econ 80a lecture 12

econ 80a lecture 12 - LINDBLOM 1977 (VERSUS O'CONNOR IN...

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Unformatted text preview: LINDBLOM 1977 (VERSUS O'CONNOR IN 1973) [NOTE RECENT UP DATE--- THE MARKET SYSTEM, 2000 not nearly as good nor any different than the original, I think, but basic argument as if not more apt today than in 1977) PART A MOTIVE DISCUSSED IN Chapter 25 "Is there a future for democracy" p. 347, where he sees the following as attributes of our society 1. chaos--veto prone society 2. corporate incentives versus corporate control 3. breakdown of class indoctrination harder to handle the masses Initial discussion---BROAD AND GENERAL LIMITS OF GOVERNMENT (a la Hayek in an important sense) 1. basically in dealing with allocation of resources the government is all thumbs 2. hard to define goal 3. goal is arbitrary---->hard to implement in terms of efficient use or resources quote on p. 75 To Adam Smith, the market system was both a coordinating mechanism and a form of decentralized incentiveto encourage a multitude of individual initiatives that authority systems could not tap. It may turn out to be that societies make a fundamental choice; either coordination over resourcefulness or the reverse. Coordination, we shall see, is the emphasis in much planning theory and in Soviet communism. as well as in some market theory. Resourcefulness is the emphasis in other interpretations of the market system, and in thepreceptoral system. "preceptoral" system is Lindblom s way of characterizing Mao s China and Fidel s Cuba .otherwise, however, the government is quite powerful via coercion LIMITS OF MARKETS usual defects i.e., widely recognized diverges from perfect competition (pareto optimality) 1. cost of information 2. private vs. public costs and benefits (other systems can deal with these issues but may not, and ignoring them helps explain rapid economic growth) 3. costs of transactions---buying and selling, but similar costs exist in other systems ---not cost of "diversity" 4. monopoly 5. public goods additions to the list i.e., Lindblom s additions 1. relies on voluntary actions...how to deal with emergencies, poverty, war, natural catastrophes... 2. insecurity and instability...market places burden on individual...recognized by Hayek enter Keynes, as a major contribution to society "Since then [the depression of the 30s,] Keynesian innovations in economic theory coupled with national income accounting have transformed these systems, a transformation that may represent man s greatest accomplishment so far in the direct application of social science to social problem solving." [emphasis added, p. 83 ] 3. corporate discretion...do they lead to "proper" decisions [ becomes a core issue below ] 4. inappropriateness of individual preferences...hair spray etc, but what's the alternative 5. moral objectives...motives of gain etc....
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This note was uploaded on 09/18/2011 for the course ECON 80a taught by Professor Kaun,d during the Spring '08 term at UCSC.

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econ 80a lecture 12 - LINDBLOM 1977 (VERSUS O'CONNOR IN...

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