Politics in Minutes (2016)
Central economic planning
Nationalized industries are a way for people to own the means of production and distribution. In this form of state socialism, the state owns the firms and makes decisions about how much should be produced and how it should be distributed. This, in turn, means that the entire economy can be centrally planned by the government. With no competitive market determining prices the government can decide directly on the allocation of resources.
And because the goods are produced for use rather than profit, production does not have to react to market fluctuations and the output can be planned so that there is no surplus or deficit – effectively ironing out the ups and downs of the business cycle and bringing stability of prices and employment. In practice, however, a nation’s economy is too large and complex for any single organization to manage, and communist states that attempted central economic planning have often failed to meet the needs of the people.