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Cutting the Gordian Knot of GE Theory

Victor Aguilar

posted on 20 November 2013

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In the context of GE Theory, the conditions required for capitalism to be efficient are implausible in practice, though conceivable in theory.  The former implies that the free market is always inefficient.  The latter implies that a central planner can mimic how capitalism would work if it were efficient while the profits and interest generated by the operations of publicly-owned business enterprises would be distributed to the general public as a social dividend.


In the context of GE Theory, there is no way for libertarians to get around this dilemma without being impaled on one or the other horn.  Either we live with a system that can never be efficient in practice or we have an efficient system but renounce private property rights and put distribution of the “social dividend” in the hands of a central planner.


Is there another way?

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