kevin quinn kquinn at falcon.bgsu.edu
Tue Jan 10 09:02:53 MST 1995

I agree in large part, but want to add 2 points. First, the notion of an
institution-independent efficiency criterion--such as the
neoclassical economist's notion of "transactions costs"--is a fiction.
Second, different institutions--planning or market--shape different kinds
of agents, with different preferences. If efficiency implies maximal
preference satisfaction, it cannot then serve as an evaluative criterion.
It simply tells us about coherence between institutions and agents. But a
less coherent institutional arrangement--one which frustrates preference
satisfaction relative to another-- may nevertheless be deemed superior
because the more frequently frustrated preferences are nevertheless more
admirable, the agency it shapes richer. Eg, we may prefer institutions
which create dissatisfied Socratess to those which create satisfied pigs!

On Tue, 10 Jan 1995, Richard Wolff wrote:

> 	Replying to Mann regarding markets versus plan: I believe that
> this is first and foremost an ideologically framed issue, a way of
> discussing the difference between conventional notions of "socialism" and
> conventional notions of "capitalism." And as such, it is apologetic much
> more than analytical.
> 	There is no such thing as "markets" in the abstract. There is a vast
> array of different arrangements prescribing (1) which social entities can
> and cannot engage in trade, (2) what resources and products may and may
> not be traded, (3) how such trade may be carried out - by what mechanisms
> and mediations, and (4) how any gains/losses from exchange will be
> distributed and to whom. Nor is that a complete list of types of
> differences among "markets." A parallel complexity attends "planning"
> in terms of what is planned, how planning is accomplished, who does it,
> how its results are social distributed and evaluated, etc.
> 	In contrast to all this, abstract "comparisons" of "market versus
> plan" have overwhelmingly been of the sort aimed at demonstrating the
> inate superiority of one versus the other. Thus they classically tout the
> virtues of whichever one they prefer - usually by choosing and
> "analyzing" one virtuous example of it - and draw suitably devastating
> comparisons with an appropriately chosen exemplar (caricature) of the one
> they do not prefer. The whole enterprise is then laced together
> analytically by elegant gestures toward that phantom that is the last
> resort of most such comparisons: efficiency!
> 	To measure the efficiency of any institution (e.g., a market or a
> planning apparatus) or indeed of any economic act or event whatsoever,
> you would have to (1) know all of its economic ramifications, all of the
> direct and indirect economic costs and benefits as its effects ramify
> throughout the economic community in which it exists/occurs and beyond,
> and (2) be able to measure each and every associated cost
>  and benefit to arrive at the "net" result enabling a judgement about the
> "efficiency" of such an institution or such an event. Even more daunting
> than this infeasible enterprise would be a comaprison of two institutions
> of events since that opuld require 2 infeasible projects of knowledge and
> measurement.
> 	"Efficiency" is a mirage, an ideological smokescreen to hide the
> polemic pleading for or against something preferred for altogether
> different, but less socially sanctioned, reasons. The notion of deciding
> between markets and planning on the basis of efficiency is absurd. That
> it occurs so regularly for over a century suggests that there are indeed
> important matters at stake, but to find and analyze them, we need first
> to recognize that they have been displ;aced onto the "efficiency" phantasm
> for polemical reasons that are fast losing their credulity.
> R. Wolff


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