Date: Wed, 1 Feb 95 0:46:42 EST From: boddhisatva <foucault-AT-eden.rutgers.edu> Subject: Re: underconsumption again--and Luxemburg Mr. Keen, In comparing your analysis to Mr Iacocca's polemic, I mean to alert you to the fact that you do indeed slight the socialist worker's capacity for strategic business. Your analysis rests on two assumptions. The first is that the positive demand pressure engendered by socialism will pull resources away from capital stocks. The second is that the removal of the need for protection from overconsumption, will have the tendency to supress innovation structurally. The first assumption is the supply side theory told from the other end. It maintains that increased demand cannot readily translate itself into capital investment. This is easily answered by pointing out that we are talking about a socialist economy, where the workers are the stockholders. With their income rising, their marginal propensity to consume will be reduced and their propensity to invest increased. Furthermore, with newfound responsibility, they will have the same impetus to create profitability as the capitalists presently do. In answering your second point, which is more germane, I will modify my previous statement to say that the proletariat will have NEARLY the same impetus to innovate for profitability. With overproduction worries structurally allayed, theory definitely predicts complacency that would lead to events you have cited. This plays to a point I have made in previous posts, that a non-employee capital market will remain necessary after the revolution. If investment, not in control of firms, but for profit participation through minority ownership is allowed, the flow of capital from antiquated industry to that which is more profitable, is assured. Greed is, once again, good, although not an unqualified good. You may well ask, "Who's the supply sider now ?" peace p.s. My handle is not "peace", but "boddhisatva", although, clearly, the one would not reject the other appelation. ------------------
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