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Central planning in a command economy

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If you were given the responsibilities of an economic advisor to Nikita Khrushchev of the Soviet Union. How would you, as a central planner, decide what, how, and for whom to produce goods and services in a country of roughly 123 million people at the time? How successful your plan would be?

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Solution Summary

Methods used by the Soviet Union to produce and distribute goods by central planning.

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The simplest way to deal with the problem is to research the actual approach the Soviet union used. In the book Comparing Economic Systems (Zimbalist et al 1989), the method is outlined:

First, possible causes for problems with last year's plan are explored. This process takes six months. For the next two months, control figures are established. These are based on the desired rate of economic growth and the allocation of national income between saving and investment.

In the meantime, each firm proposes an output and requests a certain amount of input from its association. It is in ...

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