Question

In socialism, what do we mean by the socialist calculation problem? Why is it an endorsement of a market system?

Answer 1

The socialist calculation problem, is one of the main criticisms of the centrally planned system where it is believed that when centrally planning is done, allocation of resources are not traditional and mostly in efficient in nature as they don't go by the supply and demand norms and rather go by the interests so that ultimately this in efficient system can cause the price of goods to increase due to the shortages that it has created aad due to lack of proper knowledge in framing decisions in a socialistic manner. It is an endorsement for the market system because, it tells about the drawbacks which the market system is able to address correctly and allocate the resources efficiently so that the optimal production can take place.