myopic outlook of market economies. Since the advent of Chicago school, and increase in market fundamentalism, aka freer enterprise, in 1980s, the resulting world is a world in which for the first time since the industrial revolution (successes of which market economists attribute to free market, while no free market existed in England or Netherlands until late 19th century and advent of science has nothing to do with the form of government as been proven in history time and time again), the new generation is faring worse than their parents. To claim religiously as market economists do, who are mostly themselves tied to the financial sector or whose faculties are funded by libertarian billionaires, that competition is always good and that letting the markets be without any long-term planning is the way to go, is what got us into this mess with climate change and horrible allocation of resources. What hopefully distinguishes humans from other animals is rationality and the hallmark of rationality is a thorough analysis of past and present and using this to devise a long-term plan taking into account data and insight gathered from many different areas of knowledge and science. This cooperation and long-term planning is the essence of rationality and market economy is telling us that this is not the way to go and in fact the opposite is better. Yes the opposite is better for the billionaires and the economists that get a consulting gig to push this nonsense but it's not better for our planet and its population.
Great video for a high level intro of an economy (Pure Command versus Pure Market), of which does not naturally exist anywhere in the world (hence the final mention of a Mixed economy). An economy asks these 3 basic questions: 1)Who decides what goods and services are needed? 2)Who decides how those goods and services are produced and 3) Who decides how the goods and services are distributed? Based on the answers, you land in the more specific economic system discussions of Communism v Socialism v Capitalism, of which all have a range or mixed variations.
Chad Willis in my opinion they have little to no correlation. A market economy can be socialist, and a command economy can be capitalist, hence command capitalism and market socialism
What information does the market have on guessing the needs of the market that a command economy does not? The government should have more information as they are dealing with the entirety of production. Competition does work to increase innovation once it's around, but once the company goes out of business, there's a monopoly and there's no incentive anymore. Innovation isn't exclusive to market economies as planning authorities still have problems they need to solve, and thus they may put R&D or more resources to that cause that a capitalist wouldn't because advertisement, lobbying for deregulation, and anti-competitive practices are cheaper and increase profits. The only incentive in Market Economies is profit and nothing else, innovation is secondary because advertisement, lobbying for deregulation, and anti-competitive practices are cheaper and increase profits. And pure profit incentive is flawed because it forces capitalists to decrease wealth to workers to increase profits, which causes severe wealth inequality. Demand isn't true demand in a market as it only means the demand of the people who can pay, which is a problem because wealth inequality makes it so the people who demand resources can't get resources because they can't pay for it due to low wages or long working hours.
Boone Keller : "...demand in a market ..." Important pint: the "market" sees only effective demand, "Real demand" from people with urgent needs but no money is ignored. During serious recessions produce is destroyed to "maintain prices". These could be the times a quantity of *new, debt-free money* could be printed and injected into the econy.
The government has no incentive to be efficient since there's no competition for him. People have no incentive to become great workers because there's no real need. I wouldn't study what the market needs the most if I had the chance to study what I like and get a job anyway.
How exactly would the government know about local particularities? And even if they could, do you think that a central government would be able to manage all of the infinite different items that our economies produce? They can't. The system would be pretty much like USSR. Basic needs and nothing else. High bureaucracy and inefficient production.
Just think about it. Look at the amount of, let's say, cars that we have to choose from. Look at the amount of shoes, the amount of candies etc. That's for every single category. How can you even consider that a government is able to do something like that?
Well in the Soviet Union there were great rewards for people who make production more efficient, especially if the quality stays the same. They get reward payments which sometimes can be 10 times the salary for an innovation, they are shown on the TV (I remember they dedicated TV time to "heroes of socialist labor" these are people who created some innovation, which has drastically increased the productivity of the factory. There were medals and Ordens for people who have dedicated greatly the highest being orden of "hero of the socialist labor" which is a civilian equivalent to highest military reward "Hero of the Soviet Union". So talking about unmotivated workers are falsifications. Also about the "plan" obviously it existed. But the good thing is, if you made your plan for 6 working hours instead of 8, you can go home or choose to overdo the plan for extra rewards. The best example, is that the first 5-year plan after "war communism" (economical Policy during civil war) and "NEP" (New economic policy, something close to modern market socialism or social democracy) was finished in only 4 year.
My biggest concern with both command and market economies is lack of democratic participation. Both are inherently authoritarian and do not give those producing the products and wealth in society much say in how the wealth is distributed. I’m much more in favor of participatory economics. Worker councils should control industry. We should strive for a system that creates solidarity, diversity, self-management, and efficiency.
For the U.S., at least, Economic System is mixed(Socialism & Capitalism) and Government type if Democratic Republic. Though, minority type views aren't always expressed to be concise or promoted equivalently for financial statuses(i.e.- Socialism, Green Party, Libertarian, Anarchist, etc.), compared to the Democrat and Republic Afflictions. All only based on trends on the mainstream, niche is where 'not so popular'(
Woooow , I love the way you explain things , you make me feel than I am not idiot , I just need some one who has an efficient and creative way of teaching , thank you🤍
Every economy is a planned economy. The difference between these 2 examples is who does the planning. With markets, the firm plans their own stuff. Markets can exists under capitalism and socialism. Capitalism has private individuals own and plan their businesses, and market socialism has worker cooperatives. A command economy is when a central planning board (usually part of the government) plans the businesses. Command economies can still have a lot of market elements. Like the government can plan 5 different car companies and tell them to compete with each other. The government could then allocate more resources towards whichever one does better. When sal talks about every car in the ussr looking the same, thats not inherent to command economies. He makes it sound like there's freedom of choice under capitalism, but plenty of oligopolies have formed in America over the years. 3 companies make most of the candy, 5 companies control most of the media, Amazon - i shouldn't need to elaborate on this one. I hope this helps
Well the first is something i've never heard of. What do you mean by Centrally Planned Capitalism? And Market Socialism can mean a few different things and have different variants. You can have all the factors of production owned still by the government, but have different parts of the factors be run in competition to others, within a market context. Yugoslavia had something similar to this type of system.
Following the Collapse of the USSR, People struggle to learn about Basic Economics since they just recently opened their businesses and China also embrace Capitalism to strengthen their economy with international trade while still having a Communist identity.
@@Romanov117 the collapse of the USSR led to massive privatization, theft and capital flight which resulted in oligarchs and mafias while the standards of living dropped and mortality rates skyrocketed for decades. China has a mixed state capitalist economy with market reforms which allows for the stability of a state controlled planned economy while also using markets to sustain tremendous growth.
At no point was the term “socialism” mentioned (also bear in mind that socialism is very different from communism). With regards to communism (or command economy) no doubt this is an extremely simplistic overview of the concept rather than how it actually worked in say the USSR.
Not to be disrespectful but this is such simplified and quite frankly distorted version of what a command economy is and how it functions. Please Khan Academy, do better.
@@dotjpeg9102 Under Capitalism, you're right it's not possible. In Communism, that's exactly what happens; the governing body is the people themselves, who help manage and distribute resources. All a state is defined by is a monopoly on force, of which Communism doesn't have.
In an advanced technological and futuristic world where we'd have intelligent AI and heavy automation, I think socialism will be a good choice of government simply because it would lead to maximum efficiency (The AI calculates the most efficient way to spend money and who to fire or hire depending on results and skills or personality, etc.). The problem with socialism right now with humans is that the government owning everything would easily lead to extremely inefficient spending or corruption, so right now that wouldn't work.
the video speaks in reeeeeally simple words and thus makes everything wrong. The author doesn't clarify it so you get an impression that the government just gifts the goods it orders to produce. The author just said "the givernment decides who gets what", but this is a total garble. The government gifts you nothing, you *buy* stuff from the government. You get nothing from it, you buy it. The government owns, let it be, a farm land and it says to the people who work there "you must produce 100 apples", the land produces the apples and then the government sells them to the people of the country(or abroad). And if the apples are with worms, they are awful and taste bad, *you can do nothing about it.* You buy the apples or you starve. If you think "ok I will produce my own apples, maybe I'll even share my good home grown apples with other people" then think again. You are *prohibited* to do so. Eat the wormed apples. You are not allowed to grow your own. Any competition is prohibited, any initiative you may start wanting is prohibited, any actions of your own are prohibited. Eat what you get or get nothing. If the people need 130 apples and the country produces only 100 just cope. If the people need just 80 but the country produces 100 cope again and let the apples rot. The country will never produce the amount the people need because it's literally impossible to pre count. Market does it the best but it's prohibited. And sure the video doesn't include the fact that the government may order a farm to produce 100 apples, the workers say "it's literally impossible, you have no idea about the conditions of our land, we can produce only 80 and it is the absolute maximum" the government just says "I don't care, produce it or I fire you and hire some other people". The farm produces 80, the needs are 100, people starve and the government does nothing. It just changes the workers and the cycle repeats. And sure the goods the government produces are always of a bad quality. Because there is no competition, thus no need of making better goods or improving the workers' conditions. In the normal economy if you don't like the apples the company A produces you start buying the apples of the company B or C. And if the company A makes worse apples than the other companies it bancrupts and produces no more. If it doesn't want to become a bancrupt it starts to search for ways of improving its goods. In the planned(command) economy there is only the company A(the government) and it literally has no need of any improvements and the good always have low quality. The planned(command) economy is literally just a castrated version of the economy and nothing becside it.
What he says about market economies might have been true in 2017, but it's not true now. Since the "pandemic", the inherent contradictions destroying the "free market" system have been increasingly apparent, and we are moving inexorably towards a publicly-owned command economy.
If everyone had a say in government and the government is run by the people, the people would decide who got what. It wouldn't be like this overlord telling everyone. It would be the people saying in this area the demand for that is about this % we need to distribute out enough for the people in that area. And since the government is the people, they would always look out for all peoples interest, not tainted by profit or gain, but looking to give what everyone needed. That is if the government is actually run by the people. It would be better though if you had local statisticians working out what is needed and what people want in that area, and working out if it can be done. This would all be about the best interest of the people. It would not be about setting up those in government with power as I said the government should be run by all people. But that is my view point. It would be about people working for the people, in which the government would just be a building in which all people decided what is for the best.
Sorry to disagree, but the concept presented here about the Command economy is oversimplified. If you study the Soviet Union economy, you'd find out that there did exist different companies (for example, in aviation it was Tupolev, Ilyushin, Antonov, Sukhoi, Mikoyan, Mil, Kamov and etc.) The thing was only that the government did decide on what product they would buy from these companies, as essentially everything (including the purchasing firms) was owned by the government, thus making this a way to eliminate ineffective projects and allocate resources. There was innovation included, as every so often the engineering team suggested a new version of a product. In addition, these products were traded outside the USSR, which gave some external competition. To Western fellas it might sound strange that the government owns everything, but you should remember that the people essentially owned the government. So, what I mean is, it is after all a quite utopian concept, but it is possible to make to a very high extent. Market economy is also utopian. Otherwise you'd cancel budgets and just rely on the invisible hand of the market. So please do not try to make this a dumb system. Each one has pros and cons. So does the current one.
@@Attalic I am so used to liberal economics teachers saying this stuff that I couldn't even laugh when Richard Wolff sarcastically said "Socialism is when the government does stuff. And it's more socialism the more stuff it does. And if it does a real lot of stuff, it's communism.", since this is exactly what actual economics teachers/profs often narrow it down to. Based on idealism, the liberal economic principles have become like a religion which not only critiquing means I don't understand 'basic economics', but also that they will have a hegemony over all definitions and characterizations.
I was watching this and fell asleep and started dreaming about Economic apples. Also thank you for making these. Econ is hard.
you went out quickly 😂😂
7:23 there was another problem. The people didn't just have no interest in making the goods better but it was frowned upon. In the ussr there was a story how some ingeneer created a better process for metal processing and he offered it to the leaders of his factory and he was scolded for it! He was told "do you even understand what you are offering? Using this type of process will diminish the time we need to spend on the work and it contradicts the plan! According to the plan we need to work exactly X hours a year and you just want to change the plan! Forget about it!"
i had to do khan academy math all summer and sal's voice still haunts me
Would be interested in seeing your explanation of a commune economy as anarchists idealize. I always find them intriguing, but they are arcane to me.
Also worker ownership and cooperative management. Capitalist tutorials tend to be very narrow in scope. That's what you get when capitalism turns into a religion. I had high hopes for this series and then this guy pretends it's just either private ownership or the government. What a disappointment.
@reen Square Couldn't agree more!
I'd also liked to see a discussion of monopolies
@@greensquare6235 bruh
@@greensquare6235 wdym, the guy specifically mentioned command economy's, which involve central planning and are the more centralized versions of socialism, whereas Yugoslavia with it's worker collectives was a more decentralized socialism, but this guy didn't mention socialism or capitalism specifically he was talking about command vs market economics
Acctually USSR had competion in economy, like if you director of a factory and your factory produce something better then other, you can get more orders and be better paid, of course it depends on government you have.
but prices were controlled by the state, not by corporations, and when our prices are always the same with our competitors, then there is no sense to compete
says the KGB
no there was no competition and your argument isn't related to the thing you tried to prove
Once technology advances enough, a car could become a representation of any design a person wants. Imagine a profile page with it's own style, when you get in a car you could have it looking like your own personal style. But even then a car isn't really about making a statement, it's about getting from a to b. But the point of styling is to keep the world interesting. Never a dull moment. We should be working on technology that can be the style a person wants on demand. This would not affect the hardware or software. Imagine lego blocks with motors, on a tiny scale. That can be formed in a pattern we like. The style we choose would be up to us. Now with vehicles it could just be the windows styles and so on. How much it can change would depend on how much that hindered the practicality of that object. So people would have the freedom of style without having to pay for a completely new object.
Long term even the hardware could be recycled and turned in to a better version of it's self. More efficient, by taking the materials used and reforming them, and melting the metals individually and reshaping them. With software updates this already happens all the time.
Point being if everything was working as a collective and sharing new updates, then the world would progress in a way that every human got the latest and best technology. Given sometimes new materials would be needed, but that would be the only time in which a person would need something new. The rest of the time 3d printers and methods would be available in which everyone could have any design they wanted, and then select how it is to look or even hoe stringy and soft something is. This could be done with layering. Like how fabric is woven. But point being the aim would be to allow everyone to have something by creating a device which could re-make the part made. Kind of like how the human body heals it's self, but instead it could break it's self down and build in to a totally new style and feel.
@@kylanaveros8998 What has this got to do with my comment? Do you think a Command Economy is a good idea? Do you think I am talking about a Command Economy?
@@kylanaveros8998 I'm talking more about a Circle Economy, and creating a system that uses sustainable materials, you create a system based on modern technology, in which everyone had 3D printers or a local large 3D printer, and those printers run on sustainable materials to print out the latest technology. You create a system to simply share out the designs, as if you learn about shapes and materials, how light refracts, most of what is in trees or plants can be used for most things and a machine just has to know how to transform it into the right shape or material. So most products people need can be designed on a computer, once most people learn how to do this, they can build anything, then have it printed, and the computer can formulate how to build it if it needs piecing together. Even in the future, another bot machine could piece it together for people. A database of all designs people do could be available, which people rate and categories, so people can look at certain styles.
When it comes to new innovations it's a bit different, lets say we're talking about medicine or hardware, that starts getting more complex. But the principle would be that if someone figures something out, everyone would have access to that instantly and this would be printable from any printer. Whether that is a bit of a pipe dream, because you have to limit people to what is available sustainably. Well I don't know, but I think it's possible.
As for how this would affect the economy. It would mean money isn't needed for goods, as you created a sustainable economy and machines which distribute everything. The reason people would work is to do new advancements and get what they need to do what they aim to do. So basically if there is no reason to progress then progress will not be done. The aim is to give people the time to do what they want to do, rather then having to earn money to then do what they want to do, all while being ethical and sustainable, and looking after life on the planet.
But maybe when I wrote this originally I was being too optimistic?
Hays im just asking for a help for my assignment. Nevermind
Why hasn’t this video attracted more views? It’s one of the best explanations and descriptions on the topic I’ve seen.
graphics r not good...need cartoon
It's ideological garbage.
@@greensquare6235 Not really. The ideological attsck doesn't start before the 5 minute mark
The Soviet Union is actually a bad example of command economies, since they were forced to transition from market to command economies, and existed in a globalised world were market economies were the norm. They they never worked properly, and failed. Better examples of command economies are the monarchies of the ancient world, notably the Hittites, the Assyrians, and most importantly, Ancient Egypt. This highly organised command economy lasted for thousands of years, international trade flourished, and made Egypt the wealthiest and most powerful civilisation of the ancient world before the Bronze Age Collapse.
Chile was on track... but... you know.
Difference between poverty and inequality. If no one was starving or unable to work in a market economy, the US wouldn't have those social safety nets, even if the inequality was bigger than it currently is. If everyone was richer, but the rich were richerer, there'd be no social safety nets, so it's a little inaccurate to say that the US has such systems due to extreme inequality.
Think along the line that is the first rule of economics
Hey can i ask how does the business run in the command economy
@@kylanaveros8998 There are a few ways to do it. More than a few, actually. For example, you could have government dictate who works where by investigating peoples' needs and their abilities (not my favourite). Or, with all the resources available in a first world country, you could have people tell gov't what they want to do, and chances are there will be enough people doing all the things that need doing, even if plenty aren't working by the sheer number and variety of people out there. Etc. The constant across all of these ways of doing it is that a single, well-coordinated (ideally) entity is distributing the resources to the various "businesses", whether they use them for providing a service (like a truck for a delivery service), or for assembling a product (like metal for a car manufacturer), or direct distribution to the public (like produce for a grocery store), and ideally, this distribution would be the most utilitarian; optimizing quality of life for the public. Right now, distribution of metal is determined more by profitability than by what yields the greatest quality of life, and while these metrics do have some correlation, perhaps even significant, they are not 1 to 1. Meaning there's room for improvement.
Wow thankyou for answering my assignment hahaha love it so much can i ask one more hehe
@@kylanaveros8998 Any time!
This video is the perfect illustration for the prior video about Economic Models. The Command/Market economy is itself a MODEL : a simplified version of the real world.
In this case, it is simplified to a fault and made bad assumptions, as said in the last video, about what communism looks like by applying the Command model. Communist States (USSR, Cuba, modern China and Vietnam, Laos...) or philosophers/economists (Marx, Engels, Lenin...) never called for equality in allocating products to the people. In fact, allocating ressources was not their direct concern.
When it comes to models, what's funny is that when China, when transitioning from classic socialism to socialism w/ Chinese characteristics (mixed economy w/ CCP control), they were actually able to test their new model in Southern China. When Deng Xiaoping saw that it actually worked quite well, the new model was applied to the entire country, leading to the "moderately prosperous", as they say, nation that it is today.
The most glaring issue with the Command/marked economy is the innovation fallacy. The USSR was literally the first nation to conquer space. Huge innovations were made. The problem lied in their unability to transform the gigantic breakthroughs in science into consumer products.
The fact that you can, in a so-called command economy, have at your disposal the resources of the State, and a policy that promotes human progress and glorifies pioneers, that allows you to work without the constraint of competition that cripples collaboration and solidarity is a big motivation for work.
@@jesselukaso8575 Soviets: "No human rights?"
USA: "No light industry?"
Soviets: "😵"
The incentive to improve cars in a command economy is that there is less environmental damage, faster transport of goods and workers, etc. Everything functions more efficiently. A command economy government would be wise to invest in R&D.
Wolfgang Kenshin from a post communist country and can definitely say I agree with you. Technology and capitalism just don’t go together.
@@theta3302 I still work for the government, btw.
@@TwistersSK8 what?
Thank you so much teacher Sal for letting me understand this lesson, Its better than my 2 hours live lessons!
me when they have a fundamental misunderstanding of communism and command economies 😀
SOMEONE WITH A BRAIN. THANK YOU.
cope
@@wtfimcrying Seems you're the one coping, having to rely on false information
@@Attalic why did you respond to this 4 minutes later? speed run times, also i didnt even watch the video i just know that hes coping as per the tankie quota.
@@wtfimcrying I'm on UA-cam rn, it's my break atm. Also, since when is telling someone they're quite literally wrong, coping?
Excellent explanation ♥️ u provided great help for me. Thanks a million
The globalized market is proving the assumptions at the core of market economies to be quite wrong and the whole idea that "competition" will lead to innovation and cheaper and more advanced goods is falling apart. Money is power and the more money you have the more the chances that you can get even more money. This is at the heart of consolidation that has been happening in the world economy in the past thirty years where big companies are getting bigger and bigger and because that means more power they don't let any competition to form, either buying and dissolving the competition at an early stage or drowning it out in public sphere through advertisement or outright not letting it operate (a la Amazon, threatening publishers who sell their books on other platforms). Everywhere you look in market economies, you see more and more consolidation of industries and monopolies forming instead of competition. And these monopolies in many cases are stronger than many governments and they are inherently authoritarian structures since there's no democratic representation a la a parliament or democratically elected president or executive branch or an independent judiciary. Because of these consolidations, the capitalist class, CEOs, CFOs, etc. are increasing their share of the profits as can be seen in increases in upper managerial class incomes as opposed to the rate of increase in workers income. Most economies in the world before 1980s were despite what they claimed closer to command economies. Corporations could not get as big as they get now because of anti-trust laws, governments had the power to break them up. Governments were very powerful in dealing with corporations but starting from 1980s the Chicago school, as described here as "capitalism", took over and limited the power of governments, giving more freedoms to corporations and advertising this as a democratic move, but governments ideally at least to a certain extent represent people, while corporations represent special interests, so taking power away from governments and giving them to corporations may be advertised as giving freedom to people but what it actually amounts to is taking power from people at large and giving it to the capitalist class, a group which doesn't need to answer to anyone in a democratic way. This development which is sometimes called market fundamentalism has caused huge instability in world economy, in which recessions have doubled in speed, leaving millions in dire conditions every decade in a accelerating cycle, while enriching very few; and in terms of management of resources this system also has been proven to have an abysmal track record, for instance in terms of food, the amount of food produced in the world is enough to feed the whole population of the earth three times over but billions are grappling with starvation. In communist economies when countries faced famine and starvation, the command economy was blamed for it and deaths caused from it. This is easy to do since the command economy claims to be centrally planning the economy so for the layperson it is easy to justify seeing the command economy as the cause of the things that's happening in an economy, be it famine and starvation or on the other hand success in feeding people. But when it comes to market economies, although they principally claim it to be a better way of managing the economy, through a sleight of hand, the negative consequences of the system are shifted always elsewhere because they claim that no one is planning this, so a starvation in market economies is always blamed on some other factor but all the successes are claimed as the result of market economy. But a market economy is a way of managing resources, so if the management of resources is failing as badly as it is doing now in our global market economy, the blame is on the "unplanned" short-term myopic outlook of market economies. Since the advent of Chicago school, and increase in market fundamentalism, aka freer enterprise, in 1980s, the resulting world is a world in which for the first time since the industrial revolution (successes of which market economists attribute to free market, while no free market existed in England or Netherlands until late 19th century and advent of science has nothing to do with the form of government as been proven in history time and time again), the new generation is faring worse than their parents. To claim religiously as market economists do, who are mostly themselves tied to the financial sector or whose faculties are funded by libertarian billionaires, that competition is always good and that letting the markets be without any long-term planning is the way to go, is what got us into this mess with climate change and horrible allocation of resources. What hopefully distinguishes humans from other animals is rationality and the hallmark of rationality is a thorough analysis of past and present and using this to devise a long-term plan taking into account data and insight gathered from many different areas of knowledge and science. This cooperation and long-term planning is the essence of rationality and market economy is telling us that this is not the way to go and in fact the opposite is better. Yes the opposite is better for the billionaires and the economists that get a consulting gig to push this nonsense but it's not better for our planet and its population.
apples grow on trees!!!
😂😂
true
It just called it a "farm". Even an apple tree farm is still a farm.
this is me in my economy class.
Lucia Horvátová lol
Great video for a high level intro of an economy (Pure Command versus Pure Market), of which does not naturally exist anywhere in the world (hence the final mention of a Mixed economy). An economy asks these 3 basic questions: 1)Who decides what goods and services are needed? 2)Who decides how those goods and services are produced and 3) Who decides how the goods and services are distributed? Based on the answers, you land in the more specific economic system discussions of Communism v Socialism v Capitalism, of which all have a range or mixed variations.
Chad Willis in my opinion they have little to no correlation. A market economy can be socialist, and a command economy can be capitalist, hence command capitalism and market socialism
learned more here than what i learnt in 2 weeks at school
Thanks 👍 , I'm now understand something
Thanks for the breakdown Sal!!!
Great video, very well explained and enjoyable.
Thnk yu...
It was very intresting. Best explaination
This is SO helpful, thanks so much
I was actually eating an Apple when he gave that example.
😹😹
Soo... has anybody received an answer as to whether being told to grow 10M apples is a reasonable amount of apples to grow?
This is an awesome video..Thank God for Khan Academy!
Thank you sal for this video!
are the luxury brands considered as market economy?
why not?
What information does the market have on guessing the needs of the market that a command economy does not? The government should have more information as they are dealing with the entirety of production.
Competition does work to increase innovation once it's around, but once the company goes out of business, there's a monopoly and there's no incentive anymore.
Innovation isn't exclusive to market economies as planning authorities still have problems they need to solve, and thus they may put R&D or more resources to that cause that a capitalist wouldn't because advertisement, lobbying for deregulation, and anti-competitive practices are cheaper and increase profits.
The only incentive in Market Economies is profit and nothing else, innovation is secondary because advertisement, lobbying for deregulation, and anti-competitive practices are cheaper and increase profits. And pure profit incentive is flawed because it forces capitalists to decrease wealth to workers to increase profits, which causes severe wealth inequality.
Demand isn't true demand in a market as it only means the demand of the people who can pay, which is a problem because wealth inequality makes it so the people who demand resources can't get resources because they can't pay for it due to low wages or long working hours.
Spot on👌
Boone Keller
: "...demand in a market ..."
Important pint: the "market" sees only effective demand, "Real demand" from people with urgent needs but no money is ignored. During serious recessions produce is destroyed to "maintain prices". These could be the times a quantity of *new, debt-free money* could be printed and injected into the econy.
The government has no incentive to be efficient since there's no competition for him. People have no incentive to become great workers because there's no real need. I wouldn't study what the market needs the most if I had the chance to study what I like and get a job anyway.
How exactly would the government know about local particularities? And even if they could, do you think that a central government would be able to manage all of the infinite different items that our economies produce? They can't. The system would be pretty much like USSR. Basic needs and nothing else. High bureaucracy and inefficient production.
Just think about it. Look at the amount of, let's say, cars that we have to choose from. Look at the amount of shoes, the amount of candies etc. That's for every single category. How can you even consider that a government is able to do something like that?
Well in the Soviet Union there were great rewards for people who make production more efficient, especially if the quality stays the same. They get reward payments which sometimes can be 10 times the salary for an innovation, they are shown on the TV (I remember they dedicated TV time to "heroes of socialist labor" these are people who created some innovation, which has drastically increased the productivity of the factory. There were medals and Ordens for people who have dedicated greatly the highest being orden of "hero of the socialist labor" which is a civilian equivalent to highest military reward "Hero of the Soviet Union". So talking about unmotivated workers are falsifications. Also about the "plan" obviously it existed. But the good thing is, if you made your plan for 6 working hours instead of 8, you can go home or choose to overdo the plan for extra rewards. The best example, is that the first 5-year plan after "war communism" (economical Policy during civil war) and "NEP" (New economic policy, something close to modern market socialism or social democracy) was finished in only 4 year.
1:58 You get a car a car a car 3X Oprah Winfrey's reference!
1:54 everybody gets a CAR!
@@jabel6434"🤙"
My biggest concern with both command and market economies is lack of democratic participation. Both are inherently authoritarian and do not give those producing the products and wealth in society much say in how the wealth is distributed. I’m much more in favor of participatory economics. Worker councils should control industry. We should strive for a system that creates solidarity, diversity, self-management, and efficiency.
Have you noticed how ideological these tutorials are?
How can worker councils control industry? Doesn't that pretty much equate to a command economy?
For the U.S., at least, Economic System is mixed(Socialism & Capitalism) and Government type if Democratic Republic. Though, minority type views aren't always expressed to be concise or promoted equivalently for financial statuses(i.e.- Socialism, Green Party, Libertarian, Anarchist, etc.), compared to the Democrat and Republic Afflictions. All only based on trends on the mainstream, niche is where 'not so popular'(
Woooow , I love the way you explain things , you make me feel than I am not idiot , I just need some one who has an efficient and creative way of teaching , thank you🤍
I suggest that a directly democratic goverment to be shareholder while the workers elect CEOs.
Thank you Sal Khan
Gee...I love the new learnings.
how does this guy draw so well with a computer
explain what a market socialist economy and command capitalist economy.
bruh this guy writes neater with a moue than i do with a pen ... just thinking now is he using a digital pen im stupid
I'm a market socialist... thats not how economics works. Sorry to all the people taking AP econ being mislead.
Ah crap.. frs? I have a presentation about this,,, but it's mostly on command economy
Every economy is a planned economy. The difference between these 2 examples is who does the planning. With markets, the firm plans their own stuff. Markets can exists under capitalism and socialism. Capitalism has private individuals own and plan their businesses, and market socialism has worker cooperatives. A command economy is when a central planning board (usually part of the government) plans the businesses. Command economies can still have a lot of market elements. Like the government can plan 5 different car companies and tell them to compete with each other. The government could then allocate more resources towards whichever one does better. When sal talks about every car in the ussr looking the same, thats not inherent to command economies. He makes it sound like there's freedom of choice under capitalism, but plenty of oligopolies have formed in America over the years. 3 companies make most of the candy, 5 companies control most of the media, Amazon - i shouldn't need to elaborate on this one. I hope this helps
@@eclipse6859 YO NEAT! THANK YOU. I already presented my powerpoint 3 or 4 hours ago but it's alright I could study this for my test
Wow I didn’t know. I’m never watching khan academy again.
Sal when will you upload physics with calculus
i wish it had a trascript
Well, look who's in luck
U r amazing thanks
Oprah winfrey moment @1:53
What's the difference between "centrally planned capitalism" vs. "market socialism" (eg. China)?
Well the first is something i've never heard of. What do you mean by Centrally Planned Capitalism? And Market Socialism can mean a few different things and have different variants. You can have all the factors of production owned still by the government, but have different parts of the factors be run in competition to others, within a market context. Yugoslavia had something similar to this type of system.
@@jonathanchavez2723 Centrally planned capitalism is State Capitalism
@@Attalic that’s a good point
This is a poor explanation of socialism. I would suggest actually studying how the USSR and Mao’s China functioned if that’s what you came here for
Following the Collapse of the USSR, People struggle to learn about Basic Economics since they just recently opened their businesses and China also embrace Capitalism to strengthen their economy with international trade while still having a Communist identity.
@@Romanov117 the collapse of the USSR led to massive privatization, theft and capital flight which resulted in oligarchs and mafias while the standards of living dropped and mortality rates skyrocketed for decades. China has a mixed state capitalist economy with market reforms which allows for the stability of a state controlled planned economy while also using markets to sustain tremendous growth.
Hey anyone can help me doing my assignment. How does the business run in command economy?
At no point was the term “socialism” mentioned (also bear in mind that socialism is very different from communism).
With regards to communism (or command economy) no doubt this is an extremely simplistic overview of the concept rather than how it actually worked in say the USSR.
Write something concrete in your critique.
Awesome video
I liked the explanations but the producer is obviously biased. It's okay to have personal bias but not in a educational setting.
I love you.
Peaches are more in demand because of CMBYN
3rd person to comment! YAY!!!*
*3rd times a charm :)
Not to be disrespectful but this is such simplified and quite frankly distorted version of what a command economy is and how it functions. Please Khan Academy, do better.
This is the basic understanding of macroeconomics applied in planned economies. NOT ALL Planned economies are the same.
This was such a terrible example of communism lmao, biggest strawman ever. None of what you stated about a command economy is communism
He described socialism, not communism. In communism there is no government.
@@araujo5553 There is a government under communism. There is, however, no state.
@@Attalic True. Sorry, I shouldnt have used governmkent and state interchangeably.
@@Attalic Can't have a government and no state....
@@dotjpeg9102 Under Capitalism, you're right it's not possible. In Communism, that's exactly what happens; the governing body is the people themselves, who help manage and distribute resources. All a state is defined by is a monopoly on force, of which Communism doesn't have.
In an advanced technological and futuristic world where we'd have intelligent AI and heavy automation, I think socialism will be a good choice of government simply because it would lead to maximum efficiency (The AI calculates the most efficient way to spend money and who to fire or hire depending on results and skills or personality, etc.). The problem with socialism right now with humans is that the government owning everything would easily lead to extremely inefficient spending or corruption, so right now that wouldn't work.
Read "Towards a New Socialism" by Paul Cockshott
We don't need advanced AI to plan an economy. Just computing power.
i swear every counter-argument to command economies is so arbitrary and based upon false premises... it's so sad :(
the video speaks in reeeeeally simple words and thus makes everything wrong.
The author doesn't clarify it so you get an impression that the government just gifts the goods it orders to produce. The author just said "the givernment decides who gets what", but this is a total garble. The government gifts you nothing, you *buy* stuff from the government. You get nothing from it, you buy it. The government owns, let it be, a farm land and it says to the people who work there "you must produce 100 apples", the land produces the apples and then the government sells them to the people of the country(or abroad). And if the apples are with worms, they are awful and taste bad, *you can do nothing about it.* You buy the apples or you starve. If you think "ok I will produce my own apples, maybe I'll even share my good home grown apples with other people" then think again. You are *prohibited* to do so. Eat the wormed apples. You are not allowed to grow your own. Any competition is prohibited, any initiative you may start wanting is prohibited, any actions of your own are prohibited. Eat what you get or get nothing.
If the people need 130 apples and the country produces only 100 just cope. If the people need just 80 but the country produces 100 cope again and let the apples rot. The country will never produce the amount the people need because it's literally impossible to pre count. Market does it the best but it's prohibited.
And sure the video doesn't include the fact that the government may order a farm to produce 100 apples, the workers say "it's literally impossible, you have no idea about the conditions of our land, we can produce only 80 and it is the absolute maximum" the government just says "I don't care, produce it or I fire you and hire some other people". The farm produces 80, the needs are 100, people starve and the government does nothing. It just changes the workers and the cycle repeats.
And sure the goods the government produces are always of a bad quality. Because there is no competition, thus no need of making better goods or improving the workers' conditions. In the normal economy if you don't like the apples the company A produces you start buying the apples of the company B or C. And if the company A makes worse apples than the other companies it bancrupts and produces no more. If it doesn't want to become a bancrupt it starts to search for ways of improving its goods. In the planned(command) economy there is only the company A(the government) and it literally has no need of any improvements and the good always have low quality.
The planned(command) economy is literally just a castrated version of the economy and nothing becside it.
1:59
Communism confirmed not based.
A Market Economy is Always Best
hi!!!
What he says about market economies might have been true in 2017, but it's not true now. Since the "pandemic", the inherent contradictions destroying the "free market" system have been increasingly apparent, and we are moving inexorably towards a publicly-owned command economy.
If everyone had a say in government and the government is run by the people, the people would decide who got what. It wouldn't be like this overlord telling everyone. It would be the people saying in this area the demand for that is about this % we need to distribute out enough for the people in that area. And since the government is the people, they would always look out for all peoples interest, not tainted by profit or gain, but looking to give what everyone needed. That is if the government is actually run by the people. It would be better though if you had local statisticians working out what is needed and what people want in that area, and working out if it can be done. This would all be about the best interest of the people. It would not be about setting up those in government with power as I said the government should be run by all people. But that is my view point. It would be about people working for the people, in which the government would just be a building in which all people decided what is for the best.
how do you know what 10million people want? how do you ask 10 million people about 100million decisions?
That’s socialism, whether it’s market or command
Sorry to disagree, but the concept presented here about the Command economy is oversimplified. If you study the Soviet Union economy, you'd find out that there did exist different companies (for example, in aviation it was Tupolev, Ilyushin, Antonov, Sukhoi, Mikoyan, Mil, Kamov and etc.) The thing was only that the government did decide on what product they would buy from these companies, as essentially everything (including the purchasing firms) was owned by the government, thus making this a way to eliminate ineffective projects and allocate resources. There was innovation included, as every so often the engineering team suggested a new version of a product. In addition, these products were traded outside the USSR, which gave some external competition.
To Western fellas it might sound strange that the government owns everything, but you should remember that the people essentially owned the government.
So, what I mean is, it is after all a quite utopian concept, but it is possible to make to a very high extent.
Market economy is also utopian. Otherwise you'd cancel budgets and just rely on the invisible hand of the market.
So please do not try to make this a dumb system. Each one has pros and cons. So does the current one.
I literally just wanted the basic definitions of each not your garbage political opinions on them
LMAO SO TRUE
👊 Yellow car, no returns
Ancap gang
First comment
Sí
Fin vídeo 😂
What about Islamic Economy ??
Where you're allowed to get rich, but you have to donate certain part of your wealth for charity annually.
There's a good mooc on this on coursera.
worst description of command economies
Someone with a brain. Thank you.
@@Attalic I am so used to liberal economics teachers saying this stuff that I couldn't even laugh when Richard Wolff sarcastically said "Socialism is when the government does stuff. And it's more socialism the more stuff it does. And if it does a real lot of stuff, it's communism.", since this is exactly what actual economics teachers/profs often narrow it down to. Based on idealism, the liberal economic principles have become like a religion which not only critiquing means I don't understand 'basic economics', but also that they will have a hegemony over all definitions and characterizations.
Why is it the worst?
Second
extremely biased video
12th person to comment