underconsumption again--and Luxemburg

Steve.Keen at unsw.edu.au Steve.Keen at unsw.edu.au
Mon Jan 30 14:59:12 MST 1995


Boddhisatva recently wrote:

|        I feel I must object to Mr Keen's analysis of socialist vs.
|capitalist investment climates.

|        Let's look at it this way : accepting some sort of labor theory of
|value, one can equate the financial risk taken by capitalists with the "labor
|risk" taken by socialist workers who invest their time and effort into a new
|venture.  Without question the marginal propensity for risk is HIGHER, when
|taken in aggergate, in a socialist system than in a capitalist one much the
|same way that marginal propensity to consume is higher among poor than among
|rich people.

|        Having said this, I must also say that Mr. Keen's analysis assumes
|away the independence of worker-controlled enterprise.  This independence is
|vital if the flaws portrayed in his arguments are to be avoided.
|Clearly  planned economy is undesirable for the flaws that Mr. Keen
|clearly points out.  However, the individual syndicat in world of
|syndicats of one form or other are absolutely unconstrained by the
|"resource shortage" that Mr. Keen cites.  In fact, since human effort
|is far more important in a modern economy, socialist firms have it all
|over their capitalist counterparts because worker inspiration is
|vastly less diminished.  The simple fact is that people are not going
|to stop wanting to get rich, nor should they.  Consumers are not going
|to stop wanting innovation, nor should they.  Our job as Marxists is
|to unshackle the productive force.  Wage exploitation is that shackle.
|Independent worker enterprise is the key.

In general, I see this as a defence of something which neither I nor
Kornai (whose work I was explaining) were actually criticising. This is,
I would argue, a defence of market socialism; Kornai's critique was
directed at democratic centrally planned socialism. I concede that
market socialism may not have the above problems; but Kornai's
aim was to provide a theoretical explanation for the actual experience
of slow growth by planned socialism.

However, there is one of Boddhisatva's points which I feel compelled to
address: the "independence of worker-controlled enterprise". The
point of Kornai's critique was that all enterprises in any form of
economy are constrained by their relations with other enterprises. If
your own enterprise is completely flexible, highly dynamic and full
of initiative, it can still be brought undone if your suppliers don't
deliver, or if they send defective parts.

Kornai's point is that this "external constraint" is more likely to
be realised in one where all productive factors are fully employed
than in one where there is "resource slack". It would require
perfect co-ordination for a fully employed economy to actually
produce at maximum output, since if even one firm failed to
deliver its intended output, that failure would ramify through
the entire economy and cause ALL firms to fail to reach
their objectives.

Cheers,
Steve Keen

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