Question

4) Imagine that the whole world had lived under central planning. Do you think central planning would have lasted longer than it did? Discuss.

Answer 1

Under the centrally planned system considering the whole world , all the activities will be guided by a single system who will look after all the activities of every nation. Now this phenomenon can be effective in very short term to remove the inefficiencies in the management in case when the work is delegated as per different economies, but in the long term the centrally planned world will not last.

The main reasons why the central planning for the whole world will not work are as follows -

1 - any message which needs to be communicated to any economy will take a lot of time and money

2 - the speed of the operations will reduce since all the operations will be performed by the single authority

3 - there will be more focus on the welfare related activities due to which the all over development activities of the nations will suffer

4 - the non profit motive of the central government will reduce the encouragement of the private sectors

5 - the government will not be able to look into the inside matters of the economy which could prove to be harmful in long term.

6 - the choices with the consumers will reduce to great extent because there will be only government produced goods and the private sectors involvement will reduce.