CAPITALISM, COORDINATION, AND KEYNES - REJOINDER

In the ideal market of general equilibrium theory, choices are made in full knowledge of one another, and all expectations are fulfilled. Th is pre-harmonization of individual plans does not occur in real-world markets where decisions must be taken in ignorance of one another. The Austrian school grants this, but claims that real-world price systems are nonetheless effective in coordinating raving and investment decis ions, which are motivated by disparate considerations. In contrast, Ke ynes held that without the pre-reconciliation of individual plans, inv estment and employment would be less than optimal, and the resulting d istribution of income arbitrary and inequitable.