chapter 5 book notes

Question 1

socialize

Answer 1

to spread to society an individuals cost or value

Question 2

an advocate for society would assert that the individual:

Answer 2

should act to promote the good of society, not to promote the individuals wellbeing

Question 3

Karl Marx

Answer 3

founder of socialism

Question 4

what did Karl Marx say about production?

Answer 4

production should come from each according to his ability, to each according to his need

Question 5

authoritarian choice

Answer 5

whether states decisions are made by a dictator, the peoples elected reps, or by popular vote

Question 6

what was the original rational for socialism?

Answer 6

• firms have more power than individuals so they exploit them
  - big companies are all on the same team; exploited workers may find work somewhere else but they are all the same
• fairness:
  - class system is unfair and hard to get out of. society must be controlled to eliminate the class system
  - Marx predicted machines would replace workers leaving masses unemployed
  - used to justify cost and benefits

Question 7

modern rational

Answer 7

we must socialize individual decisions by state force in order to counter socializing effect

  - cost spill over : external costs
  - externalities: external cost and benefits
  - efficient decision making in society requires that firms pay the cost of their actions 
  - another externality is created by national defense
  - efficient assessment of external costs and benefits must be done by those who have knowledge of all facets of the economy and nothing to gain from the regulatory process

Question 8

maintaining the socialist order

Answer 8

authoritarian decision makers choose for others, based on their own assessment of values and costs

• central planner decides if there will be and what devices
• central planner assigns tasks and acquire resources necessary for production
• central planner distributes goods and services

Question 9

if individuals don’t like central planner decisions:

Answer 9

• allow individual choice - choice will not be based on what state see as serving society wellbeing, not maintaining socialist order
• use force and threat of force to maintain socialist order

Question 10

US socialism

Answer 10

in any form of socialism, state must take some property rights
won’t take the title of your home, but design of home, design of appliance in home, design of automobile, and even access to your profession are restricted by state for good of society

Question 11

communism

Answer 11

taking all property rights

Question 12

fascism

Answer 12

state does not take title of property but orders the use of that property and the individual in any way it wishes

Question 13

eminent domain

Answer 13

property taken for public use – roads, parks, – but owner is compensated

Question 14

civil forfeiture

Answer 14

person is suspected of crime an property seized because automatically suspected as having contributed to crime
– common when individual possess large amounts of cash - with law enforcement taking cash and not charging the accused with crime

Question 15

latest socialist rational

Answer 15

if the state provides any good from which the individual might derive external benefits – roads, school, court– no property is private and state is justified in dictating the use of individuals property and income

Question 16

capitalism

Answer 16

• private property is important

- many capitalist philosophers consider states only function to be protection of property and persons

Question 17

the pursuit of happiness

Answer 17

the right to hold and use property freely, to choose ones profession, to make contracts and to travel

Question 18

incentive problem of socialism

Answer 18

divorces consumption from production and takes incentive to voluntarily serve

Question 19

calculation problem

Answer 19

lack of economy triggers such as scarcity