d8f27ddf   
   XPost: soc.culture.baltics, soc.culture.czecho-slovak, soc.culture.russian   
   XPost: soc.culture.nordic, soc.culture.baltics   
   From: holman@mappi.helsinki.fi   
      
   In article , David Friedman   
    wrote:   
      
   > In article   
   > ,   
   >  holman@mappi.helsinki.fi (Eugene Holman) wrote:   
   >   
      
   > >   
   > > Well, consider some of the implications. This trade enabled both parties   
   > > to bypass such basic principles of capitalist economics as interest,   
   > > profits, losses, financing, and middlemen.   
   >   
   > Nonsense.   
   >   
   > The "trading company" described in the earlier post was a middleman. So   
   > were all the people, Finnish and Russian, engaged in arranging the   
   > particular deals in the barter exchange.   
      
   They were civil servants working for the two governments, not free agents   
   working on a contractual basis.   
      
   > There were still profits and   
   > losses, even if they didn't show up on the accounts. There was still   
   > financing--the Finns had to pay the costs of producing the baggy suits   
   > in advance, before getting oil in exchange that they could sell.   
      
   True, but they knew precisely when the USSR would pay. Only during the   
   final two or three years of the USSR, when their economy started to go   
   into meltdown, did the interval between expected and actual payment become   
   a problem.   
      
   > Or in other words, the things you regard as unnecessary difficulties   
   > created by capitalism are a part of the costs of production and trade,   
   > whether or not they are labeled as such.   
      
   Large amounts of goods or money changing ownership always generate   
   opportunities for middlemen to gat a cut of the action. Still, the purpose   
   of the barter system was to minimize this "evaporation".   
      
   >   
   > You might want to think about why, if your view of capitalism as an   
   > unnecessarily inefficient system is correct, not only the Soviet Union   
   > but every other country that has tried to replace it with a socialist   
   > system--government ownership and control of the means of production--has   
   > done much worse than successful capitalist countries, instead of much   
   > better.   
      
   It is not *my* view that it is an unnecessarily inefficient system. That   
   was the thinking behind Finnish-Soviet trade, particularly on the Soviet   
   side.   
      
   As to government ownership of the means of production, it seems to me that   
   the most successful capitalist countries have marginalized, but not   
   completely excluded, the governmnt from owning the means of production.   
   Railway and power-generating systems are the stock examples. In most   
   capitalist countries the government allows the flagship airline to operate   
   as a quasi-provate company, in which the government owns a majority of the   
   shares.   
      
   > One case you might put down to special circumstances, but all of them?   
   >   
   > > Additionally, it enabled them   
   > > to avoid such factors as fluctuating prices, business cycles,   
   > > cancellations, and fickle markets.   
   >   
   > Again no. Finns who accepted payment in oil they weren't going to use   
   > themselves were taking the risk of fluctuating prices on the world oil   
   > market.   
      
   True. However, having an innovation-driven capitalist economy, the Finns   
   knew how to add value to crude oil by using it as raw material for   
   producing products worth far more. The rigid Soviet system did not allow   
   for such flexibility and improvisation.   
      
   > Russians "firms" that had agreed to take a particular quantity   
   > of Finnish goods were at risk of discovering that the other "firms" (all   
   > governmental organizations, of course) they intended to trade those   
   > goods to in exchange for things they wanted no longer wanted as much of   
   > those goods as expected.   
      
   The Soviet market was so rigid that the goods almost always found a   
   market. Particularly in the smaller cities, it was "baggy suits or   
   nothing". Consumers often bought stuff, sometimes in quantity, not because   
   they needed it, but because they thought they might be able to trade it   
   for something more desirable or use it as a bribe.   
      
   > Firms in capitalist economies can make long term contracts too, and   
   > often do. More often it turns out that the costs of doing business that   
   > way are larger than the benefits, so they don't.   
      
   They often opt for the long-term contract if the only other alternative is   
   no trade at all.   
      
      
      
   Regards,   
   Eugene Holman   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)