Chapter 5 Flashcards
(70 cards)
Socialism
an individual’s cost or value, we spread it to society, at large
Karl Marx
Founder of socialism; said production should come “from each, according to his ability, to each, according to his need”
Authoritarian Choice
Whether the state’s decisions are made by a dictator, the peoples’ elected representatives, or by popular vote
Original rationale for Socialism
Firms have more power than individuals, so they exploit workers
Socialists countered by saying…
Society has rigid classes and that firms are not really in competition with one another, but they are on the same team
Another original rationale
Fairness. Socialists view class structure as rigid said that members of the working class are forever disadvantaged by birth and cant rise above their station
Marx predicted that as technology advanced…
Machines would replace workers, which would leave masses unemployed, able to choose only between starvation and overthrow the system
By 1950’s socialists were giving up on original ways of selling socialism since?
There was no reserve army of unemployed in non-socialist countries and many perceived that people could materially advance beyond parents’s material wellbeing.
The exploitation rationale weakly survives, and
the fairness rationale- though without the rigid class ideas- is often used to justify socializing costs and benefits.
Modern rationale for socialism is….
Must socialize individual decisions by state force in order to counter nature’s socializing effects.
External costs
Costs that naturally spill over to others. Some value also spills over to others.
Externalities
External costs and external benefits
Efficient decisions making in society requires that
firms pay the costs of their actions (ch1)
With perfect regulation,
state can determine the amount of costs borne by each individual and force the firm to pay those costs, so production decisions will be efficient.
Since benefits are naturally socialized…
State socializes the cost, by forcing individuals to pay
because efficient assessment of external costs and benefits must be done by those who have knowledge of all fecets of economy and….
nothing to gain from the regulatory process. DOES NOT DESCRIBE ANY REGULATOR, ANYWHERE!!!!
State decisions makers protect…
their own self-interest and are not all-knowing.
Cannot depends on regulatory process to…
improve the disadvantages that nature’s externalities give us
In markets, people make decisions by…
balancing their own values & costs
Authoritarian decision makers choose for others based on?
their own assessments of values & costs
Marx’s principle 1..
From each, according to his ability
Marx’s principle 2…
To each, according to his need
If individuals do not agree with state’s assessment of their abilities or distribution of goods, the state can respond by?
- Allow individual choice, but this choice will not be based on what the state sees as serving societal wellbeing, so it will not maintain the socialist order.
- Use force and the threat of force to maintain the socialist order.
It does not matter whether the state’s decisions are made by dictator, elected representatives or majority rule….
force is necessary when individuals do not agree with socialist order
