Re: Re: Re: Re: Re: Re: Re: Re: Reparations and capitalist progress.

[Jim Devine <jdevine@xxxxxxxxxxxxxxx>]

Brad writes:
> It is odd, and I do not understand, just why it was that
> really-existing-socialism was so *lousy* at those parts of economic
> activity where externalities are rampant and decentralized atomistic
> decision making works worst.
>
> In technological development and in pollution control all of our--at least
> my--theories predict that a centralized bureaucracy should do a better job
> than a market in which the key outputs--low pollution, big externalities
> from other people's innovations--aren't priced. Yet the
> really-existing-socialist economies fell down most not at the
> deadweight-loss-triangle-reducing activities of matching marginal private
> cost to marginal private demand, but in these two essentially collective
> aspects of economic life.

One problem was that at the time the Stalinist growth process started, the
image of "development" and "industrialization" basically saw pollution as a
good sign, a symtom of  "progress" (just as under capitalism until very
recently). The Stalinist elite rejected the pro-environmentalist types who
took part in the Leninist phase (that Louis has reported on in pen-l)
because the goal was _national_ economic development at whatever cost,
favoring the urban groups that had the most power. Given the poverty of the
country and the invasions and encirclement by the capitalist powers, one
can understand this emphasis, though obviously the methods used to attain
national economic development leave much to be desired.

Eventually, the USSR did much better at the technical innovation side of
things (based on years of investment in education), but unfortunately most
of the investment in science was done in the military sector.

> Makes me think we need much better theories of government failure than we
> have...

Government failure has a lot to do with who the government serves.The US
government "fails" by allowing the distribution of income to get more and
more unequal (except for the current cyclical equalization) because it
reflects the balance of power in politics. The US government "fails" by
giving free access to public resources like the TV airwaves because it
serves those with the political power (the networks who have so much
influence on how the government is described in the news). The US
government "fails" by wasting billions on "Star Wars" (a.k.a. SDI,
Ballistic Missile Defense, etc.) because of the power of the
military-industrial complex. The US government "fails" by bombing Serbia
because it reflects the balance of geopolitical and economic interests of
factions of the ruling class, along with the personal interests of some of
the leaders appointed to make decisions (such as Mad. Allbright).

None of this is failure from the point of view of the interest groups. Some
of this isn't even failure from the perspective of the ruling class as a
whole. (The "government failure" of the old Stalinist state of the USSR
served the interest of the entrenched Party bureaucracy for quite a while.)

It should be noted that all of this is similar to "failure" by markets. The
market process of globalization, "deregulation," "creative destruction,"
etc. encourages widening gaps in  the income distribution. The market
process of TV network competition encourages the rise of the number of ads
per hour of broadcast (since the "consumers" of TV are the advertising,
providing the "dollar votes" which drive the process). Star Wars has been
extremely important to the arms manufacturers, as has the new kind of
"capital intensive" war that the US has been fighting against smaller nations.

Market failure and government failure often parallel each other and
reinforce each other, until people get pissed and fight back.
(Unfortunately, some of this fight back is by types like Perot, Buchanan,
and Haider.) Or like with the US Savings & Loan crisis, market failure
(excessive risk-taking) and government failure (deregulation) reinforce
each other until the price tag that the government has to pay to preserve
the stability of the financial system gets too large.

The point is to subordinate both the economy and the state to democratic
control so that people can collectively make their own mistakes rather than
having some ruling class make mistakes for them and then impose the costs
on them while reaping the benefits for themselves.

Jim Devine jdevine@xxxxxxxxxxxxxxx &
http://clawww.lmu.edu/Faculty/JDevine/JDevine.html