Final answer:
Erewhon uses a command economy, where the government controls all economic resources and makes decisions on production, distribution, and job assignments, with the aim of equally distributing resources and aligning economic activity with social goals.
Step-by-step explanation:
The government of Erewhon operates under a command economy, where the government owns and controls all economic resources, decides on the utilization of these resources, and even assigns jobs to its citizens. In this type of economic system, often referred to as a communist or planned economy, all decisions relating to the production, distribution, and consumption of goods and services are orchestrated by the government. Unlike market economies where decisions are made by the interaction between consumers and businesses, a command economy relies on a central authority to make all economic decisions. The allocation of resources and determination of production goals are carried out by central planners, which can significantly restrict the free will and choices of the individuals in society.
Moreover, in a command economy, the government is likely to set wages that are uniform across different jobs, with goods and services distributed based on decisions made by the central planners, rather than market demands. This system emphasizes equal distribution and collective ownership with the aim of aligning economic activity with a nation's broader social and economic goals. For example, in terms of production, the government decides what to produce, how to produce it, and for whom the goods and services are going to be produced.