Central administration economy

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The term centrally planned economy (also planned economy , centrally planned economy , command economy ) refers to an economic system in which substantial, if not all decisions on the allocation ( allocation ) of scarce resources such as labor , capital and soil to produce goods from a central instance be made. The concepts of such a central administration economy that have emerged since the 18th century stand in contrast to the market economy , in which everyone makes decisions in the marketparticipating individuals with respective responsibility incumbent ( decentralized ).


In a typical central administration economy , the economic process , i.e. the production and consumption of goods , is completely planned by a central authority. In contrast to this, in an ideal market economy, economic planning is carried out decentrally by all market participants , with supply and demand being controlled via the price mechanism .

The term planned economy is misleading, at least in German-speaking countries, since planning is also carried out in the market economy, for example in corporate planning. Walter Eucken introduced the term central administration economy . According to the ownership of the means of production, state or private, a socialist central administration economy is distinguished from a capitalist central administration economy. Another division is the central administration economy with private property, especially the war economy , the central administration economy with company property, especially the council democracy , and the central administration economy with state ownership , especially the state socialist centrally planned economy .

In reality, economies do not correspond to an ideal type, so an allocation can only be made gradually. In the real existing market economy, internal company planning can have organizational structures and characteristics that characterize a central administration economy if there is corresponding market dominance, cf. Oligopoly and monopoly . Furthermore, the state intervenes - to varying degrees - in the mechanisms of the market, for example through subsidies . In the case of pronounced state interventions, one speaks of a controlled economy or state interventionism , polemically also of "planned economy"; in English this is also referred to as "mixed economy". Conversely, market economy elements were found or are also found in central administration economies, to be mentioned are the New Economic Policy of the Soviet Union of the 1920s, the socialist market economy in former Yugoslavia and the special economic zones in the " socialist market economy with Chinese characteristics " People's Republic of China . The Marxist theory of state monopoly capitalism , which received its importance through Lenin in particular, attempts to describe an entanglement of economic monopolies with state apparatuses, especially in capitalist centers, in which at the same time a starting point for socialist transformation is identified. Conversely, the concept of state capitalism also serves as an anti-capitalist critique of the economic systems under real socialism. Theories of state monopoly capitalism and state capitalism partially overlap.


General provision

The central administration economy is based on the idea that the coordination between supply and demand, the distribution of resources and capital goods to production companies, the production of capital and consumer goods and the distribution of consumer goods can be coordinated and regulated by a central authority. Future- oriented planning specifications serve as an instrument for coordinating supply and demand, as well as for factor allocation .

Historical precursors

This idea of functioning planning and the demand for a planned economy organization of larger societies, entire states or the world society as a whole has historical precursors. One example is Plato's state drafts . The advance planning of the common needs, the production as well as the organization and distribution should be the task of state institutions or specifically responsible persons with Plato . Thomas More 's Utopia , Tommaso Campanella's La città del Sole or Jean-Jacques Rousseau's drafts of the state based on a social contract are named as further precursors .

Early socialism

The British entrepreneur and early socialist Robert Owen tried with the cooperative organized colony New Harmony in Indiana (USA) an aligned according to certain ideals economies into practice.


The lack of planning in capitalism is criticized in Marxism as an anarchy of production . The advance planning of the common needs, the production as well as the organization and distribution should be a common act of all society participants at Karl Marx . Against this background, in the Communist Party's manifesto, Karl Marx and Friedrich Engels demand the nationalization of all instruments of production: “The proletariat will use its political rule to gradually wrest all capital from the bourgeoisie, all instruments of production in the hands of the state, i. H. of the proletariat, organized as the ruling class, to centralize and to increase the mass of productive forces as quickly as possible. ” Among other things, they demanded

  • "Centralization of credit in the hands of the state through a national bank with state capital and an exclusive monopoly."
  • "Centralization of transport in the hands of the state."
  • "Increase in the number of national factories , production instruments , reclamation and improvement of all lands according to a common plan."

Karl Marx and Friedrich Engels, the latter with The Development of Socialism from Utopia to Science , differentiated themselves from utopian socialism in that they linked a socialist social order to certain prerequisites that would first have to mature historically. They assigned capitalism to the mission of developing the productive forces in such a way that a revolutionary transition to a higher mode of production would be possible.

Marx's Capital can be interpreted as a criticism of Hegel's portrayal of bourgeois society with market and state as the “ end of history ”. According to Marx, bourgeois society comes to an end with capitalism because of crises , rising unemployment, i.e. the reserve army plus a growing "Lazarus class" that can no longer find employment, falling profit rates , and the contradiction of an inherently communal production on the one hand with private appropriation on the other. The credit system , the trade in lending and fictitious capital, and stock corporations led to private production without the control of privatecapital. More and more are using capital that doesn't even belong to them. Private property and private personal responsibility increasingly contradicted actual communal production, which, however, along with productivity, was driven by the banking system. Stock corporations take into account the social nature of production, but on a contradicting capitalist basis. In view of the centralization of capital to a few large corporations,state interference isbecoming increasingly necessary, whichrequiresthe transition from the capitalist mode of production to the "associated mode of production"as the next step. In addition to the capitalist stock companies Marx provides in particular cooperatives of workers' co-operative factories of the workers ", as precursors of" associated production ".


In his work Capitalism, Socialism and Democracy , published in 1942, Joseph Schumpeter identified the advantages of a socialist planned economy in the absence of disruptive business cycles , greater planning security for companies and lower unemployment . These advantages could be played out if the economy became increasingly static, which Schumpeter believed it was then. Before that, in times of dynamic economic development, the capitalist system is superior.

Under the impression of the New Deal and the central planning caused by the war, the German social democratic sociologist Carl Landauer , who emigrated to the United States , drafted a draft on the possible introduction of “national planning” in the USA.

In the first edition of the socialist magazine Monthly Review , Albert Einstein put in an essay Why Socialism? (“Why socialism?”) Are reasons for socialism. The “crippling of individuals” , especially in the education system, is what Einstein considers to be an evil of capitalism that has to be countered with a socialist economy, together with an education system, that should be geared towards social goals. The means of production would be owned by society itself and would be used in a planned fashion . However, Einstein does not consider every planned economy to be socialism. A planned economy could also lead to complete enslavement of individuals.

It is important here, however, that the planned economy and socialism are two different things, the former is an economic form, the second a form of society which, according to Karl Marx, relates to the rule of the proletariat. This is supposed to break the bourgeois state power and administer the means of production. The aim is to make the state meaningless through the disappearance of classes.

Examples of central administration economics

Real socialism

Advertising poster for the GDR economy

A typical example of a centrally administered economic order was the central administration economy of the USSR and other real socialist states. Essential characteristics of the economy of these states were state ownership of the means of production, the central control of the economic process, the fixing of prices and wages and a state monopoly on foreign trade . The majority of the agricultural area was in co-operative ownership, but agriculture was also subject to state planning.

The central planning authority (see e.g. Gosplan (USSR) or State Planning Commission of the GDR ), based on forecasts of social needs , developed a plan for usually one year, which is incorporated into multi-year plans (see e.g. five-year plan ). This plan gives the individual companies precise quantities that they must adhere to precisely (also known as the ton ideology ).

War economy

German poster calls for the population to save soap during the First World War .

Typical features of a war economy are state regulation of wages and prices, product quotas, service obligations of workers, tax increases or compulsory savings .

National Socialism

The dirigistic interventions in the economy under National Socialism under the New Plan (1934), the Four-Year Plan (1936) and completely the war economy under Armaments Minister Albert Speer from 1942 onwards left little of free enterprise. The upgrade also served the Schnellplan and the Schell Plan .

On the other hand, banks that had been nationalized during the German banking crisis were gradually privatized again. In 1937 the shares in Commerz- und Privat-Bank were returned to private shareholders .

The economic system at the time of German National Socialism moved further and further away from the ideal type of the market economy and ultimately largely corresponded to the ideal type of the centrally planned economy. The war economy of National Socialism can be described as a "central administration economy with private property" or as a "capitalist central administration economy".


In France , there have been ten five-year plans since World War II as part of the planification , the last of which ended in 1992. An eleventh plan was planned for 1993-1997. In 1993 a report was published, "L'avenir du Plan et la place de la planification dans la société française" (the future of the plan and planification in French society).

United States

In 1973 US President Richard Nixon attempted to freeze wages and prices in four phases in the face of very high inflation rates.

Today's countries with central administration economies

After the fall of the communist system in Eastern Europe in 1989, only a few countries still have this economic order. The planned economy is still practiced in Cuba and North Korea, as well as partly in the People's Republic of China. The socialism of the 21st century in Venezuela also shows strong elements of the central administration economy.

New approaches

The English socialist Pat Devine developed a "model of democratic planning [...] in which planning takes the form of a political process of negotiated coordination, with decisions being made directly or indirectly by those concerned".

Participatory Economy

The US activist in the anarchist- socialist self-government movement Michael Albert developed his model of the participatory economy as an alternative to capitalism and to (from his point of view) authoritarian central administration economies of the classic Marxist type. The democratically intended plan vote takes place with the help of computers and the Internet.

Computerized planned economy

The Chilean President Salvador Allende launched Cybersyn, the first attempt at a real-time computer planning system , during his reign from 1970 to 1973 . The computer scientist Paul Cockshott and the economist Allin Cottrell are of the opinion that socialist planning in real time is possible through the use of modern information technology . This means that people's needs can be satisfied more quickly and in a more resource-conserving manner than was previously possible in planned economies. A new system for working time accounts has been proposed for Venezuela . The project is based on the technically controversial mathematical models of Cockshott and Cottrell and is not mentioned in the Baseline of the Nation of Venezuela 2007 to 2013.

Mixed form of plan and market

The majority of today's drafts of democratic socialism , such as that of the socialist party Die Linke , strive for a hybrid form of planned and market economy, which would result in a non-capitalist society as a whole. The banking system and key industries should be transferred to public or cooperative hands, while small and medium-sized enterprises can also exist in the private sector, whereby the form of ownership as a cooperative is strongly promoted. Furthermore, one wants to protect the new socialism with separation of powers and democratic control on the one hand via parliaments, on the other hand via non-partisan movements from renewed abuse of power. The extent to which key industries and the banking system should be run in public hands according to the principle of central administration or with an entrepreneurial orientation has not yet been fully discussed, at least within the party.


The following deficiencies in particular have brought criticism of the shortage economy to the central administration economies :

Lack of information

According to Friedrich August von Hayek (1899–1992), the planning department of a central administration economy can never have all the relevant information about the abilities and needs of individuals that it will need for sensible planning. The planners cannot be informed about all parameters and would therefore make wrong (inefficient) decisions . Not every need can be recognized during planning; Deficiency or excess of the goods would be the result. This would result in a waste of resources and manpower compared to a market economy where, in Hayek's opinion, such problems do not occur or occur less .

The lack of information from the planners is one of the main reasons why the many different designs for a non-market economy have so far been the subject of sharp criticism or have failed when they are actually used.

Lack of flexibility

The central administration economy is widely accused of having a low level of flexibility, since "in such an economy the instructions and planning specifications of the state planning authorities are binding and there is little or no scope for decision-making." This would impair the dynamism and innovative capacity of companies. Technological backwardness - and the associated lower standard of living - are the result.

Lack of control signals

According to the liberal economist Ludwig von Mises (1881–1973), the planned economy makes a meaningful economic calculation impossible. In particular, without private ownership of the means of production there would be no market prices for the means of production . In the absence of these market prices, according to von Mises, it cannot be determined whether the realization of a certain economic option would actually increase the “material well-being” of consumers . There is therefore a risk that, from the consumer's point of view, more urgent needs will remain unsatisfied because the option of action that has been implemented demands the necessary - scarce - means of production.

In the early years of the GDR , as a result of the first undesirable economic developments, critical considerations emphasized the neglected importance of the collective spirit, which meant, on the one hand, the neglect of individual potential and, on the other hand, the poorly functioning cooperation between different branches of production. Furthermore, warnings were given against an overly centralistic control of socialist society. The Marxist-Leninist model of socialism with a strong party as the representative of the dictatorship of the proletariat, however, in principle required a central economic control, the inefficiency of which could at best be compensated for with brutal methods and forced labor, as was used in Stalinism .

Lack of technological advancement

The economist Jürgen Pätzold summarizes frequently mentioned points of criticism. In addition to the lack of information and flexibility, he sees the lack of technological progress. Central administration economies did not produce any technical and organizational progress comparable to the market economy , since in the absence of competition there was no need to look for innovations and new solutions to problems. According to Ludwig von Mises, only the “tireless ingenuity” of a businessman and his “penchant for innovation” prevents “all economic entities from falling into sluggish bureaucratic routine.”

Lack of democracy

Another point of criticism is the thesis that central planning requires collectivism in socio-political terms and totalitarianism of the one-party system in terms of state policy . The freedom of action and movement of individuals forms a latent disruptive factor in the centrally administered economy, which the state tries to push back.

In reality, central administration economies have always been "linked to a one-party system, oligarchy and dictatorship". "Even with the initial existence of a democratic state order, tendencies to eliminate it are effective in a central administration economy."

Lack of self-determination

After the economist Wilhelm Röpke (1899–1966) a. a. Central administration economies contradict the (natural law) ideal of self-responsible and self-determined (free) people ( individuals , subjects ).

Basic Law in Germany

There are different opinions on the question of whether the Basic Law rules out planned economy measures. The two extreme forms of "forced state economy" and "liberalist" laissez-faire "" would be excluded.

According to Hans-Jürgen Papier , the Basic Law is characterized "by its fundamental economic and political neutrality". However, the legislative leeway is "not insignificantly" restricted by the basic statements of economic constitution law. However, the Basic Law does without any express economic policy program. Hans-Jürgen Papier comes to the conclusion that in the Federal Republic of Germany an economic system which "wanted to coordinate the economy in principle through central administration and in a system of imperative and centralized state planning" is not permissible. The Basic Law is not neutral in the sense that the existing and grown economic order could in principle be restructured into a central administrative or centrally planned economy.

According to Martin Kriele , decentralized wage determination and the determination of working conditions within the framework of freedom of association and co-determination contradict the central administration economy. Since freedom of association is protected as a fundamental right in Article 9 (3) of the Basic Law , parts of the literature justify the incompatibility of the central administration economy with the Basic Law.

The enforcement of a central administration economy also enforces an emigration ban .

According to the prevailing opinion, any form of economic development is permitted in a purely formal manner, provided that it observes fundamental rights. That is why economists such as Ulrich van Suntum , Hans-Werner Sinn , Bernd Raffelhüschen , Gabriel Felbermayr , Norbert Berthold and Thomas Mayer called for a more precise definition in the Basic Law. Formulations in the Basic Law that deal with the socialization of land and means of production should be dropped.

Literary representation

Towards the end of the 19th century, the US writer Edward Bellamy wrote a utopia " A look back from the year 2000 to the year 1887 ", according to which the economy in the context of a general, evenly distributed work obligation - both in terms of working hours and the quality of Work concerned - was organized. Bellamy saw an example in the US war economy during the US Civil War .

See also

Related or delimited terms


  • Carl Landauer : planned economy and transport economy. Duncker & Humblot, Munich / Leipzig 1931.
  • Christoph Deutschmann : planned economy as an ideology. On the legitimation function of the "political economy of socialism" in the Comecon countries. 1977 (dissertation 1975).
  • Don Lavoie: Rivalry and central planning. The socialist calculation debate reconsidered . Cambridge University Press, Cambridge 1985, ISBN 0-521-26449-9 .
  • Pat Devine: Democracy and Economic Planning: The Political Economy of a Self-Governing Society. Polity Press, Cambridge UK and Westview Press. Boulder, CO., USA 1988.
  • Friedrich A. von Hayek , W. Kerber: The presumption of knowledge. Mohr Siebeck, 1996.
  • Rolf H. Hasse, Hermann Schneider, Klaus Weigelt (eds.): Lexicon of social market economy. Economic policy from A to Z. 2nd edition. 2005.
  • Ulrich Baßeler , Jürgen Heinrich, Burkhard Utecht: Fundamentals and problems of the national economy. 18th, revised edition. Stuttgart 2006, ISBN 3-7910-2437-X .
  • Paul Cockshott, Allin Cottrell: Alternatives from the calculator. For socialist planning and direct democracy. PapyRossa Verlag, 2006, ISBN 3-89438-345-3 .
  • Klaus Steinitz , Dieter Walter: Plan market democracy, prognosis and long-term planning in the GDR - conclusions for tomorrow. VSA, Hamburg 2014, ISBN 978-3-89965-607-7 . ( PDF )

Web links

Commons : Central Administration Economy  - collection of images, videos and audio files

Individual evidence

  1. Walter Eucken: The foundations of political economy (=  encyclopedia of law and political science . Sub-series: Political science department ). 9th edition. Springer, Berlin / Heidelberg / New York / London / Paris / Tokyo / Hong Kong 1989, ISBN 3-540-51292-6 , pp. XVII ( books.google.de - first edition: 1940, restricted preview). See also the expression “centrally managed economy” (Eucken) from Heinz Murmann, Marktwirtschaft , in the Virtual Academy of the Friedrich Naumann Foundation for Freedom ( online ( memento from October 31, 2007 in the Internet Archive ); accessed September 19 2008).
  2. a b Baßeler, Heinrich, Utecht (2006)
  3. a b Gabler Wirtschaftslexikon, 15th edition. 2000, ISBN 3-409-32998-6 .
  4. Thomas Petersen: "Silent love for the planned economy" , faz.net , November 27, 2013
  5. "China Continues to Build a Harmonious Socialist Society," Chinese Embassy website dated October 17, 2006
  6. ^ Communist Party Manifesto, MEW 4: 481
  7. ^ Communist Manifesto
  8. See Richard B. Day, foreword to Pavel V. Maksakovsky [1929]: The Capitalist Cycle - Translated with Introduction and Commentary by Richard B. Day. Boston, Leiden 2004.
  9. See Richard B. Day, foreword to Pavel V. Maksakovsky [1929]: The Capitalist Cycle - Translated with Introduction and Commentary by Richard B. Day. Boston, Leiden 2004, and e.g. B. Capital, Volume III , Chapter 27, “The Role of Credit in Capitalist Production”.
  10. ^ Carl Landauer (1944, second edition 1947): Theory of national economic planning, Berkeley, California .: University of California Press, 1947, 2nd ed.
  11. ^ Albert Einstein: Why Socialism? In: Monthly Review , 1949. A German translation: Why socialism?
  12. Meyer's Lexicon: Article about the war economy ( Memento of October 24, 2007 in the Internet Archive ) (archived at Internet Archive )
  13. ^ Avraham Barkai : The economic system of National Socialism . Ideology, theory, politics. 1933-1945. Fischer-Taschenbuch-Verlag, Frankfurt 1988, ISBN 3-596-24401-3 .
  14. Ulrich Schäfer: The crash of capitalism - why the unleashed market economy failed . Campus-Verlag , Frankfurt am Main 2009, ISBN 978-3-593-38854-0 , p. 168 .
  15. Markus Albert Diehl: From the market economy to the National Socialist war economy. The transformation of the German economic order 1933–1945 (= contributions to economic and social history; vol. 104), Franz Steiner Verlag, Stuttgart 2005, p. 179.
  16. Nixon speech: “Effective immediately, therefore, I am ordering a freeze on prices. By Executive Order 11723 of June 13, 1973. “ Nixon speech of June 13, 1973.
  17. Quoted from Alex Callinicos : An anti-capitalist manifesto. VSA-Verlag, Hamburg 2004, ISBN 3-89965-066-2 .
  18. ^ "Alternatives from the calculator - For socialist planning and direct democracy" - Paul Cockshott and Allin Cottrell, Papy Rossa, 2006, ISBN 3-89438-345-3 .
  19. Junge Welt : “ Time instead of money: Venezuela's economy under the magnifying glass of a socialist political economy by Paul Cockshott, January 21, 2008.
  20. ^ The Quarterly Journal Of Austrian Economics: “ Towards a new socialism? (PDF; 62 kB) “- Len Brewster
  21. Lineas Generales del Plan de Desarrollo Economico y Social de la Nacion 2007-2013 ( Memento of September 21, 2008 in the Internet Archive ) (Spanish)
  22. ^ Program of the DIE LINKE party
  23. Federal Agency for Civic Education : The Encyclopedia of Economics, Basic Knowledge A to Z . Bibliographisches Institut & FA Brockhaus AG, Mannheim, 2004, ISBN 3-89331-503-9 .
  24. Considerations on the question of spare parts. In: Automotive Technology . 6/1954, pp. 162-164 and 9/1954, pp. 280-281.
  25. Critical considerations about our motor vehicle production. In: Automotive Technology. 12/1954, pp. 353-355.
  26. ^ Ludwig von Mises : The bureaucracy. ISBN 3-89665-316-4 .
  27. ^ Jürgen Pätzold: Social market economy ; a criticism of the planned economies of the Comecon states can be found in Christoph Deutschmann 1975/1977.
  28. Peter Bernholz , Friedrich Breyer: Fundamentals of political economy. Volume 2: Economic Theory of Politics. ISBN 978-3-16-146125-5 , p. 248 f.
  29. ^ Wilhelm Röpke (1958): Beyond supply and demand .
  30. ^ Institute for Education Baden-Württemberg Basic text: Social market economy and Basic Law
  31. Federal Agency for Civic Education March 19, 2007 "Economic System and Basic Law"
  32. Hans-Jürgen paper : Economic order and basic law , in: From politics and contemporary history (APuZ 13/2007). Social market economy ; Federal Agency for Civic Education, March 19, 2007 .
  33. a b Martin Kriele : Introduction to the Doctrine of the State: The historical foundations of legitimacy of the democratic constitutional state, 5th edition, 2013, ISBN 9783322935144 , p. 182, digitized .
  34. . See Thomas von Danwitz , Otto Depenheuer , Christoph Engel : report on the state of the property , 2002, ISBN 3-540-43266-3 , p 119. .
  35. Wirtschaftswoche April 30, 2019 [1]