Command economies are those of which the government has full (or most) control of the government markets. They are based on Karl Marx's original ideas that the government should run everything in order to prevent the harsh conditions that he saw while watching the activities in a friend's factory. He claimed that the industrial revolution had actually created a new form of slavery that he needed to stop.
In a command economy, the government has most of or complete control over a country's resources and manufacturing, following Marx's ideals. Private parties are unable to own land or resources, and every aspect is controlled by the government, including pay, prices, etc.
Command economies' few benefits include decreased prices for higher sought-after and rare goods such as medicines, and the fact that they seek to provide for everyone, especially the elderly and children.
The two primary forms of command economies are communism and socialism. In socialism, the government owns all of the basic resources, but all of the front end distribution can be done through private businesses.
In communism, or the ideals closest to Marx's, everything is government owned and there is no private business or property. While everyone may be considered economically equal, everyone is poor. The government selects what job you have and you have to do it. There are little to no freedoms.
Overall, command economies face shortages, due to ridiculously low prices that yield nothing. People didn't work as hard because they knew that they would get paid the same rate as one that didn't work as much. There is no reward for working harder, so people didn't. The central planners also have no idea on what is going on in the places that the people work, therefore most of their decisions are incorrect for the situation in which they are in. For example, the book says that a man was only able to have one goose to sell in communist East Germany, while there were no problems on availability in free market west Germany.
Overall, command economies sound like they are supposed to be good, and ideologically they are, but when applied, the results end up hurting far more than helping. The few still existing communist countries, like North Korea and Cuba, are very poor with horrible conditions for those that live there.
Shown below is a comparison between North Korea and South Korea on account of
1. What is produced?
Just enough, if barely enough, to support the country with no outside trading, however some of the more poor ones have accepted donations.
2. How will goods be produced?
Goods will be produced through government run factories and farms.
3. For whom will the goods be produced?
The people and leaders, no outsiders.