Comparative Economic Planning - Lecture Notes

Jul 5, 2024

Comparative Economic Planning - Lecture Notes

Introduction to Economic Planning

  • Economic Planning: The making of major economic decisions by those in power. Decisions must be conscious and based on comprehensive surveys of resources and needs.
  • Purpose: Countries plan for the economy to govern effectively and meet people’s needs.

Essentials of Economic Planning

  1. Initial Resources:
    • Inventory of current and future availability of manpower and resources.
  2. Feasible Targets/Goals:
    • Set targets for terminal dates (specific timeframes).
    • Consider capability to produce domestically (domestic investment).
  3. Policy Setting:
    • Policies to achieve goals considering initial resources and production capability.
    • Reliance on foreign dependence is discouraged.

Economic Systems

  • Definition: Organization and methods used by a country to determine production, methods, and distribution of goods and services.
  • Three Basic Questions:
    1. What goods and services are produced?
    2. How are they produced?
    3. For whom are they produced?

Types of Economic Systems

Communism

  • Definition: Government system where work and benefits are shared equally among people.
  • Beliefs:
    1. Rich get richer, and poor get poorer; aim to make everything equal.
    2. Eliminate social classes; ensure fairness and equality for everyone.
    3. Overcome social struggles to achieve goals.

Capitalism

  • Definition: Economic system where trade and industry are controlled by private owners for profit.
  • Beliefs:
    1. Promotes economic growth and raises the standard of living.
    2. Buyers influence market demand; producers create goods for profit.
    3. Little government intervention; government regulates business operations.

Problems in Economic Systems

Communism

  1. Lack of Individuality: Limits personal potential and exploration.
  2. Lack of Choice: Freedom of choice is restricted.
  3. Equal Treatment for All: Hard workers and those who do not work hard are treated equally.

Capitalism

  1. Growing Gap Between Rich and Poor: Rich get richer, and workers remain poor.
  2. Influence by Economic System on Society: Reflects the dynamics of modern society.

Case Study: China's Economic Transition

Post-World War II to Present

  • 1958 - Mao Zedong’s Great Leap Forward:
    • Goal: Increase production in farms and factories.
    • Result: Widespread famine; poor quality products; ~30M deaths from starvation.
  • 1981 - Deng Xiaoping’s Four Modernizations:
    • Areas: Farming, industry, science, and defense.
    • Outcome: Introduction of free enterprises; economic but not political freedom.
  • Modern China:
    • Huge manufacturing power; significant global economic influence.
    • Lack of political freedom; single-party system (Communist Party).
    • Ongoing need for human rights reforms.