[OPE-L:2179] Re: Re: Re: socialism in a single moon?

From: michael a. lebowitz (mlebowit@sfu.ca)
Date: Mon Jan 17 2000 - 03:50:09 EST

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At 01:47 PM 1/17/2000 +1100, Steve wrote:

>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.

        Your examples point to one of the problems because they were cases of
extensive development and the issue here is one of intensive development.
The innovation decision in fact was institutionalised in this way---
centred in research institutes. The problem, though, was getting those
potential innovations introduced in individual productive units (i.e., made
real). What existing firm would want to accept the honour of introducing
the innovation when bonuses/premia were primarily tied to making the annual
output targets (which could be negatively affected by new methods)?
According to Joseph Berliner in his book on the innovation decision, the
problem was that the bonus/premium reward associated with accepting
innovations generally was too low with the result that firms avoided these;
in contrast, where the bonuses set were high, they competed to introduce
specific innovations. The problem comes back to the existence of an
administrative mechanism which treated achievement of annual production
targets as the highest priority--- an administrative mechanism whose
relation to socialism is rather elusive.

>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.

        Kornai did contend in his early works (eg., Economics of Shortage) that
such phenomena flowed simply from a shortage economy (and that the
socialist economy inherently is a shortage economy). However, his argument
(and this interpretation) is, IMO completely undermined by his own
subsequent work, The Socialist System, which roots all tendencies of the
system in the "genetic program" given by the Marxist-Leninist Party in
power. He argues, in fact, that he had not changed his position but was now
(ie., after 1989) able to explore the deep roots of the tendencies he had
previously identified.

>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.

        At one point, he would have; however, he shifted significantly from the
50s through the 90s.

        in solidarity,

Michael A. Lebowitz
Economics Department
Simon Fraser University
Burnaby, B.C., Canada V5A 1S6
Office: Phone (604) 291-4669
        Fax (604) 291-5944
Home: Phone (604) 872-0494
        Fax (604) 872-0485
Lasqueti Island: (250) 333-8810

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