Daily Passage Test for CLAT - Oct 20 MCQs & solutions Free

Direction: Read the following passage carefully and answer the questions given below:

Richard Goodwin, the well-known American economist who taught at Harvard before migrating to Cambridge, England, because of the McCarthyite witch-hunt of the 1950s, and who, although a Marxist, did some simulations on a model of a capitalist economy. The economy in the model experienced a wave of innovations while output was determined by aggregate demand; and the simulation results showed that unless wages increased significantly because of the introduction of innovations, output and employment at the end of the wave would be lower than at the beginning. There is no reason, however, for such a rise in wages despite the rise in labour productivity because the rise in unemployment through which alone such a rise in labour productivity manifests itself would weaken workers’ bargaining strength for enforcing higher wages. The conclusion about technological change causing economic retrogression in such a capitalist economy therefore remains unaffected.

Capitalist economies, however, have not actually seen economic retrogression as a consequence of technological change. The question arises: why not? If as technological change is introduced and there is a simultaneous increase in aggregate demand for some independent reason, then there need not be either a decline in employment or output in the economy introducing such a change. But there is no reason why such an increase should occur within the capitalist sector. It will have to come from outside, and not just as a coincidence; the capitalist sector must cause such an independent expansion in aggregate demand to happen. In short, it will need to have a ‘market on tap’ existing outside of it that it can turn to to prevent a decline in output and employment. This idea, originally advanced by Rosa Luxemburg, has been borne out in practice. Capitalism has generally had such a ‘market on tap’ (a phrase of the economic historian, S.B. Saul), which is why technological change under it has been accompanied not by economic retrogression but by economic progress. [Extracted with edits and revision from ‘Flawed Idea Innovation and Retrogression’ by Prabhat Patnaik, Telegraph India]

Q. What is a compelling explanation for the lack of wage increases in a capitalist market structure despite improvements in labor productivity?

Direction: Read the following passage carefully and answer the questions given below:

Richard Goodwin, the well-known American economist who taught at Harvard before migrating to Cambridge, England, because of the McCarthyite witch-hunt of the 1950s, and who, although a Marxist, did some simulations on a model of a capitalist economy. The economy in the model experienced a wave of innovations while output was determined by aggregate demand; and the simulation results showed that unless wages increased significantly because of the introduction of innovations, output and employment at the end of the wave would be lower than at the beginning. There is no reason, however, for such a rise in wages despite the rise in labour productivity because the rise in unemployment through which alone such a rise in labour productivity manifests itself would weaken workers’ bargaining strength for enforcing higher wages. The conclusion about technological change causing economic retrogression in such a capitalist economy therefore remains unaffected.

Capitalist economies, however, have not actually seen economic retrogression as a consequence of technological change. The question arises: why not? If as technological change is introduced and there is a simultaneous increase in aggregate demand for some independent reason, then there need not be either a decline in employment or output in the economy introducing such a change. But there is no reason why such an increase should occur within the capitalist sector. It will have to come from outside, and not just as a coincidence; the capitalist sector must cause such an independent expansion in aggregate demand to happen. In short, it will need to have a ‘market on tap’ existing outside of it that it can turn to to prevent a decline in output and employment. This idea, originally advanced by Rosa Luxemburg, has been borne out in practice. Capitalism has generally had such a ‘market on tap’ (a phrase of the economic historian, S.B. Saul), which is why technological change under it has been accompanied not by economic retrogression but by economic progress. [Extracted with edits and revision from ‘Flawed Idea Innovation and Retrogression’ by Prabhat Patnaik, Telegraph India]

Q. Which of the following statements best supports the claim that, when technological revolution occurs, the capitalist sector must independently trigger an increase in aggregate demand?

Direction: Read the following passage carefully and answer the questions given below:

Richard Goodwin, the well-known American economist who taught at Harvard before migrating to Cambridge, England, because of the McCarthyite witch-hunt of the 1950s, and who, although a Marxist, did some simulations on a model of a capitalist economy. The economy in the model experienced a wave of innovations while output was determined by aggregate demand; and the simulation results showed that unless wages increased significantly because of the introduction of innovations, output and employment at the end of the wave would be lower than at the beginning. There is no reason, however, for such a rise in wages despite the rise in labour productivity because the rise in unemployment through which alone such a rise in labour productivity manifests itself would weaken workers’ bargaining strength for enforcing higher wages. The conclusion about technological change causing economic retrogression in such a capitalist economy therefore remains unaffected.

Capitalist economies, however, have not actually seen economic retrogression as a consequence of technological change. The question arises: why not? If as technological change is introduced and there is a simultaneous increase in aggregate demand for some independent reason, then there need not be either a decline in employment or output in the economy introducing such a change. But there is no reason why such an increase should occur within the capitalist sector. It will have to come from outside, and not just as a coincidence; the capitalist sector must cause such an independent expansion in aggregate demand to happen. In short, it will need to have a ‘market on tap’ existing outside of it that it can turn to to prevent a decline in output and employment. This idea, originally advanced by Rosa Luxemburg, has been borne out in practice. Capitalism has generally had such a ‘market on tap’ (a phrase of the economic historian, S.B. Saul), which is why technological change under it has been accompanied not by economic retrogression but by economic progress. [Extracted with edits and revision from ‘Flawed Idea Innovation and Retrogression’ by Prabhat Patnaik, Telegraph India]

Q. According to the passage, what did the simulations on a model of a capitalist economy by Richard Goodwin reveal about the relationship between innovations and wages?

Direction: Read the following passage carefully and answer the questions given below:

Richard Goodwin, the well-known American economist who taught at Harvard before migrating to Cambridge, England, because of the McCarthyite witch-hunt of the 1950s, and who, although a Marxist, did some simulations on a model of a capitalist economy. The economy in the model experienced a wave of innovations while output was determined by aggregate demand; and the simulation results showed that unless wages increased significantly because of the introduction of innovations, output and employment at the end of the wave would be lower than at the beginning. There is no reason, however, for such a rise in wages despite the rise in labour productivity because the rise in unemployment through which alone such a rise in labour productivity manifests itself would weaken workers’ bargaining strength for enforcing higher wages. The conclusion about technological change causing economic retrogression in such a capitalist economy therefore remains unaffected.

Capitalist economies, however, have not actually seen economic retrogression as a consequence of technological change. The question arises: why not? If as technological change is introduced and there is a simultaneous increase in aggregate demand for some independent reason, then there need not be either a decline in employment or output in the economy introducing such a change. But there is no reason why such an increase should occur within the capitalist sector. It will have to come from outside, and not just as a coincidence; the capitalist sector must cause such an independent expansion in aggregate demand to happen. In short, it will need to have a ‘market on tap’ existing outside of it that it can turn to to prevent a decline in output and employment. This idea, originally advanced by Rosa Luxemburg, has been borne out in practice. Capitalism has generally had such a ‘market on tap’ (a phrase of the economic historian, S.B. Saul), which is why technological change under it has been accompanied not by economic retrogression but by economic progress. [Extracted with edits and revision from ‘Flawed Idea Innovation and Retrogression’ by Prabhat Patnaik, Telegraph India]

Q. Why does the passage suggest that capitalist economies have not experienced economic retrogression due to technological change?

Direction: Read the following passage carefully and answer the questions given below:

Richard Goodwin, the well-known American economist who taught at Harvard before migrating to Cambridge, England, because of the McCarthyite witch-hunt of the 1950s, and who, although a Marxist, did some simulations on a model of a capitalist economy. The economy in the model experienced a wave of innovations while output was determined by aggregate demand; and the simulation results showed that unless wages increased significantly because of the introduction of innovations, output and employment at the end of the wave would be lower than at the beginning. There is no reason, however, for such a rise in wages despite the rise in labour productivity because the rise in unemployment through which alone such a rise in labour productivity manifests itself would weaken workers’ bargaining strength for enforcing higher wages. The conclusion about technological change causing economic retrogression in such a capitalist economy therefore remains unaffected.

Capitalist economies, however, have not actually seen economic retrogression as a consequence of technological change. The question arises: why not? If as technological change is introduced and there is a simultaneous increase in aggregate demand for some independent reason, then there need not be either a decline in employment or output in the economy introducing such a change. But there is no reason why such an increase should occur within the capitalist sector. It will have to come from outside, and not just as a coincidence; the capitalist sector must cause such an independent expansion in aggregate demand to happen. In short, it will need to have a ‘market on tap’ existing outside of it that it can turn to to prevent a decline in output and employment. This idea, originally advanced by Rosa Luxemburg, has been borne out in practice. Capitalism has generally had such a ‘market on tap’ (a phrase of the economic historian, S.B. Saul), which is why technological change under it has been accompanied not by economic retrogression but by economic progress. [Extracted with edits and revision from ‘Flawed Idea Innovation and Retrogression’ by Prabhat Patnaik, Telegraph India]

Q. Which of the following statements is true if technological advancement under capitalism has been accompanied by economic advancement rather than regression?