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The central planning board (CPB) has three major functions in the Lange model: First it instructs firms to set price to equal marginal cost, secondly it adjusts prices to attain market-clearing prices for goods and services, and finally, it reinvests the economic profit derived from state enterprises into the economy based on a target rate of ...
The need for long-term economic planning to promote efficiency was a central component of Labour Party thinking until the 1970s. The Conservative Party largely agreed, producing the postwar consensus, namely the broad bipartisan agreement on major policies. [31] A long-term economic plan was a phrase often used in British politics.
Economist Robin Hahnel, who supports participatory economics, a form of socialist decentralized planned economy, notes that even if central planning overcame its inherent inhibitions of incentives and innovation, it would nevertheless be unable to maximize economic democracy and self-management, which he believes are concepts that are more ...
An economic theory that defines wealth by the amount of precious metals owned. [48] business cycle. Also called the economic cycle or trade cycle. The downward and upward movement of gross domestic product (GDP) around its long-term growth trend. [49] The length of a business cycle is the period of time containing a single boom and contraction ...
A key strand of free market economic thinking is that the market's invisible hand guides an economy to prosperity more efficiently than central planning using an economic model. One reason, emphasized by Friedrich Hayek, is the claim that many of the true forces shaping the economy can never be captured in a single plan. This is an argument ...
In the history of economics, he is probably best known for his work On the Economic Theory of Socialism published in 1936, where he famously put Marxian economics and neoclassical economics together. In the book, Lange advocated the use of market tools (especially the neoclassical pricing theory) in economic planning of socialism and Marxism .
In the history of economic thought, a school of economic thought is a group of economic thinkers who share or shared a mutual perspective on the way economies function. While economists do not always fit within particular schools, particularly in the modern era, classifying economists into schools of thought is common.
The economic calculation problem (ECP) is a criticism of using central economic planning as a substitute for market-based allocation of the factors of production. It was first proposed by Ludwig von Mises in his 1920 article " Economic Calculation in the Socialist Commonwealth " and later expanded upon by Friedrich Hayek .