Palace economy

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A palace economy is a system of economic organisation in which wealth flows out from a central source (the 'palace'), eventually reaching the common people, who have no other source of income. The division of labour in such an economy leads to a leisured elite, a class of bureaucrats, and a class of subsistence farmers. This system can be seen as a combination of a command economy and a subsistence economy.

Recorded examples of palace economies include the Mycenaean and Minoan societies in ancient Greece, but many other pre-industrial civilizations also used this economic model.

The contemporary economy of North Korea has also been characterized as a palace economy. It is entirely state-controlled, and so inefficient that the country depends on foreign aid for the survival of its population^{[citation needed]}.