Additional response mainly to Henning

[Paul Davidson <PB108928%UTKVM1.BITNET@xxxxxxxxxxxxxxxxx>]

FROM:  Paul Davidson
"      Economics Department
"      523 Stokely Management Center  (615) 974-4221
Dear Doug: In my earlier responses to you and Mitchell most of the response was
 directed at Michell's comments although they overlappped some of yours.
   Let me respond to some of yours directly. There is nothing wrong with making
a profit as long as profits are payments for efficiency and not monopoly rents.
Moreover, if we can turn the profit making system into a cornicopia where real
output grows faster than population growth and the distribution can be made
less inequitable with such growth -- then no one will complain -- neither capit
alists nor rentiers nor even workers. (but maybe some disgruntled Marxists.)
   I think you overestimate the political obstacles. An underemployed
economy is not a zero sum game; all classes can gain absolutely by running
the system up to full employment; and then even further gains can be made if th
e system at full employment permits Schumpeterian entrepreneurs to increase
productivity even further. It is possible to design such a system without
destroying the good parts of "capitalism". The faults of the system, unemploy-
ent and inequitable distribution are NOT essential features of the entre-
preneurial system. If you remember the Adelman statistics that I cited
the GLOBAL golden age of1947-1972 had close to global full employment and
a significant lessening of inequalities around the world. Read my PKMT
to see the principles upon which this economic golden age can be re-
constructed.
   In Bill Mitchell's second political screed he suggests that the US
health system is rotten and we are gun and crime crazy -- apparently
because we subscribe to an entrepreneurial system.  It is not clear that
the health system in the Soviet Union, China, or Cuba is better than ours or
even Australia's. Crime or guns or state sanctioned slaughter is not unique
to an  entrepreneurial system. Crime and guns were much less
(and still is) in the entreprenurial system in England than in the US -- althou
gh I grant you that Mrs. Thatcher's brand of laissez-fairism increased the
crime rate in Britain.  But then no one ever suggested that the Gulags of theSo
viet Union, China (remenber Tiennemen Square) or Castro's Communist Cuban sun-
shine state are without  guns or slaughter.
      As the coauthor of ECONMICS FOR A CIVILIZED SOCIETY, I have never
argued that unrestrained self-interest produces a civilized community; but
I suspect that a fully employed economy that is reducing inequalities through
rapid economic groth is likely to have a better shot at becoming civilized than
either a laissez-faire entrepreneurial system or a State planned Marxist regime
   Finally, Doug suggests that capitalism is inherently oppresive "when
capitalism is threatened by unacceptable income distributions".  But that is
the reason for installing a democratically agreed upon "incomes policy", not
an argument for throwing out the very potentially productive baby with the
bathwater. After all in a democracry -- one person, one vote -- and, believe
it or not Doug and Bill, most capitalists are just as human as most workers.


Am I being ideological when I argue that full employment is a socially
desirable goal? As I pointed out in an article in the March 1972 ECONOMIC
JOURNAL, "AS LONG AS THE WORK REQUIREMENT IS A CONDITION OF EARNING INCOME FOR
PROPERTYLESS HOUSEHOLDS ... FULL EMPLOYMENT BECOMES A HUMANITARIAN AS WELL
AS AN ECONOMIC OBJECTIVE" . Until we reach a completely robotic economy where
everything is produced (till people are satiated) by non-human robots (as in
Woody Allen's movie "Sleeper" where even sexual gratification came from a
machine), society needs people to work. Doug and Bill might want to intro-
duce Marxism so that there are no propertied households and all must work
equally -- but I accept the existing system as the starting point and hope
to improve things by polis cooperation rather than setting one group against
another. The start up costs for converting the existing system to a Marxist
Garden of Eden, even if was possible (which I doubt), is just too much for
my preferences -- as long as their is an alternative that solves the faults of
our system without forcing the faults of socialism on us.    (see my
article "Markets and Governments: The Comparison of Means and Objectives Under
Different Economic Systems" pp. 99-111, in  INFLATION, OPEN ECONOMIES AND
RESOURCES, edited by L. Davidson, NYU Press, 1991 )

Have a good day!____Paul Davidson
))))_ fax # (615) 974-1686