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RENEWABLE RESOURCE: A natural resource that can be increased by either automatically through the natural forces of the environment or through actions undertaken by people. The quantities of renewable resources and not fixed and thus the amounts available for use tomorrow can be increased. Efficient use of renewable resources requires a balance between the rate of use and the rate of renewal. It is possible to efficiently use renewable resources indefinitely. However, such resources can also be exhausted if the rate of use exceeds the rate of renewal. Common examples of renewable resources are plant life, animal life, clean air, and clean water.
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                           CENTRAL PLANNING: A system of extensive central government control of an economy, including organizing production and making allocation decisions. This was the popular method of allocating resources and answering the three basic questions of allocation under communism and socialism economic systems of the Soviet Union, China, and others during the 1950s, 1960s, and 1970s. Applying the communist/socialist philosophy that private property and market allocation was "bad", central planning relied on extremely detailed plans made by government. These plans would set specific production quotas for individual products, parts, components, and inputs fabricated by all of the factories and farms across the economy. This was a daunting, complex task that required detailed production information for hundreds of thousands of different commodities.InefficiencyWhile some attribute the fall of the Soviet Union in the 1980s to the United States military build-up, the burdensome bureaucratic inefficiency of central planning played an important role, if not THE key role in this decline.Central planning tends to be inefficient due to: - One, the resources used for the central planning process cannot be used to undertake actual production. In other words, a person (the planner) who spends eight hours calculating how much flour is needed to produce bread, is not actually producing any bread.
- Two, the central planning process, being developed and implemented by mere humans, is inherently flawed. Mistakes happen. Inputs are sent to the wrong factories. A decimal point is misplaced. Too much of one good is produced and too little of another. All of these mistakes mean less output is produced with available resources.
Central Planning and CapitalismWhile central planning is usually associated with communist/socialist economies it is also practiced, to a much lesser degree, by market-oriented economies such as that found in the United States. For example, the Federal Reserve System has a "central plan" for the growth of the money supply. The Department of Transportation has a "central plan" for highway construction. Almost every city has a "central plan" that specifies where different types of activities can locate within the city.There are two main differences between "central plans" found in capitalism and communist/socialist-type central planning. - First, the plans found in capitalism are usually only for a segment of the economy. They do not attempt to integrate the massive amounts of information needed for an economy-wide central plan.
- Second, planning undertaken in capitalism works within the confines of a market-based economy, making use of market efficiencies, rather than attempting to provide an alternative to the system.
Recommended Citation:CENTRAL PLANNING, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: December 13, 2018].
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Today, you are likely to spend a great deal of time flipping through the yellow pages seeking to buy either an ink cartridge for your printer or a rechargeable battery for your camera. Be on the lookout for the happiest person in the room.
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Three-forths of the gold mined each year is used to manufacture jewelry.
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NFA
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