Re: principal/agent and social conscience
Do markets have any legitimate role in a socialist economy? In my last post on this subject I suggested that they might, but not that indicated by the standard static efficiency conditions of neoclassical economics (which are never satisfied in any economy, anyway). Instead I pointed to the properties of markets with respect to providing information on changing microeconomic conditions and incentives for effort and innovation. [Without offering any conclusions whatsoever about what the "best possible" alternative to capitalism might be.] For this heresy Robin has branded me a "market enthusiast", which conjures up unlikely visions of weekends spent avidly poring over market reports or price lists. This is possibly an overstatement on Robin's part; for what it's worth, if my only choices were status quo capitalism with all of its markets and Robin and Mike's vision of a participatory economy without any, I'd opt for the latter. However, it still seems useful to talk about the properties of markets and where the latter might fit in a progressive alternative to capitalism. Robin says: I am glad to hear that Gil Skillman thinks that the static efficiency properties of markets are the "least important" features that recommend them. In other words, Gil is conceding that markets generate reasonably accurate estimates of social benefits and costs of different goods and services -- or certainly would fail to do so if the labor market were mucked with so as to generate reasonably equitable wages. I would appreciate if Gil would explain the rationale for this concession to his fellow market enthusiasts. I think he rightly concedes a point that cannot be defended. But I do not sense that many who champion a market version of socialism understand the necessity of this concession. I'm not even sure Gil could get a majority of market enthusiasts to condone his running up the surrender flag regarding the static inefficiency that would result in a market economy with fair wages. "Concession?" "Running up the surrender flag?" The use of these loaded terms is a debating ploy. What I did was suggest that Robin's original post misrepresented the issues by focusing exclusively on the least important allocational properties of markets. I'm pretty sure I don't need to "explain the rationale" for this position to fellow PEN'rs. And whether or not I could "get a majority of market enthusiasts" to agree with this position is utterly beside the point. I'm not running for office. I'm not really even trying to win a debate. I think the issues Robin originally raised are interesting and worth considering on both sides. Finally, Robin misstates the issue: the static efficiency conditions only guarantee "reasonably accurate estimates of social benefits and costs of different goods and services" *at the margin* (and then only if one accepts the legitimacy of the underlying distribution of income, and ignores such problems as addictive behavior) which is a very different thing than Robin suggests. Regarding Gil's substantive points: 1) I don't know what restricting the capital market has to do with anything. If you want to restrict the capital market as well as the labor market, fine with me since that leaves us an economy with n-2 markets instead of n-1. Since I still believe a desirable economy has zero markets in the limit, eliminate them one by one if you have the patience for it. Seriously, I did not understand this point. No, I suggested eliminating or restricting capital markets *instead* of labor markets, and I gave a reason: the likelihood that capital markets disproportionately generate rents and promote exploitation. 2) As to whether or not markets provide the best possible information and incentives to decision makers -- and are efficient on those grounds; [I didn't say anything about what provides the "best possible" information and incentives to decision makers.] and as to whether the new game theoretic and information oriented economics that is replacing the old neoclassical efficiency analysis teaches us the true virtues of markets: Isn't it convenient that the new game-theoretic information oriented micro theory came along just when the old venerable defense for markets on grounds of pareto optimality was finally crumbling. Stupid me for having rooted on game theory and information economics! Guess I should have known better. [There doesn't seem to be an argument here.] Fortunately for game-theory and information economics, I don't think they exonerate market inefficiency at all -- but that is a long story I don't want to go into here except to say that free rider problems and biases inherent in what preferences can be most easly expressed and what ones cannot in market systems abound, and that the new information economics should help bring these problems to light -- not bury them. The point was never whether or
Re: principal/agent and social conscience
I am glad to hear that Gil Skillman thinks that the static efficiency properties of markets are the "least important" features that recommend them. In other words, Gil is conceding that markets generate reasonably accurate estimates of social benefits and costs of different goods and services -- or certainly would fail to do so if the labor market were mucked with so as to generate reasonably equitable wages. I would appreciate if Gil would explain the rationale for this concession to his fellow market enthusiasts. I think he rightly concedes a point that cannot be defended. But I do not sense that many who champion a market version of socialism understand the necessity of this concession. I'm not even sure Gil could get a majority of market enthusiasts to condone his running up the surrender flag regarding the static inefficiency that would result in a market economy with fair wages. Regarding Gil's substantive points: 1) I don't know what restricting the capital market has to do with anything. If you want to restrict the capital market as well as the labor market, fine with me since that leaves us an economy with n-2 markets instead of n-1. Since I still believe a desirable economy has zero markets in the limit, eliminate them one by one if you have the patience for it. Seriously, I did not understand this point. 2) As to whether or not markets provide the best possible information and incentives to decision makers -- and are efficient on those grounds; and as to whether the new game theoretic and information oriented economics that is replacing the old neoclassical efficiency analysis teaches us the true virtues of markets: Isn't it convenient that the new game-theoretic information oriented micro theory came along just when the old venerable defense for markets on grounds of pareto optimality was finally crumbling. Stupid me for having rooted on game theory and information economics! Guess I should have known better. Fortunately for game-theory and information economics, I don't think they exonerate market inefficiency at all -- but that is a long story I don't want to go into here except to say that free rider problems and biases inherent in what preferences can be most easly expressed and what ones cannot in market systems abound, and that the new information economics should help bring these problems to light -- not bury them. The fact that the Soviet economy suffered more from lack of motivation and incentive problems than from static inefficiencies in resource allocation is 1) a position I have been arguing since 1981 (Socialism Today and Tomorrow, 1981, and Chapter 9 of Quiet Revolution in Welfare Economics, 1990) so I am not going to disagree; but 2) hardly proof that markets are the most efficient systems of motivating socially useful efforts and innovations. Apes look good compared to dinosaurs, but Gil -- wait till you see a human! While static efficiency was my initial concern in designing and defending a participatory economy as a more equitable but no less efficient alternative to market economies -- since that was the traditional critique of any non- market based system for resource allocation -- I have more recently examined objections to participatory economies on motivational, incentive, and innova- tion grounds. I will send Gil, and any others interested a copy. Within a month the Left Bulletin Board System, LBBS, will be accessible from the internet along with its library of articles. The article titled "Why Partic- ipatory Economics?" in the June issue of Z Papers is in the LBBS library and can be down loaded by any interested once LBBS is on the Internet. In Solidarity, and Hasta la Victoria Siempre
Re: principal/agent and social conscience
In an earlier message Gil Skillman said that while he could not endorse my call for a vision with an economy with zero markets in the limit, that he could certainly endorse a call for having n-1 markets if we have n right now. That amounts to saying that some sort of market socialism would be an improvement over capitalism, which few on pen-l have disputed, and I have explicitly agreed with. But I have yet to hear an answer to a problem I posed for advocates of market socialism a while back, and Gil's posting brings the issue up clearly. I assume that the 1 market Gil would eliminate is the labor market, and I assume that the reason is that a labor market does not distribute income equitably in Gil's view [which I would share]. So the logic is eliminate the labor market, set income differentials through some sort of political process that is more equitable than free market labor outcomes that pay even middle talented professional baseball players millions per year while paying hard working garbage collectors less than $25,000 per year. Or, the example that catches my attention at the moment, the basketball coach at the University of Maryland -- who I like as an avid Terps fan -- negotiating a multi-million dollar multi-year salary that will pay him $250,000 annualy with- out endorsements while no faculty member at this institution of higher earning [a truly Freudian slip] earns over $100,000 -- no matter how wise and famous. But the problem is if we set wages and salaries fairly, and if that means out- comes different from marginal revenue products -- otherwise what's the point? - then what does that imply about the price structure in the other n-1 markets that Gil is considering retaining? I once saw an estimate that on average two thirds of costs are labor costs. In which case, on average two thirds of the cost of all final goods would be miscalculations of true social opportunity costs. To make a long story short, how can one pretend to eliminate the labor market and keep the other n-1 markets without recognizing that the highly vaunt ed, and highly over estimated, efficiency properties of the pricing mechanism in all those other markets would go completely by the wayside? In Solidarity, You Can't Have Your Cake and Eat It Too!
Re: principal/agent and social conscience
Robin Hahnel's post raises two issues: 1) What market should be considered the primary target for elimination in a move toward market socialism? 2) Given elimination of said market, what's the use of allowing the other "n-1" markets to continue? Wouldn't their efficiency properties, such as they are, be eviscerated? On the first issue, Robin is right to suggest that equity is the primary consideration. But if he'll allow a vision of market socialism that includes a) a progressive income tax with a "negative" component, b)significant inheritance and gift taxes, and c) significant and more equally allocated educational spending, I'd say the market which is the primary target for either elimination or significant restriction is not that for labor, but for capital. My argument is that unrestricted capital markets, such as those in the US, create socially unjustified differentials in access to income, decision rights in production, and macroeconomic power. Exactly how capital markets should be restricted depends on how one weighs the foregoing concerns. To take an example for the sake of argument, creation of a labor-managed economy would be a significant improvement over the status quo, and would require severing the connection between capital supply and decision rights in production. But suppose for the sake of argument that achieving socialist equity goals requires elimination of labor markets resulting in expected (increased) divergences in wages and marginal products. Is it true, as Robin suggests, that no net efficiency advantages can be expected from allowing all other (primarily commodity) markets to continue? I disagree, and our difference here has much to do with the distance between traditional neoclassical economics and modern (information- and game-theoretic) economics. The static efficiency properties of complete and competitive markets, on which neoclassical economics obsesses and which Robin insists would be lost, are certainly the least important allocative aspects of markets. The decentralization and (imperfect) competition provided by market allocation arguably promote effort incentives, product quality, adaptability to changing microeconomic conditions, and innovation better than any other mechanism we know of. [To take a concrete example, compare the development of computers in the US and in the former USSR.] The Eastern European economies didn't collapse because they failed to equate marginal revenues and marginal costs; they collapsed because nobody worked, the goods produced were crappy, supplies didn't respond to changes in needs, production methods were outmoded and dangerous, and incentives for innovation were miniscule to nonexistent. In solidarity, Yeah, But at Least I Have a Cake!
RE: principal/agent and social conscience
In Roemer's model the coupons all get evenly distributed by taking all their stocks away from today's capitalists and handing out new coupons to every citizen so they all have identical portfolios -- although if you think about that it makes for very strange porfolios. But then, if there is any point to the coupons at all, people are free to trade coupons with one another, which is why the coupon portfolios people come to have will be very, very different from one another within a short time after his coupon economy starts up.
RE: principal/agent and social conscience
In response to Doug Henwood's question: I don't believe there is any point to coupons if you can't trade them. If you couldn't trade them there would be no need to hand them out. The government chould simply send each citizen an equal size annual dividend check -- which was Lange and Lerner's original proposal. Roemer wants them traded to generate market signals about the relative performance of different firms -- or at least coupon holders' opinions and expectations about the prospects of different enterprises. As I try to explain in the forthcoming issue of Z (October): 1) the price Roemer pays for permitting coupons to be traded is that non-labor income will not be equal -- contrary to Bob Pollin's statement to the contrary. 2) The market signals generated are unlikely to be very accurate if they are the collective opinion of millions of small shareholders with little at stake and with few resources to gather accurate information. 3) Roemer himself doesn't seem to think even semi-egalitarian coupon market signals are accurate indicators of firm importance because he proposes two additional mechanisms for monitoring firm performance: the investment bank trusts who would be their source of loans for investment, and large mutual funds whose managers would have incentive and resources to monitor carefully. In which case, I ask why pay the price of unequal non-wage income? i.e. why trade the coupons, or as Doug puts it, why have the coupons at all. At which point we're back to Lange and Lerner -- not that I thought much of their model either -- but we don't need the intellecutal services of John Roemer.
Re: principal/agent and social conscience
I've been itching to get into the very interesting "P/A social conscience" discussion initiated by Jim Devine, but I've been hung up with other duties. Since as a result many posts on the subject have already flown by, I won't attempt a close response to the various issues, but here are some comments about particular aspects. 1. In Jim's opening remarks, he says "[Roemer's] scheme doesn't seem to deal with the principal/agent problem any better than capitalism does." I believe that Roemer's position on this is that his version of market socialism won't deal with the problem any *worse* than capitalism does either, and meanwhile it will offer improvements in terms of income equality and efficient provision of public goods, at least. In fact the point of Roemer's thought experiment, as I understand it, is to achieve the minimally essential set of goals "that socialists want" (see the first chapter of his book, _A Future for Socialism_) while departing as little as possible from existing allocational institutions. In this sense, Roemer's work can be understood as updating the old Hayek/Lerner debates about the feasibility of (to some degree market-based) socialism. One defense of such an approach is that, while it may be less politically exciting (cf. Jim's aside about what Zapatistas are or are not fighting for), it is perhaps more politically feasible than other, more dramatic visions of socialism. It is also more of a known quantity, in terms of what works and what doesn't. What version of socialist alternatives do you think Eastern European countries are more likely to be willing to subscribe to, for example? 2. Jim's refutation of this "do-no-worse" approach to socialism echoes a fundamental dichotomy in debates on possible socialist futures. Roemer's vision corresponds to what one might call an "egalitarian liberal" approach to socialism, for which the fundamental commandment is to change property rights in an egalitarian direction, without necessarily changing patterns of social interaction. Jim's vision is more in a collectivist direction (similar to the proposals of Albert and Hahnel, to whom Jim refers), which emphasizes democratic participation at all levels of economic decisionmaking. [There is also a middle ground staked out by Bowles Gintis, Schweickart, and others, of "economic democracy", or universal worker ownership of production. But that's a separate post.] Jim suggests the possible superiority of the collectivist approach to socialism in terms of "develop[ing] institutions that encourage the development of social conscience". Perhaps it is possible to engineer this, though Doug Henwood's comment about the chicken-and-egg problem is certainly apropos. It is also possible that collectivist institutions will excite social antagonism, as people get tired of sitting through all those f***ing meetings [cf Nancy Folbre's exchange with Albert and Hahnelthe tyranny of the anal-compulsive?] To put it more generally: Jim's approach *may* do better in terms of the incentives problem, but it may also do worse on other fronts. I raise one set of issues related to Arrow's impossibility theorem in my URPE conference paper to which Jim refers. Jim suggests that the development of social conscience may mitigate against such problems, a possibility discussed in part 4 of my paper. But there is as yet no telling how much so and under what conditions. 3. Bottom line: there are costs benefits, broadly understood, to both visions of socialism (as well as the "intermediate" approach). I agree with Bob Pollin that Roemer's approach should be taken seriously by those on the left, if only for pragmatic reasons: if Albert Hahnel socialism were not a realistic alternative for 300 years and Roemer socialism were realizable in 30, would you still fight against the latter? But there are more than purely pragmatic issues at stake. The different visions of socialism relate to real, and not properly dismissible, differences in values held among us on the left. It is far from obvious that even among PENrs we could achieve consensus on what the appropriate model of socialism is, even ignoring pragmatic considerations. [E.g.: I wonder where Mike Lebowitz's "libertarian socialism" fits on this spectrum? How about Nancy Folbre's? Y'all out there?]In the absence of such a consensus, I'm glad to have the alternatives spelled out by Roemer, Albert and Hahnel, Bowles and Gintis, P. Devine, Schweickart, etc., and I don't feel ready to dismiss any of them. At least they help us to make clear what the alternatives are. Gil Skillman [[EMAIL PROTECTED]]
Re: principal/agent and social conscience
On Thu, 22 Sep 1994 12:56:58 -0700 [EMAIL PROTECTED] said: 1. In Jim's opening remarks, he says "[Roemer's] scheme doesn't seem to deal with the principal/agent problem any better than capitalism does." I believe that Roemer's position on this is that his version of market socialism won't deal with the problem any *worse* than capitalism does either, and meanwhile it will offer improvements in terms of income equality and efficient provision of public goods, at least... Exactly! Despite Bob P's misunderstanding, my point was (1) that Roemer wasn't solving the p/a problem and (2) one partial solution was to encourage social conscience, but he (like most other market socialism schemes) was encouraging the p/a problem to persist by encouraging atomistic individualism. 2. Jim's refutation of this "do-no-worse" approach to socialism echoes a fundamental dichotomy in debates on possible socialist futures. Roemer's vision corresponds to what one might call an "egalitarian liberal" approach to socialism, for which the fundamental commandment is to change property rights in an egalitarian direction, without necessarily changing patterns of social interaction. Jim's vision is more in a collectivist direction (similar to the proposals of Albert and Hahnel, to whom Jim refers), which emphasizes democratic participation at all levels of economic decisionmaking. "Refutation" is *too strong a word*. More accurate is "criticism." I don't see how anyone could see my message as an attempted refutation. BTW, I never presented my vision except via scattered references to other peoples's work. Among other things, it should be clear that I didn't endorse A H's scheme except to the extent that they addressed the issue I brought up. I tend toward Pat Devine-no-relation's scheme, at least as an early stage. Also, I don't simply go in the "collectivist" direction, since there are other species of collectivism besides democratic collectivism. Jim suggests the possible superiority of the collectivist approach to socialism in terms of "develop[ing] institutions that encourage the development of social conscience". Perhaps it is possible to engineer this, though Doug Henwood's comment about the chicken-and-egg problem is certainly apropos. It is also possible that collectivist institutions will excite social antagonism, as people get tired of sitting through all those f***ing meetings [cf Nancy Folbre's exchange with Albert and Hahnelthe tyranny of the anal-compulsive?] For both of these, I agree that the problems should be addressed; in fact I addressed the former in a reply to Doug. For the latter, I also agree that this is a problem; but that's no excuse not to address the issue of how a society can be structured to promote social consciousness. For example, the identities of who attends the f***ing meetings could be chosen at random, as with ancient Athenian democracy. (This choice excluded slaves women metics, but that's another issue.) We have to develop _new_ methods of enforcing democratic accountability (at minimum cost of silly meetings, etc.) if we want to deal with the problem Gil brought up. I raise one set of issues related to Arrow's impossibility theorem in my URPE conference paper to which Jim refers. Jim suggests that the development of social conscience may mitigate against such problems, a possibility discussed in part 4 of my paper. But there is as yet no telling how much so and under what conditions. I'd like to hear more about this, as I said before. 3. Bottom line: there are costs benefits, broadly understood, to both visions of socialism (as well as the "intermediate" approach). I agree with Bob Pollin that Roemer's approach should be taken seriously by those on the left, if only for pragmatic reasons... I agree that all such schemes should be taken seriously and contrary to Bob Pollin, I never said otherwise. However, it is important to *also* look at schemes that are more closely related to the actual struggles proposals of people who are fighting against the system. That's why "what the Zapatistas are fighting for" is very relevent, plus the fact that if you're ever to get something besides capitalism you can't simply say "here's a nice and efficient plan that provides equity, too." Not only is a mass popular movement necessary to tip capitalism over, but that movement needs to be motivated by thinking that they're working for something they *want* rather than some nice academic plan. I think that the 2nd 3rd Internationals overdid their critiques of utopianism, but the basic fact is that an idea without a movement goes nowhere (unless it fits with the current balance of power). The need for a mass movement suggests that "pragmatic" schemes may not be *practical* because no one really want them. BTW, the mass democratic movements I've read about and encountered emphasized the democratic-collectivist direction rather than the "market system plus reforms"
Re: principal/agent and social conscience
While Bob Pollin "urged Jim Devine to look more carefully into the Roemer model before being so dismissive," I would urge Bob Pollin to read Roemer's book more thoroughly before endorsing the model. Pollin writes: "capital assets have been evenly distributed, so that all non-wage income is evenly distributed." This is completely untrue. Roemer INITIALLY distributes stock ownership so all citizens have identical portfolios. But the whole point of his coupon stock market is that people will then trade stocks with one another. (If he weren't going to let them trade stocks, he would have no market signals of which firms were performing "better" and which "worse," right?) While he doesn't let people sell their stocks for money or goods, people do trade stocks for other stocks. Some people will fare better and some worse in these trades. Consequently some will end up with more valuable portfolios and re- ceive larger dividends, and some will end up with portfolios full of lemons and get very little dividends. Non-wage income will NOT be "evenly distribu- ted." Morover, in the book Roemer chastizes leftists for "fetishising" public ownership and "demonizing" private ownership; and recommends permitting individuals to start of private companies, keep the profits, and then receive handsome prices when their firms reach a certain size that Roemer insists should be rather large, and the state buys them out. That process will hardly leave non-wage income evenly distributed. And to be fair, shouldn't Pollin mention that Roemer estimates that changing to a coupon economy would only have raised Black median family income 2% in the US in 1959. (He estimates greater gains for other years, but none very substantial, and his estimates neglect the fact that he recommends permitting significant private ownership to continue. Anyone who thinks the appendix is anything other than sloppy, methodologically-flawed piece of empirical non- sence might expalin why.)
RE: principal/agent and social conscience
I haven't read Roehmer and so I'm not taking a position on the viability of his theory. I do wonder, from Bob Pollin's last comment, though, how do all the "coupons" get evenly distributed in the model? This part seems critical. Thanks. Nancy Breen National Institutes of Health
RE: principal/agent and social conscience
A reply to Bob Pollin's condescending comment on my "anecdote on Germany"'s banker capitalism: I guess I was a mite too subtle. Let be more direct. It is not clear from Bob's posts _how_ Bank-based financial systems are organizationally more efficient than the alternatives (American system of corporate control?) nor how the "more efficient" principal/agent relationships in such systems generate _improved private outcomes_ (for capitalists, managers, workers, consumers) as well as _social outcomes_. As for Bob's references to "a huge literature on comparative financial systems, much of it good", such comments hardly enlighten the discussion -- probably less so than "anecdotes". _What_ precisely is good about much of this literature? (Gee, Bob, some of us have even read some of the stuff). In the case of Japanese bank-based capitalism with which I'm most familiar, are your references to greater organizational efficiency related to keiretsu banks' relationships with affiliates in reducing the cost of capital, in coordinating investment plans, in relational contracting with subcontractors, in acting as corporate automatic stabilizers in the macro context, or acting as penultimate lenders of last resort? If so -- or not -- please say so. It would help the discussion along to more substantive issues. And what do Pollin and Roemer have to say on the impact of this banker capitalism or cartel capitalism on consumers, workers, small/medium size enterprise, and democratic process? |~~~| Brent McClintock| | Economics | People have "a taste| Carthage College|for effective work | Kenosha, Wisconsin 53140|and a distaste for | USA | futile effort"| Phone: (414) 551-5852 | | Fax: (414) 551-6208 | Thorstein Veblen | Internet: [EMAIL PROTECTED] | | ~
RE: principal/agent and social conscience
Jim Devine protests that he is not being dismissive of Roemer. But, as if to clinch his anti-Roemer position, he comes up with this bit of silliness: "I don't think the Zapatistsas in Chiapas are fighting for coupon socialism. Correct me if I'm wrong." If that isn't dismissive, then what is? I'd suggest that to be fair, Jim might want to mention why Roemer has the coupon stock market in the first place. Its because in his model, capital assets have been evenly distributed, so that all non-wage income is evenly distributed. The model eliminates the big capitalists Jim--how did you manage to miss that minor detail in Roemer. One can make serious arguments about various aspects of the Roemer model, as one can make against all market socialist proposals. But two things. First, Roemer recognizes these, and attempts to consider them seriously (unlike Jim Devine). And second, lets get real: markets are going to be around for some time whether we like them or not; shouldn't we be debating how best to socialize them--to get them to serve egalitarian ends as best as possible--rather than restating the obvious point made by Adam Smith himself (even before the "Wealth of Nations", in "A Theory of Moral Sentiments"), that, unmediated by institutions that promote the common weal, they become swamps of greed and competitiveness? Along this line, hasn't it become clear that non- market forms of social organization--bureaucracies and even democracies--will also create lots of room for greedy, competitive people to push their way to the top? What are the forms of economic organization that can best promote a workable, democratic egalitarianism? Isn't that the real question? As for Brent McClintock's anecdote on Germany, it is interesting, but also just an anecdote. There is by now a huge literature on comparative financial systems, much of it quite good. Roemer's model comes out of this literature in part, as does my own paper that I mentioned in my last posting. -- Bob Pollin -- Bob Pollin
RE: principal/agent and social conscience
On Tue, 20 Sep 1994 12:56:52 -0700 [EMAIL PROTECTED] said: Roemer has the coupon stock market in the first place. Its because in his model, capital assets have been evenly distributed, so that all non-wage income is evenly distributed. The model eliminates the big capitalists Jim--how did you manage to miss that minor detail in Roemer. I *did not* miss that detail. Rather, I assumed that everybody knew it.Someone other than I should provide a summary of the model. (BTW, I thought that you were going to bring up the fact that, at least in theory, JR's coupon socialism works better than the bureaucratic socialism of the old USSR. Granted, though it's hardly the only scheme that does so.) One can make serious arguments about various aspects of the Roemer model, as one can make against all market socialist proposals. BTW, I happen to like a different kind of "market socialism" approach better, that of Pat Devine (no relation). The point is if one wants market socialism, one has to be conscious of the problem that market institutions encourage the kind of opportun- ism that produces the principal/agent problem. As far as I am aware, Pat Devine's scheme doesn't do so much, either, and should do so. *All* such schemes should face Albert Hahnel's critique rather than shutting off such questions. But two things. First, Roemer recognizes these, and attempts to consider them seriously (unlike Jim Devine). And why the personal enmity here? sorry if I stepped on your toes. second, lets get real: markets are going to be around for some time whether we like them or not; shouldn't we be debating how best to socialize them--to get them to serve egalitarian ends as best as possible Sure markets can't be abolished overnight. But any scheme for organizing society should be conscious that such institutions tend to take on a life of their own, develop interest groups to defend them, etc. (The Roemerian bankers will be the first to lobby for the return of capitalism and they will have a lot of power.) There has to be an effort to reconcile the means (markets, bureaucracies, etc.) to the ends (democratic collectivism). I think Diane Elson's ideas of socializing markets makes more sense. She's very conscious of the fact that production and distribution are social processes. I'm not sure that Roemer is socializing markets as much as proposing such a minimal program that it misses most of the socialist critique of capi- talism. (Yeah, I know Elson's scheme has its limits, but Bob Pollin knows very well that I think highly of her scheme as a first start.) as possible--rather than restating the obvious point made by Adam Smith himself (even before the "Wealth of Nations", in "A Theory of Moral Sentiments"), that, unmediated by institutions that promote the common weal, they become swamps of greed and competitiveness? if this is so obvious, why doesn't the vast majority of economists take it to heart? am I correct to think that J. Roemer's scheme doesn't take it to heart? he seems to think of markets as natural organisms that don't need artificial (human-created) underpinnings. Along this line, hasn't it become clear that non- market forms of social organization--bureaucracies and even democracies--will also create lots of room for greedy, competitive people to push their way to the top? For me, *that* is an obvious point. I never advocated bureaucracy. The point is to democratize it, not to set up a new USSR-style bureaucracy or a new caste of Roemerian bankers. BTW, what's to keep the bankers from acting like the IMF "in the name of the coupon- holders" just the way the CalPers (which officially acts in the name of California Public employees) encourages down- sizing? I think that socialists would do better to figure out ways to ensure democratic accontability than to maximize the role of markets. The market is not a form of democracy, even if everyone has an equal number of "dollar votes." What are the forms of economic organization that can best promote a workable, democratic egalitarianism? Isn't that the real question? My initial question was about social conscience. If such can be encouraged, it helps creates democratic egalitarianism. It helps deal with the p/a problem (though no such solution should get *all* the weight) and the voters' paradox. The trouble is that market-mongering discourages such conscious- ness (as does bureaucratic command-mongering, BTW). Final note of humility: as far as I can tell, the Zapatistas aren't fighting for socialism (either of the Roemerian sort or any other). But they're *not* fighting for markets, but for democratization. The latter is the essence of socialism. in pen-l solidarity, Jim Devine [EMAIL PROTECTED] or [EMAIL PROTECTED] Econ. Dept., Loyola Marymount Univ., Los Angeles, CA 90045-2699 USA 310/338-2948 (daytime, during workweek); FAX: 310/338-1950
