Price control?

[kelvin]

Previous communist countries were notorious for price control. How does price control fit in with communism? The USA experimented with price control in the 1970s. Due to increasing inflation Presidents experimented with price control, it was called "fine tuning the economy" at the time. The result was instead of increasing inflation, they got explosive inflation.

[redstar2000]

Previous communist countries were notorious for price control. How does price control fit in with communism?

No, those were socialist countries (at least in their own eyes) and their price controls worked quite well, overall.

In communism, there would be no "prices" because there'd be no money and no production of goods and services for sale.

Artifically set prices, under socialism or capitalism, generally lead to enhanced "black market" activity, putting upward pressure on wages and costs (inflation). Under socialism, the correct response is rationing, to make sure that everyone has access to basic necessities at an affordable price. There is rationing under capitalism as well, but it works differently: the wealthy get more than they could possibly use and the poor get nothing.

Some people actually believe this is a "law of nature".

I'm not one of them.

:cool:

[kelvin]

Quote: from redstar2000 on 5:35 am on June 27, 2003
Previous communist countries were notorious for price control. How does price control fit in with communism?

No, those were socialist countries (at least in their own eyes) and their price controls worked quite well, overall.

In communism, there would be no "prices" because there'd be no money and no production of goods and services for sale.

Artifically set prices, under socialism or capitalism, generally lead to enhanced "black market" activity, putting upward pressure on wages and costs (inflation). Under socialism, the correct response is rationing, to make sure that everyone has access to basic necessities at an affordable price. There is rationing under capitalism as well, but it works differently: the wealthy get more than they could possibly use and the poor get nothing.

Some people actually believe this is a "law of nature".

I'm not one of them.

:cool:

Rationing is not a cure for black market activity. The insentive for black market activity is still present with rationing.

You are beginning to outline an extremely regimented economy. Prices are controlled, supplies are rationed, and how about labor? Don't forget wages. They must be controlled too.

Soviets not communist. Then there really has never been a test to see if communist economic theory will work.

Soviet/Socialst price control work? That is debatable. I say no.

http://www.brookesnews.com/031904pricecontrols.html

But Gerard Jackson just is really guessing. The same as you.

In a true communist system without money. Then how do you measure the true economic viability of a factory. A brick factory, brickes go out. Raw materials and labor go in. In a free market the economic viability is measured by net profit. How do you know a communist brick factory is economically viable? What indicator do you use? You have to know, because if another brick factory has a better index, then should both factories be run according to the most efficient way?

[redstar2000]

You are beginning to outline an extremely regimented economy. Prices are controlled, supplies are rationed, and how about labor? Don't forget wages. They must be controlled too.

Yes, by the standards of western capitalist economies, a socialist economy would appear to be "extremely regimented".

So what? The measure of any economy is not how much or how little it is regulated, it is how well does that economy fulfill the basic needs of the entire population. Defenders of capitalism like to argue that capitalism has done a better job than any other system so far--the implication is that we should "stick with a winner". Well, that's true...as long as you avoid looking at the glaring and ever increasing inequalities.

What I would argue is that capitalism has done a remarkably piss-poor job, in light of the wealth it has "created".

When a resource-poor country like Cuba can do a far better job of educating and providing health-care for all of its children than a fabulously wealthy, capitalist nation like the United States...that says something about capitalism--and it's not very flattering.

In a true communist system without money. Then how do you measure the true economic viability of a factory. A brick factory, brickes go out. Raw materials and labor go in. In a free market the economic viability is measured by net profit. How do you know a communist brick factory is economically viable? What indicator do you use? You have to know, because if another brick factory has a better index, then should both factories be run according to the most efficient way?

No, actually you don't have to "know". All you need to know in a communist economy is: are the bricks being used? That's what "production for use" means.

If we have a real shortage of bricks, then someone might look into some possible ways of increasing brick-making efficiency...otherwise, it makes no difference.

For rather complicated reasons (having to do with the labor theory of value), it is in the interests of a capitalist to increase "efficiency"--meaning, essentially, getting more surplus value from the labor of his employees. That motive is irrelevant in a communist society.

For the capitalist, "efficiency" has something of the moral imperative that "salvation" once had in feudal times.

Communism is different.

:cool:

[kelvin]

Quote: from redstar2000 on 12:23 pm on June 27, 2003
You are beginning to outline an extremely regimented economy. Prices are controlled, supplies are rationed, and how about labor? Don't forget wages. They must be controlled too.

Japan is just geographically isolated and resource poor. Janpans economy hums along while Cuba grinds to a halt. Eventough there is a western embargo on Cuba, the embargo did not apply to Soviet Trade Block countries.

Yes, by the standards of western capitalist economies, a socialist economy would appear to be "extremely regimented".

So what? The measure of any economy is not how much or how little it is regulated, it is how well does that economy fulfill the basic needs of the entire population. Defenders of capitalism like to argue that capitalism has done a better job than any other system so far--the implication is that we should "stick with a winner". Well, that's true...as long as you avoid looking at the glaring and ever increasing inequalities.

What I would argue is that capitalism has done a remarkably piss-poor job, in light of the wealth it has "created".

When a resource-poor country like Cuba can do a far better job of educating and providing health-care for all of its children than a fabulously wealthy, capitalist nation like the United States...that says something about capitalism--and it's not very flattering.

In a true communist system without money. Then how do you measure the true economic viability of a factory. A brick factory, brickes go out. Raw materials and labor go in. In a free market the economic viability is measured by net profit. How do you know a communist brick factory is economically viable? What indicator do you use? You have to know, because if another brick factory has a better index, then should both factories be run according to the most efficient way?

No, actually you don't have to "know". All you need to know in a communist economy is: are the bricks being used? That's what "production for use" means.

If we have a real shortage of bricks, then someone might look into some possible ways of increasing brick-making efficiency...otherwise, it makes no difference.

For rather complicated reasons (having to do with the labor theory of value), it is in the interests of a capitalist to increase "efficiency"--meaning, essentially, getting more surplus value from the labor of his employees. That motive is irrelevant in a communist society.

For the capitalist, "efficiency" has something of the moral imperative that "salvation" once had in feudal times.

Communism is different.

:cool:

Actually you have to "know" what is the production cost index of your bricks. If you don't know then you don't know if the house your building is using the most economically efficent material. If brick is too expensive, then why not switch to wood? If you don't know the cost, then you can not measure the economic impact to your entire system.

So you must be able to meaure the cost by some kind of measurement index. If you don't know the index, then you don't know if the house your building is being economically wastefull.

[redstar2000]

So you must be able to meaure the cost by some kind of measurement index. If you don't know the index, then you don't know if the house your building is being economically wastefull.

How can I put this so you can grasp it? Being "economically wasteful" is not a "sin" under communism.

It's a different system with different motivations.

I have to admit that many people in the present day find the whole "mind-set" of communism difficult to come to grips with...rather like a feudal lord being informed that there was really no such thing as "royal blood".

Nevertheless, if Marx was right, then "efficiency" in the capitalist sense of the word will be a trivial consideration in communist society...which will have very different priorities.

Of course, if belief in "royal blood" is really central to your identity and self-esteem...my message will fall on deaf ears.

:cool:

(Edited by redstar2000 at 5:29 pm on June 27, 2003)