In market economies prices distribute outputs among households, and they allocate productive resources, which have alternative uses, to the production of various outputs. The price system therefore has distributional and allocational functions in the world of neoclassical price theorists. In a world with capitalist institutions, however, prices will or will not validate past financing and capital-investment decisions as well as distribute income to workers and to owners of capital assets. But the relations between capital-asset compensation and the allocation of capital-asset services to various outputs is not as direct and simple-minded as the relation between labour compensation and the allocation of labour services to various poductions. Time, investment, and finance are phenomena that embarrass neoclassical theory; once problems with capital accumulation in a capitalist environment are introduced, the theory breaks down.
Thursday, 1 January 2009
I'm really getting in to this book now, another snippet below. Neo-liberalism is all well and good, until you have a finance sector...