Micro efficient, macro inefficient

Chris Dillow discussees whether Capitalism Micro efficient, macro inefficient, or not.

One might add that Marxists' main complaint against capitalism is that it is macro inefficient rather than micro inefficient. Their beef isn't so much that capitalism produces too much of one one good and not enough of another, but rather that it had a tendency towards crises; that it is exploitative and alienating; and that it has unpleasant cultural effects, for example by leading us to regard others with greed or fear which, Cohen says (pdf), "are horrible ways of seeing other people." These are all macro problems, not micro ones.

Again, this is not to claim that capitalism is wholly micro efficient; leftists believe that markets over-supply finance, weapons and pollution and under-supply more caring occupations - though whether these are state failures or market failures is moot.

All this poses a question. What sort of economic system does the idea of micro efficiency but macro inefficiency lead to?

We can discount the social democratic option. We know now — as Keynes did not — that macroeconomic policy within market capitalism is not sufficient to create full employment, perhaps for reasons identified by Kalecki or perhaps because capitalists capture the state; still less does it solve the faults alleged by Marxists. Nor am I attracted to the participatory planning of the sort advocated by Robin Hahnel; it seems like using a sledgehammer to crack a nut. This leaves some form (pdf) of market socialism and economic democracy. 

Emphasis Mine

We know the forces of production, under Capitalism, are stupendous. The amount of goods and sevices produced is staggering.

Yet, we still have starvation even though we throw away 40% of the food. We have homelessness even though buildings are empty. We have run-away climate change even though renewable energy sources exist and work. We have unemployed people even though the employed are stressed out over being over-worked. We have poverty in the midst of great wealth.

Capitalism is great at production, but lousy at distributing the benfits.

The central question is who controls the means of production? If a minority does, then the minority benefits. If the people, as a whole, controls it, then the people, as a whole, benefits.

The actual mechanism, by which we achieve the latter, is still under intense discussion.