A planned economy is an economic system in which decisions regarding production and investment are embodied in a plan formulated by a central authority, usually by a government agency. The justification for central planning is that the consolidation of economic resources can allow for the economy to take advantage of more perfect information when making decisions regarding investment and production. In an entirely centralized economy, a universal survey of human needs and consumer wants is required before a comprehensive plan for production can be formulated. The state would require the power to allocate the workforce, for setting production values and for overseeing the distribution system of the economy. The most extensive form of a planned economy is referred to as a command economy,centrally planned economy, or command and control economy.

In such economies, central economic planning by the state or government controls all major sectors of the economy and formulates all decisions about the use of resources. Planners decide what should be produced and direct lower-level enterprises to produce those goods in accordance with national and social objectives.