Economic Criticisms of Marxism

the economic calculation problem criticism of socialist economics, or more precisely central economic planning. first proposed ludwig von mises in 1920 , later expounded friedrich hayek. problem referred of how distribute resources rationally in economy. free market solution price mechanism, wherein people individually have ability decide how should distributed based on willingness give money it. price conveys embedded information abundance of resources desirability in turn allows, on basis of individual consensual decisions, corrections prevent shortages , surpluses; mises , hayek argued possible solution, , without information provided market prices, socialism lacks method rationally allocate resources. many consider refutation of socialism , shows socialist planned economy not work. debate raged in 1920s , 1930s, , specific period of debate has come known economic historians socialist calculation debate. in practice, ussr, north korea, , cuba, example, have used centrally planned economies , have been historically subject frequent shortages, ussr collapsing entirely.

reduced incentives

some critics of utopian or egalitarian socialism argue income sharing reduces individual incentives work, , therefore incomes should individualised as possible. critics of socialism have argued in society holds equal wealth there can no material incentive work, because 1 not receive rewards work done. further argue incentives increase productivity people , loss of effects lead stagnation. john stuart mill in principles of political economy (1848) said:

it common error of socialists overlook natural indolence of mankind; tendency passive, slaves of habit, persist indefinitely in course once chosen. let them once attain state of existence consider tolerable, , danger apprehended thenceforth stagnate; not exert improve, , letting faculties rust, lose energy required preserve them deterioration. competition may not best conceivable stimulus, @ present necessary one, , no 1 can foresee time when not indispensable progress.

however, later altered views , became more sympathetic socialism, particularly fourierism, adding chapters principles of political economy in defence of socialist outlook, , defending socialist causes. within revised work made radical proposal whole wage system abolished in favour of co-operative wage system. nonetheless, of views on idea of flat taxation remained, albeit in toned-down form.

the economist john kenneth galbraith has criticised communal forms of socialism promote egalitarianism in terms of wages/compensation unrealistic in assumptions human motivation:

this hope [that egalitarian reward lead higher level of motivation], 1 spread far beyond marx, has been shown both history , human experience irrelevant. better or worse, human beings not rise such heights. generations of socialists , socially oriented leaders have learned disappointment , more sorrow. basic fact clear: society must accept men , women are.