Reply To: Economics of State Sadism.

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`1. Free market systems under strict regulations are proven to work very well, these include the Scandanavian model and China’s “communism with Chinese characteristics”. Regualations do not necessarily create, a situation where there is unnecessarily red tape, but can be used to improve market efficiency and overall welfare.

2. In North Korea , there is likely a big political anxiety towards opening up free market for consumers, privatization of factors of productions in the economy, or other economic agents and foreign direct investments. This anxiety may be justified in a theoretical sense, as the transition for highly centralized economies, with a control of basic and other consumer good, to less centralized and more free market emphasized systems, have happened to create a situation of societal corruption (Secondary markets underground prices, and spending on items with low utility value). So private businesses may not necessarily be, the only economic means to improve productivity and welfare by itself. There may, also be a large requirement for.
– Improving business/private market information and accountability practices for the state.
– Creating an incentive system for management of private businesses, emphasis on localized levels giving local administrators a high level of flexibility.

3. The problem of inequalities as state by your response, based on the market and bargaining power of private businesses, has to be solved separately in Totalitarian states and more political open free market states. The range of problems, and their solutions are very large so discussion on this will last forever, however in my mind, few cornerstone steps to improve economic success of the state overall requires these few steps.
Totalitarian – command economy system.
– A highly transparent market information system, a system of economic accountability to, increase market information, and a large effort to translate this into analysis for decision makers at different levels, given the emphasis on local flexibility in economic management.
– A strict rule of law, or if the legal system is not reliable then. A heavy investment accountability practices of state and other economic/social agents, with the force of compliance enforced by possibly, (if the judicial is inefficient) from non judicial entity such as the security apparatus or anti corruption body.
– A strong guidance department, for combating non compliance and other malicious activities, and the coordination of the 2 points above.
– An emphasis, on setting personnel accountability for middle and higher level administrators, and leaders.
– Giving positions of responsibilities, to more merit based promotions through a technocratic system.

Free Market System
– A strict rule of law.
– To educate, and promote public understanding to, the use of state intervention, to create market efficiency and welfare, as to improve public participation to government initiatives in relation to social welfare.
– To make, business’s with high national importance, quasi state controlled entities, with the interest of the state as a significant priority.
– To manage, with greater legal and permit-able efficiency, the incentive for accepting compliance to private individuals.