Full text: Some Comments on the Politics of Full Employment.

capitalism are much too strong. In fact it is a basic difference 
between capitalist and socialist countries that in the former 
there is an inherent tendency for effective demand to fall short 
of the possibilities offered by the available capacities and 
ressources which puts a brake on the investment while in the 
latter there is a tendency to overinvestment. A successfull reform 
will therefore probably lead to considerable inflation, to 
increasing inequalities of income, to black markets and to 
corruption. I may at this moment remind the reader that I am 
almost exclusively writing in terms of hypothetical analysis 
because hardly any of the socialist countries has as yet really 
succeeded in bringing about the boom I described. The only 
exception is China where also the results in form of inflation c^n''' 
be duly observed. In some other socialist countries the situation 
is overshadowed by the problem of foreign debt^ this could 
possibly lead to aberrant forms of reform, which would start by 
dismissing redundant labour in unproductive industrie^. Such a type 
of reform would be counterproductive because it would add nothing 
to production or standard of life and only introduce the 
additional problem of effective demand. As long as the redundant 
labour can not be employed elsewhere it makes hardly any sense to 
dismiss it. I shall therefore not discuss this aberrant kinds of 
reform in the following. 
To continue my speculation. It may be assumed that the reformers 
will dismantle a very great part if not the bulk of the controls 
which served to keep the development within the frame of the plan. 
What gives rise to the expectation that they will go far in this 
direction is the fact that the reformer-economists in some 
socialist countries seem to have acquired a belief in the 
charismatic qualities of "the market" which far surpasses that of

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