[OPE-L:2177] Re: Re: socialism in a single moon?

From: Steve Keen (s.keen@uws.edu.au)
Date: Sun Jan 16 2000 - 21:47:12 EST

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I believe that the level of innovation in the Soviet system could have been
a lot higher than it was, if for instance it had been institutionalised in
the same fashion that electrification or the expansion of heavy industry was.

However, the point of my post was that there is a serious thesis extant
which argues that the general tendencies of a socialist economy would
produce less innovation than a capitalist economy--regardless of whether it
was historically backward or forward of coexisting capitalist economies.

On your comment that:

">In essence, the process of innovation simply requires freedom for
>experimentation, for doing something different from "normality" or
>tradition. This is I think far more a political, ideological, juridical,
>cultural, and moral question than a question of economics."

Kornai's contention is that this not correct. If a firm faces massive
effective demand, which equals or outstrips its capacity, then the easiest
way to fulfil that demand is by producing last year's model--and devoting
no resources to innovation. To coin a phrase, notional innovation simply
requires freedom, but actual innovation also requires time and money.
Kornai puts a very serious argument forward that the de facto mechanisms of
a socialist economy do not provide the incentives to commit economic
resources to innovation, whereas the de facto mechanisms of a capitalist
economy do.

I can appreciate the desire to defend socialism against an apparent attack.
This is not one. Kornai would, I think, describe himself as a socialist. He
was simply trying to explain the huge differences in effective product and
process innovation between the capitalist and socialist block without
having recourse to "Stalinism" as the explanation of everything. He was
also, I expect, trying to inform those who might wish to bring about future
socialist states that they could not "utopianly" rely upon the socialist
economy generating innovation unless it was "scientifically" planned for.


At 10:59 AM 1/16/00 -0500, you wrote:
>---------- Forwarded message ----------
>Date: Sun, 16 Jan 2000 16:55:53 +0100
>From: Jurriaan Bendien <djjb99@worldonline.nl>
>Jerry wrote:
>> b) One could also argue that socialism has the capacity to promote
>> innovation in ways that capitalist firms can not.
>Why such timidity ? If you ask me, the whole idea that a socialist economy
>would stifle innovation because it lacks competitive pressure etc. is
>simply an ideological hoax. It is based on the experience of poor countries
>which lacked a democratic civil society, seeking to industrialise under the
>tutelage of a despotic bureaucratic caste which referred to socialist
>ideology to justify itself.
>This bureaucratic caste stifled all innovation and innovators which it
>perceived as a threat to its interests, and made the generalised
>application of innovations very difficult except in those areas which it
>prioritised and rewarded. Even so, you cannot say that e.g. Soviet science
>and art, or Chinese science and art, have not been extremely innovative in
>many areas, making decisive contributions to human progress from which the
>West has benefited. And bourgeois society can be just as repressive towards
>innovative behaviour if it does not conform to the logic of markets and the
>profit motive, or even just to bourgeois norms of behaviour. Indeed it can
>ruthlessly exploit innovators and creative people, or place them in
>Faustian-type dillema's, thereby repressing innovation.
>In essence, the process of innovation simply requires freedom for
>experimentation, for doing something different from "normality" or
>tradition. This is I think far more a political, ideological, juridical,
>cultural, and moral question than a question of economics. The economic
>issue concerns more the application and generalisation of inventions,
>ensuring the institutional arrangements which allow inventions to be
>appropriately applied and generalised. Admittedly, the two overlap in
>regard to the question of "moral and material incentives". But if (1) you
>do not accept Stalinism or Maoism etc. as the socialist model for
>innovation, and if (2) you break with the myth that innovative behaviour is
>chiefly caused by capitalist economic behaviour, and if (3) the existence
>of markets does not gurantee freedom for the majority, the field of
>possibility is really wide open. If socialism is about anything, it is
>about the liberation of the creative powers of the working classes. Maybe
>we should be more concerned about lack of innovative thinking among
>socialist economists !
>As the French students said in 1968, "L'imagination au pouvoir" !
Dr. Steve Keen
Senior Lecturer
Economics & Finance
University of Western Sydney Macarthur
Building 11 Room 30,
Goldsmith Avenue, Campbelltown
PO Box 555 Campbelltown NSW 2560
s.keen@uws.edu.au 61 2 4620-3016 Fax 61 2 4626-6683
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Home Page: http://bus.macarthur.uws.edu.au/steve-keen/
Workshop on Economic Dynamcs: http://bus.macarthur.uws.edu.au/WED

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