ECON 19 Chapter Notes - Chapter 7: Friedrich Hayek, Joseph Schumpeter, Economic Planning
Document Summary
Central planning board is unable to solve the problem of information. Prices also convey information, it is a mechanism of translating information into prices. The social planning board is unable to perform this task, which is performed by the market. Social planning begins with economic choices, distorts individual choices and wants, and will eventually control the entire society, it will turn into a totalitarian state. Agreed with marx that capitalism will collapse and will be replaced with socialism. Capitalism, socialism, and democracy he describes three factors that will contribute to the fall of capitalism. Entrepreneur will be replaced by a manager, who wants to consolidate the business, there will be less innovation. Society moves to socialism, schumpeter described long-run economic developments. Institutionalism originated in the united states around 1900. It arose in times with robber capitalism and labor conflicts. There was a challenge to laissez-faire policy in the face of monopolies, depression, and poverty.
