What Are The Obstacles On The Road Of Market Given By Marx?

Among the major obstacles on the road to reform are the following:
1. Prices of both inputs and outputs are often far from market-determined prices. Food, housing, and energy are generally heavily subsidized, while automobiles and consumer durables sell at levels far above the world price levels.
2. Enterprises in command economies operate with soft budget constraints, a term signifying that operating losses are covered by subsidies and do not lead to bankruptcy. In a market economy firms must be fiscally responsible enterprises must know that nonprofit ability ultimately means economic bankruptcy for the firm and economic ruin for the managers.

3. In market economies, output is primarily produced in private firms in the United States for example only 3 percent of gross domestic product is produced by the federal government. In Soviet style communist countries by contrast between 80 to 90 percent of output was produced by the state.
4. In addition, transition to the market requires setting up the legal framework for a market, establishing a modern banking system, breaking up the persuasive monopolies, tightening monetary and fiscal policy in order to prevent runaway inflation, and opening up the economy to international competition.

Add Comment

Report