Re: [OPE-L] Non equilibrium

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sat Apr 21 2007 - 11:01:32 EDT

>We -market socialists- think market economies 
>have proved the possibility to keep the 
>Entrepreneurship alertness even in absence of 
>privet property, due to the principal-agent 
>relations embedded in the stockholders forms of 
>management organization. Keiretsu's are groups 
>of firms associated with a main bank that 
>monitors their management and assigns loans. The 
>criterion to do this is the same used in western 
>form of capitalism or the 2th post-war USSR: 
>profitability. A high degree of market 
>concentration and large scale production like 
>Keiretsu's or Microsoft has not makes us think 
>in the absence of competition. We just have to 
>guarantee that non-market entry barriers impede 
>I send you herewith a paper that considers the 
>Keiretsu case in the light of market socialism: 
>John Roemer, "The Morality and Efficiency of 
>Market Socialism", Ethic, Vol. 102, Nš 3, (Apr. 

On this paper I think Tom Mayer writes in his 
book  Analytical Marxism (sage) , "The nature of 
govt intervention represents  Roemer's  most 
original contribution to the  theory of market 
socialism. By simply regulating the
interest rates at which firms borrow money, govt 
planners can, as Roemer and his colleagues show, 
achieve virtually any technically feasible 
composition of investment..Such regulation of 
interest rates is a nonintrusive but effective 
form of central planning. Neither  output nor 
prices not the distribution of labor is centrally 
planned--only the
composition of investment. Investment planning is 
not the arbitrary imposition of a govt 
bureaucracy: the broad features of investment are 
decided by democratic political processes. Roemer 
considers political determination of investment 
necessary to avoid possible market failures.
For example, equilibrium investment levels often 
fall below the social optimum." p. 273

One wonders though whether the political 
manipulation of interest rates or even the money 
supply is enough to achieve the "social optimum".


This archive was generated by hypermail 2.1.5 : Mon Apr 30 2007 - 00:00:17 EDT