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Excerpt from 

 Oldrich Kyn: Marx and the Mechanism of Functioning of a Socialist Economy

Paper presented at the Belgrade conference celebrating one hundred years anniversary of publication of the first volume of 'Das Kapital’

This paper was written 1965 and published 1968 in OECONOMICA, VOL. III No. 1, Prague

 

At present Czechoslovakia is taking the first serious steps in the implementation of the new system of control of the national economy. …we are aiming at … resurrection of the market mechanism …. In this context the critical problem of compatibility of central planning with the function of market emerges…..

To what extent are our new ideas about the functioning of a socialist economy in accord with Marx's theory? Marx did not think that the market would exist under socialism or communism and he considered rational conscious control of the economy and planning to be the antithesis of the spontaneous activity of the market.

 

 

Marx, … saw the market mechanism as functioning purely on ex post basis….. In a market economy a commodity is being produced for public, but its producer never knows ahead of time whether he is actually producing something that the public would want….The lack of ex ante coordination of production decisions leads necessarily to the spontaneous imbalances and cyclical fluctuations in market economies…. 

Today market does not function solely in an ex post manner. … Almost no producer works completely "in the dark". He always has some information, albeit incomplete, that allows him to anticipate demand and thus to determine what is to be produced. … To what extent it was correct is tested by the market. ….The ex post actions of the market can thus be understood as ex post corrections in those situations where demand has not been correctly anticipated….

 

….the quality of economic coordination provided by the market mechanism … depends on specific circumstances… it can be improved by better information systems and more reliable methods of prediction…The channels of information … have been greatly improved. A much greater volume of information of a much higher quality is gathered and passed on to firms. The speed with which this information is passed has also increased. A very important role in this connection is played by the improvements in central statistical services and by analytical work of diverse market research organizations.
The above mentioned processes can all lead to a great improvements in ex ante decision-making of firms and thus limit necessary corrections which the market must make ex post. We thus see that without eliminating market mechanism the planned coordination and development of the individual parts of the national economy can be strengthened. So the concept according to which the market mechanism acts only blindly, on an ex post basis and leads to spontaneous and unintended development of the national economy, is becoming less and less true.

 

 

 

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