Economics for Democratic Socialism. Drexel University Spring Quarter 2009. Economic Planning. In the early twentieth century, many socialists and others believed that market outcomes are chaotic, irrational, and very inefficient.
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Economics for Democratic Socialism
Spring Quarter 2009
Oskar Lange, 1904-1965
P. N. Rosenstein-Rodan
This is Rosenstein-Rodan’s “Shoe factory example.
The managers of the shoe factory assume that growth in demand will be slow, so …
Let us return to the simple example of “Economia,” and economy that produces only two goods.
How to plan for this tiny economy?
The “optimal plan” in terms of the planners’ preferences is at point * But, of course, it isn’t that easy!