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Keynesian Economics versus Socialism comparison chart
Edit this comparison chartKeynesian EconomicsSocialism
Key Proponents John Maynard Keynes, Paul Samuelson, Brad DeLong, Paul Krugman. Charles Hall, François-Noël Babeuf, Henri de Saint-Simon, Robert Owen, Charles Fourier, Louis Auguste Blanqui, William Thompson, Thomas Hodgskin, Pierre-Joseph Proudhon, Louis Blanc, Moses Hess, Karl Marx, Friedrich Engels, Mikhail Bukinin.
Political System Can coexist with a variety of political systems, including dictatorship, oligarchy, republics, and "democratic centralism." Can coexist with different political systems. Most socialists advocate participatory democracy, some (Social Democrats) advocate parliamentary democracy, and Marxist-Leninists advocate "Democratic centralism."
Religion Freedom of religion. Freedom of religion, but usually promotes secularism.
Economic System Keynesian. The means of production are owned by public enterprises or cooperatives, and individuals are compensated based on the principle of individual contribution. Production may variously be coordinated through either economic planning or markets.
Key Elements Centralized banking, government investment in infrastructure, centralized government actively setting monetary and fiscal policy. Calculation in kind, Collective ownership, Cooperative common ownership, Economic democracy Economic planning, Equal opportunity, Free association, Industrial democracy, Input–output model, Internationalism, Labour voucher, Material balancing.
Private Property Typically permitted. Two kinds of property: Personal property, such as houses, clothing, etc. owned by the individual. Public property includes factories, and means of production owned by the State but with worker control.
Ideas Free markets sometimes lead to inefficient macroeconomic outcomes. The public sector and its central bank can be used to stabilize output over the business cycle. All individuals should have access to basic articles of consumption and public goods to allow for self-actualization. Large-scale industries are collective efforts and thus the returns from these industries must benefit society as a whole.
Free Choice Production decisions are driven by a mixture of State decision and consumer demand. Taxpayers are forced to fund projects aimed at spurring production. Some socialized endeavors may exist. Other choices are generally left to the individual. Religion, jobs, & marriage are up to the individual. Compulsory education. Free, equal access to healthcare & education provided through a socialized system funded by taxation. Production decisions driven more by State decision than consumer demand.
Way of Change Change results from a mixture of market incentives & government controls. Change can be swift or slow depending on change in policy, perceived degree of crisis, or even whim. Workers in a socialist state are the nominal agent of change rather than any market or desire on the part of consumers. Change by the State on behalf of workers can be swift or slow, depending on change in ideology or even whim.
Social Structure Classes exist based on their relationship to capital. Varying amounts of class mobility. Class distinctions are diminished. Status derived more from political distinctions than class distinctions. Some mobility.
Economic Coordination Believes the State can spur production and bring about full employment by taxing people in order to invest in infrastructure and by setting or influencing interest rates. Planned-socialism relies principally on planning to determine investment and production decisions. Planning may be centralized or decentralized. Market-socialism relies on markets for allocating capital to different socially-owned enterprises.
Philosophy Aggregate demand does not necessarily equal the productive capacity of the economy. Government and central banking can be used to smooth out the business cycle. From each according to his ability, to each according to his contribution. Emphasis on profit being distributed among the society or workforce to complement individual wages/salaries.
Examples While politicians the world over often use Keynesian arguments to defend their desire to tax and to spend, few actually advocate cutting government spending during the boom or cutting taxes during the bust. Union of Soviet Socialist Republics (USSR): although the actual categorization of the USSR's economic system is in dispute, it is often considered to be a form of centrally-planned socialism.
Political Movements Neo-liberalism, democratic socialism, social democracy, national socialism, fascism. Democratic socialism, communism, libertarian socialism, social anarchism, and syndicalism.
Means of control Interest rates and monetary policy in general is controlled through discretionary centralized banking. Federal government stimulates production through taxation, deficit spending, and public works projects. Usage of a government.
Ownership Structure The means of production are generally privately owned, but production may be directed by the State in times of crisis. The State owns some institutions (e.g., a central bank). The means of production are socially-owned with the surplus value produced accruing to either all of society (in Public-ownership models) or to all the employee-members of the enterprise (in Cooperative-ownership models).
View of war War is good for the economy because military spending creates jobs when the economy is depressed and spurs production both directly and via the “multiplier effect.” Rebuilding destroyed infrastructure further stimulates the economy. Opinions range from prowar (Charles Edward Russell, Allan L. Benson) to antiwar (Eugene V. Debs, Norman Thomas). Socialists tend to agree with Keynesians that war is good for the economy by spurring production.
Definition The view that, in the short run (and especially during recessions), economic output is strongly influenced by aggregate demand (total spending in the economy). A theory or system of social organization based on the holding of most property in common, with actual ownership ascribed to the workers.
Modern Examples While politicians the world over often use Keynesian arguments to defend their desire to tax and to spend, few actually advocate cutting government spending during the boom or cutting taxes during the bust. Modern examples of socialist countries include China, Cuba, Laos and Vietnam. Countries like India, Portugal, North Korea and Sri Lanka also refer to themselves as socialist in their constitution.
History Keynes published his "The General Theory of Employment, Interest and Money" in 1936. Historic socialist examples include the Paris Commune, the Strandha Commune, Hungary, Romania and Bulgaria; none continue to have Communist governments.
Variations Neo-Keynesian economics, post-Keynesian economics, new Keynesian economics. Market socialism, communism, state socialism, social anarchism.

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