...planning. As a coordinating mechanism for socialism and an alternative to the market, planning is defined as a direct allocation of resources and is contrasted with the indirect allocation of the market. The level of centralization in decision-making in planning depends on the specific type of planning mechanism employed. As such, one can distinguish between centralized planning and decentralized planning. An economy primarily based on central planning is referred to as a planned economy. In a centrally planned economy the allocation of resources is determined by a comprehensive plan of production which specifies output requirements. Planning may also take the form of directive planning or indicative planning. A distinction can be made between physical planning (as in pure socialism) and financial planning (as practiced by governments and private firms in capitalism). Physical planning involves economic planning and coordination conducted in terms of disaggregated physical units; whereas financial planning involves plans formulated in terms of financial units. Different forms of economic planning have been featured in various models of socialism. These range from decentralized-planning systems, which are based on collective-decision making and disaggregated information, to centralized systems of planning conducted by technical experts who use aggregated information to formulate plans of production. In a fully developed socialist economy, engineers and technical specialists, overseen...
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...Why Socialism is Bad and Doesn't Work 1. Introduction Socialism is a socioeconomic philosophy which has failed everywhere it has been tried. Socialism is bad because it results in large, intrusive and controlling government that diminishes the role and value of individual citizens. While Socialism promises prosperity, equality, and security, it delivers poverty because it promotes victimhood and big government solutions; and it offers a false hope of a utopian society which results in the loss of freedom and the rise of governmental tyranny. Socialism is defined as a centrally planned economy in which the government controls all means of production. Many have come to realize that it was nothing but a catastrophic failure . Socialism was created to remedy the economic and moral defects of capitalism. However, it has far surpassed capitalism in both economic malfunction and moral cruelty. Yet the idea and the ideal of socialism remain as a solution today. 2. History Socialism aims at a social system based on public ownership of the means of production (Von Mises, 1969). Arising in the late Eighteenth and early Nineteenth Century, socialism developed as a reaction to the hardships caused by capitalism and industrial revolution. The premise of socialism is that the government owns and operates all material resources in a social system. Socialism first originated in France and England at about the same time, but as it grew socialism took individual paths throughout each...
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...In a way, communism is an extreme form of socialism. Many countries have dominant socialist political parties but very few are truly communist. In fact, most countries - including staunch capitalist bastions like the U.S. and U.K. - have government programs that borrow from socialist principles. "Socialism" is sometimes used interchangeably with "communism" but the two philosophies have some stark differences. Most notably, while communism is a political system, socialism is primarily an economic system that can exist in various forms under a wide range of political systems. Comparison chart | |Communism |Socialism | |Philosophy |From each according to his ability, to each according to |From each according to his ability, to each according to| | |his needs. Free-access to the articles of consumption is |his contribution. Emphasis on profit being distributed | | |made possible by advances in technology that allow for |among the society or workforce to complement individual | | |super-abundance. |wages/salaries. | |Economic System |The means of production are held in common, negating the |The means of production are owned by public enterprises | | |concept of ownership in...
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...Socialism Vs. Capitalism & Everything In-Between. We have all grown up seeing that we live in a world that divides our planet into territories. These territories are bordered by imaginary lines that divide us from them. The borders in which we live play a major role in developing each of our identities, our customs or traditions, the way we conduct ourselves in business and personal endeavors. Some of us have grown up with an expectation of freedom to choose, while others depend on their government to act in their best interest. Depending on what country you call home, you either participant in a free market economy, a controlled economy, or a mixture of both. In this report we are going to look at what creates each type of economy and where we can find examples of each within the world. First we are going to analysis the characteristic of a Free Market Economy. In a free market, the government’s role is to “make sure that the market is stable enough to, properly, conduct business” (Freidman). In purity, the system hopes to “eliminate subsidies for industries, the pre determination of prices, and the amount of regulation controlling certain industry sectors”(Freidman). The implementation of a free market introduced individual property rights, which allows citizens to voluntarily exchange property/resources at a price arranged solely by the mutual consent of the buyer and seller. The seller is free to choose if the price being offered is worth their property; without threat...
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...Types of Economic Systems. Socialism Socialist economic systems (all of which feature common ownership of the means of production) can be subdivided by their coordinating mechanism (planning and markets) into planned socialist and market socialist systems. Additionally, socialism can be divided based on the ownership of the means of production into those that are based on public ownership, worker or consumer cooperatives and common ownership (i.e., non-ownership). Communism is a hypothetical stage of Socialist development articulated by Marx as "second stage Socialism" in Critique of the Gotha Program, whereby economic output is distributed based on need and not simply on the basis of labor contribution. The primary concern for socialist planned economies is to coordinate production to directly perceived satisfy human needs/economic demand (as opposed to generate profit and satisfy needs as a byproduct of pursuing profit), to advance the productive forces of the economy while being immune to the perceived systemic inefficiencies (cyclical processes) and crisis of overproduction so that production would be subject to the needs of society as opposed to being ordered around "capital accumulation".[7][8] Capitalism Capitalism generally features the private ownership of the means of production (capital), and a market economy for coordination. Corporate capitalism refers to a capitalist marketplace characterized by the dominance of hierarchical, bureaucratic corporations. Mercantilism...
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...CHAPTER 2 THE GLOBAL ECONOMIC ENVIRONMENT SUMMARY A. The economic environment is a major determinant of global market potential and opportunity. In today’s global economy, capital movements are the driving force, production is uncoupled from employment, and capitalism has vanquished communism. Based on patterns of resource allocation and ownership, the world's economies can be categorized as market capitalism, centrally-planned capitalism, centrally-planned socialism, and market socialism. The final years of the twentieth century were marked by transitions toward market capitalism in many countries that had been centrally controlled. However, great disparity still exists among the nations of the world in terms of economic freedom. B. Countries can be categorized in terms of their stage of economic development: low income, lower middle income, upper middle income, and high income. Gross domestic product (GDP) and gross national income (GNI) are commonly used measures of economic development. The 50 poorest countries in the low-income category are sometimes referred to as least-developed countries (LDCs). Upper middle-income countries with high growth are often called newly industrializing economies (NIEs). Several of the world’s economies are notable for their fast growth; the BRIC nations include Brazil, Russia, India, and China. The Group of Seven (G7), Group of Eight (G-8), and Organization for Economic Cooperation and Development (OECD) represent...
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...The attitude to property sets socialism apart from Liberalism and Conservatism, which both regard property ownership as natural. Common ownership for socialist is a key principle because they believe according to Socialists property is unjust: they favour common ownership because wealth is produced by the collective effort of human labour, thus should be owned by the community not by privately by individuals. Another reason why socialists favour common ownership is because they believe property breeds acquisitiveness therefore is morally corrupting. Socialists argue that private property encourages people to be materialistic, leading individuals to believe human happiness can be gained through the pursuit of wealth. Those with their own property want to gain more, whilst those who have little or no wealth can no longer acquire it. Socialists also believe property is divisive: It creates conflict in society, for example, this is most clearly illustrated in the Marxist belief of class conflict. According to Marx, class is linked to economic power, as defined by the individuals relationship to the means of production, Class conflict is therefore between ‘capital’ and ‘labour’, that is between the bourgeoisie; owners of productive wealth, and the proletariat; those who live off the sale of their labour. Those who believe in fundamentalist socialism, which is a form of socialism that seeks to abolish capitalism and replace it with a qualitatively different kind of society, favour...
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...Chapter 02 National Differences in Political Economy True / False Questions 1. A country's political economy and culture are independent of each other. True False 2. It is not possible to have democratic societies that emphasize a mix of collectivism and individualism. True False 3. The communists believed that socialism could be achieved by democratic means, and turned their backs on violent revolution and dictatorship. True False 4. In an individualist society, the welfare of society is best served by letting people pursue their own economic self-interest. True False 5. The central message of collectivism is that individual economic and political freedoms are the ground rules on which a society should be based. True False 6. There is a global trend of societies shifting from individualism toward collectivism. True False 7. It is possible to have a democratic state where collective values predominate. True False 8. It is possible to have a totalitarian state that is hostile to collectivism and where some degree of individualism is encouraged. True False 9. The most practical form of democracy is direct democracy. True False 10. Most modern democratic states practice representative democracy. True False 11. In a market economy, if demand for a product exceeds supply, prices will rise, signaling to producers to produce more. True False ...
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...Socialism is a range of economic and social systems characterised by social ownershipand democratic control of the means of production,[7] as well as the political ideologies, theories, and movements that aim at their establishment.[8] Social ownership may refer to public ownership, cooperative ownership, citizen ownership of equity, or any combination of these.[9] Although there are many varieties of socialism and there is no single definition encapsulating all of them,[10]social ownership is the common element shared by its various forms.[5][11][12] Socialist economic systems can be divided into both non-market and market forms.[13]Non-market socialism involves the substitution of factor markets and money with engineering and technical criteria based oncalculation performed in-kind, thereby producing an economic mechanism that functions according to different economic laws than those of capitalism. Non-market socialism aims to circumvent the inefficiencies and crises traditionally associated with capital accumulation and the profit system.[22] By contrast, market socialism retains the use of monetary prices, factor markets, and, in some cases, the profit motive with respect to the operation of socially-owned enterprises and the allocation of capital goods between them. Profits generated by these firms would be controlled directly by the workforce of each firm or accrue to society at large in the form of a social dividend.[23][24][25] The feasibility and exact methods of resource...
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...Due: 21/04/15 To what extent have socialists favoured the common ownership of wealth? (45) Amongst co-operation, equality and class politics, common ownership otherwise known as collectivism, is one of the core themes and goals that socialists strive to achieve. Socialism is traditionally linked with supporting the idea of common ownership of wealth. Common ownership is the idea that wealth is produced by the collective effort of human labour and should therefore be owned by the community, not private individuals When looking at how far socialists favour and have favoured the common ownership of wealth it is important to start with the beginnings of socialism. Socialism emerged as a reaction to social and economic conditions created by nineteenth century industrial capitalism. It was linked to the rise of a new class of industrial workers who experienced the poverty and degradation of early industrialism and was a critique of the liberal market society and capitalism. Socialists, after some time, were separated into the forms of revolutionary and parliamentary socialists. And it was the reformist socialists who came to accept capitalism was the best means of generating wealth. The core themes of Socialism all point to the idea of common ownership of wealth. Community, for example, stands for the idea that individuals are inseparable from society and therefore inseparable from one another. They believe humans are bound together by common bonds of sympathy and comradeship...
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...Name: Instructor: Course: Date: Capitalism and Socialism 1 Varieties of capitalism arise from a number of institutional characteristics that prevail in the developed economies of the globe. Such institutional characteristics include; education and vocational training, industrial relations, inter-firm relations, corporate governance and intra-firm coordination (Soskice & Hall 23). These characteristics differentiate two forms of capitalism, coordinated market economies- CME’s and liberal market economies- LME’s. Aside from differing in their institutional characteristics, these two forms of capitalism differ in certain macroeconomic aspects especially industrial specialization and comparative advantage. The table below pinpoints the differences between the forms of capitalism based on the institutional characteristics; Institutional characteristic | Liberalized markets (LME’S) | Coordinated markets (CME’s) | Education and training | Formal learning from high schools and colleges | Apprenticeship, bestowing industry specific skills | Inter-firm relations | Competitive | Coordinated/collaborative | Industrial regulations | Deregulated, anti-tax, tax breaks | Motivates information sharing and coordination among firms | Comparative advantage/specialization | High-tech and service | Manufacturing | Income distribution | Largely unequal | Generally evenly distributed | Mechanism | Competitive market arrangements | Non-market relations | An example of...
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...Economics Economies of Scale Reduction in cost per unit resulting from increased production, realized through operational efficiencies. Economies of scale can be accomplished because as production increases, the cost of producing each additional unit falls. Diseconomies of Scale “Economies of scale” is a simple concept that can be demonstrated through an example. Assume you are a small business owner and are considering printing a marketing brochure. The printer quotes a price of $5,000 for 500 brochures, and $10,000 for 2,500 copies. While 500 brochures will cost you $10 per brochure, 2,500 will only cost you $4 per brochure. In this case, the printer is passing on part of the cost advantage of printing a larger number of brochures to you. This cost advantage arises because the printer has the same initial set-up cost regardless of whether the number of brochures printed is 500 or 2,500. Once these costs are covered, there is only a marginal extra cost for printing each additional brochure. Economies of scale can arise in several areas within a large enterprise. While the benefits of this concept in areas such as production and purchasing are obvious, economies of scale can also impact areas like finance. For example, the largest companies often have a lower cost of capital than small firms because they can borrow at lower interest rates. As a result, economies of scale are often cited as a major rationale when two companies announce a merger or takeover. However...
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...Ramirez Miami Dade College Professor Valdes Principles of Macroeconomics Different Economic Models, Different Results. Believe or not, each person is free to decide which economic model is the most suitable for its company or business; well, the same idea applies for countries. Each country has the freedom to choose whichever economic model is going to be their guidance for its economic development. Choosing between 3 options sounds easy, but it is not easy. Capitalism, socialism, and finally mixed economics are the three basic economics models that have been around the world since the beginning of the economics’ studies. Each one of the models listed before are different one from another; they are opposite ideas, so their results after practicing them are very different. According to the Scottish philosopher Adam Smith, considered “The father of Economics”, the capitalism is the best way to increase the economic efficiency in any country. Adam Smith (1776) The Wealth of Nations that “free market economy produces more wealth, and more benefits to society, than other systems.” He argued that the competition between different people is the key to create a successful capitalism. The pursue of people’s individual interests makes possible the creation of a free market. Everybody wins, the costumers and the owners wins. Capitalism works very simple, companies and businesses have to address the needs of the society, but also they have to set affordable prices; they are able to have...
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...Mrs. Acres Homemade Pies Business 508 Professor Jack McCaffery Summer 2010 Rosie Wright BUS508 Assignment #1 1. Choose your company or service for your business proposal. It is not to be a franchise (McDonald’s). I would like to complete my business proposal on the company I work for; the name of the company is “Campus Crest Communities”. Campus Crest builds student housing across the United States. Their corporate office is located in South Park, they have 29 properties. 2. Analyze the situations below, complete the actions, and prepare a 3-4 page report with your conclusions: o Given the business situation of Mrs. Acres Homemade Pies (p. 30) and using the economic concepts of supply and demand, explain 1. Discuss what you think will happen to the supply, demand, and price of the product in the short-term; 2. Discuss what you think will happen to supply, demand, and price of the product in the long-term. 3. Explain why you think supply, demand, or equilibrium price will be different, if at all, in the short-term and the long-term. Mrs. Acres Homemade Pies Discuss what you think will happen to the supply, demand and price of the product in the short-term Mrs. Acre’s homemade pies are very successfully within her local supermarkets and a few family restaurants. Although the company’s success is driven by the quality of the product and the incentives provided for her employees. It’s very important that we pay attention...
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...2 ©2013 Cengage Learning. All Rights Reserved. r po a ub cly a e b e ebs e i © 2 0 1 3 oC e n g s t e d Lteoa r n p n g .l i A l l R icgch tsss iR el s e w v e d .i t M , y n n ©2013 Cengage Learning. All Rights Reserved. May n age i r a posted to a publicly accessible website, in whole or posted to a publicly accessible website, in whole or May not be scanned, copied or duplicated, w i t o th o lee socra n n ep a r c . p i e d o r d u p l i c a t e d , o r ot be scanned, copied or duplicated, or b n d, o in part. in part. Economics The Framework for Business 2 LO1 What is economics? LO2 How does fiscal and monetary policy impact the economy? LO3 What is the free market system and the supply and demand relationship? LO4 What are planned market systems? LO5 What are mixed market systems? LO6 What tools are used to evaluate economic performance? 2 ©2013 Cengage Learning. All Rights Reserved. May not ©2013 Cengage Learning. All Rights Reserved. May not posted to a publicly accessible website, in whole or in posted to a publicly accessible website, in whole or in be scanned, be scanned, part. part. copied copied or or duplicated, duplicated, or or Global Economic Crisis: How did this happen? In late 2008: √ The banking system hovered on the edge of collapse √ √ √ Property values plummeted Home foreclosures soared Layoffs put more than a million Americans out of work The stock market lost more than 1/3 its value 3 or be scanned, part...
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