what about inequalities between firms (market socialism)
hagena at mhd1.moorhead.msus.edu
Sun Nov 6 00:32:03 MST 1994
Andrew Hagen writes:
> > Would market socialism have business cycles? Why not? What happens when
> > demand fails? If a program of Keynsian spending is called for, who buys
> > the bonds to service the governmental debt? You can't just print money!
Justin Schwartz writes:
> Actually this is not so clear. Depends on your theory of the business
> cycle whether market socialism would have such cycles. Insofar as they
> depend on private investment and the animal spirits of capitalists--their
> willingness to invest--it would not have them. Demand can be kept up in
> part by a high basic income provided to all,
can it? What if inflation takes off and there is widespread agreement
that interest rates must be hiked to fend it off?
Alternatively, how will MS keep inflation at a relatively constant level
year to year? (Of course, if inflation was always a certain rate, year
after year, no one would care about it, no matter how high it was. The
problem with inflation (or the beauty of it) is always that is
> paid for from taxes, also
but if it all comes from taxes then you will not get a macroeconomic
stimulus. You need to put new money into people's hands.
> because their is little downward pressure on profit shares except that due
> to a desire to make cheaper stuff. Keynesian spending, incidentally, need
> not require purchase of bonds.
I'm obviously no expert, but I thought it did!
> Part of Keynes' point was that the
> government can indeed stimulate the economy by spending money it doesn't
> have, generating economic activity which it can tax to pay for the spending.
But before the new activity generates the new taxable income the
government must spend new money. It can either print it or borrow it. You
probably don't want to print it, because of inflation. So you have to
borrow it, at least for the time it takes for the Keynsian multiplier
effect to be realized, right?
The safe conclusion is that MS will suffer from many of the same
misfortunes of capitalism.
> > The point is, you can't just assume regulation will work. We need a
> > convincing explanation of how regulation in market socialism will be
> > qualitatively different than that in capitalism.
> Actually regulation, when it is actually tried, works pretty well in
> capitalism. Too often the regulation is not funded or enforced, as with
> OSHA, but you can look at the increase in gas milage in your car as an
> instance of effective regulation.
Exactly. The problem with regulation is not that human beings are
incapable of applying their reason to the regulation of economic matters,
but instead that a government cannot rule a market; the market rules the
government. Regulation fails because of the political power of the
Andrew Hagen hagena at mhd1.moorhead.msus.edu
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