A CONTRIBUTION TO THE MACRO THEORY OF COMPARATIVE ECONOMIC-SYSTEMS

Within the framework of the general equilibrium model of the firm developed by the author, which features (i) the neoclassical market mechanism for allocation of non-human resources and a cooperative game for allocation of human resources, (ii) a separation of ownership (stockholding) and control (management) of the firm in the capitalistic economy, and (iii) endogenous formation of firms, the following theorem is established: If the socialistic economy can be decomposed into several subeconomies, each satisfying increasing returns with respect to the firm size, then for each equilibrium of the capitalistic economy there exists an equilibrium of the socialistic economy such that the former is Pareto superior to the latter. © 1990.