Re: Participatory Planning

["Mark S. Knell" <mknell@xxxxxxxxxxxxx>]

On Mon, 28 Feb 1994 Steve Keen wrote:

> On the self-contained nature of the sectors, however, I'd argue that
> Fel'dman's paper is explicit. To quote it:
>
> "Thus defined, sector B possesses the remarkable property of being
> capable of existence without sector A, but only for the purposes
> of simple reproduction." (Fel'dman, 1928, in Spulber, 18 1964,
> _Foundations of Soviet Strategy for Economic Growth"_, p. 177). I can't
> find as explicit a refernce for sector A's self-containment, however.

Steve, The reason why you cannot find an explicit reference for sector
A's self-containment is that sector B is a non-basic sector. But this is
not the important point raised by Fel'dman. It is a theory of growth or
expanded reproduction. What makes his contribution interesting is that he
divides sector A into two parts: A1 which "supplies all industries in
both sectors with ADDITIONAL capital to enable reproduction to expand";
and A2 which "supplies sector B with the means of production required to
sustain output at a given level". [p. 176] Thus basic 'capital' goods are
produced in sector A1 and non-basic 'capital' goods are produced in
sector A2. This idea can be depicted in a three sector Sraffian model
with 1 basic and two non-basic commodities.

There is also a 'Keynesian' element in Fel'man's thinking, as Erlich and
Domar pointed out. In the next paragraph Fel'man divides sector B into
two parts: B1 "which provides the increments of variable capital" and B2
which is "required to maintain consumption at any given level". The two
sector model of Kalecki and Ed Nell capitures this idea well. Here labor
in sector A requires (or demand) a certain amount of consumption goods
produced in sector B. And the workers in sector B will also require (or
demand) output from sector B. Through in a multiplier a it looks abit
post-Keynesian.

I think it is important to continue reading the paragraph quoted because
confirms what Fel'dman is after:

"Thus, starting from an anlysis of what is required for a more precise
division of output - from the viewpoint of determining the value of
consumer goods required to satisfy the existing level of needs - we have
arrived at a confirmation of the above idea: that production must be
divided into SECTOR B, capable of maintaining consumption at a given
level even with a cessation of the inflow of producers' adn consumers'
goods from sector A to be added to the capital of sector B, and SECTOR A,
which provides both sector B and itself with all capital required for
expansion and reproduction." [pp. 177-178].

Trying to read the equations following this passage will give you a big
headache though!

Mark Knell
University of Vermont