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Command economies took most of the blame for the economic collapse of the Soviet Union and North Korea. The lesson taken from the second half of the 20th century was that capitalism and free markets were indisputably more productive than socialism and command economies.

Three broad explanations for such failure were given: socialism failed to transform the nature of human incentives and competition; political government processes corrupted and ruined command decisions; and economic calculation was proven to be impossible in a socialist state.

Soviet revolutionary thinker Vladimir Lenin first tried to implement an economic structure that lacked competition and profits in 1917. By 1921, Lenin was forced to adopt the New Economic Plan to incorporate some form of motivation for positive production.

Political economists in the western economies often argued that such motivations were still directed incorrectly. Rather than satisfying customers, the concern of the socialist producer was to satisfy his higher-ranking political officer. This discouraged risk and innovation.

In response to concerns about high executive salaries and profits, economist Milton Friedman countered regulatory thinking by inquiring, "Is it really true that political self-interest is nobler somehow than economic self-interest?"

This argument states that concentrated power in the political realm tends to flow into the wrong hands. Leninists and Trotskyites complain that Stalinist command economies fail based on political corruption, not inherent flaws in the economic system.

In 1920, Austrian economist Ludwig von Mises wrote an article entitled "Economic Calculation in the Socialist Commonwealth." Mises argued that without free markets, no correct price mechanism could form; without a price mechanism, accurate economic calculations were impossible.

Famed socialist economist Oskar Lange later admitted it was Mises's "powerful challenge" that forced socialists to try to build a system of economic accounting. After decades of trying to replicate the price mechanism in free markets, however, the Soviet Union still collapsed.

Mises responded, arguing that such attempts were doomed to failure because no monopolistic government could reasonably be "in perfect competition with itself," which is how prices arise.

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What makes command economies fail?