> Socialism is based on public ownership of means of production AND the price regulation.
Regulating prices creates the problem of economic calculation, which leads to inherent inefficiencies in the market. There is a lot of information contained in prices. In mature markets, prices generally reflect the amount of labor that went into creating an object. This is not true in new markets where new innovations give one supplier an advantage, or in markets protected by patents or copyrights. But in older markets, profits drop to below 5% of price, from competition, and generally reflect the amount of labor that went into the product. Now imagine the the hundreds of components that go into, say, a car. Now imagine the thousands of parts that go into each of these components. Each of these components and each of these parts were designed and built with the price in mind. Prices tell the designer the most efficient way to get something done. For each part, the designer knows what type of problem he is trying to solve and the price tells him which path to take for his solution which incurs the lowest cost. When prices are regulated, then distortions develop in this process, and then the designer no longer knows the most efficient way to solve his problems. For example, gold is the best conductor of electricity, and silver is next. But prices tell the designer that copper will solve the problem for the cheapest cost, and hence the least amount of labor. When prices are distorted, then this information is lost. This why socialism can never be as efficient as capitalism. For each individual item for sale in a market, the price is set to create a balance between supply and demand, which leads to a reflection of the amount of labor which went into an item. Distort this process and the resulting solutions for complex products and services will no longer be efficient in that they will no longer provide the solution for the consumer that reflects the least amount of labor for that solution. Craig On 10/09/2012 11:18 PM, Jouni Valkonen wrote: > Jarold, no, it is not called socialism. See my first post in this > threat. Socialism is based on public ownership of means of production > AND the price regulation. If income is just redistribute via basic > income, it does not have an effect of the ownership of means of > production and definitely it does not have an effect for price > regulation. On the contrary, because increasing median purchasing > power of people will increase the power of free market economy, > because free market economy is based on the supply and *consumer* > demand. This is polar opposite to that of socialism and free market > economy does work the better the higher is the median purchasing power > of the people. > > Therefore only thing what distinguishes socialism from ricardian > capitalism, that in ricardian capitalism /Rockefeller/ owns the means > of production and controls the prices, but in socialism /state/ owns > the means of production and controls the prices. For individual > consumer they both are the same, because democracy is lacking in both > systems. And indeed without keynesian redistribution of wealth and > antitrust laws, Rockefeller would indeed have the monopoly of production. > > The new economic system that Jed is referring is called Keynesian > redistribution. That was widely practiced in 1960's, that was the > golden age of keynesian redistribution. However, I would think that we > need to modify keynesian redistribution in various ways. I personally > would like to call the new keynesian economy as Star Trek economy, > where there is no scarcity of basic needs — globally! > > —Jouni >
