Re: Keynes and socialism

["Forstater, Mathew" <ForstaterM@xxxxxxxx>]

Exactly Barkley (not the 'widely argued' part--I am not familiar with
these, provide some cites please), but the idea of indicative (or
strategic) planning being consistent with Keynes.  The problem, of
course, as Christine Rider wrote around the time the Soviet-style
nations were collapsing, is that support for such a social democratic
mixed economy often presumes "that there is a continuum of economic
mechanisms running between the extremes of central planning to
laissez-faire markets" (1988, p. 139).  Kornai's distinction between
capitalism and socialism as, in their ideal-types, 'demand-constrained'
and 'resource-constrained' systems, respectively, is useful here
(although Mark Knell showed in a 1988 paper that Kornai's formulations
relied unnecessarily on microfoundations, the same conclusions can be
derived based on Lowe's distinction between structure and behavior).
Nell wrote a few papers around that same time (late 80s), including one
called "Where is the Keynes of Eastern Europe?", showing the debt Kornai
owes to Kalecki and Kaldor, as well as Keynes himself of course.  But
Nell strongly discourages any hope that a theoretical basis for a
synthesis of the two systems can be derived from the analysis:

	"The planned area of capitalism is not
resource-constrained...Nor is the market area 	of socialism
demand-constrained.  The virtues of each system, technical
innovativeness 	and full use of economic resources, respectively, depend
on the mode of operation of 	the system as a whole.  These can
therefore not be developed in a mixed system.  Not 	so the vices and
defects appropriate to each--alienation and corruption on the one
hand, and baroque technical development and bureaucratic abuse on the
other.  A mixed 	system could easily end up with the worst of
both worlds, but it cannot have the 	best." (Nell, 1987)

This is obviously stated strongly and very pessimistic, but the point is
important.  Some of the supporters of a social democratic mixed system
suffer from the view that the 'efficiency' of capitalist firms vis-a-vis
Soviet ones is somehow separable from "the mode of operation of the
system as a whole" (iow, they see it as a micro efficiency--see Sherman,
1990).  Nell's macrofoundations of micro approach views the relative
'efficiency' as due to capitalist markets being 'buyers' markets' due to
insufficient aggregate demand.

We certainly could be doing a lot better than we are now, but whether we
can have a 'hitchless' SD mixed market socialism is another question
entirely.

Mat

The Rider and Knell articles are both from RRPE, Vol. 20, No. 2-3.
A version of Nell's 1987 New School working paper is in Nell and
Semmler, eds., NICHOLAS KALDOR AND MAINSTREAM ECONOMICS.
Sherman's essay is from Monthly Review, Vol. 41.


-----Original Message-----
From: Barkley Rosser [mailto:rosserjb@xxxxxxx]

     It is widely argued that in _The End of Laissez Faire_ Keynes was
the first to suggest what we now label "indicative planning," although
he did not pursue this topic very much later, and it was not implemented

particularly in the UK, especially compared with France,
Japan, and some other countries.
Barkley Rosser