The Capital Market and the Problem of Full Employment
In this chapter, the problems related to capital (in addition to product and labour) market as a constitutional element of market socialism proper (MS) are discussed. First, high benign consequences expected from the introduction of equity shares market are stressed. Second, these expectations are confronted with the well‐known tendency of the pure market mechanism to underemployment and cyclical fluctuations. Third, the possibilities and limits to attenuate these phenomena by fiscal and monetary policies in MS are analysed. Fourth, the idea of a general capital charge to be levied on every type of asset owned by firms, regardless of the degree of their liquidity, is proposed. This charge aims to solve the general conflict which may arise in MS between a given distribution of national income and the final use of this income needed for securing both optimal utilization of capacity and full employment. However, the authors do not hide formidable difficulties in combining in MS micro efficiency with macro stability at a satisfactory level of economic activity.
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