I agree with Robin Hahnel that externalities are pervasive in market economies and that a great deal of mispricing occurs as a result. The question that needs addressing, though, is how to calculate externalities accurately enough without a decentralized, flexible price system. To take the example RH gives, a large range of consumer items were significantly mispriced because of a failure to take into account the costs of disposal of packaging materials. But how is an accurate calculation of this cost to be arrived at in the absence of a decentralized price system which tells us the (doubtless changing) cost (price) of disposing of packaging materials? That's one problem. If you then expand this task to including all the significant costs of all externalities, and then require that all such calculations be carried out by an extensive system of democratic planning, then the informational problems do prima facie appear to be colossal. There is also the problem which was historically experienced in non-market economies of implementing a system of incentives for planners not to dump externalities on other people. The Communist bloc countries did have enormous pollution problems. A democratized system of planning would help, but it's not obvious that serious problems would not still be encountered. The question at issue would then be whether these problems would be systematically greater or smaller in magnitude than those generated by a system of markets combined with serious measures of planning and regulation, such as proposed by the 'market socialist' school. On redistributive taxation: even the hyper-capitalist USA once had tax rates in excess of 70 percent and capitalist countries in Europe had much more progressive tax systems than they do now. The willingness of the population to accept highly progressive taxation is tied to the range and quality of public services which they receive in return. I think there would still be considerable popular support for high-quality universal health-care, child-care, education, etc based on highly redistributive taxation. The weakening of support for redistributive taxation in recent years is more due to the fact that there has been less of it--big tax cuts for the rich--and public services have suffered as a result. Hence people are less willing to pay for sub-standard services. Peter [EMAIL PROTECTED]
