OPE-L message, [OPE-L] Differentiation and Two Socialist schools of thought

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Dear Jerry:

Jerry on 05/10/2007: The purpose of advertisement is not to provide information to consumers. Still less is the purpose to be "fair"! The purpose is simply to help *sell* a product.

It is true that advertisement exploits the sentiments and complexes of human mind, but is dangerous to think that in a Socialist Commonwealth these things would be absent. Dangerous because the Planner willing to reduce the set of goods and services, canceling differentiation, would set up as a master interpreting our will better than us. That’s why instead of prohibiting advertisement we have to make rules to reduce as possible its manipulation function, for example, setting the appropriate regulation to guarantee that the information advertised is as technically true as possible without impeding to reinforce brand loyalty. This loyalty is not immune to quality whenever non-market barriers are absent.

Imagine that our Socialist Commonwealth is able to produce a differentiated set of goods as does Capitalism. In absence of fair advertisement the consumers’ decisions would be far difficult. Besides, in absence of fair advertisement is difficult to imagine any kind rivalry to efficiently reduce cost opportunities. Now that the massively use of personal computers have let many Marxists recognize the technical and ethical value of freedom to choose, even in absence of market, I think we are in a position to close a little the gap that historically has separated two Socialist schools of thought, from which we are representatives. The Market Socialist Henry Dickinson characterized better than many these two schools.

Economics of Socialism, Books for Libraries Press, Freeport, New York, ([1939] 1971), pp. 25-26.

“With regard to the significance of pricing for a socialist economy, socialists are divided into two schools of thought: those who hold that the individualistic assumptions behind the pricing process have no relevance for a socialist community, and those who hold that they have.

(a) The first school would reject in principle the notion that the demand schedules of individual consumers give any adequate indication of human needs […] It rejects the two corner-stones of individualistic economics: the doctrine that individual knows best what is good for him, and the doctrine of insatiability of human wants. It asserts rather that the basic needs of humanity can be ascertained better by scientific study than by offering people a choice of goods in the market-place, and that non-basic needs are the result either of class standards of consumption (Veblen’s conspicuous waste and pecuniary emulation) or of profit-mongering advertising campaigns, which multiply satisfactions without increasing satisfaction. If these views be accepted, social production will be carried out not in response to the indications of the market but according to a planned survey of human needs.

(b) The second school of socialists starts off with the liberal individualistic conception of welfare as consisting in the satisfaction of particular individuals’ particular wants, interpreted by those individuals themselves by an act of deliberate conscious choice. It entrusts the satisfaction of those wants to a collectivist economic organization rather than to private enterprise, because it believes that collectivism can, when the distribution of income as well as the organization of production is taken into account, provide a greater aggregate of individual satisfaction than private enterprise can. A social order of this type may be called libertarian socialism. Adherents of this school desire socialism in order that they may establish, for the first time in human history, an effective individualism.”

Jerry on 05/10/2007: It is an assumption employed in the marginal utility theory of consumer choice.

* There is rational behaviour by consumers;
* Consumers have "perfect information" about the prices and qualities of all commodities that they might purchase on the market.

It is a fault of the neo-classical orthodoxy reign in academy making us believe that the marginal utility theory of consumer choice is homogenous. Austrians better that us –Market Socialists– have been during more than a century loyal to a research program developing a different subjective theory of value. A landmark of the scholarly rediscovery of this fact is: William Jaffé: “Menger, Jevons and Walras De-Homogenized”, Economic Inquiry 14, 4, 1976, pp. 511-524.

Best regards,

Alejandro Agafonow