Price system
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Major types
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In
A price system may be either a
History
Price systems have been around as long as there has been economic exchanges.
The price system has transformed into the system of global capitalism that is present in the early 21st century.[2] The Soviet Union and other Communist states with a centralized planned economy maintained controlled price systems. Whether the ruble or the dollar is used in the economic system, the criterion of a price system is the use of money as an arbiter and usual final arbiter of whether a thing is done or not. In other words, few things are done without consideration for the monetary costs and the potential making of a profit in a price system.
Debate on socialism
The American economist
According to Bockman, the original conception of socialism involved the substitution of money as a unit of calculation and monetary prices as a whole with calculation in kind (or valuation based on natural units), with business and financial decisions replaced by engineering and technical criteria for managing the economy. Fundamentally, this meant that socialism would operate under different economic dynamics than those of capitalism and the price system.[5]
In the 1930s, the economists
Hayek
In "
See also
- Free price system
- Regulated market
- Planned economy
- Catallactics
- Economic calculation debate
- Economic history
- History of economic thought
- Lange model
- Market economy
- Price mechanism
References
- ^ William J. Baumol. "Price system". Encyclopædia Britannica. Retrieved 2 January 2018.
- ^ I Am The Price System R. B. Langan Great lakes Technocrat April 1944, # 66.
- ^ Harbinger Edition, 1963. LCCCN 63-19639. First Published as a series of essays in The Dial (1919) then as a book in 1921.
- ^ Full Text (HTML)
- ISBN 978-0-8047-7566-3.
According to nineteenth-century socialist views, socialism would function without capitalist economic categories - such as money, prices, interest, profits and rent - and thus would function according to laws other than those described by current economic science. While some socialists recognized the need for money and prices at least during the transition from capitalism to socialism, socialists more commonly believed that the socialist economy would soon administratively mobilize the economy in physical units without the use of prices or money.
- ^ Revisiting the Socialist Calculation Debate: The role of markets and finance in Hayek's response to Lange's challenge, by Auerbach, Paul and Sotiropoulos, Dimitris. 2012. Kingston University London, Economics Discussion Paper 2012-6, pp. 1-2: "He readily acceded to the need for efficiency calculations to be made in value terms rather than using purely natural or engineering criteria, but claimed that these values could emerge along lines consistent with neoclassical value theory, without the need for a market in capital goods and without private ownership over the means of production."
- S2CID 144970753[permanent dead link]
- ^ Friedrich Hayek (September 1945). "The Use of Knowledge in Society" (PDF). The American Economic Review. 35 (4): 528.