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From: mck@ratex.UUCP (Daniel Kian Mc Kiernan)
Newsgroups: net.politics
Subject: Economic Issues -- Back to Torek
Message-ID: <980@ratex.UUCP>
Date: Thu, 21-Mar-85 17:37:17 EST
Article-I.D.: ratex.980
Posted: Thu Mar 21 17:37:17 1985
Date-Received: Fri, 22-Mar-85 03:18:54 EST
Organization: TMP
Lines: 61


     Mr Torek finds my EMPIRICAL arguments, that concentrations of economic
power (on the order of those which currently exist) could not arise in a
Free Economy, to be 'insufficient'.  It's hard to see what might satisfy
Torek by way of an empirical proof, short of instituting a Free Economy.
     Mr Torek asks about the case of natural monopoly, suggesting that
perhaps I find it unreal or unproblematic.  Indeed, I do.  For a natural
monopoly to present a problem, it would have to have exclusive ability to
produce a vital product for which there are no feasibile substitutes.
     As Torek tells us that he is an intermediate student of economics, I
have no qualms in recommending to him *The Political Economy of Monopoly*
by (the recently deceased) Fritz Machlup (who has probably been mentioned
in Torek's earlier readings).
     Mr Torek seeks to save Socialism from the onslaught of von Mises by
defining Socialism as a system in which workers own the means of
production.  I regard this definition as trivializing; surely we wish to
draw a distinction between Socialism and Capitalism!  I would hold that a
system is Socialist if, WITHIN that system, resources are allocated by
administrative rather than market processes.  Mr Torek is quite right
(even if we impose my definition on his discussion) to note that voluntary
Socialist systems (actually advocated by Libertarian Karl Hess) are
economically possible within a Free Economy.  However, these systems are
only feasible to the extent that there is a meaningful external price
system to guide judgements (hence, when Socialist states adjust prices,
they do so by bringing them more in accord with those of more Capitalistic
states).  As an administrative system (whether called 'corporation' or
"People's Republic") grows relative to the external market, it supplants
the price system with administrative judgements, which in turn NEED
external market prices to guide those judgments.  So Mr Torek is right
that Socialist systems are feasible -- if they are microsystems within a
market.
     Mr Torek again brings up the hypothetical case of internalizing
externalities by taxation policies.  As I pointed out earlier, such models
are only feasible when the relevant good is not a bad for one of those
taxed; it would be nice of Torek to present us with a real-life example,
but his point does not depend on the existence of such a case.  Rather,
Mr Torek argues that 'A moral/political principle is a generalization; it
is wrong if it is wrong in even one case'.  True enough, and those
Libertarians (like Henry Hazlitt) who attempt to found Libertarianism on
Utilitarianism (or some such), are open to such an attack.  I, however, do
NOT base my Libertarianism on such a foundation.  Why then do I present
economic analysis?  Because many anti-Libertarians do attempt to found
their systems on such bases, and the point that Torek notes on exceptions
also applies to anti-Libertarian systems!  I generally do not involve
myself in non-economic arguments because of time constraints.
     Mr Torek wishes to save his claim that education produces
externalities by noting that education makes possible invention.  If
invention generated externalities, this would provide an argument that
government can promote performance by SUBSIDIZING INVENTION (not education,
for it would not be education which generated the externality).  However,
copyrights (or analogues thereof) capture the externalities which might
otherwise be generated.
     Mr Torek claims that my suggested rational reason for valuing present
consumption over future consumption is 'extrinsic'.  We may be using
incompatible semantic paradigms here, but if I understand Mr Torek
correctly, he is saying that death (and other diminishments of capacity)
are unnecessary and can therefore be excluded from rational calculation.
This is awfully silly, hence my question of semantics.

                                        Back later,
                                        DKMcK