Midterm Review Questions

Midterm Review Questions - nll ulc usxana Ilvnl Inc...

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Unformatted text preview: nll ulc usxana Ilvnl Inc IVNIUIIIL o Mdterm optional ‘6 of grade Don't w rite name on the exam, just w rite Pl. Blue book, w rite in ink. 1 Question on intro statement 6 sub—conpo ents. A. What is Muscovite Rent Granting. MJscovite Rent granting was the over ig and m that all the Czars used to rule. mo 72gb First contrived by Ivan the Great, Musco ite Autocrats were believed to be selected by the hand 5"de. Since they were picked by God, the Autocrats always did the right thing and were 3, smith” unrestrained b rule of scriture, custo , constituto etc. This power allowed all Czars to ,Ofi‘mnmselect “servitors” to manae the econo ic affairs and collect taxes in a revocable area in (Onl‘rol exchange for a small amount of the tax. The Muscovite system used rent granting to obtain optimal amount of economic control, evn if it was not maximizing profit like under Adam Smith’s W In the neoclassical model, people need to be paid by the value they create to maximize output. Since Muscovite re tgranting did not compensate workers by their marginal value added, it gave laborers a tremend us incentive to reserve their labor since they were vastly underpaid. -_ B. How did Muscovite Rent Grantin o System operate under Czar’s time? 5011 ray") The czarist form of Rent Granting first etablished by Ivan the Great resembled a hierarchical 04:0“ form of delegation with the czar being a absolute autocrat. Because duties were simply ; Var delegated very few people actually recei ed value added income. In this system the czar would I 90 A gift land to surrogate absolute rulers an demand payment for the land, thOUQh there was no > angi’gilfipecific rules on what one owed the cz r or how they attained the money or goods to pay the MM) Nflyczar. This typically meant that the servitrs would either use slave labor to create goods or tax people living in the area. Peter the Grea implemented a form of co-governance with the formation of a bureaucracy for science nd innov ‘n withi n - u. scovite s stem, essentially the WW nd the firs time a mixed economy can be seen in Russia, Though several czars impleme ted differe t iterations of the model it eventually succumbed in the early 1900’s. After th Bolshevik Revolution and the failed Post-Office model, the Lenin led regime constructed a New Economic Polic , which leased state property to individuals to operate on a for-profit basi. Despite the new packaging however, the system was extremely similar to the Muscovite modl where despotic rulers practiced rent granting. C. How did Lenin’s post office sche - Differ from Ivan the Second? Which is more practical? an: log e-_:- --“‘ ‘ “‘:‘: -- ‘ :-="”:-: :."““ In- . . -in-time *2» ' Lenin and the Bolshevik created a market-less economy where all the means of All) production were nationalized as a way 0 combating runaway inflation during War Communism. [ystth The model functioned similarly to a mail order cata ogue where everybody was mandated to AM} work and because they had to work, the were allowed to ask for goods by writing letters. The difference between the post office sche e and the rent granting model of Ivan II is that Lenin’s system had no apportionment system. his means that the overnment didn’t distribute ower, Wt. This ine‘ffiiency eveqtually led agricultural production falling by 46% and 4 million d in from starvation. Due to these facts, Ivan “’5 rent granting model can clearly be argued to be relatively superior to the post office scheme. I'\II ulc uctuna IIUIII unc Ivlulcl IIL o Mdterm optional V: of grade 0 Don't w rite name on the exam, just w rite P10. 0 Blue book, w rite in ink o 1 Question on intro statement 6 sub-conponents. {ed-ac; vs. D. What is the difference between the New Economic Policy and Nicholas ll’s 114913 170m“. co-government economic system (czar)? As a result of the ost office model ‘n com letel Lenin sought a new economic system that would Wale without them becoming wealthy and while still having state ownership of prope . The result was the New Economic Policy. In the NEP the state owned the commanding heights of the econom and a ointed “Red Directors" to run companies on a aw for-profit basis, an-embraeing-ofihenemdmrkmafidamfimhieh-helpefio EMW “be increaseefficieney. This system of co-governance was dissimilar to Nicholas us where the ZDquoperated as an advisory panel to the cza©however, he was not required to heed their advice. Also, the systems were different in that W investment, a practice made illegal by Lenin. Though the actual a ortionmen s were very similar between the systems, there were distinct differences in the roles of those not in charge and in what was allowable in the economy. E. How did communist ideolog effect extraction and apportionment in Agriculture and industry? ’Vfioc‘ws‘ "34* “*‘w In). 28¢ a? 1% 43. seat [W5 The ideology that resulted from the communist government had profound affects on the Russian economy. The style of rent granting within the NEP fostered the same Principal-Agent problems found within the Nluscovite model where even though the Red Directors are hired by the state, they still have personal incentives to pursue their magenda. This could mean something as simple as sub-contracting work to others in order to increase profits--an illegal practice. The traits of the system eventally lead to Wwithin the economy, which in time helped lead the country to the rise of Stalin. By 1_9__21 this system had caused industrial produ ' in Russia to fall to 20% of 1913 levels and agn'gultural production to 54% of 1913 levels, proof of the system’s abject failure to be remotely viable. “W” n nw—awlohom¢ Ami/F t , - CO” F. How did communism ideology affect rent granting? akin-w. 1.30%th 7 AM L014 5 “ ‘O‘fl'éfl A command economy based communism required a communal adaptation of the rent granting ruggel. To Lenlnt is meant the te must own the commandin hei hts of the economy while rent granting and rent seeking models dictated how the overnment leased com anies to managers and directors to be run. Since one of the main attributes of communism is complete equality, naturally wages were egalitarian in nature which caused directors to seek out “counter-revolutionary? means of pursuing individual wealth or wim‘h‘gldi gwork. This is a departure from the norm under Nicholas II where many of these W were run by foreign mpaniesjhat used neoclassical means of compensation to drive results. In the end, by switching to a command-based rent granting model the Bolsheviks suppressed th by Mm; incentive to work hard or be innovative. ...
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Midterm Review Questions - nll ulc usxana Ilvnl Inc...

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