What is the difference between a command economy and a capitalist economy?
Essentially the degree of involvement of the government in the economy. In a capitalist economy, people are free to own property (capital) and to choose how to employ this and their labor. Generally speaking, people choose to acquire as much capital as they can get their hands on (enriching themselves – ‘greed is good’) by any means possible, generally hard work but also investing their capital (bank accounts, shares, real estate). In a command economy people are less free to own property and are also obliged (commanded) to perform jobs the government wants them to do. The theory behind capitalist economies is that people acting in their own self-interest will self-organize into a stable system. Adam Smith was the first person to realize this (his ‘invisible hand’) and IMHO is as remarkable a discovery as Newton’s in physics. It is equally remarkable that it is generally true. The command economies work according to the theory that the government can understand every aspect of the econ
