centralplanerade

Centralplanerade is Swedish for centrally planned economies, where the state determines what goods are produced, in what quantities, and how resources are allocated through a comprehensive plan rather than market prices. In such systems, the government typically owns the means of production and directs investment, output targets, and pricing decisions through central authorities.

Historically, central planning emerged with socialist and communist theory and was implemented most prominently in the Soviet Union and its satellite states, especially via Gosplan and the series of five-year plans beginning in the 1920s. Similar arrangements existed in Eastern Europe, and in Maoist China, as well as in Cuba, North Korea, and other allied regimes during the Cold War.

Key characteristics include centralized decision-making, long-term goals, sectoral ministries, and allocation of resources across industry, agriculture, and services; majority of productive assets are state-owned or controlled; price formation often set by the plan rather than market forces; enterprise autonomy is limited.

Strengths cited: ability to mobilize resources for large-scale development, rapid industrialization, full employment in theory, and the ability to pursue national priorities regardless of profits. Critics: inefficiency, misallocation, insulated from consumer demand, shortages or surpluses, poor information, lack of innovation, incentive problems, and corruption risk.

During the late 20th century, many centrally planned economies reformed toward mixed economies, decentralizing planning, introducing market mechanisms, or privatizing. The Soviet Union collapsed in 1991; Eastern Europe transitioned; some sectors remain planned in limited form in some countries. Today central planning is mostly associated with historical models and is contrasted with market or mixed economies.