Justin wrote:
>Attacking Hayek for being too neoclassical is like attacking Marx for
>being too neoclassical. Hayek, Mises, and the Austrians dislike NCE for
>many of the same reasons that Marxists do: it's a poor description of
>actual markets (this is more Hayek than Mises) ...
I didn't say that Hayek and the Austrians were NC economists (or if I did
it was due to inadequate consumption of caffeine). But the Austrians are
typically even more right-wing than the mainstream of NC economists,
bringing in all sorts of pseudo-anarchistic stuff about "natural" or
"spontaneous" order. (It's hard to tell whether the Austrians are worse
than the Chicago-school NCers, since the right/left scale is not useful
except on a very abstract level.) These people are ignorant of the fact
that markets are human-created institutions, instead seeing them as gifts
from the gods.
>Please, go read Hayek's Individualisma nd the Economic Order (Chicagao
>1940+/-); it's short, clear, accessible, and reading it will avoid many
>problems and misunderstandings in the discussion. Besides, it is a very
>good and important book.
I don't like being told: "go read this book" by some allegedly Great Man.
It's a little bit like telling me to simply go away. Or like those folks
who come the door with Good News who tell me that if read the Watch Tower,
everything will make sense. "Go read X" is too much like appeal to
authority, which is one of the basic logical fallacies. For a serious
discussion, it's best to present a summary of one's viewpoint, defending it
as well as one can, and then say "for more on this, go read X."
Anyway, I've found that when I go and read X, I have a different
interpretation of it than did the person who urged me to read it. I'd
rather skip the X and discuss the interpretation (i.e., the urger's own
views).
Now, unlike Paul Phillips, I'm no expert on the subject under discussion,
so someday when my research projects get into the territory of "how
socialism should be organized" again, I'll read Hayek. (These days, of
course, a Hayek-style information critique is applied to markets.) But I
think I'll (re)read Horvat first. The reason is that I've never been one of
those who thought that the whole economy could be planned using a
spread-sheet or that GOSPLAN was the best thing since sliced bread. In
fact, years ago, I would have described myself as some sort of "market
socialist." As far as I can tell, Hayek's only relevant to those who think
that planning is the only solution or those who think only in terms of a
crude plan/market dichotomy. I'm not one of those.
Anyway, tally-ho and all that, here's the discussion:
I wrote:
> > The point is (to repeat myself) that if the _centralized_ part of the
> planning process is only dealing with _abstract_ (or general) issues like
> the growth rate of the economy or the percentage of the total product
> that goes into investment or the balance between broad industrial
> sectors, there's no need for some Hayekian all-knowledgeable mind. <
>OK, I agree with that sort of planning, as long as there are competitive
>markets operating below the Fed level.
I don't see why it has to be a "competitive market," especially given the
way "competitive markets" cause all sorts of negative results. (The fact
that I have to repeat this is a sign of poor communication.) In many ways,
monopolies are better (as when they are more able to pay high wages to
their employees, while the textbook-standard monopoly's restriction of
output can mean restriction of pollution, too). Competition in product
markets encourages wage-cutting, which encourages the race to the bottom,
increased human misery, and underconsumption. Among other things.
Now in a different missive, Justin explains that the kind of "market
socialism" that he favors involves workers' control. You should have said
so earlier, Justin, because there are a lot of different kinds of market
socialism (cf. Roemer). In any event, if workers control factories, that
would probably prevent a race to the bottom, or at least discourage it. But
it does not negate the other problems with markets.
In yet another different missive, Justin writes that he thinks >planning
(without markets) won't work, would be inefficient. (In a market context,
some, even much, planning is fine). <
I think that the comment that "planning (without markets) won't work, would
be inefficient" begs the question. What is meant by "working" here?
Different people have different definitions of success and therefore of
"working" (as I noted, from the point of view of the military-industrial
complex, a $500 toilet seat is a success -- while from the perspective of
the Soviet ruling class, GOSPLAN worked for a long time).
The term "efficiency" also does not speak for itself. It refers to the
successful attainment of given goals. That means that the "efficiency" of
the market would be judged differently by socialists and capitalists,
because these people have different goals. (The standard kind of
efficiency that economists invoke is Pareto Optimality, which preserves the
existing distribution of wealth.) Or you should be very specific by what
you mean by efficiency, adding qualifications, such as "allocative
efficiency".
In any event, markets aren't efficient by any standard if externalities
exist (as they do, in spades), if information problems exist, if one of
your goals is egalitarian distribution of power, etc. We can't simply wield
the phrase "the efficiency of markets" as if it were a magic talisman.
Economists outside of the University of Chicago and its pseudopodia are
quite conscious of market inefficiencies. (Some Chicago-types seem
conscious of their beloved market's failures, but assume that the
government is always worse.)
More importantly, I think that the parenthetical remark has things
precisely backward. I'd say instead that in a planning context, some, even
much, market allocation is fine. This requires qualification and
explanation, of course.
First, I think ideas of "market socialism" (or even better, Diane Elston's
idea of "socialized markets") make sense as part of a _transitional
socialism_, since the idea of instantly abolishing markets is crazy. ( Of
course, _all_ socialisms are supposed to be transitional, but it's
important to emphasize this.) Almost every socialist experiment has left
the small business sector alone in the early stages, while relying on
markets for a lot of things.
Second, markets should be subordinated to the democratic will of the
working people. That can only be done via planning. Markets cannot express
the democratic will, only planning can, since markets by their very nature
express only individual wills. And as Kenneth Arrow noted and Matthew Rabin
indicated in his survey of the psych literature, Albert and Hahnel's
hypothesis that markets encourage snow-balling individualism -- and rampant
free-riding -- makes a lot of sense. Anyone who proposes a market socialism
should be very conscious of the way that market institutions create
barriers to the further progress (democratization) of socialism.
Naturally, we should also be conscious of the similar problems of planning
institutions. But my point is that markets have problems that are quite
similar to those of planning institutions, for example, creating interest
groups that will fight to preserve their privileges. This is another reason
to avoid the simplistic plan/market dichotomy.
One key point is that democratic decision making is the only way to truly
decide the extent that market forms are used to deal with economic
problems. Though pre-determined recipes like Schweikart's can be
interesting, all they can do is be advisory. People don't have to take the
advice. Most importantly, to repeat myself, we also shouldn't set up market
institutions that prevent such democratic decision-making.
One reason that planning is needed is that we need to plan to abolish
markets as much as possible. Market socialism seems a "necessary evil," but
it's still an evil. We need to figure out how to abolish markets, by
understanding other ways that people can organize society. Given the
rejection of the Soviet model (the effort to attain total central control),
we should look at other models. Here goes:
If I were to start drawing a picture of how socialism is organized, I
wouldn't start with the self-evident superiority of markets (as market
socialists seem to do) or the superiority of technocratic fixes (the way
the group that Hal Draper dubbed the "plannists" do). I'd start with one of
those diagrams that the US Socialist Labor Party (the deLeonists) used to
pass out, showing a hierarchy of negotiations among workers' councils. Or
some notion of "guild socialism." These are incomplete and abstract, but
help us get away from the sterile plan vs. market dichotomy. It emphasizes
the key issue of who is supposed to be in power.
In order to be more concrete and empirical, I'll dredge up some personal
experience. I participate in the library committee at work and I notice
that the Library presents an alternative to competitive markets and also to
top-down planning. The Library has a mission statement, which defines a
bunch of different goals and objectives. (I can't remember whether its
goals or objectives which is quantitative, but one of them is.) The key
point is that there's no effort to reduce all of the Library's goals to a
single number, as with profit maximization. That's a _good thing_, since
the world is too complex to allow a single number to summarize the goals of
an organization such as a library (and most or all other institutions). The
mission statement is set in response to what the Administration wants --
but the faculty and the students are also very important, as are those
people who live in the neighborhood of the University who come to our
Library. (The Law students who study for the bar exam don't count, because
they're not really welcome guests, except those from Loyola Law.)
The head librarian tries to live up to the mission statement, while living
up to the standards of the accreditation organization. It is very clear
what success is, without over-emphasizing a single factor like the "bottom
line." Of course, the library has a budget, which it cannot exceed for
long, so it minimizes costs (subject to constraints). It doesn't have a
"soft budget constraint," which need not be part of any process (either
market or plan). (I think it's a big conceptual mistake to assume that
planning schemes always involve soft budget constraints. This mistake
arises from obsession with the Soviet case.)
Libraries are necessarily not-for-profit institutions, as far as I can
tell. (A for-profit library is called a bookstore and is a very different
animal. Bookstores advertise, limit the variety of book titles to maximize
turnover, try to take over other bookstore or shut them down, etc.) They
work together in networks, providing such services as interlibrary loan to
each other. They also help each other in a lot of other ways. There is also
some friendly rivalry -- but not market competition. In the end, libraries
do a damned good job, as long as they're not starved of funds (as most
public libraries are in California).
I don't see why we can't organize the world more along those lines rather
than encouraging individualism the way markets do. The only major change is
that I would increase the role of the employees in making library
decisions. They already participate in the library committee, but their
role could easily be larger. (I think it would be better if the librarians
were on the faculty, as at my previous job.)
This story can be summarized by thinking of the "fingers" of Adam Smith's
"Invisible Hand" [a picture is attached]. This also helps us deal when an
issue that Justin doesn't address at all: "what is a market?" I'd guess
that Justin's "market" only has three of these fingers. The Library avoids
using all four fingers, including the middle (rude) one:
1) individualistic greed, the worship of a quantitative bottom line: this
does not apply in the case of the library, since the goals are more complex
(as they should be). Instead of simply seeking profit, the library has
certain responsibilities (the mission statement) and is held accountable
for not living up to them.
I also think that workers' cooperatives should avoid a single-minded focus
on a single number (like profits per worker in the Ward-Domar model). If
they do so, it encourages the kind of exclusiveness of a fraternity. In
Yugoslavia, I bet that the tendency toward this kind of restrictiveness and
exclusivity was one factor that allowed ethnic hostilities to persist and
intensify (especially given the way the market forms encouraged growing
inequality). One thing I learned from a previous discussion with Paul
Phillips is that Yugoslavian worker co-ops didn't really follow the
Ward-Domar model in hiring. If I understand Horvat correctly, that's
because they were much more embedded in society than in the standard market
story (they were subject to political control). But as the Yugoslav system
fell apart (as unemployment rose) and as it went in the direction of
hyper-decentralization, I'd bet that the fraternity-type exclusiveness
asserted itself, speeding the way toward the deluge. (Of course, I value
information from Paul or others that validates or contradicts this assertion.)
(There is a question of how labor-power markets should be organized to help
abolish Ward-Domar type exclusivity of co-ops. One idea is to have the
workers choose which firms they want to apprentice for, if they can meet
basic skill requirements, so that it's not the firms that are making the
basic hiring decision. (This would reverse the balance of power in
labor-power markets.) Then they could earn "tenure" at the end of the
probation period, following societally-decided rules and the consent of the
co-op. Of course, those with tenure would still be held responsible to the
co-op and society.)
2) prices as signals. Libraries don't charge prices, except perhaps a
nominal price for getting in (the price of the library card). Since they
don't finance these operations via these fees, they have a budget allocated
by some larger collectivity (the university, the municipality or whatever).
Thus, they are held responsible to these larger organizations.
The problem with the Adam Smith model is that prices are supposed to be the
only signals. That means that the firm or co-op is only held responsible to
the person with the "dollar votes." That means that the firm isn't held
responsible to the community, the country, etc. This encourages the
standard irresponsible behavior associated with capitalists (or the most
economistic trade unions).
3) private property: none of the librarians "owns" the organization or its
books. Rather, it is owned by the university or the municipality. That's
property, but there's no pretension of it being private. ("Private"
property isn't really private in its impact, so it isn't really private,
because of the role of externalities, both technical and pecuniary. Having
enough of it gives one power over others.) Because the library isn't the
private property of the librarian, he or she can be fired (unlike Rupert
Murdoch, say) for irresponsible behavior. He cannot accumulate power the
way Rupert Murdoch does, either.
4) competition: libraries don't compete with each other, at most engaging
in friendly rivalry. Note that there is "consumer choice" nonetheless,
since there are other libraries and no-one forces you to go to the library.
One can also get a lot of information from the government-sponsored
Internet or the private book-sellers, so libraries also compete with
institutions outside their sector.
One problem with the market here is that it emphasizes "exit" over "voice"
(to use Hirschman's terms). Rather than encouraging people to communicate
with each other, it encourages them to "take their balls and go home." This
encourages people to avoid keeping the producers responsible for the things
they do. It also discourages loyalty and solidarity.It seems to me that
those are values we want to encourage.
In general, we can learn about alternatives to the market by looking at the
not-for-profit sector. I've worked for three such organizations (three
universities and the Federal Reserve). My wife has worked for a bunch (the
Cancer Society, Planned Parenthood, the Arthritis Foundation, the Center
for Healthy Ageing, Childrens [sic] Hospital, etc.) My impression is that
these organizations generally do a good job at attaining their goals. When
they fail most miserably, it's because of the "market context" that Justin
sees as so important. These organizations mess up when they're kowtowing to
the wealthy, trying to get government-subsidized funds from them. The
fund-raisers tend to take over, in addition to having company cars and
similar perks. The goals of the organization get skewed toward fund-raising
rather than trying to cure cancer, help those with cancer, etc. In fact,
some not-for-profit organizations seem to spend all of their resources on
fund-raising and perks for their leaders. This kind of abuse isn't solved
by any Invisible Hand. Rather, there are organizations (including
government agencies) that criticize and/or punish not-for-profits that go
in that direction. Public pressure also has a big effect, as seen with the
United Way scandal.
It's true that a corrupt not-for-profit will sometimes have a hard time
getting donations, but it's not the market that provides the information
(Hayekians take note!) but rather the accreditation agencies. (The market
creates an incentive to keep information secret (as seen in "intellectual
property rights"), so not-for-profit agencies, including those of the
government, are needed. See for example, Mishkin's Money & Banking
textbook.) In any event, sometimes the donors like the idea of having
"charitable" balls for themselves that simply provide entertainment but
little or nothing in the way of charity. In a true market fashion, these
"charitable" organization serves the consumers, i.e., the rich folks.
Another way that the "market context" corrupts the not-for-profits is when
they (or at least the health-oriented ones) get in bed with the drug
companies. Awhile back, Arthritis Foundations tried to market aspirin,
acetaminophen, and ibuprofen for one of the drug companies. This is despite
the fact that the acetaminophen (Tylenol) is not an anti-inflammatory and
thus does nothing to help with arthritis! Luckily, this effort failed.
There's no doubt that not-for-profits such as the public schools in Los
Angeles have problems besides the lack of funds. However, my impression is
that that's mostly due to a lack of responsiveness to the people the
schools are supposed to represent. The solution here is not to marketize
this kind of "socialism" (the voucher system) but to give more power to the
PTAs [Parent-Teacher Associations] and less to the educational
bureaucracies. (PTAs aren't the whole story since more centralized setting
of general educational rules -- e.g., whether to teach so-called creation
"science" or not -- is needed.) Of course, the PTAs could do a better job
if the capitalists weren't continually upping the work load so we'd have
more time for helping our kids. But if the PTAs had more influence, people
would be more interested in participating in them, while they'd likely be
more willing to pay taxes for the schools. (Capitalism encourages the
isolation of the elderly from the young, so we often see the former willing
to starve the publis schools.)
How about steel mills? surely their product is much simpler than education
and the like, so that a narrow-minded focus on the bottom-line, along with
competition, produces the best results? But steel mills produce much more
than just steel. They have an environmental impact. This involves stuff
like infrastructure, which is absolutely necessary to the workings of a
steel mill. If they shut down and move to Malaysia, there are pecuniary
externalities. Steel mills also produce people: the people who work there
come out different (more dehumanized) than when they went in.
Further, if you examine an actual steel mill, you'll find that its owner is
quite involved in the community, affecting collective decisions about
infrastructure, pollution, and even education. (It's not just having market
relations with the rest of the world, contrary to the textbooks.) The
problem with these community relations is that most of the power is in the
hands of the owner. The owner may be regulated by the distant bureaucrats
at the Environmental Protection Agency, but they aren't held responsible to
the community, since they have more concentrated political power (and can
call on their employees to back them in the name of job preservation). This
problem doesn't change if the firm is owned by the workers, since pollution
and the like help boost profits per worker. It has to be clear from the
start that the goal isn't simply to maximize a single number -- and that
the firm is responsible not only to its members, but also to the community
and the central government.
I should mention that most markets don't fit with the society-free image
put forth in economics textbooks. Almost all have some sort of industry
self-regulation organization to keep the most ruthless capitalists from
hurting the industry's public image (which doubles as a lobbying group).
One point would be to turn that self-regulation into regulation by society.
Note that the above "recipe for the cook-shops of the future" is only as a
guide for what might arise. Obviously, actual socialism will be a result of
actual struggle, which will involve discussions like the current one. As I
said, I can imagine that in the early stages that elements of "market
socialism" would play a role. Again, we have to be very careful to make
sure that market institutions don't create barriers to the development of a
more completely democratic socialism.
>Justin asked: >>I also think it's not planning: I mean, what makes it
>planned, if the decisions are made indeoendently of each other by
>production units and not coordinated? <<
>I responded: > Did you read the part where I noted that individual units
>made decisions within the framework set by the central planning agency? If
>so, you would have noted that decisions are not made "independently of
>each other." I used the word "independent" to mean as opposed to being
>under the thumb of the central bureaucracy. True independence of all of
>society is in any case impossible.<
Justin now says:
>OK, so we have competitive production units operating within Fed-like
>constraints? Or we have little monopolies meeting targets (set by whom?)
>as they see fit under the very broad and general supervision of government
>planning boards which exercise some kind of oversight, but not central
>planning? I am hazy here, help me out.
As with the library example, the goals of decentralized organizations would
be set democratically in consultation with what are called "stake-holders"
in the biz lit. These stake-holders would include the local governments in
the neighborhood, the central government's regulatory agencies, their
suppliers, the people who benefit from their services, etc. (Even
capitalist corporations are supposed to respond to the wants of the
stake-holders, but that's usually nothing but responding to political
pressure, plus PR spin.)
Unless one rejects Polanyi out of hand, this emphasis on stake-holders (the
community) is absolutely necessary. We don't want markets to be separated
from society or -- worse -- running society. Polanyi pointed to the many
problems that arise from the _laissez-faire_ illusions of the non-societal
market (including depression and fascism). Markets must be subordinated to
society, which must be democratized.
> > One of the problems with the Hayekian argument is that it ignores the
> role of the undemocratic one-party state.<
>
>This concedes taht nothing in the Hayekian argument depends on the
>existence of such a state.
The fact that our local follower of Hayek (you) ignores the way in which
democracy facilitates the centralized part of the planning process suggests
that the Hayekian argument is one-sided and narrow-minded. Bringing in the
fact that the central planners need not be omniscient for the plan to
"work" (if the mix of centralization and decentralization is done right)
also suggests that Hayek's point is irrelevant, as I've said before.
> > In fact, Hayekians want such a state in order to prevent
> popular-democratic meddling with the beloved and sacred
>free market. <
>Well, in his political philosophy, Hayek was no fan of democracy. He
>blamed Hitler on democracy, foolish man. Hayek did not advocate a
>single-party state but rather a Schumpterian elite-compition democracy and
>a fairly minimal state. But I am no fan of Hayek's political philosophy. I
>do not have to be to see he is onto something with his calculation
>argument, any more than I have to subscribe to Marx's romantic ideal of
>planning to appreciate his critique of capitalism.
Marx really didn't have any ideal of planning. (Perhaps you're thinking of
Edward Bellamy?) He never described it except in the most abstract terms.
He was optimistic, thinking that people could decide how to organize
socialism for themselves rather than having lawyers and economists make
decisions for them.
It should also be pointed out that H's elitist anti-democracy (competition
amongst establishment elites) fits perfectly with his view of the market as
some sort of natural state of human affairs, "spontaneously" arising from
the mire. I don't think that we can separate his political philosophy from
his romance with the market, except to note that when push comes to shove,
he'd probably drop his nominal endorsement for democracy to defend the
market. If I remember correctly, he dropped his shallow social democracy
when he supported Pinochet.
<ellipsis>
> > Another problem is that there's an either/or here: plan _versus_
> market. We don't have to go that way. <
>Sure, of course. I am a _market SOCIALIST_ after all. Plan what you can, I
>say, and market what you must.
It's interesting that all of your critique is aimed at the mechanisms that
allow workers to control their lives collectively -- i.e., planning --
rather than at the market. It's interesting that you always equate the plan
to the USSR. It's a little strange that the market has replaced
"democratic" as the key qualifier of socialism.
> >And what is competition? is it the mythical passive competition of
> lemonade stands for the consumer's business? is it the competition of
> small workshops hiring small numbers of workers who had similar resources
> to their "masters" that Smith saw? is it the grinding competition that
> drives small farmers out of business, into the hands of agribusiness, or
> under the thumbs of the agro-industrial complex? is it the aggressive
> competition of oligopolistic firms, trying by hook or crook or dirty
> trick to get advantage and market share? is it the competition of
> factions within the CPSU? We need clarity, not the wielding of
> neoclassical shibboleths.<
>Ideally, it is fairly vigorous competition between worker-managed
>cooperatives who are actively trying to promote markets for products and
>services with new ways of makiing old ones and new products and services
>that no one has thought of, with at least enough coops in play so that
>there is actual consumer choice. For technical reasons (the Ward effect),
>coops will tend to be smallish, so more vigorous competition is likelier.
>i will explain this later.
Finally, the necessary component of workers control comes in, seemingly as
an afterthought. In fact, workers' controlled socialism seems a better
transitional form than "market socialism." Then the question becomes: how
can we insure that workers _actually_ control the economy? how does the
market promote this democracy? prevent it? How can we prevent this means
from becoming an end in itself?
We shouldn't presume that all new products that people are willing to pay
for and new techniques that lower internal costs are good. I won't
reproduce my arguments here, except to note once again that we can't solve
political problems (i.e., products and processes that affect large numbers
of people who aren't involved in the buying process) with a presumed
automatic mechanism (the market).
Some people assume that if technical issues were subject to democratic
oversight, people would be technologically conservative. I think that this
shows a lack of faith in people or an insufficient commitment to democracy.
I think that one important reason why people seem to be increasingly
conservative on issues of technology is that they've experiences a lot of
cases where profit-seeking corporations have imposed the costs of
technology on people (pollution, unemployment, etc.) If they actually had
some say about costs and benefits, I think that people would learn to avoid
both knee-jerk conservatism (NIMBYism and anti-science) or knee-jerk go-go
pro-tech (capitalism).
It's a mistake to confuse markets with "actual consumer choice." Libraries
provide consumer choice without being a market, while markets restrict
consumer choice to serve only those with money, while shaping consumer
tastes to serve the bottom line.
>... The calculation problem is the name given in the literature to the set
>of objections to planning that I have been pushing. It goes back to Mises'
>1920 article on "Economic Calculationa nd the Socialist Commonwealth."
I think that debate is excessively tied up in the plan/market dichotomy and
is thus mostly useless. It's only relevant to those who believe that the
economy could be planned using a spread-sheet program or the like. Again,
I'm not one of those folks who thinks that Bellamy or the old USSR
presented The Model.
> > To me, ultimately the democratic electorate must be sovereign, i.e.,
> determining the "value" of various goods and services and the allocation
> of resources between different uses. <
>Well, value may be subjective, but price is objective. Given a set of
>resources, preferences, and production techniques, there is a matter of
>fact about what we have to give up to get certain preferences.
We can't take preferences as given, especially since the social environment
of a market encourages certain kinds of preferences (via selection and
indoctrination). Markets also allow only the expression of individual
tastes, but not social values (as Arrow points out).
Prices may be "objective," but since they depend on subjective valuation,
they end up being indirectly subjective. (The price of yachts depends on
how many rich people there are, too.) More importantly, there's nothing
about planning that rules out the use of prices. There are all sorts of
planning schemes that involve prices. I don't get this identification of
markets with prices and plans with their absence. (If I remember correctly,
the old USSR had prices. So does Cuba.)
>To determine whether a certain decision is rational, which includes
>whether we want to subsidize it, we have to know what those costs are. The
>only way we have to determine them with any reliability is markets. With
>pure planning we have no way of telling what our choices cost. That is the
>calculation problem in a nutshell.
Rational? from whose perspective? Some socialists think they can define
"rationality" for people (e.g., Paul Baran). But to someone who believes
in democratic sovereignty, the only yardstick for "rationality" is the
democratic expression of the general will.
Further, market-determined costs are only internal costs (excluding
externalities). They are not the true social costs (cost to society,
including to future generations). To the best of my knowledge, the only way
that social costs can be determined is via a democratic mechanism, though
economists can advise the public on this issue.
Again, I see the case of "pure planning" as irrelevant, a red herring.
>But now it appears that you do not advocate pure planning, so the question
>is just, how much must we matket and what controls shall we place on
>markets? In other words, you are a market socialist too. I am not
>surprised. Almost anyone sane is who has given it real thought.
Please don't insult me. As should be clear from the above, "market
socialism" is a very simple concept that doesn't fit a complex world. I
also think that it's a sign of ideology that you imply that people who
disagree with you are insane. (It's reminiscent of your view that only
analytic philosophy involves clear thinking.)
> >Markets and technocrats must be subordinated to the people. The special
> moneyed interests and those who monopolize expertise should have no
> special powers.<
>
>Well I certainly agree with the second sentence. I agree, too, that market
>decisions should be politically revocable. But that is consistent
>withsaying we need markets and the information they provide.
see the above.
> > You seem to do nothing but compare ideal markets to Soviet-style
> top-down planning, without acknowledging the real-world problems of
> markets (e.g., adverse selection and moral hazard, external costs and
> benefits).
>As I acknowledged in a post to Doug, I have leaned that way. Course
>pro-planning types do the opposite, compare idealized plans to capitalist
>markets.
So if your self-defined enemies do something, you do the opposite? That's
not the best intellectual strategy. (Pinochet likes chocolate ice-cream, so
I refuse to eat it? the enemy of my enemy is my friend?)
>I said: we have governments and regulation. [to deal with externalities
>and the like]
>
> > which Hayek would oppose (or at least his followers). After all,
> governments and regulation are part of planning, right?
>Some and some. Hayek was less libertarian than a lot of his followers. But
>i am no sort of libertarian. I am a socialist. Moreover, I love big
>government, regulation, administrative agencies, because I don't trust
>markets. I just think we need 'em.
I don't think you've really analyzed what a "market" is. See the above.
> > The problem with market systems is that those with the most money -- or
> simply those who are specifically being regulated -- also have the most
> political power and influence and can thus "capture" the agencies that
> are supposed to regulate them. To break this, we have to get away from
> the rule by the one-dollar/one-vote principle (markets) and move to the
> one-person/one-vote principle (democracy).<
>Sure, but wealth and income differentials would be small under market
>socialism because there would be no private ownership of productive
>assets. Wealth differences would be due to differences in skill, industry,
>and luck, which, since I think most people are pretty even if not in all
>areas, then at least in some such, woulfd not lead to great inequalities.
> > markets encourage self interested behavior. But planning doesn't? The
> USSR was a kleptocracy. <
>
>Jim says > again, the USSR!
>
>OK, I promise not to mention the USSR if you promise not to mention
>capitalist markets. We can deal with ideal models of planning and ideal
>socialist markets, throwing away all our real world experience. As an
>economist, that should make you comfortable. But remember, no lessons from
>capitalist markets!
No, that's exactly the wrong direction to go. Real-world experiences with
workers' control, not-for-profit organization, and planning should be
compared to real-world capitalism and petty markets to avoid idealist
fallacies. But theory cannot be avoided, since theory is necessary to the
understanding of empirical reality.
> > an economy where all assets belong to "the state" isn't socialist
> unless the people own the state.<
>
>I agree.
>
> > but then why is it _market_ socialism rather than a
> socially-controlled (democratically-controlled) market? and why do market
> socialists tend to forget about the downside of the market?<
>
>Cal it waht you like. Schweickart calls it Economic Democracy. As for
>forgetting the downside of the market, as I say, it's a rhetorical effect
>of daeling in this strange little world where, unlike the rest of
>universe, it is universally accepted that markets are terrible and
>planning is fabulous, except for course for our real world experience of
>it it.
who is it that thinks that planning is "fabulous"?
>So I tend to exaggerate. I agree with almost every bad thing you say about
>markets. I just don't see how we can make do without them. they have to
>regulated thoroughly and watched carefully, though.
The point, as Pat (NR) Devine, says is to "unpack" markets, figuring out
how to break down their functions and figure out how to replace and control
them. The same goes for planning. The plan/market dichotomy is a mind-shackle.
> > the problem with the info that undemocratic planners get is that
> almost all of it is lies. If people are providing info to a planning
> agency that they _trust_, they're less likely to lie. <
>They can trust the planners and still want to do less work or have more
>resources to do it. And a lot of this operates unconsciously.
Markets discourage solidarity (as any unionist will tell you). Actually,
the shortage economy that results from the story you tell (following
Kornai) has a lot of positive aspects, like permanent full employment. You
can point to advantages of the excess-supply economy (capitalism), but that
just says you have to get away from this plan/market dichotomy. (Oh yes,
the excess-supply economy has the advantage of scaring workers to to do
alienated labor under authoritarian conditions.)
BTW, lying is rampant in markets, too. Have you ever bought a used car? as
Akerlof argues, even the most competitive market doesn't solve the problem
(adverse selection). Markets encourage lying, often called "advertising,"
but including many other phenomena.
> > Also, there are more ways for people to express their wants
> democratically than in simple votes.<
>
>I am unclear about how the information in the plan is to be conveyed to
>the planners, but I presume it will not be in the form of votes, but in
>terms of information like: We have 150 people with such and such skills
>who can work 12 hours a day seven days a week but would rather work fours
>hours a day for three days a week, and we make widgets by the X process,m
>which requires...
This is the problem of setting up worker co-ops, which is just as much a
problem with "market socialist" schemes. The creation of such co-ops must
be planned.
> > If there's a clear _cost_ to getting something, people don't
> automatically "ask for more than they (truly) want." Market prices aren't
> the only way to ration scarce goods.<
>
>Sure, but often the costs are hidden, and we don't know about them without
>prices or some analogue.
that's why prices don't do the job: costs are hidden! capitalists only care
about their private costs.
> > the economy is already subject to political control. The issue is: by whom?
>
>The proletariat organized as the ruling class, who else? I amy be a pretty
>poor excuse for a Marxist, bt this is one thing I have not given up.
The key question is how markets can allow democratic control rather than
being forces that encourage free-riding and the re-establishment of
classes. We should realize that markets are political institutions, with
political effects, rather than assuming that they can somehow provide an
apolitical technical fix.
Even though the above is extremely long, my description of a socialist
economy is very abstract. That's because I can't simply wield magic
concepts like "market efficiency" and assume that people will bow down in
front of me.
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~JDevine
"From the east side of Chicago/ to the down side of L.A.
There's no place that he gods/ We don't bow down to him and pray.
Yeah we follow him to the slaughter / We go through the fire and ash.
Cause he's the doll inside our dollars / Our Lord and Savior Jesus Cash
(chorus): Ah we blow him up -- inflated / and we let him down -- depressed
We play with him forever -- he's our doll / and we love him best."
-- Terry Allen.
