Re: [Pen-l] Paul Davidson sums up

[John Vertegaal <vertegaa@xxxxxxxxx>]

raghu wrote:
> On Sun, Mar 8, 2009 at 8:57 PM, John Vertegaal <vertegaa@xxxxxxxxx> wrote:
> > Like union representatives holding veto power, on boards of directors of
> > those "corporations that run the economic world"? If so I'd fully agree, but
> > I would call that social democracy in action, rather than applied Marxism.
> > I'm by no means convinced that a command economy, whether planned centrally
> > or not, is more efficient than what we presently have in OECD countries;
> > given of course the fair wage and financial control policies of a social
> > democracy.
>
>
> Interesting discussion. A natural question is why did central planning
> fail so disastrously in communist USSR and China, while WalMart and
> UPS are doing it so successfully? Is it because of market discipline?
> -raghu.

To my mind there is a sociological reason underlying the economic one. 
I believe that although people are born with an innate drive to be ever 
more productive, this tends to get killed off when results in the form 
of betterment fail to materialize. While central planners may for a time 
succeed in suppressing this natural state of being, especially if their 
country is still undeveloped and by calling on patriotism for support, 
they cannot change human nature. Most people will slack off, when they 
see no difference in a resulting reward, while knowing they have become 
more productive.

Although the central planning of a command economy does fix supply and 
prices, its defining feature lies in fixating demand, from which supply 
and pricing are derived. It is impossible for WalMart and UPS to fix 
demand, as that comes about from all those other and generally less 
successful firms and their employees. Central planning encompasses both 
sides and thus is fundamentally different from planning in the private 
sector. WalMart and UPS are "successful" not thanks to their own 
planning savvy, but by exploiting a pay differential between those 
others who determine the demand for their output and their own operating 
cost.

The best that central planners in developed nations could ever hope to 
accomplish, is distributing the final output of accruing efficiencies to 
those responsible for it. But why take on this nearly impossible task 
when a cost+ pricing system will do it all automagically? Given of 
course a universal profit sharing program, stimulated by taxation 
(dis)incentives.

John V

_______________________________________________
pen-l mailing list
pen-l@xxxxxxxxxxxxxxxxxx
https://lists.csuchico.edu/mailman/listinfo/pen-l