{"id":89,"date":"2014-09-03T21:03:30","date_gmt":"2014-09-03T21:03:30","guid":{"rendered":"https:\/\/courses.candelalearning.com\/internationalbusiness1xmaster\/?post_type=chapter&p=89"},"modified":"2015-02-17T19:34:50","modified_gmt":"2015-02-17T19:34:50","slug":"reading-socialism-and-planned-economies","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-internationalbusiness\/chapter\/reading-socialism-and-planned-economies\/","title":{"raw":"Reading: Socialism and Planned Economies","rendered":"Reading: Socialism and Planned Economies"},"content":{"raw":"

Socialism is characterized by social ownership of the means of production.<\/strong><\/h2>\r\n
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KEY\u00a0Points<\/h3>\r\n
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    \r\n\t
  • A planned economy is a type of economy consisting of a mixture of public ownership of the means of production and the\u00a0coordination\u00a0of production anddistribution\u00a0through state\u00a0planning.<\/li>\r\n\t
  • Socialism has many variations, depending on the level of planning versus market power, the organization of\u00a0management, and the role of the state.<\/li>\r\n\t
  • In a socialist system, production is geared towards satisfying economicdemands\u00a0and human needs. Distribution of this\u00a0output\u00a0is based on individual contribution.<\/li>\r\n\t
  • Socialists distinguish between a planned\u00a0economy, such as that of the fomer Soviet Union, and socialist economies. They often compare the former to a top-down bureaucratic capitalist firm.<\/li>\r\n<\/ul>\r\n<\/div>\r\n
    <\/div>\r\n<\/div>\r\n<\/section><\/div>\r\n

    Terms<\/strong><\/h3>\r\n<\/div>\r\n
    \r\n
      \r\n\t
    • Socialism<\/em>:\u00a0 Any of various economic and political philosophies that support social equality, collective decision-making, distribution of income based on contribution and public ownership of productive\u00a0capital\u00a0and natural resources, as advocated by socialists.<\/li>\r\n\t
    • Planned economy:\u00a0 <\/em>An economic system in which government directly manages supply and demand for goods and services by controlling production, prices, and distribution in accordance with a long-term\u00a0design\u00a0and schedule of objectives.<\/li>\r\n<\/ul>\r\n
      \r\n

      Examples<\/strong><\/h4>\r\n
        \r\n\t
      • There are few clear examples of purely socialist economies; nonetheless, many of the industrialized countries of Western Europe experimented with one form of social democratic mixed economies or another during the twentieth century, including Britain, France, Sweden, and Norway. They can be regarded as social democratic experiments, because they universally retained a wage-based economy and private ownership and control of the decisive means of production. Variations range from social democratic welfare states, such as in Sweden, to mixed economies where a major percentage of\u00a0GDP\u00a0comes from the state sector, such as in Norway, which ranks among the highest countries in quality of life and equality of opportunity for its citizens.<\/li>\r\n<\/ul>\r\n<\/div>\r\n
        <\/div>\r\n
        \r\n

        <\/h3>\r\n

        Planned Economy<\/strong><\/h4>\r\nA planned economy is a type of economy consisting of a mixture of public ownership of the means of production and the coordination of production and distribution through state planning.\r\n

        Planned Socialist Economy<\/strong><\/h4>\r\nEconomic planning in socialism takes a different form than economic planning in capitalist\u00a0mixed economies. In socialism,\u00a0planning\u00a0<\/em>refers to production of use-value directly (planning of production), while in capitalist mixed economies,planning\u00a0<\/em>refers to the design of capital accumulation in order to stabilize or increase the\u00a0efficiency\u00a0of its process. While many socialists advocate for economic planning as an eventual substitute for the market for factors of production, others define economic planning as being based on worker-self management, with production being carried out to directly satisfy human needs. Enrico Barone provided a comprehensive theoretical\u00a0framework\u00a0for a planned socialist economy. In his model, assuming perfect computation techniques, simultaneous equations relating\u00a0inputs\u00a0and outputs to\u00a0ratios\u00a0of equivalence would provide appropriate valuations in order to balance\u00a0supply\u00a0and demand.\r\n\r\n
        \"\"\r\n
        Hierarchy of Needs<\/div>\r\n
        Worker self-management and production to satisfy human needs are key.<\/figcaption><\/figure> \r\n\r\nThe command economy is distinguished from economic planning. Most notably, a command economy is associated with bureaucratic collectivism, state\u00a0capitalism, or state socialism.\r\n

        Socialism<\/strong><\/h4>\r\nSocialism is an economic system characterized by social ownership, control of the means of production, and cooperative management of the economy. A socialist economic system would consist of an organization of production to directly satisfy economic demands and human needs, so that goods and services would be produced directly for use instead of for private profit driven by the accumulation of capital.\u00a0Accounting\u00a0would be based on physical quantities, a common physical magnitude, or a direct measure of labor-time. Distribution of output would be based on the principle of individual contribution.\r\n\r\nThere are many variations of socialism and as such there is no single definition encapsulating all of socialism. They differ in:\r\n
          \r\n\t
        • The type of social ownership they advocate;<\/li>\r\n\t
        • The degree to which they rely on\u00a0markets\u00a0versus planning;<\/li>\r\n\t
        • How management is to be organised within economic enterprises; and<\/li>\r\n\t
        • The role of the state in constructing socialism.<\/li>\r\n<\/ul>\r\n<\/div>\r\n
          \r\n

          <\/h4>\r\n
          \r\n

          GLOSSARY<\/h3>\r\n
          \r\n
          \r\n\r\nAccounting<\/strong>\r\n\r\nThe development and use of a system for recording and analyzing the financial transactions and financial status of a business or other organization.\u00a0The process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information. (definition by the American Accounting Association)\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nCapital<\/strong>\r\n\r\nMoney and wealth. The means to acquire goods and services, especially in a non-barter system. Already-produced durable goods available for use as a factor of production, such as steam shovels (equipment) and office buildings (structures).\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nCapitalism<\/strong>\r\n\r\nA socio-economic system based on the abstraction of resources into the form of privately-owned money, wealth, and goods, with economic decisions made largely through the operation of a market unregulated by the state. A socio-economic system based on private property rights, including the private ownership of resources or capital, with economic decisions made largely through the operation of a market unregulated by the state.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nCommand Economy<\/strong>\r\n\r\nMost of the economy is planned by a central government authority and organized along a top-down administration where decisions regarding production output requirements and investments are decided by planners from the top, or near the top, of the chain of command.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nCooperative<\/strong>\r\n\r\nA type of company that is owned partially or wholly by its employees, customers, or tenants. Abbreviation: co-op.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nCoordination<\/strong>\r\n\r\nThe resulting state of working together; cooperation; synchronization.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nDemand<\/strong>\r\n\r\nThe desire to purchase goods or services, coupled with the power to do so, at a particular price.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nDesign<\/strong>\r\n\r\nTo plan and carry out (a picture, work of art, construction etc. ).\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nDistribution<\/strong>\r\n\r\nThe process by which goods get to final consumers over a geographical market, including storing, selling, shipping, and advertising.\u00a0the set of relative likelihoods that a variable will have a value in a given interval. A probability distribution; the set of relative likelihoods that a variable will have a value in a given interval.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nEconomic System<\/strong>\r\n\r\nAn economic system is the combination of the various agencies, entities (or even sectors as described by some authors) that provide the economic structure that defines the social community.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nEconomy<\/strong>\r\n\r\nCollective focus of the study of money, currency and trade, and the efficient use of resources.\u00a0The system of production and distribution and consumption. The overall measure of a currency system; as the national economy.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nEfficiency<\/strong>\r\n\r\nThe extent to which a resource, such as electricity, is used for the intended purpose; the ratio of useful work to energy expended.\u00a0The extent to which time is well used for the intended task. Improved efficiency was a principle goal of progressives, one they thought attainable by the application of scientific and rational thought to social problems.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nFramework<\/strong>\r\n\r\nThe identification and categorization of processes or steps that constitute a complex task or mindset in order to render explicit the tacit and implicit. A basic conceptual structure.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nGDP<\/strong>\r\n\r\nGross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. A measure of the economic production of a particular territory in financial capital terms over a specific time period.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nGood<\/strong>\r\n\r\nAn object produced for market.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nInput<\/strong>\r\n\r\nSomething fed into a process with the intention of it shaping or affecting the outputs of that process. Each participant's contributions that are viewed as entitling him\/her to rewards or costs. Examples include time, effort, and loyalty.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nManagement<\/strong>\r\n\r\nThe act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively. Administration; the process or practice of managing.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nMarket<\/strong>\r\n\r\nA group of potential customers for one's product.\u00a0One of the many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nMixed Economies<\/strong>\r\n\r\nA system in which both the state and private sector direct the way goods and services are bought and sold.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nMixed Economy<\/strong>\r\n\r\nAn economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. Most mixed economies can be described as market economies with strong regulatory oversight, in addition to having a variety of government-sponsored aspects.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nOutput<\/strong>\r\n\r\nProduction; quantity produced, created, or completed.\u00a0data sent out of the computer, as to output device such as a monitor or printer.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nPlanning<\/strong>\r\n\r\nThe act of formulating a course of action, or of drawing up plans.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nProcess<\/strong>\r\n\r\nA series of events to produce a result, especially as contrasted to product.\u00a0in reference to capabilities, a process is how the capability is executed.\r\n
          <\/div>\r\n<\/div>\r\n
          Profits<\/strong><\/div>\r\n
          Collective form of profit.<\/div>\r\n
          <\/div>\r\n
          \r\n\r\nRatio<\/strong>\r\n\r\nA number representing a comparison between two things.\u00a0The relative magnitudes of two quantities (usually expressed as a quotient).\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nServices<\/strong>\r\n\r\nThat which is produced, then traded, bought or sold, then finally consumed and consists of an action or work.\r\n
          <\/div>\r\n<\/div>\r\n
          Supply Provisions<\/strong><\/div>\r\n
          The amount of some product that producers are willing and able to sell at a given price, all other factors being held constant.<\/div>\r\n
          <\/div>\r\n
          \r\n\r\nState Capitalism<\/strong>\r\n\r\nThe term state capitalism has various meanings, but is usually described as commercial (profit-seeking) economic activity undertaken by the state with management of the productive forces in a capitalist manner, even if the state is nominally socialist. State capitalism is usually characterized by the dominance or existence of a significant number of state-owned business enterprises.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nSystem<\/strong>\r\n\r\nThe part of the universe being studied, arbitrarily defined to any size desired\u00a0A whole composed of relationships among the members.\r\n
          <\/div>\r\n<\/div>\r\n
          \r\n\r\nWelfare State<\/strong>\r\n\r\nA social system in which the state takes overall responsibility for the welfare of its citizens, providing health care, education, unemployment compensation and social security.\r\n
          <\/div>\r\n<\/div>\r\n<\/div>\r\n<\/section><\/div>\r\n<\/div>\r\n<\/div>","rendered":"

          Socialism is characterized by social ownership of the means of production.<\/strong><\/h2>\n
          \n
          \n

          KEY\u00a0Points<\/h3>\n
          \n
          \n
          \n
            \n
          • A planned economy is a type of economy consisting of a mixture of public ownership of the means of production and the\u00a0coordination\u00a0of production anddistribution\u00a0through state\u00a0planning.<\/li>\n
          • Socialism has many variations, depending on the level of planning versus market power, the organization of\u00a0management, and the role of the state.<\/li>\n
          • In a socialist system, production is geared towards satisfying economicdemands\u00a0and human needs. Distribution of this\u00a0output\u00a0is based on individual contribution.<\/li>\n
          • Socialists distinguish between a planned\u00a0economy, such as that of the fomer Soviet Union, and socialist economies. They often compare the former to a top-down bureaucratic capitalist firm.<\/li>\n<\/ul>\n<\/div>\n
            <\/div>\n<\/div>\n<\/section>\n<\/div>\n

            Terms<\/strong><\/h3>\n<\/div>\n
            \n