PARADIGMS OF ECONOMIC DECENTRALISATION 49
the following. First, it is argued that the outcome of the functioning of a decentralised economic regime of autonomous, market-linked production units, even when it attains the best equilibrium which it is spontaneously capable of reaching^ cannot achieve, and indeed is violative of, certain broad social objectives. Secondly, it is pointed out that such a regime can settle down at any one of a whole set of possible equilibria, which can be unambiguously ranked in terms of superiority, but of which the most superior equilibrium can scarcely ever be spontaneously attained and would as a rule require central intervention for its attainment. (The first argument can then be reinterpreted as saying that even if the most superior equilibrium is attained it still violates social objectives).
The first of these arguments is too well known to require much discussion. Whether it is the Marxian tradition, or the "cumulative causation" theorists like Myrdal and Kaldor, or even neo-Classical economists from Pigou downwards, each of these strands has argued, based of course on its own unique perception of how the market functions, that the market outcome diverges from social objectives. Each correspondingly has its own remedy for rectifying the situation, which invokes a particular paradigm of state intervention.
All this is well-known. I would like therefore to move on and focus on the second argument. This argument which falls under the rubric of "anarchy of commodity production", in the language of Marxian economics, underscores the fact that decisions taken by one particular micro-unit, have effects which are confined not to that micro-unit alone, but which encompass other micro-units as well. Consequently decisions that appear individually "rational" for each particular micro-unit, when aggregated across micro-units, yield an outcome that is patently "irrational" for all of them taken together and even for each of them individually. If they colluded, i.e. abandoned decentralised decision-making, or if a central authority, in the form of the State, intervened systematically to rectify the situation, then only can this "irrationality" be possibly overcome. It follows in other words, that decentralised decision-making, even when informed by individual "rationality", is fundamentally "irrational" because the units in reality are not separable from one another.
The classic argument of this genre of course is provided by Keynesianism (though the basic idea informs much of Marx's writings and is in conformity with Hegel's dictum: "The whole is not the sum of its parts"). Each firm in a capitalist economy acts "rationally" in taking investment decisions, but the sum total of the actions of all