After having discussed in class the two extreme ends of the continuum ranging from the idea of an entirely centrally planned economy to the idea of a chaotic free market economy, this assignment will now focus on how economies position themselves in the middle area of the continuum. Furthermore this assignment will analyze this middle area according to Karl Marx’ findings and views.
To begin with I will shortly summarize the idea of a centralized planned economy and the idea of the other extreme, the free market economy. Afterwards we will focus on the area in between these two extremes, answering the question of the level of control in economies and where to position ourselves according to Marx. Since Karl Marx is criticizing planning as well as free markets, the final goal of this assignment will be to identify his solution or answer on how much control there should be and where to position an economy best. A conclusion will then summarize the findings of this paper.
A planned economy is a type of economy that gives the government total control over the allocation of resources. It alleviates the use of private enterprises and allows the government to determines everything from production over distribution to pricing. In theory this idea of an economy gives several benefits, which we have discussed in class, such as stability, it meets collective objectives and the economy does not suffer from business cycles. Nonetheless, criticism could be that an economy like that is inefficient in the distribution of resources. Furthermore it raises the question of fairness and authenticity: is the government democratically elected? Who determines the so-called collective objectives? A planned economy seems to offer plenty of benefits in theory, but in reality it creates a wide basis for criticism.
If we consider the idea of a free market economy on the other hand, in which there is no government intervention, buyers and sellers transact freely according to demand and...