COWAN@XX.LCS.MIT.EDU (01/05/87)
To: fagin%ji.berkeley.edu@UCBVAX.BERKELEY.EDU
How do you define "unnecessary?" Barry Fagin asks.
Let me give an example of "unproductive economic activity" told by
Seymour Melman at MIT last week. He said, "I do your wash, you do my
wash, we pay each other a dollar, and the GNP goes up two dollars."
Regarding Barry's question--
C'mon, Rich. Just what are 'unnecessary goods'? Unnecessary as
in 'unnecessary for survival'? As in 'shouldn't be produced?' In
whose opinion? Yours? Mine? The State Office of Industrial
Production?
He assumes I advocate a tribunal to decide which brands of paper
towels are necessary and which are not. This is not correct. I am
saying that the economic system makes decisions for us, which actively
promote certain types of activity which would not take place if the
ground rules were different. Under alternative ground rules, the
whole society would be better off: the benefits of prosperity would be
shared by more people. Yes, I am making a judgement that greater
distribution of wealth would be desirable. Would you disagree?
The "free market" is really a myth; today, even in the purest
capitalist system you must have lots of rules and regulations that
define how the market works. That's why the US is now giving China
intensive training in how to organize Western style trading. Whether
these rules promote economic growth tantamount to Melman's laundry
example or not depends on how they are designed. This is a conscious
decision; there is no one way to do it that is "freer" than another.
Rich
P.S. I have never read Galbraith. Don't attribute my views to his
influence.
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