Re: [OPE] market socialism

wrighti@acm.org

> 
>     What you call "mild inequalities" was anything but "mild" in many
> 
>     of the countries which adopted market socialist models. In the former
> 
>     Yugoslavia, for instance, some firms paid skilled workers twenty times
> 
>     the salary of unskilled workers! (By contrast, the ratio in the former
> 
>     USSR was about 3.5 to 1). In 1981 the top 10% of income earners received
> 
>     23% of all income. This compares to the top 10% earning 27% of all
> 
>     income ... in the USA! 
> 
>      
> 
>     The chickens of market socialism really came home to roost in Yugoslavia
> 
>     in other ways.  
> 
>      
> 
>     For example:
> 
>      
> 
>     - increasing inflation rates (1.5% from 1956-1964; 10.4% from 1965-1970;
> 
>     14-5% from 1976-1980). Note the trend!
> 
>      

The capital of the worker-controlled firm in Yugoslavia was social
property. So there was no incentive for the members of the firm to
invest in capital rather than wage payments (it might be ok for young
workers, but the investment would penalize the older workers).

So the property relations generated an incentive structure in which
firms were motivated to finance investment with external debt and
distribute net earnings in the form of wages and bonuses.

According to David Ellerman, the reason inflation increased was: (i)
high wages and bonuses increased consumer demand beyond capacity, and
(ii) the demand for loans to finance capital investment pushed up the
money supply.

> 
>     - increasing unemployment rates (5.5%  in 1960-65; 7.5% in 65-76; 12%
> 
>     from 1977 to 1980). Note trend!
> 
>      
> 
>     The question that was asked at the time by many socialists was "is this
> 
>     socialism?". What kind of "socialism" has the business cycle,
>     unemployment,
> 
>     inflation, large income inequalities, etc.? 
> 

Whatever the ins-and-outs of the Yugoslavian experiment
one thing is clear: how an economy performs is crucially dependent on
the constitutional structure (including the property rights and
decision-making mechanisms) of the firms that comprise it.

If "pro-detailed-planning socialists" can learn from the history of
socialist planning experiments then of course "anti-detailed-planning
socialists" can learn from the history of socialist market experiments.
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