What is a key characteristic of a command economy?

A command economy is primarily defined by significant government involvement in economic activity. In such an economic system, the government typically plans and controls production, distribution, and pricing of goods and services. This central authority makes decisions about what to produce, how to produce it, and for whom it is produced, in an effort to meet the needs and goals of the society as a whole, rather than relying on market forces or individual business decisions.

The emphasis on government regulation and planning distinguishes a command economy from other economic structures, such as market or mixed economies, where supply and demand play a more significant role and private ownership is prevalent. In command economies, the state often owns the means of production, which contrasts with systems that prioritize free market dynamics or private ownership of businesses. Additionally, low taxes on businesses are generally associated with encouraging private enterprise and investment, which would not be a characteristic of a strictly command economy where the government exerts more control over economic activities and their outcomes.