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Hi, could you help draw concept map on the school of thought Marxism and Austrian Economics Marxism Major assumptions: 1. There are two principal classes
Hi, could you help draw concept map on the school of thought "Marxism and Austrian Economics"
Marxism Major assumptions: 1. There are two principal classes in the society a. Bourgeoisie b. Proletariat 2. Wages of the workers are determined at subsistence level of living. 3. Labour is the main source of value generation. 4. Factors of production are owned by the capitalist. S. Capitalist exploit the workers. 6. Labour is homogenous and perfectly mobile. 7. National Income is distributed in terms of wages and profit. Austrian School of Economics Austrian economics are based upon these main principles considering individuality and subjectivity: 1. Methodological Individualism To understand the action of the whole group, we have to go to the each separate individual within this group and understand the way of thinking of that particular individual. Using logic and deduction we can then reflect the thoughts of the individual upon the whole group to foresee it actions. 2. Methodological Subjectivism Even the explanation of the given acts of the individual and his thinking are still subjective as they are judged by another individual or a group. 3. Determination of Price The Austrian School of Economics rejects the classical approach that states the price is determined by supply and demand or production costs. It contemplates that the price of any given goods are defined by subjective needs, requirements and desires of the individual. RMIT Classification: Trusted Austrian School of Economics 4. Determination of Interest Rates Adding individualism and the aspect of time explained a lot about interest rates. The Austrian economics sees money in relationship with time and its owner, who might want to save the money or spend it right now. 5. Business Cycles All of the above in cooperation creates an uneven economy map, which in reaction creates business cycles to reach the equilibrium. 6. Pivotal to that economic model is the Entrepreneur The entrepreneur is not only capable of seeing opportunities that others miss, but is innovative in taking advantage of them and exploiting them to the profit of themselves, their companies and their local and national economies. Carl Menger was one of the first to study entrepreneurship as he defined the entrepreneur: entrepreneurs are those who create, calculate, and manage productive activitiesStep by Step Solution
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