Earlier this week Michael Perelman wrote:
Why do societies prefer planning over markets when faced with crises? Did
the US turn to markets to win the world wars?
I guess this was directed at me, so I'll try to answer. Just as people
in general are eager to achieve betterment in their own circumstances,
so do they yearn for betterment in national affairs; especially if the
two are seen as intrinsically linked. So if a case for it can be made,
like when a nation faces a crisis, demand commandeering, which I hold
central planning to be all about, can be expected to receive a ground
swell of support. Moreover economically seen, this is no different than
the (re)building of infrastructure, final output from which no monetary
return is expected. It takes place all the time in mixed economies with
great success. But I'm not aware of a convincing argument, why this
demand commandeering should be a model for the entire economy. The
justifying Marxian parameter seems to be exogenously given, impervious
to logic.
Do people win admiration
as entrepreneurs when they sell bottled water at inflated prices during
disasters?
Of course not. During disasters the authorities should commandeer all
the necessary means of life support. There is no room for any kind of
disaster profiteering in my approach.
John V
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