In which economic system are economic decisions made by the government rather than by market forces?

In a command economy, the government plays a central role in making economic decisions, which includes determining what goods and services are produced, how they are produced, and who receives them. This contrasts sharply with market-driven systems, where supply and demand, rather than government decisions, dictate economic activity. In a command economy, the state typically owns the means of production and directs economic resources to align with national goals or plans, rather than allowing individual choices and market forces to guide economic transactions.

This system is often characterized by a focus on collective goals over individual profit, which can lead to different incentives and outcomes than those found in market economies. In doing so, command economies attempt to prevent market failures and ensure that everyone has access to basic needs, though this approach can sometimes lead to inefficiencies and lack of innovation.