Question

Needing background help for a paper!! How did a centrally planned economy negatively affect the Soviet Union!

Answer 1

Well it was because (as far as I know) a centrally planned economy cannot compete with Adam Smith's famous Invisible Hand of markets.It has been observed that when markets are left on their own every unit works for themselves but somehow,as though an invisible hand is acting,in general the benefit for all is maximised.As if this invisible hand is guiding all the units, who are working in their self interests,to maximise the the general wellness of society.

Another related reason is that the scale of decision making involved in centrally planned economies is so huge that it is practically impossible.To find out.fir every single individual that who needs what,when,where,how much and at what price is practically impossible to ascertain for a central authority.Therefore this decision making is handed over to individuals themselves in non-centralised economy while the central authority ensures that property and legal rights are enforced because that is important for the Invisible Hand to work.