The Problem with Command Economies: Lack of Initiative and Innovation

By Nozick Nightingale

- 2 minutes read - 305 words

The problem with command economies is the inherent lack of initiative and innovation. Because of the uniform and rigid guidelines imposed by the government, citizens lack the motivation to explore creative solutions and ways to innovate. This problem has been observed throughout history - from Louis XIV’s France to today’s China.

In 18th century France, where the king was absolute, royal command was the primary source of direction for the government, economy, and citizens. Louis XIV understood the value of the arts, and the court benefitted from prodigious amounts of governmental investment. However, money came at the cost of economic stagnation and little attempt was made to improve the workings of the state.

In modern day China, economic progress is largely driven by the government’s Five Year Plans. Although successful in terms of increasing the Gross Domestic Product, it has been demonstrated that the country’s impressive growth may come at a cost. By relying on the same plan over and over again, China fails to take the initiative to innovate and is no longer able to nurture creativity in the country. A closer look shows that the majority of innovation in areas such as artificial intelligence, relies heavily on outside forces such as American talent and resources.

States with command economies have a tendency to stifle initiative, but fortunately, the problem is fixable. In the words of economist Jeffrey Sachs, “The key to successful economic development is to build up the initiative and initiative-taking capacity of the people.” To ensure that citizens are able to stay creative and find ways to innovate, it is necessary to promote entrepreneurship and freedom from the state. People must be free to explore solutions and to test creative ideas.

Ultimately, the solution is not to eliminate the government’s control, but to balance their control with the freedom to explore.