Economics Dictionary of ArgumentsHome
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| Planned economy: A planned economy is an economic system where the government controls production, distribution, and prices, rather than market forces. Central authorities set goals, allocate resources, and regulate industries to achieve economic and social objectives. This system contrasts with market economies, where supply and demand drive economic decisions. See also Socialism, Communism, State capitalism, Economic systems._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Soviet Union on Planned Economy - Dictionary of Arguments
Coyne I 12 Planned Economy/Soviet Union/Coyne/Boettke: MisesVsSocialism: Abolishing prices - through the joint abolition of property rights and mone - would mean that planners would be unable to determine whether platinum or some other good should be used to construct railroad tracks. The result would be economic chaos in contrast to the rational order promised by proponents of the socialist system. >Socialism/Mises, >Calculation, >Price/Mises, >Planned economy/Mises. SocialsmVsVs: The socialists took Mises's critique seriously and revised their vision. The result was a model of "market socialism," offered by Oskar Lange and Abba Lerner, which sought to maintain the desirable features of the socialist system while addressing the critiques raised by Mises. Solution: The market socialist model included the use of money and allowed for a free market in final consumer goods and in labour markets. The means of production would still be nationalized. A Central Planning Board would be responsible for providing provisional ("shadow") prices for inputs to firms. Based on these provisional prices, firms would be instructed to select the combination of inputs that minimized the cost ofproducing the level of outputs that maximized profits. Problem: But how were firms to know this level of output? Solution: The Central Planning Board would instruct firms to follow the dictates of the perfectly competitive model by setting their prices equal to the marginal costs of production and to produce those levels of output that minimize average costs. Coyne I 13 The market socialists were aware that the Central Planning Board might select the incorrect provisional prices - that is, prices that did not reflect the true underlying scarcity. They argued, however, that this would not pose a problem because adjustments could be made on a trial-and-error basis based on inventories that would be observable to the planning board. Just as markets tended to correct for surpluses by putting downward pressure on prices, so too could the Central Planning Board by adjusting prices in the face of excess inventories. Similarly, just as markets respond to shortages with increases in prices, so too would planners who would dictate higher prices in the face of a lack of inventory. According to the market socialists, this process would mimic, if not exceed, the effciency of markets while maintaining the economic, social, and political goals of socialism. Socialism/HayekVsSocialism: It is here that F.A. Hayek entered the debate. The market socialists, Hayek argued, were preoccupied with a static notion of equilibrium where all relevant economic knowledge was given, known, and frozen. >Socialism/Hayek._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Soviet Union Coyne I Christopher J. Coyne Peter J. Boettke The Essential Austrian Economics Vancouver 2020 |
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