Market Socialist Economy

[RedKnight]

I've read this lecture given by FUWA Tetsuzo,
Japanese Communist Party Central Committee Chair, in defense of the market based policies of the "New Economic Policy". http://www.jcp.or.jp/english/jps_weekly/2002-0827-fuwa.html I myself support the idea of "market socialism" http://en.wikipedia.org/wiki/Market_socialism. And I also think that it would have been better if Nikolai Bukarin, and the "Right Opposition"http://en.wikipedia.org/wiki/International_Communist_Opposition had gained power in the Soviet Union. So I feel that the market isn't the problem, but capitalism is. I do not feel that this is contradictory. But what do the rest of you think?

[Hyacinth]

Contrary to what the Wikipedia article says, re: market socialism being abandoned in the USSR after the NEP, “market socialism”, i.e. state capitalism, was still in use throughout the existence of the Soviet Union. GOSPLAN, for instance, actually used concepts like shadow prices (but draped in Marxist-Leninist rhetoric) during their planning process.

The reason for this is that before recent times we simply lacked the a) sufficient data processing capability, and b) sufficient data gathering capability to actually properly plan an economy. Oscar Lange, the ‘father’ of “market socialism” deserves to be given some credit in that he recognized, in response to the socialist calculation debate, that the only means by which (at the time) planners could effectively plan an economy was with the use of the price system and market mechanisms.

The difference between the NEP and the five-year plans wasn’t that one was centrally planned and the other market socialist; the NEP allowed for the existence of ordinary capitalism in the context of the overall Soviet economy, whereas Stalin’s economic policy fully implemented state capitalism in the USSR.

Now, all that having been said, the issue with ‘market socialism’, or for that matter any system which relies upon market mechanisms and the price system, is that it is simply outdated. We have overcome the technical problems facing socialist planners: namely, through the advent and advancement in computers we now process the sufficient data gathering and processing capacity to properly plan an economy without recourse to market mechanisms. You should take a look at Cockshott and Cottrell Towards a New Socialism (http://ricardo.ecn.wfu.edu/%7Ecottrell/socialism_book/), as well as Project Cubersyn (http://en.wikipedia.org/wiki/Project_Cybersyn), an early Chilean effort under Allende, to get an idea of what socialist planning would look like.

Or, for that matter, take a look at the world’s most successful planned economy: Wal-mart. They pioneered barcodes, and uses this technology to keep track of all the stock in its stores, but goes even further, they have rather complex computer models which model consumer behaviour so that they can predict it and in turn use it to maximize profits. The technology to effect planning not only exists, but is used by large corporations to maximize their profits in the context of a market system.

[pusher robot]

Or, for that matter, take a look at the world’s most successful planned economy: Wal-mart.

Wal-mart is not a planned economy. It is a planned enterprise that simply could not exist without the free market. They would be unable to efficiently allocate anything without prices.

[Hyacinth]

Wal-mart is not a planned economy. It is a planned enterprise that simply could not exist without the free market. They would be unable to efficiently allocate anything without prices.Given that they operate in the context of a market economy, of course not. My point is simply that the computational tools necessary to model complex economic system both exist and are already in use. There is no technical reason why said tools couldn’t be adapted to a planned economy without recourse to the price system, instead using something like labour-time+direct material accounting, or else energy accounting.

[Kwisatz Haderach]

Wal-mart is not a planned economy. It is a planned enterprise that simply could not exist without the free market. They would be unable to efficiently allocate anything without prices.
Right, Wal-mart responds to price signals, but those signals are external. The point is that the internal organization of Wal-mart, which is planned, is capable of very efficiently responding to those external signals. Presumably it could respond just as efficiently to any signals, market or not. So we have established that firms (or state departments or whatever you want to call them) can be just as efficient in a planned economy as in a market economy.

That's a significant thing to have established, though of course there is still the matter of price signals to deal with.

[Hyacinth]

That's a significant thing to have established, though of course there is still the matter of price signals to deal with.
Indeed, especially considering that Wal-mart as an economic entity is larger than most countries.

Interestingly enough I think Wal-mart itself, in its use of barcode technology in order to keep track of purchases and stock, also shows how it could be done in a planned economy without recourse to price signals. Price signals send suppliers an indication of the demand of their product, according to which they can adjust production and supply. But if you were to keep track, in real time, of all the economic activity in a country (which is feasible with things like the internet, and barcodes; Wal-mart already effectively does this, only with their stores of course) you would no longer need to look to prices in order to determine demand, and hence produce an appropriate supply. You would be aware of all the consumption immediately, and could adjust for it in turn, in fact, more effectively than a market system ever can, on account of the fact that there are delays in the price system (prices don’t adjust immediately to correspond to demand).

[Die Neue Zeit]

In my IT course, I learned that some supplier-customer relationships are intimate enough such that the customer can monitor IN REAL TIME the inventory levels of the supplier!

There's a whole load of BUSINESS stuff that economists are so ignorant of that validates the labour theory of value (value-added chain; cost-volume-profit analysis; cost-plus pricing; activity-based costing, pricing, and management; etc.). :)

[Schrödinger's Cat]

What is meant by "market socialism," exactly? As the Wikipedia article points out, you can either mean the Chinese model or Proudhon individualist socialism?

[Schrödinger's Cat]

Big corporations and firms are in some ways more harmful than good - they lose productivity with management. The only good comes from investment in big and costly projects - which would require small businesses teaming up (unlikely in a market economy). Corporations are so plentiful and productive because they enjoy subsidizing and protection. It's the defining factor of capitalism, but the system's apologists are either willfully ignorant, or enjoying the fruits. ;)

Classical liberalism is closer to classical socialism than it is contemporary libertarianism.

[Hyacinth]

What is meant by "market socialism," exactly? As the Wikipedia article points out, you can either mean the Chinese model or Proudhon individualist socialism?
I can't speak for everyone here but I'm specifically referring to the Lange Model (http://en.wikipedia.org/wiki/Lange_Model). Not to Proudhon's mutualism, nor to "socialism with a Chinese character", i.e. capitalism.

[pusher robot]

Indeed, especially considering that Wal-mart as an economic entity is larger than most countries.

Interestingly enough I think Wal-mart itself, in its use of barcode technology in order to keep track of purchases and stock, also shows how it could be done in a planned economy without recourse to price signals. Price signals send suppliers an indication of the demand of their product, according to which they can adjust production and supply. But if you were to keep track, in real time, of all the economic activity in a country (which is feasible with things like the internet, and barcodes; Wal-mart already effectively does this, only with their stores of course) you would no longer need to look to prices in order to determine demand, and hence produce an appropriate supply. You would be aware of all the consumption immediately, and could adjust for it in turn, in fact, more effectively than a market system ever can, on account of the fact that there are delays in the price system (prices don’t adjust immediately to correspond to demand).

But prices are not one-way signals; they also signal to the consumer the feasibility of their demands given the constraints of supply. If you eliminate prices your barcode tracking systems will simply record every product flying off the shelves as people satsify even the smallest of demands without regards to the cost. With price=0, demand rises to near infinity.

[Kwisatz Haderach]

But prices are not one-way signals; they also signal to the consumer the feasibility of their demands given the constraints of supply. If you eliminate prices your barcode tracking systems will simply record every product flying off the shelves as people satsify even the smallest of demands without regards to the cost. With price=0, demand rises to near infinity.
Who said anything about eliminating prices? That would only be feasible for goods that are no longer scarce. If something is scarce, it has to be rationed in some way, which means that people would only be able to purchase it in exchange for some form of currency, or voucher, or coupon, or, in general, something to prove they have a right to purchase the item.

We were talking about eliminating the market mechanism for determining prices, and replacing currency with a different rationing system. We were not talking about handing out unlimited free stuff.

[Hyacinth]

But prices are not one-way signals; they also signal to the consumer the feasibility of their demands given the constraints of supply. If you eliminate prices your barcode tracking systems will simply record every product flying off the shelves as people satsify even the smallest of demands without regards to the cost. With price=0, demand rises to near infinity.
You say that as though it would be a bad thing. :lol:

Regardless, even if people hypothetically wanted to consume infinite goods and services it is physically impossible for them to do so. After all, there are only so many goods I could possibly load in my cart to take home. Not to mention wants are also physically restrained: there is only so much television that I can watch, so much food that I can eat (without getting sick, and even if I were to stuff myself, my stomach puts a limit on how much I can fit in), so much travel I can do, etc. Given these limits on consumption it is possible to produce an abundance of goods and services for people to consume. And under conditions of abundance there is no need to ration products via a price system or any other credit scheme.

The market mechanism in place actually produces artificial scarcity, inasmuch as not all of the goods produced for sale on the market end up being consumed (as well as other mechanisms such as planned obsolescence). You might dispute this point, but for many goods it is the case that we already possess the technical means to create abundance (data being the most prominent, and incontestable, example, though I would argue that the same applies for other goods like food).

Lastly, let us grant you scarcity, for the sake of argument. I don’t think anyone here is proposing that we do away with a credit system of some sort in order to ration scarce goods. Replacing the market system and price mechanism with other forms of accounting (e.g. energy credits, labour-time, direct material, etc.) permits for the creation of a currency based on those accounting methods. The difference, of course, being that workers would be compensated fully for their inputs into the system with, for instance, labour-time vouchers. So there would still be a cost to consumers by which they would be able to prioritize their needs and wants.

[pusher robot]

Who said anything about eliminating prices?

Well, I guess that's what I thought this language was talking about:

But if you were to keep track, in real time, of all the economic activity in a country (which is feasible with things like the internet, and barcodes; Wal-mart already effectively does this, only with their stores of course) you would no longer need to look to prices in order to determine demand, and hence produce an appropriate supply.

Are you saying we'd still have prices, we just wouldn't look at them? Why would we ignore potentially useful information?

[pusher robot]

So there would still be a cost to consumers by which they would be able to prioritize their needs and wants.

Well, then, you still have prices, you still have a market. It just doesn't use dollars as a currency.

[Hyacinth]

Well, then, you still have prices, you still have a market. It just doesn't use dollars as a currency.
Only in the loosest sense of the term ‘market’, where we take it merely any structure that allows for the exchange of goods and services between consumers and producers. As for a price system, I misspoke; yes a credit scheme is a price system, the difference being that the prices would not be set by free market mechanisms.

[Hyacinth]

Are you saying we'd still have prices, we just wouldn't look at them? Why would we ignore potentially useful information?
I intended to contrast a planned economy with a market economy, stating that a planned economy could have access to consumer demand information directly rather than having to rely on price signals (as does the free market system). If, even in the context of a planned economy, the fixed prices set for goods somehow provide relevant information to planners, then by all means take them into account. I did not mean to suggest that it is irrelevant.

[Die Neue Zeit]

I don't think pusher robot understands his defense of CAPITAL (and capital accumulation / M-C-M) here. Labour credit, as you said, comrade, is a pricing system.

[pusher robot]

Labour credit, as you said, comrade, is a pricing system.


Yes, I said that. Do you understand that I am not talking about capital at all in this thread, that I'm talking about markets?

[Kwisatz Haderach]

Yes, I said that. Do you understand that I am not talking about capital at all in this thread, that I'm talking about markets?
Hmmm, define "markets."

[Schrödinger's Cat]

If you want to break down the word into microscopic lessons, a gift economy can constitute a market to some people. In that case, I'm all for markets. [But then again, piracy is a no-no by most market enthusiasts. Copyright protections act as a "silent" agreement by the producer. I don't get how capitalists attack copyright laws when it's just another contract between producer and consumer, but hey - capitalist apologists aren't keen on making sense - see land acquisition]:thumbup1:

[Hyacinth]

I also fail to see the relevance of what the existence of a market, in some sense of the term, has anything to do with the viability of planned economies.

[Publius]

But prices are not one-way signals; they also signal to the consumer the feasibility of their demands given the constraints of supply. If you eliminate prices your barcode tracking systems will simply record every product flying off the shelves as people satsify even the smallest of demands without regards to the cost. With price=0, demand rises to near infinity.

Unless you institute some non-monetary form of cost, or some form of cost not like what's used today.

For example, if an economy provided for everyone's bare necessities, to some reasonable limit or another, and then allowed people a certain amount of income above that to spend on what they liked, then none would be in a position to just buy whatever they wanted.

They'd still be limited in how much they could take, but they wouldn't be limited so as to suffer starvation or homelessness, etc.

There could even be variation among incomes -- not everyone would have to be equal. Rawls, I think, makes this point effectively, that if allowing some to have more ends up benefiting the poor more than brute equality, then it should be preferred. For example, paying doctors more seems perfectly sensible to me due to the expertise and time investment being a doctor requires.

In a lot of ways this would function like the current system -- it's essentially a market system, after all -- but in other ways it'd be different.

There'd still be signals to respond to for purposes of leisure items, and for necessary goods, simple tabulation of what people generally require should suffice, ignoring special cases, for which we can assume a mechanism for.

To get an equitble system of wealth distribution you don't necessarily need to destroy the price system entirely, I think.

Of course most people on here would disagree, but I'd argue that they disagree for ideological, not pragmatic reasons.

[Bud Struggle]

Of course most people on here would disagree, but I'd argue that they disagree for ideological, not pragmatic reasons.

I'd argue that NOTHING'S GOING TO CHANGE. Nothing. This is the way it is--to even for a second to think otherwise is just dreaming--not just wishful thinking for the future--but "Santa Claus is going to come down the chimmney and bring me a new bike" DREAMING.

Otherwise this thread is Spot On. :)

[Hyacinth]

To get an equitble system of wealth distribution you don't necessarily need to destroy the price system entirely, I think.

Of course most people on here would disagree, but I'd argue that they disagree for ideological, not pragmatic reasons.
Indeed not, nor do I think that people here were arguing that (except under a gift economy, where any price system would be pointless since a gift economy functions under a condition of abundance). Moreover, we were mostly talking about a socialist economy, which, despite the claims to the contrary, doesn’t imply an equal distribution of income or of goods. The principle of “from each according to their ability, to each according to their needs” is one that is suppose to function under a communist gift economy, not under socialism, where people would still receive returns according to their contributions. So if doctors were judged to contribute more, or due to pragmatic economic considerations it was deemed beneficial to give them more, then they would receive more.

[Hyacinth]

I'd argue that NOTHING'S GOING TO CHANGE. Nothing. This is the way it is--to even for a second to think otherwise is just dreaming--not just wishful thinking for the future--but "Santa Claus is going to come down the chimmney and bring me a new bike" DREAMING.

Otherwise this thread is Spot On. :)
Human society is not so static as to permit for no change, if that were the case we’d still be living in the Stone Age. Progress, contrary to all the naysayers, has been made, and continues to be made; both economic and technological progress, as well as social progress. What you’ve just said there has often been repeated, I’m sure, throughout history: before the French Revolution, before the abolition of slavery, etc. The conservative view that things cannot, and will not, be changed has been proven wrong time and time again.

[Die Neue Zeit]

Hmmm, define "markets."

^^^ The thing that distinguishes capitalism from previous systems is the presence of both labour and capital "commodity" markets.

[Publius]

I'd argue that NOTHING'S GOING TO CHANGE. Nothing. This is the way it is--to even for a second to think otherwise is just dreaming--not just wishful thinking for the future--but "Santa Claus is going to come down the chimmney and bring me a new bike" DREAMING.

Otherwise this thread is Spot On. :)

What is dreaming? That you could run an economy on the principles I just outlined?

It'd be trivial to organize. Now would it work... that's a different question, but it's not like what I outlined was some pie-in-the-sky nonsense like a gift economy, it's just a more equitable market economy.

And your argument that NOTHING'S GOING TO CHANGE is really a pretty stupid argument. If you want to talk generalities, how about betting that everything is going to change, sooner or later, and none of us have any idea how. That seems like the fairer bet to me.

I'm sure the average pragmatic Roman thought his social order was about all man could be expected to achieve, and he was right, for a time.

What's insane about providing people basic necessities and denying them luxuries unless they work?

Everyone, for free, gets housing, food, enough to live on, etc. but no income in the way of luxury goods. Sure, I guess people COULD freeload and do nothing all day, but I can't imagine they'd enjoy it, since they have no tv, no money to buy or do anything they want, etc. when getting that money would be trivially easy as everyone would be provided with labor, should they want it.

Maybe you think they'd just resort to theft or something, which is something I assume is a problem in any society, but fiscal equality and equality of opportunity are two things known to reduce crime, not engender it.

Look at America's crime rate vs. Europe's, and then compare the social welfare systems.

So yes, my ideas might be wrong, but they're not obviously wrong, as you seem to suppose, probably because you haven't thought them through.

[Publius]

Indeed not, nor do I think that people here were arguing that (except under a gift economy, where any price system would be pointless since a gift economy functions under a condition of abundance). Moreover, we were mostly talking about a socialist economy, which, despite the claims to the contrary, doesn’t imply an equal distribution of income or of goods. The principle of “from each according to their ability, to each according to their needs” is one that is suppose to function under a communist gift economy, not under socialism, where people would still receive returns according to their contributions. So if doctors were judged to contribute more, or due to pragmatic economic considerations it was deemed beneficial to give them more, then they would receive more.

It seems that we agree, but I hear talk from a lot of doctrinaire communists and anarchists that any sort of price system is no good and that any sort of income disparity is unjust.

[Die Neue Zeit]

^^^ So why do you continue to defend CAPITAL and the means to accumulate it, as if it were eternally bound to price systems? [At least consider Hyacinth's talk about labour credit as a replacement for "money." :) ]

[Demogorgon]

I'd argue that NOTHING'S GOING TO CHANGE. Nothing. This is the way it is--to even for a second to think otherwise is just dreaming--not just wishful thinking for the future--but "Santa Claus is going to come down the chimmney and bring me a new bike" DREAMING.

Otherwise this thread is Spot On. :)

Nah, nothing ever stays constant in life. I mean in the last twenty years the entire Eastern Block has come down; China and India have become world players, Apartheid has ended in South Africa, a new Socialist movement has emerged in Latin America and goodness knows what else. Nobody can predict the future, but one thing is for sure and that is that there will be change.


The thing that distinguishes capitalism from previous systems is the presence of both labour and capital "commodity" markets.Indeed. There are essentially three type of market. Markets in Goods and Services, Capital and Labour. THe last two are necessarily exploitative for reasons I hardly need to point out. The first one is only exploitative depending on how the rest of the economy works. A socialist economy that awarded each person spending power in proportion to their Labour (with allowances for those who can't work of course) could have a fair market in Goods and Services so long as it abolished markets in capital and Labour.

[Bud Struggle]

What is dreaming? That you could run an economy on the principles I just outlined?

It'd be trivial to organize. Now would it work... that's a different question, but it's not like what I outlined was some pie-in-the-sky nonsense like a gift economy, it's just a more equitable market economy.

And your argument that NOTHING'S GOING TO CHANGE is really a pretty stupid argument. If you want to talk generalities, how about betting that everything is going to change, sooner or later, and none of us have any idea how. That seems like the fairer bet to me.

I'm sure the average pragmatic Roman thought his social order was about all man could be expected to achieve, and he was right, for a time.

What's insane about providing people basic necessities and denying them luxuries unless they work?

Everyone, for free, gets housing, food, enough to live on, etc. but no income in the way of luxury goods. Sure, I guess people COULD freeload and do nothing all day, but I can't imagine they'd enjoy it, since they have no tv, no money to buy or do anything they want, etc. when getting that money would be trivially easy as everyone would be provided with labor, should they want it.

Maybe you think they'd just resort to theft or something, which is something I assume is a problem in any society, but fiscal equality and equality of opportunity are two things known to reduce crime, not engender it.

Look at America's crime rate vs. Europe's, and then compare the social welfare systems.

So yes, my ideas might be wrong, but they're not obviously wrong, as you seem to suppose, probably because you haven't thought them through.

Well, to be hones we have subsistance welfare that keeps people from starving here in the United States--and it works pretty horrendously, but it does work, and people don't starve to death. We put people on welfare up in rather undesireable housing and let them live there, too. Pretty awfully to be sure--but they have a place to live....is that what you are talking about?

Who in the right mind would want to live like that?

All you have to do is to drive up to the projects in Harlem or the Bronx or whereever--and you'll see what that sort of lifestyle looks like. Double, tripple the amount of money you give these people--I doubt it would make much difference--as long as people don't EARN what they have it isn't important to them. Yes we have to do those things out of compassion--but in essence, they really don't work.

And the reason I said that nothing's going to change is because that's human nature--collective farms didn't work in the SU for that reason.

As far as Rome goes--you know, we really don't have a much different social order than they had in Rome or anywhere else for most of history, there are the rich and the poor--there were different names for the rich--Particians, Nobles, Aristocrats, Borgeoise--but they were all essentially the same thing. Same with the Plebs, etc.

I just don't see anything changing. Hey, I could be wrong--and maybe I'm being too fatalistic--but people would have to change A LOT of the way they think and behave for your plan to work.

[Die Neue Zeit]

^^^ Speaking of subsistence welfare, why not apply a similar principle to means of exchange (thereby eliminating capital accumulation)? All the technology is here (debit cards, credit cards, supercomputers, etc.), resolving the "socialist calculation debate." Or are you so wedded to your small capital? :rolleyes:


And the reason I said that nothing's going to change is because that's human nature--collective farms didn't work in the SU for that reason.

Yes, as if there was only one type of "collective farm" - the kolkhoz (whose legal owners, BTW, were in the same class as you are today :p ). :rolleyes:


Indeed. There are essentially three type of market: markets in Goods and Services, Capital, and Labour. The last two are necessarily exploitative for reasons I hardly need to point out. The first one is only exploitative depending on how the rest of the economy works. A socialist economy that awarded each person spending power in proportion to their Labour (with allowances for those who can't work of course) could have a fair market in Goods and Services so long as it abolished markets in Capital and Labour.

Since you personally spend more time in OI than in other fora, I'd like to point this to you:

http://www.ecn.wfu.edu/~cottrell/socialism_book/

[Demogorgon]

Since you personally spend more time in OI than in other fora, I'd like to point this to you:

http://www.ecn.wfu.edu/~cottrell/socialism_book/
Ha ha! I know Paul Cockshott slightly

[pusher robot]

Unless you institute some non-monetary form of cost, or some form of cost not like what's used today.

For example, if an economy provided for everyone's bare necessities, to some reasonable limit or another, and then allowed people a certain amount of income above that to spend on what they liked, then none would be in a position to just buy whatever they wanted.

They would if price=0. Right? If they have even $1 of extra income to spend on what they liked, that $1 buys an infinite amount of goods priced at $0. That was my point, and the reason I think prices are necessary.


To get an equitble system of wealth distribution you don't necessarily need to destroy the price system entirely, I think.

Of course most people on here would disagree, but I'd argue that they disagree for ideological, not pragmatic reasons.

You would have to destroy the price system for labor. That's a pragmatic consideration. "Goods" are not the only thing bought and sold at market.

[Demogorgon]

The trouble with presuming that demand will be near infinite when the marginal cost for procuring any given good is zero is that it doesn't bare out. There are lots of things with a marginal cost of zero that we only use in moderation. In this country it includes education, healthcare, public transport for the over-65s (and for everybody under certain circumstances) and so forth. None of these goods have anything like infinite demand, nor is there any real problem allocating them despite the consumer paying no price.

Publius's suggestion that some things be provided for free and other things be provided at a price is just a variation on what happens now. Saying that it wouldn't work is a bit silly.

[pusher robot]

Publius's suggestion that some things be provided for free and other things be provided at a price is just a variation on what happens now. Saying that it wouldn't work is a bit silly.

I wasn't really arguing with Publius, I was pointing out that his argument was orthogonal to mine.


There are lots of things with a marginal cost of zero that we only use in moderation. In this country it includes education, healthcare, public transport for the over-65s (and for everybody under certain circumstances) and so forth. None of these goods have anything like infinite demand

They don't? So you're saying that if you went to a senior citizen and asked whether they would like a bus stop closer to their house, they'd say no? You're saying that if you asked most people if they would like some more education, they'd turn it down? Nobody at all would like to see better service or more research results in the provision of their own health care?

Or are you really conceding that demand is near infinite but supply is arbitrarily constricted to where politicians have decided people seem to have "enough?"

[Demogorgon]

They don't? So you're saying that if you went to a senior citizen and asked whether they would like a bus stop closer to their house, they'd say no? You're saying that if you asked most people if they would like some more education, they'd turn it down? Nobody at all would like to see better service or more research results in the provision of their own health care?

Or are you really conceding that demand is near infinite but supply is arbitrarily constricted to where politicians have decided people seem to have "enough?"
Sure people are always going to want better services. However the existence of a price system is not as crucial to determining that as you are making out. Over-65s would like bus stops closer to their houses, I am sure, but so would I and I do pay for the service! The fact I pay does not make my demand for that show up any more than it might otherwise.

To stick with the public transport example, should the demand for it be near infinite at zero-price then it would stand to reason that the demand for it amongst the over-65s would far outstrip supply, but it quiet blatantly does not. It isn't like the heavily subsidised Soviet stores where people wanted far more goods than there were goods available. The buses are usually half empty.

To continue with public transport, you can't accurately measure demand for it with a price system anyway. So many people cheat and dodge the fairs that the transport companies don't even try and track demand that way. Further those that do pay by and large do so by purchasing general passes that let you go anywhere within a certain zone by any route for a given period of time making it impossible to track which routes are most in demand. Rather the companies find out what services people want through asking people to fill out questionnaires. Now I am sure I don't have to point out how inaccurate data drawn from a self selecting sample of people who are bored enough on the train to actually fill the form out can be, so the fact that the transport companies still rather use that than trying to rely on their price system says a lot. Transport fairs are simply there to bring in revenue to supplement whatever the Government gives in subsidies. It cannot be used to track demand.

Now obviously transport is just one example, I am not saying that this will hold true in any other given market, though there are certainly other similar ones, however it does show that at least in some situations a price system is not a suitable means to allocate resources efficiently.

[Publius]

Well, to be hones we have subsistance welfare that keeps people from starving here in the United States--and it works pretty horrendously, but it does work, and people don't starve to death.

Yes.

What I propose is quite a bit larger than this -- everyone in the society would get it -- but is the same in principle.

So it obviously CAN work.

And it's just a fact that our country's welfare system sucks compared to the systems in other countries, which suck compared to what I propose.



We put people on welfare up in rather undesireable housing and let them live there, too. Pretty awfully to be sure--but they have a place to live....is that what you are talking about?

No. I'm talking that everyone in society would be provided housing and food and basic necessary amenities, effectively taking those items out of the market.

Give everyone (not just the poor) housing units (although most non-poor people already have housing, so you wouldn't actually need to do this), give everyone a basic allotment of food, basic household necessities, etc.

These allotments don't need to be bad. In fact, they shouldn't be. But I can't imagine that anyone would be happy to live with JUST the bare essentials, because getting luxury items would be contingent upon actual work, which could again be provided by the government, say, building houses or working in food plants, light bulb plants, etc.



Who in the right mind would want to live like that?

None.

Which is exactly why none, or almost none, in my proposed society would try to 'cheat the system' by taking the free house and food and doing nothing.

Because even though they'd have perfectly adequate housing (not like Section 8 slums you see today) and adequate food (not food stamps) they still would have no TV, no internet, no radio, no luxury goods, no fancy food.

They wouldn't be paupers, but it wouldn't be especially enjoyable.

To get those goods, you'd have to do essentially what you do now: work for disposable income.

It's called DISPOSABLE income for a reason. It can be disposed of without you dying or suffering any great distress.

But on the other hand it's not like society will stupidly provide you with every amenity in the blithe hope that you'll work. If you want thing's nicer than the bare minimum, you'll have to do something, which won't be hard as the government will have all sorts of jobs for you to do, building the houses it gives away and providing the goods it gives away.



All you have to do is to drive up to the projects in Harlem or the Bronx or whereever--and you'll see what that sort of lifestyle looks like. Double, tripple the amount of money you give these people--I doubt it would make much difference--as long as people don't EARN what they have it isn't important to them. Yes we have to do those things out of compassion--but in essence, they really don't work.

Exactly.

Which is why any system of restribution has to put in some coercion to work.

I would make it just mandatory that you have to work to receive anything, and maybe that is the only teneble solution, except in cases of people who just cannot work for whatever reason, but I don't think so.

But if it is the case that people are content to do nothing, just make their getting anythign contingent on doing some work or another.



And the reason I said that nothing's going to change is because that's human nature--collective farms didn't work in the SU for that reason.

No, they didn't work for a lot of reasons.

Part of it was a mistaken incentive system.

Answer? Produce a different incentive system, one that maintains what works in the current structure and fixes the problems.

It's currently a problem that people who work can be left out in the cold, unable to buy the basic necessities of life.

OK. We can fix this by making sure that everyone gets the basic amenities, and that luxury goods are tied to labor. Or, failing that, that getting any sort of goods for 'free' from the government be tied to productive labor.

The problem is solvable.



As far as Rome goes--you know, we really don't have a much different social order than they had in Rome or anywhere else for most of history, there are the rich and the poor--there were different names for the rich--Particians, Nobles, Aristocrats, Borgeoise--but they were all essentially the same thing. Same with the Plebs, etc.

I don't want to get into particulars, as it's an aside, but no, our social order is really nothing like Rome's.

I mean, there are similarities, but they're facile, obvious, and un-enlightening.



I just don't see anything changing. Hey, I could be wrong--and maybe I'm being too fatalistic--but people would have to change A LOT of the way they think and behave for your plan to work.

Changing the way people think is just a natural consequence of changing the way they live.

Changing the way they behave is just a consequence of putting in the right incentive system.

Right?

[Publius]

They would if price=0. Right?

Yes.

Or at least, somewhat.


If they have even $1 of extra income to spend on what they liked, that $1 buys an infinite amount of goods priced at $0. That was my point, and the reason I think prices are necessary.


My post was in broad agreement with this.

I was pointing out areas where I think price is necessary, luxury goods. Maybe all goods require some non-trivial price to prevent abuse.

If that's the case, so be it.



You would have to destroy the price system for labor. That's a pragmatic consideration. "Goods" are not the only thing bought and sold at market.

Only for labor in certain fields, namely those goods deemed "necessary."

"Luxury" goods, or rather, 'non-necessary goods' would be subject to the vicissitudes of the market because, to a large degree, it doesn't matter what people do with their luxury money.

As long as none in the society is starving, dying of sickness, homeless, etc., anything above that is just gravy.

The capitalist paradigm works for providing people with popular music, movies, entertainment devices, toys, etc.

[Bud Struggle]

Yes.

What I propose is quite a bit larger than this -- everyone in the society would get it -- but is the same in principle.

So it obviously CAN work.

OK, so let's say it can work hypothetically. Now what happens to me and those other charming captains of industry that actually make things run? What do we get--can I have a 9000sf house if I earn it? A Bentley GT, The boats and summer houses and such, or are you going to let me earn as much as I want and then tax the hell out of me so I can never do any better than "pretty good?"

Then why should I bother? Or rather, why should I earn anything on paper? You have a perfect recipe there for an underground economy. Because that's what you'll get with a 75% (I'm guessing) tax rate that will have to pay for all of this.

I don't mind paying some taxes so that people don't starve or go homeless--that's my Christian duty, but anything more--I don't much think I'm going to be happy with it. I can see me either doing not too much, or going underground.

Just wondering.

[Kwisatz Haderach]

It's simply not true that demand would be near infinite for any good of price=0. There is such a thing as diminishing marginal utility, pusher robot. Eventually, the utility of an additional unit of good X becomes so low that it's not worth the effort to go to the store and pick up, or not worth the space it takes up in your house.

And that's an important point: There are many non-price constraints to how many goods of a certain type you can buy or own. A communist economy could use such non-price constraints to limit demand. Example: All-you-can-eat restaurants. Your demand for food in such a restaurant, even if the food is free, is limited by how much you can eat.

I would like all food to be distributed on a "all-you-can-eat" basis.


You're saying that if you asked most people if they would like some more education, they'd turn it down?
I'm sure many would turn it down. Acquiring education, even if it has no monetary cost, takes time. The demand for education is limited by time-related issues even in the absence of money.


Or are you really conceding that demand is near infinite but supply is arbitrarily constricted to where politicians have decided people seem to have "enough?"
To the extent that this point is in fact decided in such a way as to please voters and help politicians win elections, it is not arbitrary.

[Publius]

OK, so let's say it can work hypothetically. Now what happens to me and those other charming captains of industry that actually make things run? What do we get--can I have a 9000sf house if I earn it? A Bentley GT, The boats and summer houses and such, or are you going to let me earn as much as I want and then tax the hell out of me so I can never do any better than "pretty good?"

I don't know.

The principle I follow, which is the same one that Rawls' proscribes in his works, is to permit inequality as long as the inequality ends up benefiting the less well off.

So if you allowing you to be so wealth ends up benefiting the poor more than it harms them, I wouldn't see any problem with it.

That said, I doubt such ridiculous amounts of wealth are necessary to motivate anyone and I think they're just symptomatic of the sick culture we're creating here in America.

Other countries get along just fine without such disparities of wealth.

I don't know what you mean by "pretty good."

I think in a society where everyone was pretty equal, having, say, 10 times the average would provide you a level of comfort far beyond what ANYONE in the society would regard as 'pretty good.'

But of course that's nothing in comparison to making 250 times the average, but then what good is that?

Do you really think having 250 times the average provides that much more motivation than having 25 times the average?

There are maybe a few hundred people in this world who could only be motivated by such insane sums of money -- somehow I think the human race could get along just fine without placating them.

Hell, maybe we'd be better off without their ilk.

I don't know.



Then why should I bother? Or rather, why should I earn anything on paper? You have a perfect recipe there for an underground economy. Because that's what you'll get with a 75% (I'm guessing) tax rate that will have to pay for all of this.

Well, labor wise a lot of it would be "free labor" as the jobs the government creates would just be the jobs necessary to produce all the things it produces and gives away for free like food, houses, light bulbs, what have you.

In this sense, a lot of the 'cost' would be circular.

But no sense avoiding the charge, there'd probably be a fairly high tax rate. But so what? 75% of several billion dollars still leaves you, at minimum several hundred million dollars. What can you buy with a few billion that you can't buy with a few billion less?

Even a 90% tax rate, when the sum is large enough, is really trivial. Say we tax people who make over a $100 million a year at 90%. OK. They still net 10 million a year. Last I checked you can buy a Bentley with that. You can buy nearly any house in the world on one year's income, which is not trivial.

What are the only things you couldn't reasonably buy?

Your own nation state? The entire NFL?

So what? A few super-rich people won't get to do absurd things with money they wouldn't miss if it was gone? Somehow I don't see this as the fatal flaw you do.

I don't know, but it's not something I concern myself with, and I don't think it's something most rich people concern themselves with.

Although I now realize your charge is more about doing things 'underground' than about the pure economics of the situation.

OK. How are you going to run a Microsoft 'underground'? A giant steel mill? A car plant?

These are absurdities, especially in a state that would necessarily be as large and as involved in the economy as the one I suppose.

How would you sensibly take your billion dollar salary off the books without someone noticing? Surely someone at the company would notice, and since companies have to report their financial information, it would be trivial to find you out.

I guess you could try to bury it, but that'd be stupid because if we catch you, we'll just take everything and throw you in jail, all because you weren't content with a few million dollars a year and needed a few tens of million.

Somehow I'm not too worried about this happening regularly.



I don't mind paying some taxes so that people don't starve or go homeless--that's my Christian duty, but anything more--I don't much think I'm going to be happy with it. I can see me either doing not too much, or going underground.

Just wondering.

Well, you'd have every incentive to work: you could still make large sums of money, because a lot of the income you generate would go towards helping society, which is a net benefit for all.

And you'd get to keep a sizable portion of it (hundreds of thousands of dollars up to millions of dollars) and spend it however you liked on the nicest homes and cars and boats available.

So you have every incentive to make as much money as you can, you just can't make the insane sums you make now.

And I don't think there'd be a real risk of an underground economy for reasons outlined earlier. It just wouldn't make any sense. It wouldn't work.

[Green Dragon]

And that's an important point: There are many non-price constraints to how many goods of a certain type you can buy or own. A communist economy could use such non-price constraints to limit demand. Example: All-you-can-eat restaurants. Your demand for food in such a restaurant, even if the food is free, is limited by how much you can eat.

I would like all food to be distributed on a "all-you-can-eat" basis.


But that food still has to get to the store. It still has to be grown. Those providers still need ways to know what to produce. Producing "everything" seems an inefficient way of doing so.

One also has to consider how such a communist society would realise such a goal. It would seem it would have tell people how much of a particular product they can have, and place limits on what can only be completely arbitrary a means. Saying that the "voters" approve it says nothing about the nature of the decision.




I'm sure many would turn it down. Acquiring education, even if it has no monetary cost, takes time. The demand for education is limited by time-related issues even in the absence of money.


yes. But that is part of the trade off: is the time invested in the education WORTH it? It takes "time" to do anything. How much "time" does it take to go to an "all you can eat restaurant? is it worth in comparison to the "time" it takes to go to a more straight "order a specific meal and that's it" restaurant? Its a judgement call by the consumer of course. But how is decision determined?

[eyedrop]

Somehow I'm not too worried about this happening regularly.

I'm not that sure, if I check the tax-list on the 1o richest in my country you can see that most of them even have a negative income which I very much doubt is what really happens.

Name Income Tax Fortune
Stein Erik Hagen 0 7 959 357 1 307 677 115
Olav Thon 61 640 766 60 375 704 7 187 886 636
Kjell Inge Røkke 0 8 554 054 1 422 663 852
Johan Johannson1 659 131 12 559 810 1 989 931 010
Odd Reitan 2 926 553 2 553 689 197 446 520
Johan Andresen jr. 16 161 668 53 039 040 8 053 736 868
Arne Wilhelmsen 17 160 624 11 901 404 618 105 886
Arne Blystad 3 524 818 3 462 519 402 699 248
Fred. Olsen 15 269 855 7 228 904 148 573 496
Trond Mohn 21 993 074 22 431 733 2 678 517 118
Jens U-Moe 0 10 016 137 1 669 285 720Source (http://www.kjendis.no/2007/10/12/514884.html)

Many of them have a 0 kr in income, which is just rediculious. If this official list had been true many of the richest men would become poorer and poorer.

[eyedrop]

Put a somewhat more readable file here

[Publius]

I'm not that sure, if I check the tax-list on the 1o richest in my country you can see that most of them even have a negative income which I very much doubt is what really happens.
Source (http://www.kjendis.no/2007/10/12/514884.html)

Many of them have a 0 kr in income, which is just rediculious. If this official list had been true many of the richest men would become poorer and poorer.

But that isn't because anything is going underground, is my guess, it's because "income" doesn't count money accrued from stock dividends, or non-monetary compensation, or stock options, etc.

There are all sorts of ways of getting income that aren't "income" so defined by the tax register.

Solution: tax those too.

I don't think that any of those people *received no money* during that fiscal year, do you?

IN fact they obvious didn't, because all of them did pay significant tax, even the ones with "zero income."

So it's not really an issue.

[eyedrop]

But that isn't because anything is going underground, is my guess, it's because "income" doesn't count money accrued from stock dividends, or non-monetary compensation, or stock options, etc.

There are all sorts of ways of getting income that aren't "income" so defined by the tax register.

Solution: tax those too.

I don't think that any of those people *received no money* during that fiscal year, do you?

IN fact they obvious didn't, because all of them did pay significant tax, even the ones with "zero income."

So it's not really an issue.

True enough. Around the 225k USD a year almost everyone starts using loopholes in the tax laws. The top tax brackets are mostly payed by people from 100k untill 200k, even though we have 54% top-tax bracket, here in theory, it doesn't work as out in practise. I guess those loopholes could theoretically be corrected.

The question is if such a system, where the richest actually pays their dividends, can come about without a major powershift of some kind. Here in Norway it has gone the opposite way the last 20-30 years or so (take it with a grain of salt). If you earn a decent wage now you are paying a larger dividend of your income in tax than the richest 5%

How would you propose that your tax system would come into power?

A lot of the tax they are paying is from wealth tax BTW

[Bud Struggle]

Here's a plan of taxation that people are pushing ehre in the United States. It's called the Fair Tax.

I don't think that it has much chance in the near future--but in time--it might fly.

http://en.wikipedia.org/wiki/FairTax

[Die Neue Zeit]

Like all the howlings about the "death tax" (estate tax spun around linguistically to make it sound scarier), this is an Orwellian spin on a mixed tax scheme. It is progressive only on the low end, but regressive as you go upwards. Moreover, value-added taxation is far superior to retail sales taxation, taxing at every step. :)

[Demogorgon]

Here's a plan of taxation that people are pushing ehre in the United States. It's called the Fair Tax.

I don't think that it has much chance in the near future--but in time--it might fly.

http://en.wikipedia.org/wiki/FairTax

That thing must be one of the most misnamed things I have ever seen. How on earth can a highly regressive tax be "fair"?

[Bud Struggle]

That thing must be one of the most misnamed things I have ever seen. How on earth can a highly regressive tax be "fair"?

It's fair because YOU decide if you want to pay it or not. If you don't want to pay a lot of tax--you don't buy a lot of stuff.

I'm not sure how things are where you live, but here in America people are dedicated consumerist--they will be just itching to spend their money and support their country.

[Demogorgon]

It's fair because YOU decide if you want to pay it or not. If you don't want to pay a lot of tax--you don't buy a lot of stuff.

I'm not sure how things are where you live, but here in America people are dedicated consumerist--they will be just itching to spend their money and support their country.

There is a 17.5% VAT rate here (more or less the same thing as what the fair tax proposes, except easier to collect). Believe me I don't choose to pay it. I need to buy things.

The irony is that income tax is easier to avoid than Sales based taxes. There are alternatives to working, or at least earning enough to fall into tax brackets. There are pretty much no alternatives to buying things. Income tax is more voluntary than what the FairTax proposes.

[Kwisatz Haderach]

I'm not sure how things are where you live, but here in America people are dedicated consumerist--they will be just itching to spend their money and support their country.
Actually, no. They would be itching to buy foreign goods not subject to the sales tax - i.e. find a legal loophole that allows them to make the purchase technically outside the borders of the US, and then import the good. This would lead to massive tax evasion, unless the government raised import tariffs to match the internal sales tax...

...which would crash the US economy.