> Right except that he conceived an economy where there was no
> risk of labor being wasted. Labor created its own value, by
> definition, and this is clearly not so. Suppose we all
> decided to go back to subsistence farming. The economy would
> be destroyed. People have clearly have the ability to make
> wrong decisions about production. So how do they make right
> ones? By gathering objective data to judge the benefits - and
> - by considering the risks and pricing them in. The money
> system provides a simultaneous means of transmitting data and
> pricing in risk. The problem, I think, is not money itself
> but who has it.
I think I fundamentally agree with your drift, it is just a few details that I find moot.
1. The Soviet development - I am pretty sure that the Western characterization of it as building a workers' and peasants' utopia (or nightmare, depending on one's political preference) is pretty much a bunch of fairly tales. The goal was accelerated economic development and th emeans to that en were quite ingenious - to use one's weakness - economic backwardness that retarded the growth of economic institutions and vested interests with them - as their strength. That strength was twofold: first they were relatively free from "path dependency" that is the weight of existing economic institutions that would restrict their policy choices, and second and more imporatntly - becaouse of them being behind other countries, they had a choice of economic models tried in those countries. They chose the cartel corporatism tried earlier in France, Germany and Japan over more free market orineted British model, and they adotpet that solution to the resources they had (i.e. state assuming the role of banks). This was the best they could under the circumstances and it served them well.
Now, a bunch of US pundits armed with the 20/20 hindsight is speculating that at the end, central planning had limitations. Duh. Of course it did, but this was like a wheelchair for a handicapped person racing a physically fit person on a bicycle. The latter wins, and the hindsight pundits say that that the former lost because of his wheelchair and he should have been riding a bicycle instead. These hindsight pundits forget that at th ebeginning of therace th ehandicapped guy was in such a bad shape that under no circumstances he could ride a bicycle, and if it were not for the wheelchair he would not even be in the race. Such hindsight sepculations are usually nothing more but mythmaking instead of a serious historical analysis.
2. The concept of risk can be applied to many different situations. My main objection was to the reasoning that capitalists are rewarded for their "risk" - which I find to be an exception form of self-serving bullshit. All they are risking is their own possession of wealth rather than wealth itself (which can be transferred to someone else). That is a real risk, form their point of view, no doubt - but why should others reward them for managing to stay rich. If I had a $1,000 and saved it in my bank account instead of loosing it in gambling, and then demanded that you pay me an extra premium because I successfully avoided the risk of loosing my money.
But of course, the concept of risk applies to many other situations such as wasteful uses of resources. Clealry in such situations risk management involve many approaches, and price signals and financial management in general is one of them, and important one I may add. But there other possible mechanims as well, such as regulatory mechanisms, informal controls, cultural norms and expectations. A good policy would involve a wise choice of these mechanims to fit a particular situation. But what we have instead is a bunch of pundits chanting monetize monetize monetize like a broken record. What monetization often does is enabling pifering by the elite who the claim to be "rewarded" by the "risk" they took, whereas th eonoy "reward" they deserve is 9mm right between the eyes.
So the bottom line is that I agree with you that financial controls can be a very powerful and useful resource management tool, albeit one of many possible tools - but you have to also admit that the current financial management practices amount to hardly anything more than graft and pilfering by the elite whose only "contribution" is being well connected.
Wojtek