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Unformatted text preview: apter 2 31 Learning Objective 2-1 Slide
32 The Coordination Problem
in Command Systems
Central planners must coordinate (and
attempt to anticipate) the millions of decisions
that will be made by consumers, resource
suppliers, and businesses.
Since the outputs of many industries serve as
inputs to others, the failure of any industry to
meet its target (planning failure) causes a
chain reaction of other missed targets in other
Chapter 2 Learning Objective 2-1 32 The coordination problem in command systems
emanates from the fact that people are responsible for
making coordination decisions. Anticipating all the
future needs of a social system would be impossible
for a group of individuals even in the event they were
quite experienced in the command system planning
process. There are literally millions of resources
available to be combined in numerous different ways
to provide finished goods and services. Invariably,
planning participants will underestimate the need for
some goods and services, and over-estimate the need
for others. Secondarily, in economic systems an error
in judgment in the...
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This note was uploaded on 09/10/2009 for the course ECO 2251 taught by Professor Kirkland during the Spring '09 term at Troy.
- Spring '09