Chaos Theory and Leftist Economics

Forstater, Mathew ForstaterM at umkc.edu
Sat Nov 3 13:08:02 PST 2001


From: "Doug Henwood" <dhenwood at panix.com>
>
> To be fair to the right, which I suppose one should be, they make a
> distinction between internal corporate planning and economy-wide
> planning. Corporations that make bad plans lose money and can go
> under, while those that made good plans will thrive; economies that
> make bad plans have to live with the consequences. Not that I
> subscribe to this, but it is what they'd say.
>
> Doug

Once, when I presented a paper promoting alternatives to "rational" or "optimal" economic planning that included a section critiquing the Austrian argument against economic planning (the Austrians often go on and on about the 'creative powers' of entrepreneurs, while denying policymakers that same human characteristic), someone in the audience presented an argument like the one Doug is noting. He said, "if a corporation builds a bridge and it messes up the job, it suffers the consequences, but if government builds it and messes up..." and then he just lifted his eyebrows and held up his hands palms up. I said pardon my ignorance but you'll have to finish the sentence for me, because it is not clear to me at all that there are no consequences for government incompetence. And there are certainly no a priori reasons that we cannot implement institutional mechanisms for dealing with such situations. Moreover, government often awards contracts to private firms anyway. What we need to understand is that one of the main reasons for planning is that the market often creates situations where the interests of individual firms are not identical to the interests of the economy as a whole. Mat



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