Resources Or Incentives For Economic Growth?
In 1960's there was a controversy in Czechoslovakia about the causes of economic stagnation and about the economic policy, that would lead to resumption of economic growth. One group of economists that contained primarily planners and other government officials, argued that the only way to achieve the resumption of economic growth was to increase substantialy investment. That would of course result in decline of the overall standard of living. Their argument was that this is necessary, because the country 'lives beyond its means', and that 'where are no sufficient resources there cannot be economic growth.' Acording to their views the economic growth can be maintained only if the share of investment in National Income is permanently increasing. The opposite group of mostly academic economists argued, that the stagnation was not caused by the shortage of resources, but by their inefficient use. They saw this as an outcome of the command economic system and asked for resumption of the market mechanism that would increase factor productivity and thus stimulate the economic growth without the need for increased share of investment and reduction of the standard of living.
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