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14 Cards in this Set
- Front
- Back
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Historical Background |
A. Lenin a. There were not enough proletariat to revolutionize so there needed to be a party that acted in the name of the Proletariat b. People argued that this took away individual freedom. c. Lenin said lets focus on economic equality first and poverty later d. Even if that means oppression e. Lenin wanted party to rule f. Stalin took over Lenin wanted collective leadership; Stalin wanted individual leadership B. Rose Luxemburg a. Wanted to build a system where people are free and alienation are not there anymore b. Disagreed with Lenin c. Marx wanted all of the Ploteriat to act at the same time not a small group d. Peaceful movements with demonstrations |
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Centrally Planned Economy (Normal Socialism): Price |
A. Price a. Under Capitalism - Capitalists Consumers are free to buy whatever they want to buy - Price is determined by supply and demand b. Under socialism - Government (Central Planning Commission) takes the place of the auctioneer system under Walrus
- CPC decides the price and tells the enterprises to produce what they want
- They adjust the price accordingly (trial error) To match equilibrium Prices of Capital Goods - If QS>QD, they tell enterprises to lower price next year
-IFQS |
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Centrally Planned Economy (Normal Socialism): Output |
A. Output Every public enterprise received a quota on how much to produce -You have to produce xxx this year -The government give them the raw materials to produce -Public does not have a choice on how much to produce |
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Centrally Planned Economy (Normal Socialism): Income Distribution and Wages |
a. CPC determined the wages - Miner should make as much as a doctor - Goal is to narrow the gap between physical labor and clerical labor - Even though the difference in wages narrowed down, there was still inequality - More privileged members got to be members of the party - Essentially you replaced one privileged group in the capitalist system with another in socialism |
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Centrally Planned Economy (Normal Socialism): Efficiency Outcome |
a. Since they only did the readjustment once a year, QD≠QS - They were using old information to make these decisions - Some goods were under produced and others were overproduced |
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Market Socialism: Consumer Prices |
A. Let market forces determine prices a. Price buyers willing to bay = marginal utility - Demand determined by utility b. Price sellers are willing to sell for = marginal cost - Supply demanded by marginal cost Determining The Prices of Capital Goods |
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Market Socialism: Prices of Capital Goods |
A. Determined by Central Planning -by trial and error; like the auctioneer system - QS>QD = lower price QS -QS<QD = raise price B. Every year the CPB determines the price of capital and watches what happens a. Lets public enterprises decide whether they want to buy the product ir not |
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Market Socialism: Output Determinationby Public Enterprises |
A. Price = Marginal Cost a. Wanted public enterprises to behave like capitalist firms b. Produce the output that equalizes marginal cost and price If they did that, they would be as efficient |
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Market Socialism: Evaluation of Managers Based on Following Production Rules |
Under capitalism, profit is how managers are evaluated
A. Market Socialism wanted to run the enterprises to certain rules instituted by CPB a. If they didn't, they got fired |
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Market Socialism: How Wages Are Determined |
a. Some jobs cause pain and some jobs cause pleasure - It is possible to like your job |
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Market Socialism: Income Distribution |
A. Basic wage a. Same for everybody; regardless of jobs b. All human labor is doing a useful function - Trash collectors are as important as any other job B. Wage Adjustment Based On Disutility of The Job a. If job causes disutility, the wage increases Social C. Dividend Firms are owned by the public a. If the firms make profits, the citizens get the profit Every citizen is a shareholder |
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Market Socialism:Contraction |
- Thereis a special board that controls expansion and contraction of each industrythat decides on expansion and contraction - Rule: Price = Average Cost A. Contraction: CPB will want to contract industry if its expanding too much B. If goal is to contract, CPB will introduce competition and open some firms until price equals average cost. a. Increasing competition will decrease price Ex: If car cost is 15,000 and industry is making 20,000.. CPB will bring in competition to lower price - - Industries whose prices are lower than average cost |
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Market Socialism: Expansion |
- There is a special board that controls expansion and contraction of each industry that decides on expansion and contraction - Rule: Price = Average Cost A. Expansion will occur if industry is contracting too much. B. CPB will decrease competition until price equals average cost - Price is LOWER than average cost. -CPB will decrease competition so that the price equals average cost. The industry will then EXPAND. - If car cost is 15,000 and industry is making 13,000 CPB will decrease competition to increase price |
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