Date: Tue, 21 Jan 97 21:39:23 EST From: boddhisatva <kbevans-AT-panix.com> Subject: Re: M-I: Susan Woodward on Socialist Yugoslavia Mr. Rosser, When looking at Yugoslavia and the other "failed experiments" of East European market socialism, consider their paucity of credit mechanisms. Credit systems are utterly essential for market systems (and all modern economies) to work. I think you will find that nearly every failing market system - capitalist or socialist - has an inadequate or corrupted credit system. Simplistically, producer goods need the credit markets to value them properly, just as consumer goods need the consumer market. Consumer credit provides a feedback between the two. Economies become unstable without proper credit markets because new technologies are not properly valued before they are committed to, and in a way that appropriately reflects their inherent risk. This is, of course, one of the essential flaws with planned economies. They have essentially arbitrary credit. Some capitals get carte blanche, while others are squeezed brutally, and there is no middle ground. Where, in a market system, a new technology may require a half dozen or more creditors to get going (requiring different terms and rates of return) , a planned economy has one creditor who gives the "thumbs up" or "thumbs down" on a project, like Caesar. peace --- from list marxism-international-AT-lists.village.virginia.edu ---
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