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Comparative economic systems

Comparative economic systems. Gabriel Söderberg, Uppsala University. Historical process: Feudalism  Capitalism  Debate / struggle over alternatives  alternatives shape each other Systems always undergoing change Theory vs. Reality , never any pure examples. Before we begin ….

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Comparative economic systems

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  1. Comparativeeconomic systems Gabriel Söderberg, Uppsala University

  2. Historical process: Feudalism Capitalism  Debate/struggle over alternatives  alternatives shapeeachother • Systems alwaysundergoingchange • Theory vs. Reality, never any pure examples Before webegin…

  3. Decidewhat is to be produced • Organizeresources (human labor, energysources, tools, machinesbuildingetc) for the production • Allocate the productionresults • Decidehowtoreinvestmentsurplus (ifany!) • Providelegitimacy for the economic distribution What do economic systems do?

  4. Private ownershipofproductionresources (factories, machines, raw materials)  owners = ”capitalists” • Workersreceiveswages, • Capitalists ownproduction and sells it for money profit • Consumersdecide the product (consumersovereignty) • Capitalists decidehowtoreinvest profit  ackumulation • The capitalists organizeproduction, and the ”Invisible Hand” of the market ensures social efficiency Capitalism (in theory)

  5. After Industrial Revolution • Unprecedentedproductionincrease new richclass, ”capitalists/Bourgeoisie” • A new group: workers • Poverty, severeconditions in factories • Beginningofthoughts on howtochange the system Capitalism ca. 1840

  6. Systematized Socialism, provided a moreintellectuallycoherent program • Historyprogressesthrough a numberof different economic systems: Feudalism, Capitalism, Socialism • Technologicaldevelopment social tensions (classstruggle)  new system • Capitalismrevolutionizestechnology impoverishmentof the laborclass  revolution  socialism allowed by the technologycreated by capitalism Marxism

  7. Not muchto go on from Marx! • Plannedeconomy • Market socialism • Mixed economy (most/all capitalist systems) Socialism???

  8. World Wars plannedwareconomies  socialism possible? • Ludwig von Mises 1921: Needof market to set prices for calculation • Friedrich von Hayek 1945: Market necessarytochannel information to humans withlimitedunderstanding • Information is the crucial problem of socialism  socialism is impossible! ”The Socialist CalculationDebate”

  9. Markets not necessarily capitalist • Market mechanismbetterthan planning • Oskar Lange: • Consumersovereignty, central planning board experiments withprices, adjustsproductionafterconsumption • State ownsfactories, but managers acttominimizecosts as if on market • Interest in computation and statistics as guidance Market socialism

  10. Labor unions  higherwages  betterworkcondittions • Increasedrightstovote governmentsintroduceregulations, social securityetc • Split between social democracy and communistparties • Depression of the 1930s  bad reputation ofcapitalism • Mixed economies: large public sector, regulated markets, social securityetc 1900-1960 Socialism changescapitalism

  11. ”Temporary arrangement” on the wayto Socialism  technologicaldevelopmentimportant • First 5-year plan ca 1930 • State owns all productiveresources • Planners not consumersdecidewhattoproduce • Planners set prices and wages • After 1991 quick market reform (”shocktherapy”) 1917-1991 Sovietplannedeconomy

  12. After 1945: Extension ofSovietmodelto Eastern Europe • 1960s: reform attemptstoincrease market mechanism • Yugoslavia: work-managedproductionunits • Hungary, Poland: market reforms from 1968 • Less reform in othercountries: Albania, Romaniaetc • After 1991 quicktransitionto market economies 1960-1991 Eastern Europe

  13. Attack against ”socialist capitalism” • Deregulationsof markets • Business-friendly, anti-regulationpoliticianselected: Thatcher in UK, Reagan in USA • Fall of socialism  ”There is No Alternative” • ”Heroiccapitalism” • Market efficiencyemphasized, reforms toensure social efficiency 1980- Neoliberalism

  14. Deng Xiaoping • Markets reforms: ”Economic Special Zones”, decollectivizationofagriculture, introductionofprivately-ownedcompanies • ”Socialism withChinesecharacteristics” • Communist party still in control, cf. Russia/Eastern Europé • Future? 1979- China, Market reforms

  15. Financialmeltdown 2008  falsehoodof market efficiency? • Environmentalcrisis in a system based on constant ackumulation? • Technologies thatdissolves private property (file-sharing, 3d-printers etc)? • Completemechanizationofproduction  no workersneeded whowillbuyproducts? Wherearewe going?

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