There is no such thing as the invisible hand, laissez-faire does not work, free market capitalism is a failure. It is necessary, for a market economy to work, that an institution regulates the market, the government. This is because, businessmen, entrepreneurs, bankers etc… are driven by money, and alienated by money, to eventually make risky decisions for money.
The point of public ownership is to create a democratic system in the economy, where all members of enterprises own the means of production. Nationalization and socialization is replacing the capitalist with the government or the bureaucrat, which again creates economic dictatorship.
Having a poor economic base in China during the early 1950s Mao Zedong and the communist party, created a program, a plan, of industrialization, centralization and collectivization, setting a similar economic system as the new ally, the Soviet Union. The plan was mainly to create a higher and heavier industrial production through new high technological capital, and stabilizing agricultural production. There was a re-organization of economic structure between 1952 and 1957, by 1956 65% of the enterprises were state owned, and 32% were public-private owned firms. Also in agriculture, the system was changed, farms were collectivized, and peasants were encouraged to sell their farms to the state.
As you can see here, the output of industrial production increased, agriculture also increased in production. So maybe, centralization and collectivization does work, the failure of the Chinese economy occurred during the Great Leap Year.
|1952||1957 planned||1957 actual output|
|Coal||63 million tonnes||113 million tonnes||124 million tonnes|
|Pig iron||1.9 million tonnes||4.7 million tonnes||5.8 million tonnes|
|Steel||1.3 million tonnes||4.1 million tonnes||5.2 million tonnes|
|Oil||0.4 million tonnes||2 million tonnes||1.4 million tonnes|
|Cement||2.6 million tonnes||6 million tonnes||4.6 million tonnes|
|Chemical fertiliser||0.2 million tonnes||0.6 million tonnes||0.7 million tonnes|
In 2006 the US had a trade deficit of 817 billion US dollars, and they now have an unemployment rate of 5.1%, which is quite high in a period of economic stability. There are many reasons for this, one of them is, the growing amount of imports, and the decreasing amount of exports. The demand of domestic production lowers as cheaper imports increase, this means that many businesses reduce productivity, and therefore lowering their employment, or, businesses go in debt and create unemployment. Why don’t they just decrease the amounts of imports?
Of course, all information which I write will not come from me, it is information which I learned from somewhere, therefore, I will always cite my work.
This is a video on you tube which I created, to show you Karl Marx’s view on the working class and the capitalist class. The Bourgeoisie is 19th century language for capitalists, and proletariat is 19th century word for working class.
This is my first post on this blog, the reason for this post is to give you a basic overview of what the blog will be about. The blog will pretty much refer to any social, political or economic issues, news or, ideas that I have. I will state quick comments using posts, but I will post larger pieces of works on the pages section.