Is it free to print money on a command economy?

[Vampiregenesis]

In the market economy, there is the drawback of inflation when you print money which can cause problems depending on the reaction of the market forces but is there such a thing on a command economy like the soviet union one?

Since you control everything then you can freely print money in order to hire more workers. You can pretty much pay everyone and allow them to trade within your borders which means none would die from hunger or be homeless. Of course you can't overdo it since they will lose the motivation to work but I can't think of any other drawback.

Your exports/imports wouldn't be affected either because if you have advanced products that everyone needs then none will deny their prices just because you print money endlessly for your people. They will give the amount of currency that you want. Your exchange rate would be the one you want.

Basically if the world was one and our currencies/countries didn't compete with each other, command economy model would be better wouldn't it?

Market economy makes you more competetive so its better in the current world but isn't it idiotic to continue like this?

Also, something tells me that some central banks are printing free money for their precious elite members. None would notice the difference.

[Cæli]

and how exactly are you making sure that the central controller is not printing too much money because it's an easy short term solution to hard problems?
it's a problem of trust. it's not sustainable because humans make mistakes, are selfish, and tend to often hate each others.

"elite" benefiting from the newly created money before it spreads and devalues the currency is called the cantillon effect.
only a matter of time before it spreads. people notice the difference with the loss of value of their currency over time.
which happens. until it starts being more than an annoying detail.

[Vampiregenesis]

and how exactly are you making sure that the central controller is not printing too much money because it's an easy short term solution to hard problems?
it's a problem of trust. it's not sustainable because humans make mistakes, are selfish, and tend to often hate each others.

"elite" benefiting from the newly created money before it spreads and devalues the currency is called the cantillon effect.
only a matter of time before it spreads. people notice the difference with the loss of value of their currency over time.
which happens. until it starts being more than an annoying detail.

Yeah but what can you do if you don't trust the central controller? you don't have control over anything. Everything has a specific price and everyone is getting a specific wage. What can they do that it will cause a problem to the system. They may not even know that the central controller is doing this.

[PC2]

Since you control everything then you can freely print money in order to hire more workers. You can pretty much pay everyone and allow them to trade within your borders which means none would die from hunger or be homeless.

No, this part is magical thinking. Money doesn't matter very much because it's just a symbolic medium of exchange that is more convenient than bartering. In economics what you should actually be thinking about is *wealth creation* and not money creation. "Money" itself has no significant utility and problem solving value so talking about money in the absence of economic fundamentals doesn't make any sense.

[Cæli]

Yeah but what can you do if you don't trust the central controller? you don't have control over anything. Everything has a specific price and everyone is getting a specific wage. What can they do that it will cause a problem to the system. They may not even know that the central controller is doing this.

then you either rebuild the system from scratch and repeat the same mistakes and face the same consequences, or you work toward building a system that isn't as dependant on the trust of central controllers. gold doesn't have this problem for instance, and some advocates for its use to maintain the value of a national currency...but we moved from gold for a reason. or you somehow automate monetary creation and make it auditable publicly with no possible cheating involved. we currently don't have the solution, but I'm sure we'll find a way, as we always overcome our problems throughout history.

prices and agreed wages are a result of monetary supply and market behaviours which itself is dependent on roughly every little details in our world. no one can control that because you can't control everyone. and if you do, people will really dislike that, as explained.

like I said, they can print too much money, and if there is too much money in circulation, it will devalue the currency, it just happen and there is many real life examples. people certainly notice when their money points to 0, or when prices increase.

[Mihalik]

You can pretty much pay everyone and allow them to trade within your borders which means none would die from hunger or be homeless.

The availability of cash is not what determines the availability of food/consumer goods or real estate.

Also the problem of poverty in a market economy is not tied to the shortages of goods, it's tied to artificial scarcity.

[callipygoustp]

Hell yeah it is.

[Yadryonych]

Is it free to print money on a command economy?

You dont need money in a command economy. Goods are issued and acquired by command, employees are being rationed by command

[Dhrizzle]

Creating money doesn't create the things you need to buy. If you print a lot of money you also have to produce a lot of goods for the money to be spend on. If you dictate that prices have to be fixed then you will run out of goods before people run out of money and run the risk that the first to the store buys more than they need or is "fair" and causes shortages. If you let prices fluctuate then eventually inflation would mean that the total money in the system has the same value as the old amount, but with a chaotic transition that could cause shortages or an "unfair" distribution of goods.

[Draco-Onis]

In the market economy, there is the drawback of inflation when you print money which can cause problems depending on the reaction of the market forces but is there such a thing on a command economy like the soviet union one?

Since you control everything then you can freely print money in order to hire more workers. You can pretty much pay everyone and allow them to trade within your borders which means none would die from hunger or be homeless. Of course you can't overdo it since they will lose the motivation to work but I can't think of any other drawback.

Your exports/imports wouldn't be affected either because if you have advanced products that everyone needs then none will deny their prices just because you print money endlessly for your people. They will give the amount of currency that you want. Your exchange rate would be the one you want.

Basically if the world was one and our currencies/countries didn't compete with each other, command economy model would be better wouldn't it?

Market economy makes you more competetive so its better in the current world but isn't it idiotic to continue like this?

Also, something tells me that some central banks are printing free money for their precious elite members. None would notice the difference.

These seems apropos to your question

[Sunseeker]

Adding money to the system inherently devalues the money. Doesn't matter what sort of system you use.

Of course if you're using a command economy why the fuck are you using money? Just tell people what to do and provide them with whatever you think is fitting.

[Endus]

If you're using money, it's fundamentally to conduct exchange on a market. That's the purpose of "money"; to act as a medium of exchange in a market system. Any command economy relying on a market system for exchange is still going to have to deal with the actions of the market, including how supply affects demand, which is the root of why printing money willy-nilly ends up devaluing the currency; you inflate supply, which decreases demand, which lowers value. Controlling that money supply is a necessary component of any market system, not just a command economy.

If you want to get around that, you'd have to move to a non-monetary economy. Which, at least in theory, is by no means ridiculous or impossible; on the micro scale, most households work as non-monetary economies. You don't get paid for doing basic chores (and no, a child's allowance being tied to chores isn't the same thing), and exchanges within the household aren't done financially. You don't have to pay whoever cooked dinner for doing the cooking, or whoever paid the bills for doing so. There are tasks that need doing, and they're meted out according to whatever method the family determines (generally, whoever's capable of doing it and/or available to get it done).

Obviously, a macro form of the same thing would be a whole different beast, but it demonstrates the underlying principles on which it could be theoretically built, at least. And in such an economy, you wouldn't have "money" in the first place, rendering the question pointless.

[Vampiregenesis]

In a command economy where everyone is getting a specific amount of money which doesn't allow him to buy too much of something and the prices of goods remain the same, how could that trigger an inflation problem? you are not allowed to profit and you are always getting the same paycheck monthly, your money can buy a very specific amount of goods which is enough for you in order to survive.

Well, this might trigger a shortage of goods because you will have new buyers who previously didn't have any money but you can counterbalance this by increasing the production of goods, so everyone can buy something and survive.

But then again like some said above, if you are doing all of this then it might not be practical to use money as a medium at all. Nevertheless, I believe money would still make life more practical and easy to aquire and trade goods.

[kamuimac]

In the market economy, there is the drawback of inflation when you print money which can cause problems depending on the reaction of the market forces but is there such a thing on a command economy like the soviet union one?

Since you control everything then you can freely print money in order to hire more workers. You can pretty much pay everyone and allow them to trade within your borders which means none would die from hunger or be homeless. Of course you can't overdo it since they will lose the motivation to work but I can't think of any other drawback.

Your exports/imports wouldn't be affected either because if you have advanced products that everyone needs then none will deny their prices just because you print money endlessly for your people. They will give the amount of currency that you want. Your exchange rate would be the one you want.

Basically if the world was one and our currencies/countries didn't compete with each other, command economy model would be better wouldn't it?

Market economy makes you more competetive so its better in the current world but isn't it idiotic to continue like this?

Also, something tells me that some central banks are printing free money for their precious elite members. None would notice the difference.

it doesnt work . look at what happened to wenesuela which should be one of richest countries in the world due to oil they have. and yet they starve there.

inflation kills that model.

- - - Updated - - -

If you're using money, it's fundamentally to conduct exchange on a market. That's the purpose of "money"; to act as a medium of exchange in a market system. Any command economy relying on a market system for exchange is still going to have to deal with the actions of the market, including how supply affects demand, which is the root of why printing money willy-nilly ends up devaluing the currency; you inflate supply, which decreases demand, which lowers value. Controlling that money supply is a necessary component of any market system, not just a command economy.

If you want to get around that, you'd have to move to a non-monetary economy. Which, at least in theory, is by no means ridiculous or impossible; on the micro scale, most households work as non-monetary economies. You don't get paid for doing basic chores (and no, a child's allowance being tied to chores isn't the same thing), and exchanges within the household aren't done financially. You don't have to pay whoever cooked dinner for doing the cooking, or whoever paid the bills for doing so. There are tasks that need doing, and they're meted out according to whatever method the family determines (generally, whoever's capable of doing it and/or available to get it done).

Obviously, a macro form of the same thing would be a whole different beast, but it demonstrates the underlying principles on which it could be theoretically built, at least. And in such an economy, you wouldn't have "money" in the first place, rendering the question pointless.

then we would swap to barter like in ancient times.

i guess people slept on histor lessons when teachers tought them the genesis of monetary systems in the world.

[Dhrizzle]

Adding money to the system inherently devalues the money. Doesn't matter what sort of system you use.

Of course if you're using a command economy why the fuck are you using money? Just tell people what to do and provide them with whatever you think is fitting.

Money allows for choice where the goods are distributed rather than expecting people to barter among themselves.

[Cæli]

In a command economy where everyone is getting a specific amount of money which doesn't allow him to buy too much of something and the prices of goods remain the same, how could that trigger an inflation problem? you are not allowed to profit and you are always getting the same paycheck monthly, your money can buy a very specific amount of goods which is enough for you in order to survive.

Well, this might trigger a shortage of goods because you will have new buyers who previously didn't have any money but you can counterbalance this by increasing the production of goods, so everyone can buy something and survive.

But then again like some said above, if you are doing all of this then it might not be practical to use money as a medium at all. Nevertheless, I believe money would still make life more practical and easy to aquire and trade goods.

I believe I've already explained it, but inflation happens when more money is created, inflation is the devaluation of a currency over time following monetary creation, which increases things such as price as a consequence. it doesn't have to be a bad thing, but there can be such thing as creating too much money. you don't know if that central controller is really trustworthy with the valuation of your currency over many decades.

[Easo]

You dont need money in a command economy. Goods are issued and acquired by command, employees are being rationed by command

Which has never happened. Oh, no, wait, it did, once, for whole 5 years in Khmer Rouge.
It is pretty much impossible to do without money in a modern economy, no matter how it is controlled.