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Economic Calculation Reloaded: “the Economy” of the Public Sector

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fotolia_36692129_xs_0The argument of the economic calculation does not magically vanish once we leave the institutional realm of socialism, I’d say on the contrary. In every economy considered nowadays, with frequent excesses of vocabulary generosity, a “free market” economy, there exist many instances in which the resource allocation faces totally different exigencies from those specific to the economic calculation. The common ground is concerned with the same ex-economical level of institutional arrangements that programmatically or contextually exclude the private propriety. We are talking about the territory firmly occupied by the state bureaucracy, the one that invents myriads of ”public” domains that are incorporated in a pyramidal way in what is named today, in a scientifically contradictory way, “the economy of the public sector”. Any current economy involves or gravitates towards a public sector. By definition, the public sector includes the activities whose results, namely the public services – security, education, public illumination etc. – don’t have monetary value on the market. Thus, the use of economic calculation in the public sector faces the same unshakable theory of impossibility, hence the (systematic) circumvention of the public sector from the market test, from the continuously changing balance of profit and bankruptcy. The market test is simply not compatible with the nature of public sector, especially with state-owned or municipal enterprises, with public services as security, justice, education, health, road infrastructure etc.

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Cosmin Marinescu