From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Wed Dec 07 2005 - 12:28:31 EST
Jerry, you asked: Granted, this does not capture all of complexities associated with spending, but is it misleading to use it to represent a "stylized" set of relationships? Whether or not it is misleading, depends on your purpose of analysis and what you intend to describe by it, I guess. Perhaps you could include also imports (some of which is for re-export). Point is really that in socialist economics one ought to distinguish between the incomes and demand of social classes, and by functional category of expenditure. What CAN be misleading is the way the NIPAs or UNSNA present this type of information, because: (1) the accounting system is oriented to the concept of value added and physical capital assets, and therefore, a whole set of expenditures is typically excluded from consideration, (2) the accounts do not differentiate expenditures in class terms or - with some exceptions - in terms of economic function, (3) the role of credit money is not well presented in the accounts. I wrote a post about this in response to Rakesh but I'm not sure you published it. You asked: A side-note: I wonder about your categorization re "eco-destructive goods". Well I was being a bit provocative. But, yes, some goods seem to be simply eco-destructive, and probably ought not to be produced at all, because there are better alternatives. The distinction between "demand in general" (a potential demand) and "monetarily effective demand" is basic to socialist economics. Just because people don't have the cash, doesn't mean they don't have (unmet) needs. There is a demand allright, but not a monetarily effective demand. The dictatorship of markets asserts itself precisely when people have real and legitimate needs which cannot be met, because to satisfy them requires money people do not have. Markets are fine, if they permit people to organise the satisfaction of their own needs in a reasonable way, on own initiative, but they're a pest, if basic needs cannot be met because of them, and when a direct or legal allocation or resources would be much better. The basic critique of unregulated markets is that, ceteris paribus, they favour the strong against the weak (a power relationship), thus exascerbating socio-economic inequality. The exceptions to this rule are few, there are some, but they are few. I don't think we can do without markets in this juncture of history, but what is possible is to assert some control over the "rules of the game" so that we prevent a grotesque maldistribution of incomes, products and assets. In socialist economics, markets are one instrument for resource allocation, among others, to be applied according to criteria of efficiency/effectiveness, freedom and social justice. The point of departure of socialist economics is I think really that there is no ownership form which is *intrinsically* good or bad, or *intrinsically* better/worse than any other. The question is, which ownership forms can best satisfy social needs in a specific situation, given certain priorities which a population has. If, in a socialist economy, the government has a mandate from the majority, it can flexibly experiment with those ownership forms which, on the whole, work best to satisfy human needs. Admittedly, this makes resource allocation directly political, and responsive to the interests of social classes, but much the same happens in a capitalist economy anyway, without formal acknowledgement that this is the case. As Lewis Caroll quipped, "the question is who is master, that is all". Regards Jurriaan
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