Re: Reparations andcapitalist progress.

["Nathan Newman" <nathan.newman@xxxxxxxx>]

>On Behalf Of Brad De Long
> 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.

Why would your theories predict that managers in state run enterprises would
decrease externalities?  Only if preventing those externalities are tied to
concrete interests with political power will any society, whether capitalist
or state-controlled, reduce them.  Without the democratic empowerment of
those interests, they will fail in any industrialized system where
production interests have an invariably large de facto power.

If there is an argument for centralized production, it is that given the
equal democratic empowerment of those "externality interests", it is easier
to politically structure rules to restrain externalities under centralized
systems than under competitive ones.  But without the first step of
political democracy, it is unclear why centralized systems should
necessarily act on that greater capacity to restrain a range of
externalities when they can often be dumped onto more vulnerable, less
powerful interests?

-- Nathan Newman