Re: socialism v. capitalism?

[Charles Jannuzi <b_rieux@xxxxxxxxx>]

I'm using the old thread title because I lost
track of all the other ones. First, let me say I
found Mandel's arguments largely irrelevant to
the real world of real development economies, but
I enjoyed much of the critical discussion that
followed.

I think of the issue more like forest ecology.
You need a mixx of 'species' and a mix of 'tree
ages' over an extensive area (so the forest
becomes a political economy's hinterland) to have
a healthy economy. All functional economies are a
mix of what most call capitalism and what most
call socialism. By the term market I assume the
function of buying and selling of goods and
services, so in that sense 'socialism' is as
capable of markets as 'capitalism'.  I'm defining
'functional' here as a national political economy
that employs most and takes care of most, without
dysfunctional levels of poverty, hunger, wealth
disparity or military production--so the US and
North Korea are not  functional economies.

In Japan, the socialist aspects include large,
top-down national corporations (which, except for
highway corporations, surprise, make money) and
local but nationally coordinated, bottom-up
cooperative enterprises (agriculture, fisheries,
credit and insurance co-ops, etc). Certainly the
cooperatives are not 'capitalist' in the market
fundamentalist and liberal economics scheme of
things.

Many former co-ops in Japan now function as other
types of companies, including 'kabushiki kaisha'.
For example, the supermarket where my wife and I
shop every week used to be an agriculture co-op
but is now a national chain with corporate status
(though its suppliers still include a large
number of co-ops).

One big reason why both top-down and bottom-up
enterprises have been able to compete long-term
in 'market' economies is because they do not pay
profits to shareholders. This is the paradox of
capitalism. Capitalist companies are supposed to
prosper and compete because the 'successful' ones
revinvest profits and accumulate and attract
still yet more capital, allowing them to do more
things better than the less successful ones they
drive out of business. Or so the doctrine goes.

But as the real world shows, they often don't
reinvest but rather feed the greed. Also,
companies like Enron or Tyco or GE seem to get so
large and unmanageable that there may well not be
any rational planning going on at the
microeconomic level. No one now cares to look at
GE very closely so long as it continues to show
growth in profits. Has anyone noticed that it
makes most of its money on monopolies, government
contracts, and investment banking?

During short-term booms and bubbles the basic
advantage of national companies or co-ops (that
they don't have to pay out hundreds of millions
or even billions to stock holders) is lost
because market fundamentalists--the priests and
the congregation-- forget what a bubble is--a
time when irrational amounts of money are lent to
shareholders in order to lend more money to stock
companies to create 'profitable' bubbles for
shareholders.

The non-KK side of Japan, of course, is the side
of Japan most foreigners know nothing at all
about, and it's the side of Japan that Toyota and
Sony would like to 'liberalize' out of existence.
Though it should be pointed out that the likes of
Toyota and Sony largely benefitted--not from free
markets--but fixed export markets in the US that
allowed them to charge higher prices for their
goods and earn profits. This was especially true
of the 1980s and Japanese automobiles, where
there were strict quotas that benefitted mostly a
handful of Japanese automobile manufacturers,
especially Toyota, Honda, and Nissan. Microchips
might have worked out this way, too, except US
trade strategists maneuvered the Japanese out of
processor chips and OSes and into commodity DRAMs
(review the Super 301 Trade Laws). Moreover, the
strict quotas were a double edged sword, forcing
the Japanese to buy chips from the US even as
grey markets supplied the US with Japanese chips
because the quotas created shortages. US
interests largely control processor chips, OSes,
and, by acquisition, RAM production as well.

On a recent trip to Malaysia, I was asked if I
thought Malaysia was well on its way to being a
fully developed Asian economy. Specifically, the
conversation seemed to lead to this native
Malaysian notion that Malaysians just didn't take
to business and so they couldn't reproduce the
Japanese miracle. I pointed out that the biggest
difference I saw between Japan and Malaysia
(besides the abundant resources Malaysia has) was
that Malaysia had got the national policy and
national corporations right, but had neglected
full development for those living outside the big
cities. In Japan, through national corporations
and through nationally-coordinated cooperatives,
the developed standard of living is enjoyed
throughout the country, not just the big cities.
In Malaysia, the countryside looks largely
abandoned.



Charles Jannuzi
Fukui, Japan

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