Re: [OPE] II-Socialist Cybernetics in Allende’s Chile.

alejandro_agafonow@yahoo.es

Dear Jerry:

The argument of Dickinson was as follows:

«On the other hand, variety and freedom of choice involves the risk that goods may be unsold or saleable only below cost; this is a waste, and waste must be paid for. It is only fair that the social cost of this waste should be borne by those persons on whose behalf it is incurred, that is, by the consumers of categories of goods whose demand is liable to more than average fluctuation. This could be effected by a surcharge depending on the degree of uncertainty involved in the provision of goods or service. Unless uncertainty is taken into account in social costing there will be a tendency to devote too many resources to branches of production where there is only a small chance that the product will be wanted» Dickinson, Henry D. [1939] 1971. Economics of Socialism, New York: Books for Libraries Press (pp. 97)

You are right in pointing out that if we apply this surcharge “would be _more_ likely that there would be unsold (or unexchanged) goods and hence wasted resources”.

However, some goods will be demanded anyway though in a fewer amount. In our criterion, there is always an inevitable waste due to uncertainty that community has to bear. Nevertheless, this “uncertainty surcharge” would make possible to cover at least in part this waste, borne by those minorities with rare preferences.

The surcharge is justified not only because of the uncertainty involved in the risk of producing goods that may be unsold or saleable only below cost, but because diverting resources from the production of more demanded goods, would increase their scarcity and therefore their prices. So the entire community would be penalized.

I have to highlight that this surcharge is only applicable to non-primary goods. Concerning a rare disease, the issue is different since we are dealing with primary goods.

Kind regards,A. Agafonow

----- Mensaje original ----
De: GERALD LEVY <gerald_a_levy@msn.com>
Para: Outline on Political Economy mailing list <ope@lists.csuchico.edu>
Enviado: viernes, 6 de junio, 2008 15:16:23
Asunto: RE: [OPE] II-Socialist Cybernetics in Allende’s Chile.

> However, as Henry D. Dickinson stated, consumers have to be responsible for their venality and if we 
> start the production of a good that in short time will be unsold because consumers changed their minds, 
> we have to charge them with an “uncertainty surcharge”. They have to be responsible for their 
> preferences but we should not forbid in advance certain rare or marginal consumptions.

Hi Alejandro A:

An "uncertainty surcharge" would cause the price (or exchange rate,
in the case of barter) to increase and this would mean that it would 
be _more_ likely that there would be unsold (or unexchanged) goods 
and hence wasted resources.

In solidarity, Jerry

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