[OPE-L] A class dimension of aggregate demand

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Wed Dec 07 2005 - 12:28:31 EST


you asked:

Granted, this does not capture all of complexities associated with spending,
but is it misleading to use it to represent a "stylized" set of

Whether or not it is misleading, depends on your purpose of analysis and
what you intend to describe by it, I guess. Perhaps you could include also
imports (some of which is for re-export). Point is really that in socialist
economics one ought to distinguish between the incomes and demand of social
classes, and by functional category of expenditure. What CAN be misleading
is the way the NIPAs or UNSNA present this type of information, because:

(1) the accounting system is oriented to the concept of value added and
physical capital assets, and therefore, a whole set of expenditures is
typically excluded from consideration,
(2) the accounts do not differentiate expenditures in class terms or - with
some exceptions - in terms of economic function,
(3) the role of credit money is not well presented in the accounts.

I wrote a post about this in response to Rakesh but I'm not sure you
published it.

You asked:

A side-note:  I wonder about your categorization re "eco-destructive

Well I was being a bit provocative. But, yes, some goods seem to be simply
eco-destructive, and probably ought not to be produced at all, because there
are better alternatives.

The distinction between "demand in general" (a potential demand) and
"monetarily effective demand" is basic to socialist economics. Just because
people don't have the cash, doesn't mean they don't have (unmet) needs.
There is a demand allright, but not a monetarily effective demand.  The
dictatorship of markets asserts itself precisely when people have real and
legitimate needs which cannot be met, because to satisfy them requires money
people do not have. Markets are fine, if they permit people to organise the
satisfaction of their own needs in a reasonable way, on own initiative, but
they're a pest, if basic needs cannot be met because of them, and when a
direct or legal allocation or resources would be much better.

The basic critique of unregulated markets is that, ceteris paribus, they
favour the strong against the weak (a power relationship), thus
exascerbating socio-economic inequality. The exceptions to this rule are
few, there are some, but they are few. I don't think we can do without
markets in this juncture of history, but what is possible is to assert some
control over the "rules of the game" so that we prevent a grotesque
maldistribution of incomes, products and assets. In socialist economics,
markets are one instrument for resource allocation, among others, to be
applied according to criteria of efficiency/effectiveness, freedom and
social justice.

The point of departure of socialist economics is I think really that there
is no ownership form which is *intrinsically* good or bad, or
*intrinsically* better/worse than any other. The question is, which
ownership forms can best satisfy social needs in a specific situation, given
certain priorities which a population has. If, in a socialist economy, the
government has a mandate from the majority, it can flexibly experiment with
those ownership forms which, on the whole, work best to satisfy human needs.
Admittedly, this makes resource allocation directly political, and
responsive to the interests of social classes, but much the same happens in
a capitalist economy anyway, without formal acknowledgement that this is the
case. As Lewis Caroll quipped, "the question is who is master, that is all".



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