Calculation Problem Again

Steve.Keen at unsw.EDU.AU Steve.Keen at unsw.EDU.AU
Sun Oct 30 16:36:13 MST 1994


On Justin's comments re Mandel's simplification "solution" to the planning
dilemma:

A year or two ago a visiting Japanese scholar (presenting a paper on
Keynesian demand-constrained growth models) tabelled a document produced by
MITI which classified consumption according to the year in which the products
had been invented. That is, they broke total consumer spending down according
to whether the items being consumed had existed prior to 1950, 1960, 1970,
and 1980. This literally means existed, by the way: they weren't, for example,
treating an improved car as a new invention--the car had been invented sometime
around 1900, so spending on cars in total was lumped into the "invented before
1950" category.

The numbers were normalised (i.e., spending in 1950 was set at 1) and adjusted
for inflation. here they are:

For 1990:
Total spending: 35.7
Post-1980 inventions: 2.067
1970-1980 inventions: 4.232
1960-1970 inventions: 8.994
1950-1960 inventions: 14.285
Pre-1950  inventions: 6.164

In other words, consumers in Japan (which admittedly is at the extreme end
of the consumption spectrum) spent less than a 5th of their income on
products which had been invented before 1950. So adding a time and
innovation perspective to the system makes it even less likely that planners
could "anticipate" demand.
Cheers,
Steve Keen


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