Under Marxism
a) wealth is equally distributed among the entire population
b) people are incentivized to innovate
c) central planners determine the allocation of scarce resources in the economy.
d) prices are set by a free market
The correct answer and explanation is:
The correct answer is: c) central planners determine the allocation of scarce resources in the economy.
Explanation:
Marxism is a theory of economic and social systems based on the ideas of Karl Marx, which critiques capitalism and advocates for a classless society. In Marxist thought, the government or central planners take on the role of determining how scarce resources are allocated, rather than relying on the market or individuals. This is known as central planning or a planned economy.
In a capitalist system, the distribution of wealth is influenced by the market, where supply and demand dictate prices and production. In contrast, Marxism aims to eliminate the private ownership of production and redistribute wealth to address inequality. The central planners, under a Marxist regime, control the means of production, labor, and resources, making decisions on behalf of the population.
While the ultimate goal of Marxism is a classless society with equitable distribution, this vision is not fully realized under all forms of Marxist regimes. Central planning in a Marxist economy would theoretically ensure that resources are used efficiently and that wealth is distributed based on need rather than profit. However, critics argue that central planning can lead to inefficiencies, shortages, and lack of innovation because central planners may not have accurate information or the flexibility to respond to market needs.
In a Marxist system, private ownership is abolished, and the state often becomes the sole producer and distributor of goods and services. This directly contrasts with capitalist systems where the market sets prices and rewards innovation through competition and profit incentives. Additionally, the lack of competition in a Marxist system can stifle individual entrepreneurial efforts, as innovation is not always incentivized by the same mechanisms present in capitalist economies.