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Microeconomics Question from Walter E. Williams:Edit

The Marxist doctrine of distribution is "to each according to his needs and from each according to his ability" while the capitalist doctrine is ". . . to each according to what he produces." Explain the meaning of each statement.

AnswerEdit

The Marxist doctrine does not reward factors of production according to their marginal products. The result is an inefficient supply of inputs and an inefficient level of output, which is inefficiently distributed. The capitalist system rewards (allocates) output according to the marginal product of the inputs to production. An input that is more productive (has a higher marginal product) will receive a greater share of the output, all other factors held constant.

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