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Why shouldn't a socialist economy establish by democratic political
processes a social welfare function expressing its social priorities, and
find and use the shadow prices that arise from maximizing this welfare
function subject to resource availability constraints to allocate
resources? In general these won't be proportional to embodied labor
coefficients, especially if the social welfare function puts some weight on
the consumption of future generations (which I suppose a socialist society
>> If it is true that prices in capitalist economies are closely correlated
>> with embodied labor coefficients, why is this an argument that a socialist
>> economy with centralized allocation of resources should use embodied labor
>> coefficients in planning?
>It is not directly, but the context here was an argument against Samuelson
>who argued that socialist economies should use 'bourgeois prices',
>prices of production.
>My point is that whilst there might be some abstract justification for this,
>constructs one in terms of growth of population relative to productivity,
>outweighed by the desirability of getting rid of commodity fetishism.
>Calculation in terms of labour values makes the social relations between the
>producers transparent and un-mystified. As such it creates a massive
>ideological pressure towards equality of rates of pay. Retention of monetary
>calculation obfuscates this and makes it easier to justify what are
>essentially class differentials in incomes.
>Against this it may be argued that calculation in terms of direct labour
>is potentially less economically efficient. What I was concerned to argue in
>last post was that if such inefficiencies do exist, then they must exist in
>economies as well, and as such not constitute an argument against
Duncan K. Foley
Department of Economics
New School University
65 Fifth Avenue
New York, NY 10003
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