Economics in an International Context Assignment

Economics in an International Context - Assignment Example According to Paul (2012), communism refers to the political and economical development model which was proposed by Karl Marx and later on supported by Lenin. The concept of the communism refers to the final part of the human historical development, where people are in charge of both the political as well as the economical system. In his book he also mentioned that according to Marxist theory, government can be defined as an instrument of class operation. Communism promises to provide each individual their needs despite of whatever class they belong to. According to Paul, command economy can also be referred as a planned economy. It can be defined as a specific economic system where the government has the power to control most or all the associated factors related to production. It generally exists when government decides to use the central planning system to allocate resources and funds as well as determine the volume of output across the segments. (Paul, 2012, p. 15). 2. Advantage o f Planned/ Command Economy: There are various advantages associated with command economy. In command economies, the central government control what and how much of most products will be produced. By controlling as well as deciding the prices and wages the central government also able to control and monitor how much of the production is allotted to each household. According to Katkoff (1961) The central government controls production and income in command economies. Due to this feature of command economies, the price could not be resolved based on how much would be the production and how much people’s demand is, In command economies, the price of the product is to always remain stable. In most planned economies, prices are determined by the policy makers. Hence, one major advantage of implementing the planned economy is that it is helpful to eliminate the chances of inflation and price fluctuations which are the two main challenges to the capitalist free market economies. Anot her important advantage associated with planned economy is the planned use of manpower, as well as the highest rate of social development (katkoff, 1961, pp.371-372). 3. Disadvantages of Planned/ Command Economy: According to Glisenberg (2001), a planned economy is with the character of satisfaction must. But, along with this advantage it also weakens the incentive as well as inspiration for the labor Because there is a rational system of condition for wants. Asa result it is almost impossible to allow a worker’s dependents to experience the full consequences of his or her lack of efficiency in production systems. The most recent example of this lack of employee motivation and responsibility situation was observed in China but later on in 1980 the great economic reform in the country helped them to overcome the situation. During the command economy phase , allocation of goods was depending on the labor hours and individuals were not responsible for the penalty of their works. As a result , the labor efficiency was much lower in China. According to his review, another key disadvantage associated with this type of economies was there were very less chances of technological innovations because they were not motivated to do so as there would be no obvious rewards for such good performance. The lack of competition also means that there are less efficient and innovative. As the main intention is non-profit so the mindset of improving as an aim as well as an employee also reduced drastically. Sometimes there are