week 6
Dezhao Chen
Week 6 Discussion
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Q1. Given the similarities and differences of three contending theories (Marxism, Neoclassical and Keynesianism) that you have learned in the class, briefly analyze the key factors that contributed to the decline of economic systems under Marxism in the late 20th century in the countries of Eastern Europe and East Asia. Give specific examples as part of your answers
The Marxist theory’s most fundamental principle is that it, ‘… sought to transform capitalist Europe into a cooperative commonwealth of freethinkers, and often called “socialism” or “communism.” (p. 135). The theory was that everyone would work for the better good of the state and others. The major pillars of Marxism and production are culture, politics and the natural climate. Marxism created tension in these three spheres as Wolff and Resnick (2012) say,
This in turn implies that the economy is always in a state of tension and change. A change in climate will favor some kinds of production and distribution and inhibit others. Changing political trends will favor and inhibit certain kinds of production and distribution. Changing cultural patterns too will stimulate some kinds of production and distribution and stifle others. (p. 144)
Besides the tension in the three spheres, another reason why Marxism collapsed especially in Russia is due to mismanagement and corruption. Marxism states that the fundamental power is to be given to workers and overproduction is supposed to benefit them. However this was not the case in Russia whereby greedy heads of government took over the benefits that came with the laborer’s work.
Q2. In understanding the process of rapid transformation of economic systems in many nations in the world from the beginning of 1990s, briefly explain why freedom to choose the right theoretical foundations still do matter to develop an appropriate economic system for economic growth and better income distribution of a society.
The freedom to choose the right theoretical foundations to follow as a nation whether neoclassic, Marxism or Keynesian theory is fundamental because it affects how people in the country see the world. For example Americans who live in a capitalist society view the world differently to Russians who are socialists and communists. Wolff and Resnick (2012) say that,
It follows that individuals will likely act differently depending on which theory they use in thinking about the economic aspects of their lives and social surroundings. As with theories people use to understand other objects of interest. to them (love, nature, politics, etc.), economic theories have conscious and unconscious effects on how people think and act. (p. 348)
Due to the fact that the economic system that the people of a country will choose will affect their lives, they should be the ones to develop an economic system that they feel will be of most benefit to them.
References
Wolff, R. D., & Resnick, S. A. (2012). Contending Economic Theories: Neoclassical, Keynesian, and Marxian (The MIT Press). The MIT Press.
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Weini Gu
Wk6
Top of Form
Q1. Given the similarities and differences of three contending theories (Marxism, Neoclassical and Keynesianism) that you have learned in the class, briefly analyze the key factors that contributed the decline of economic systems under Marxism in late 20th century in the countries of Eastern Europe and East Asia. Give specific examples as part of your answers.
Economic systems under Marxism in late 20th century was developed and generated under the background of post war period and this would lead to a continuation of the war time practice in this time. During war time, Marxism work perfectly as people are fighting and working together to protect their nations and produce materials and supplies for war. The production and operation mode are generated under the war and reform time where the society is going through major changes and challenges from outside threats. Yet, with the increasing economic development after war, the inner drive to push the socialism in these countries begin to die away as people would start to think about their own interest and profits at this time. They would gradually not be satisfied with what is given and distributed from the nation. The feature of low efficiency and absolute fairness are all the weak points of what Marxism brought to countries of Eastern Europe and East Asia during that time and eventually led to the decline of Marxism at that time.
Q2. In understanding the process of rapid transformation of economic systems in many nations in the world from the beginning of 1990s, briefly explain why freedom to choose the right theoretical foundations still do matter to develop an appropriate economic system for economic growth and better income distribution of a society.
The freedom to choose the right theoretical foundations does matter to develop an appropriate economic system for economic growth and better income distribution of a society. For example, in the United States, where people was originally fighting for their independence and their ownership to their property in the War of Independence, this is why later on the US economic system is build on capitalism. They value private ownership and related property rights to every citizen. A private property system gives individuals the exclusive right to use their resources as they see fit. That dominion over what is theirs leads property users to take full account of all the benefits and costs of employing those resources in a particular manner (Powell, 2003). The historical background and economic goals of different countries may attribute a lot to what is the best economic and political system for the country. The majority of people in US are pursuing what capitalism value for, the privatization of property and individual property rights.
Reference
Powell, B. (2003). Private Property Rights, Economic Freedom, and Well Being. Retrieved from website: https://www.mercatus.org/system/files/Private-Property-Rights-Economic-Freedom-and-Well-Being.pdf
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