(after a baaad illness, I'm baaack!)
On Mon, 17 Feb 1997, I wrote >Wait a sec, Justin! [the dumping of
costs and the grabbing of benefits is] _exactly_ the way a
capitalist market works... <
On Tue, 18 Feb 1997, Justin Schwartz answered: >>I agree that
putting the costs on others and taking the advantages for oneself
is how capitalist politics works. In fact my statement is a very
close paraphrase of one by Justice Holmes (talking about
capitalist legislation). The point that this is a psecial problems
for planned socialism is that in it, the whole economy is
politicized; there's no room for any nonpoliticized
decisionmaking. I agree that rich coops exercising power in virtue
of their wealth would be a problem in MS ["market socialism"].<<
This is a strange juxtaposition! I say that the capitalist
_market_ is such-and-such and Justin responds that he agrees that
capitalist _politics_ is that way! (Luckily, he then goes on to
repeat his previous point, so I don't have to do that.)
This somewhat bizarre misreading pushes me to clarify my
perspective, which BTW does _not_ deny that the problem of dumping
of costs on others and the extraction of benefits from others is a
problem that advocates of "planned socialism" have to face:
1. I think one of the hallmarks of radical political economics
(following Marx's lead), one of its major steps beyond the
puerility of neoclassical economics, is its rejection of the
artificial distinction between "economics" and "politics" except
as part of a preliminary analysis. Herb Gintis, back in his better
days, made the useful distinction between "sites" and "practices":
the "site" of the "economy" (e.g., the production process)
involves not only "productive" and "exchanging" practices but also
what people often call "political" activity (e.g., supervisors
cajoling workers). (That production involves politics is a theme
of a lot of work by Marglin, Braverman, Bowles, Edwards, Gintis,
etc. and shows up in an anemic way in the "efficiency wage
hypothesis.") The "state" site involves not only "political"
practice but also production and exchange, etc.
Another step forward for radical political economics (again
following Marx) is the view that that the economic process entails
historical time, in which the present is merely a moment in the
incessant move from the irreversible past to the unknowable future
(paraphrasing Robinson). Static models won't do.
2. My precise point, one that Gintis would probably reject, was
that a market (one kind of site) involves "political" activity, as
defined by the Holmes quote: especially given their competitive
environment, capitalist organizations are oriented toward
aggressive profit-seeking, which pushes them to actively look for
ways to externalize internal costs (dump burdens) on others and to
internalize external benefits.
Back in the 1970s, two pretty conservative neoclassicals Lance
Davis and Douglass North had a book which posited the
internalization of external benefits (as part of the explanation
of the growing size of corporations, among other things); what
they missed was that this logic applies just as well to the
dumping of costs. (This omission is probably due to an ideological
bias in favor of markets.) This dumping of costs is what E.K. Hunt
emphasized in his critique of welfare economics, which I already
cited.
3. One way to avoid the fact that markets involve politics is to
embrace the orthodox-neoclassical and technological-determinist
theory of externalities. That theory holds that the degree of
external costs (or benefits) of a production process is given and
fixed by technology, which itself is given exogenously,
independent of profit-seeking activity (so that "entrepreneurs"
choose the level of pollution given constraints). But that theory
should be rejected because (a) it ignores dynamics (historical
time), the way in which technologies are created and applied
change over time, as with most neoclassical images of the market
as a peaceful equilibrium, broken only by exogenous shocks; and
(b) it ignores the profit motive in shaping and filtering which
technologies are developed and applied, which changes the
constraints seen by "entrepreneurs" over time.
An example of this kind of change that involves seeking the
ability to pollute or to otherwise dump costs on others: white
people in the eastern United States during the early 19th century
had the choice between staying where they were and being forced to
consume each others' "smoke" and/or developing road, canal, barge,
ship, and railroad technologies that allowed them to go to the
west, where they could more easily dump pollutants, abuse the
land, internalize the Indians' benefits (;-)), etc. They chose to
do both. The development of these technologies probably had other
types of benefits which helped to motivate individuals, but the
search for ways to externalize (internalize) costs (bene
