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Another try at a comment thread

September 14th, 2006

I’m having another go at opening comments on the Fabianism post below. I think the problem is that the ideology under discussion is objectionable to my spam filters, not for political reasons but because it contains the name of a well-known treatment for male performance problems.

Anyway, if you have comments, you should be able to post them here, but try to avoid the text string in question.

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  1. Hank Reardon
    September 14th, 2006 at 10:58 | #1

    Mr Quiggin,

    As a relative newcomer to your blog I had you picked as a true Fabian Socialist. Given that you are so easily prepared to say that socialism still remains the best hope for the future why would you then choose to refer to yourself as social democratic. What are the key differences between the position you state as holding and true socialism being what you believe in?

  2. jquiggin
    September 14th, 2006 at 11:43 | #2

    A good question, Hank. I prefer “social democratic” because it clearly refers to the set of policies implemented and advocated by social democrats in the second half of the 20th century, including a mixed economy, an active welfare state, government responsibility for full employment and so on.

    By contrast, socialism is less well defined. It can mean comprehensive public ownership, which I don’t support, or it can be just a general statement of values and aspirations, consistent with social democracy.

    My reference to the best hope for the future was a bit ambiguous. I meant it to refer to the socialist tradition as it is embodied in social democracy.

  3. taust
    September 14th, 2006 at 13:04 | #3

    Socialism has let us face it ‘baggage’.

    Much more important for the left is explain what does it stand for.

    Does it stand for the interests of well organised victim groups & ethnic groups?

    Whilst I think the answer to that question is no. It has a ethos that is more than representing the interst of such groups. In practice it would be hard to defend the left from the charge.

    Does the left believe in supporting subsidising special interest industry sectors.

    Government responsibility for full employment is a good test case for development of a left ethos that can resonate with electors.

    What can I expect from a left government in the way of policies demonstrating government responsibility for full employment that would be significantly different from the policies being used now.

    What insight into achieving full employment by government action has the left got that is different from the neo-conservatives.

    Of course one could ask does the left exist anymore?
    What are the real political difference between people? The Latham question. (my apologies for mentioning the name of the devil in leftist circles I hope it does not give you trouble with your spam filter again).

  4. Bring Back EP at LP
    September 14th, 2006 at 13:36 | #4

    to be a fabian is to be well red

  5. September 14th, 2006 at 16:23 | #5

    In the below I will replace the “i” in the subject word with ! to get around the filter. No other intent should be read into it.
    The problem that democratic soc!al!sm has (IMHO) never really dealt with is the inherent contradictions between the aims of full employment, “social justice” and the freedoms of liberal democracy. To me at least it is clear you can never have all three – and even two together are tricky. This, to me, is why the soc!al!st movements are losing steam and favour.
    The problem is that the goal of social justice normally means either or both of two things – a minimum wage where the minimum is above the productive capacity of some members of society, resulting in persistent under- or unemployment; and / or a strong welfare state, where the resulting high tax rates and / or intrusion into the citizen’s lives becomes increasingly incompatible with the goals of liberal democracy.
    If anyone can convince me that all three are not mutually incompatible I would like to hear it, but I have not seen any evidence where it has worked for any decent length of time.

  6. James Farrell
    September 14th, 2006 at 16:32 | #6

    I agree that some reference to socialism or at least social democracy needs to be retained. With the changes proposed, one could see the society becoming a haven for refugees from the Democrats.

    But I think you need to be clear whether you really want collective ownership of all resources. I don’t mind having restrictions on various kinds of private property rights; and I want outright state ownership in certain areas. On the other hand, I’m not in a hurry to start nationalising the banks or anything like that. So I’d need to know whether that was a core objective.

    Also, objective ‘a’ in your own proposal is rather indigestible. Can’t it be broken down a little?

  7. Paul Walter
    September 14th, 2006 at 18:55 | #7

    Why is Fabianism, which I would regard as basically the same thing as Democratic Socialism anyway, slipping unde the radar as a viable option for the arrangement of human affairs?
    Firstly, consumer capitalism has produced to much that occupies the public’s limited mentality else where. Diversions range from the war on tourism to Jennifer Lopez’ latest cosmetic surgery, to stuffing oneself full of junk food that has probably cost enough resources to deny half a dozen third world people a good feed.
    Secondly, we need to consider the related point of overtly political propaganda and the propaganda machine, something being denied this very day by Sen.Coonan. In a nutshell, too much Janet Albrechtsen, Ray Martin, Gerard Henderson and Ted Lapkin and not enough genuine and well-presented current affairs at the right time.
    Finally, the problem of leadership and communication. Beazley, Bracks, Blair, McClelland and so forth themselves are all closet socially conservatives. Their factions have captive the only large scale organisations capapable of mediating and moderating neo liberalism and Globalisation- Labo(u)r parties.
    The Beazley idiocy over compulsory Australian (Addams Family?) “Values” Declarations by Muslim visitors is a case in point. Rather than demanding that Howard actually lead by example and do the difficult part; the PRACTICING of “values” and rather than asking what these nebulous “values” are, he reinforces neo-con ideology of an actual war on terrorism, that justifies the indeterminate relegation of genuinely serious social issues and debates.
    The writer is well-aware that bloggers have commented on the difficulties of legislating morality, etc- especially when it comes to the scandalous “problem” of “stealing” from the wealthy, through a bit of tax, to put a bit back into the world these have usually so assiduosly pillaged, that so generously sustained them.
    But the rule of law and spirit of justice worked for a while under Keynesianism, and we must remember that “globalisation ” is only Capitalism’s sly attempt to side step Democracy by going multi-national. Now, more than ever Fabianism and social democracy are needed, rather than being obsolete ( a black propaganda notion), for obvious reasons involving the maintainence of democracy

  8. ansteybranchopolous
    September 14th, 2006 at 22:18 | #8

    when I went to join the Fabians last year Race Matthews told me by email you had to be a member of the alp – so long as that joke of a party monopolises the brand I’ll have nought to do with them.

  9. September 14th, 2006 at 22:23 | #9

    Just quickly – re: the supposed incompatibility of socialism and liberal democracy – For me, the core tenets of liberalism include: equality before the law; freedom of speech, assembly and association; a consequent pluralism, and a balance of legislative and constitutional arrangements and power that defends these core liberties from the arbitrary exercise of power.

    Now, some will say that liberalism implies ‘getting goverment out of people’s lives’, ‘low tax, small government’ etc. In the US, the opposite is the case, where liberalism is commonly seen as another term for what the rest of the world knows as social democracy. For me, so long as one retains a commitment to civil liberties, then that is at the core of the liberal ideology – and one who combines such values and beliefs with a socialist commitment to either – at one side of the spectrum – sweeping social ownership or – at the other – a mixed democratic economy – can legitimately call themselves a ‘liberal socialist’.

    The socialism I espouse is one of a ‘democratic mixed economy’ that combines wage earner funds with mutalism, co-operativism and public infrastructure, collective consumption and services, and Government Business Enterprises. (GBEs) I don’t see this as being incompatible with liberal democracy, and I believe that a ‘mixed democratic economy’ leaves plenty of room for an independent and diverse civil society and public sphere – and a thriving private sector – as in Sweden, Finland, Denmark etc. It also leaves plenty of room for pluralism, and checks and balances defending core liberties. I don’t think we need to choose: liberalism OR socialism – the Italian anti-fascist demonstrated this with a determined commitment to liberal socialism – and a landmark book on the topic.

    On the other hand – I do concede there may be some restrictions on pluralism by encoding social rights constitutionally as I would prefer. But, to be fair, a liberal constitution excludes absolutist ambitions – and why ought social rights – eg: to education, health, aged care, employment, freedom from poverty – be seen as secondary to liberal rights?

    I suppose you could just as easily call me a social democrat as a democratic socialist. For me, really, it’s a false dichotomy anyway: an opposition that made sense during and after the First World War – but which doesn’t make sense given the plurality of socialist position today, and the loss of any illusion that communism on a grand worldwide scale is possible. When the battle to reconstruct political language is, for me, a key struggle – a struggle to re-radicalise the idea and culture of social democracy – and smash the outdate opposition beteen social democracy and socialism.

    Anyway – what is happening in the Fabian society is really the dissolution of democratic socialism and social democracy – the same movement in my opinion – into a kind of liberalism: and only a ‘kind’ of liberalism – because the society increasingly accomodates the full spectrum of Labor ideology – and not all Labor ideologues are liberal by any stretch of the imagination. I see this as a potential setback for the social democratic/democratic socialist movement – as I think I say – a narrowing of the political field with a consequent impoverishment of the public sphere/civil society.

    Anyway – I look forward to further debate here, and thank John for being so kind as to publish my article on his website.



  10. September 14th, 2006 at 22:27 | #10

    oops – I forgot to mention which Italian anti-fascist I was talking about – I meant to say Carlo Rosselli – if anyone’s interested. Thanks.

  11. September 14th, 2006 at 23:20 | #11

    It is those “social rights” that are the dispute – are they rights, properly so called, that any and every member of our society is entitled to? For an adult member of our society, is there a right to education? Is there a right to health? Is there a right to aged care? Is there a right to employment? Is there a right to freedom from poverty?
    These are, for an adult, in a fundamentally different class (IMHO) to the right to freedom of conscience, the right to participate in the democratic process (etcetera) which I presume you count as the “liberal” rights.
    If, as an adult, I have the right to be employed, is that in the same class as the right to life? I breathe, therefore give me work?
    To me, the (as you term them) liberal rights are rights, properly so called, which should only be limited insofar as they unduly impinge on others ability to enjoy the same rights and only removed or further limited by the actions of a court of law.
    The other “rights” identified must be further limited than that – removing them (again, IMHO) from the class of “rights” altogether, making them merely privileges at best, to be added to, reduced or removed as needed or desired by the society as a whole, through a democratic process.

  12. September 15th, 2006 at 00:24 | #12

    Psst! Anyone wanna buy some Cialis?

  13. Hank Reardon
    September 15th, 2006 at 09:40 | #13

    So what is the role of capitalism in all of this then?
    I’m interpreting the advocacy here of a “mixed economy” is in some way singing capitalisms praises and being a virtual admission of socialism not being able to work.
    Or was this discussion topic just a quest for claiming the middle ground?

  14. jquiggin
    September 15th, 2006 at 10:01 | #14

    “I’m interpreting the advocacy here of a “mixed economyâ€? is in some way singing capitalisms praises and being a virtual admission of socialism not being able to work.”

    Or equally, singing socialism’s praises and a virtual admission of capitalism not being able to work. As the name implies, the mixed economy is a mixture of the two, the idea being to ge the best of both. As you say, it occupies the middle ground, which helps t why voters throughout the developed world like it so much.

  15. September 15th, 2006 at 10:31 | #15

    I think it depends on what you mean by capitalism. Is capitalism any economy governed by private ownership of the means of production? Or is it only characterised by private ownership of the ‘commanding height’ of economic activity? Is it possible to have a world with private capital coexisiting with mutiple forms of social ownership, and still call this socialism? I think it is. I think the original objective of universal state ownership is too ambitious and cannot work. I do think, however, that ideally wage earner funds should control the ‘commanding height’ of economic activity along with mutual societies, co-operatives, public infrastructure and service, GBEs etc.

    We are, however, a long way away from this, and as Bernstein recognised, socialism is not just a ‘final aim’ : it is a MOVEMENT. And, as a movement, socialism has the aim of eliminating exploitation and facilitating various forms of social redistribution and collective ownership. Whether or not seeing this as reaching a ‘final aim’ is dubious – as I don’t think we ought be outlawing private ownership of small business, or self-employment, and we cannot even realistically socialise the ‘commanding heights’ as is for fear of financial instability and capital flight. What we should be doing, however, is establishing support structures for co-operativism, including genernous tax incentives, and provide interest free loans for collectives seeking to take over their workplaces as co-operatives.

    In the long term, however, we should still talk about socialising or democratising the ‘commanding heights’: especially as democratic wage earner funds get a solid grip on a national economy – and we should unite with the world democratic socialist/social democratic movement, to counter the destabilisation that may be caused by finance capital, and to establish an international strategy to resuscitate the idea of collective ownership, and put this strategy into practice. I think such strategies are definately socialist – but whether they are post-capitalist?? Well – they do not abolish private capital – the wage earner funds themselves would extract surplus value from workers in enterprises they own – so the scenario would not be without contradiction. But it still heralds a democratisation of the economy, and of broader society – and as a situation where a form of capitalism and a form of socialism co-exist – I think it is something worth fighting for.

    Re: claiming the middle ground – I think the ‘middle ground’ is something we continuously define and contest, and the aim of any movement ought to be to contest and define the relative middle ground and ‘make it theirs’. In the post-war environment, Keynesianism was the mainstream economic ideology. I think, now, we need to fight to reconstruct the intellectual and ideological environment again – but this time also to fight for a radicalised social democracy that, like Sweden in the 1980s (I think) – attempts to take the battle for economic democracy ‘one step further’.



  16. September 15th, 2006 at 10:35 | #16

    Also – I’ve seen an argument that ‘liberal rights’ are rights, and ‘social rights’ are not – but what is it exactly that makes the right to a living wage, or to nutrition and shelter, less imporant than free speech? What is this other than bourgeois ideology? Rights are about creating ‘a good society’ – both for the individual and for social groups – and remember social groups and classes consist of individuals. Social rights are key to ‘creating a good society’. In a ‘good society’, the right to a living wage ought not be constructed as a ‘privilege’. I’d like to see more arguments about why exactly ‘liberal rights’ are superior to ‘social rights’ – or, on the other hand, why we ought consider them equal. (as I do)


  17. Hank Reardon
    September 15th, 2006 at 11:12 | #17


    I think the answer lies in the fact that one set of these rights are genuine and one set is bogus.
    On the capitalist side they speak of rights such as the right to live your own life, to earn your own living, to own what you earn, the right to think your own thoughts and the right to speak your mind.
    On the socialist side there are rights to free medical care, education, a living wage, welfare, nutrition, shelter, and the right to be spoken of in sensitive terms.
    Can you see the problem? All of these are completely incompatible and can’t all be rights.
    The conundrum here is that if you believe these to all be rights then we venture into the realm of the concept of a right to violate rights. If everybody is supposed to have the same rights then this concept is of course ridiculous and solving which set of “rights” is bogus needs to be identified and agreed upon.

  18. September 15th, 2006 at 11:34 | #18

    Well – what you call ‘capitalist rights’ are not necessarily ‘liberal rights’. True, some of the ‘rights’ you ascribe to capitalism are incompatible with social rights. But social rights are not incompatible with liberal rights – and this is how I come to insist on a liberal socialism. I believe both in strategic social ownership, a democratised economy, and in civil liberties.

    Rights are constructed and contextual – not absolute – but we construct them as being absolute in order to better entrench and defend them. Personally, I do not believe that a person has the ‘right’ to all their income – and hence be free from tax – with the consequence that government, social services and welfare – collapse. Taxation and social expenditure are part of the social contract – and social redistribution and expenditure are fair so long as we have ‘no taxation without representation’. Leaving ‘the market to sort us out’ when it comes to health care, education – even whether or not we have decent nutrition and a roof over our heads – is fundamentally injust and inhumane. The ‘market’ does not have ‘magical’ properties that allow it to fairly and justly distribute life chances, life’s necessities and opportunities.

    BTW, though – if you insist that we have the right to all the wealth we produce, then the consequence of this would be the abolition of capitalism – as last time I checked employment of labour still entailed the extraction of a surplus.



  19. September 15th, 2006 at 12:15 | #19

    By that last comment you seem to be straying into the territory of the labour theory of value. Do you mean to say that the contribution of land, capital and organisational ability to the productive process is of no value? The supposed “surplus” is (IMHO) a nonsence – without any of these factors there is no production and labour becomes valueless. It is all co-dependent and the removal of any one renders all the rest worthless.
    On your other point – just because of supposed or possible market failure in an area does not mean that the government needs to step in. There should be a further step to ensure that the actions of the government does not make the situation worse and that private charity cannot do better.
    The “logic” that identified market failure means that governments must intervene is simply flawed.

  20. September 15th, 2006 at 12:52 | #20

    I would encourage you to read this piece on Catallaxy which, I feel, puts a case opposed to yours very well.
    Essentially, and argued from a differing start point, it provides an answer to the question on where the will of the majority, even where expressed through a democratic process, should have the right to over-ride an individual’s will as expressed through their actions.

  21. Hank Reardon
    September 15th, 2006 at 13:45 | #21


    To settle the argument we need to establish a test for what a right is to see whether or not it qualifies for being called a right and we need to establish how a right can be impaired or infringed.
    Best definition I ever heard ascribed to rights is “A right is a moral principle defining and sanctioning a man’s freedom of action in a social context.”
    Now given we all want to live in a peaceful world the best test for a right in my opinion is whether it prohibits or authorises the initiation of force. A “right” that authorises the use of force will be bogus and the right that prohibits force will be genuine.
    Does this sound fair enough? Is this the best test for establishing the bona fides of a right?

  22. September 15th, 2006 at 16:26 | #22

    I don’t see what you’re getting at with ‘the use of force’. The state inevitably has to resort to force to uphold its laws. Is someone is guilty of tax evasion, then it is up to the courts and legal authorities to hold them to account. The physical safety of citizens is, in last resort, garaunteed by the state.

    Where the state fails is to uphold liberties, by arbitrarily suppressing dissent, then its acts are not legitimate. But without an element of co-ercion, no-one would ever pay tax, social services would be unaffordable, violence between citizens would possibly escalate etc. Even a liberal understands that the apparatus of state must be used to enforce the social contract. Where I disagree with the current arrangement, is that the state apparatus is used for all manner of other reasons that are incompatible with our rights and liberties – eg: ‘sedition’ legislation, suppression of strike action and onerous sanctions for those who attempt to exercise their legitimate right to withdraw their labour etc.

    re: the labour theory of value – I recognise that capital invested in a firm represents past labour – and that, fairly, there should be a return on investment. But – as is – that return is limitless, and ultimately an employee will contribute value to a firm that makes up for this investment, and yet nevertheless a surplus will continue to be extracted. This is exploitation.



  23. September 15th, 2006 at 16:28 | #23

    ansteybranchopoulos, you’ve got it wrong.
    You don’t necessarily have to be in the ALP but you may not be a member of another political party.

  24. gordon
    September 15th, 2006 at 18:03 | #24

    Times change. It is much easier now to say that one is gay than that one is a socialist. It is very hard to advocate protectionism, often hard not to be republican. It is not because socialism or protection have been discredited or republicanism “proved right�, but because it is fashionable. Few opponents of socialism, advocates of free trade, or republicans can do much more than mouth a few stock phrases in argument about these things. It is not long before they appeal to authority, become personally abusive or wander off in search of a drink. Holding the right attitudes is a class badge, not proof of reasoned conviction.

    Prof. Quiggin has posted on “soft power” several times over the last few years, and I can see why. I very much doubt whether these changes in what is socially acceptable in middle-class circles represent anything more than the successful exercise of “soft power” over the last couple of decades. But its penetration is limited; the sudden and unexpected success of Pauline Hanson a few years ago showed how selectively and superficially “soft power” has affected Australian attitudes to these issues.

    The Hanson phenomenon also showed to what lengths people will go to stop the boat being rocked, and that in turn revealed that there are real stakes being played for here, not just whether somebody you haven’t met before is “U� or “non-U�. The class badge is also a ticket to a gravy train. In their March 2006 discussion paper (N0. 514), Atkinson and Leigh state: “During the 1980s and 1990s, top [Australian] income shares rose rapidly. At the start of the twenty-first century, the income share of the richest was higher than it had been at any point in the previous fifty years. Among top income groups, recent decades have also seen a rise in the share of top income accruing to the super-rich. Trends in top income shares are similar to those observed among other elite groups, such as judges, politicians, top bureaucrats and CEOs.�

    It is not surprising that socialism is unfashionable; it is always fashionable to be rich and never fashionable to be poor. And yet Australians, of all people, should know that it is possible to live in the middle. This once was a pretty egalitarian society, and within living memory, too. But when the middle is squeezed, you have to work out which way to jump, and up is better than down. When wild women like Pauline look like upsetting the applecart, it’s not surprising that some pretty shady tactics are used.

    So if most anti-socialist, pro-immigration republicans are really doing no more than buttering their bread in times of stress (or trying to meet people who they hope will butter it for them), what price a debate about socialism? Not much, I think, unless it turns on exactly why and how Australia abandoned an egalitarian ideal. That issue is worth a lot more analysis than it has received.

  25. September 15th, 2006 at 19:07 | #25

    While the State also continues to enforce such things as the inability to sack a worker without cause and without notice (which it does, even after WorkChoices through the civil courts) then the moves the other way just represent a balance of state power. As for ’sedition’ legislation, you will not find many except big “c” Conservatives who agree with this.
    As for the return to capital being limitless – it is only limitless in the sense that the return to any factor is limitless. The return to labour is also ‘unlimited’ in the same way. I repeat: the use of all four factors is crucial. The returns to each reflect, correctly, their relative scarcity and importance to the productive process.
    A failure to recognise this will condemn your viewpoint to utter irrelevance (IMHO).

  26. September 15th, 2006 at 19:39 | #26

    re: Pauline Hanson

    One Nation are a curious phenomenon. While, on the one hand, they represented a reactionary and prejudiced attempt to enforce a single ‘template’ of national identity – of the kind you would expect from the Conservatives – on the other hand they represented policies such as the re-establishment of a peoples’ bank. This side of One Nation is something you rarely hear discussed – the populism of Pauline’s appeal derived from her appeal to anxieties about national identity, the desire to hark back to a mythical monocultural past, Asian immigration etc. But it is sad that it is left for the likes of One Nation to promote traditional social democratic policies for the economy, while the ALP swallows the neo-liberal bait hook, line and sinker, and even the Fabian society now is concerned that socialism is ‘unfashionable’, and thus the National Executive decides to relegate about half a century of commitment to socialist reform to ‘the dustbin of history’.

    Meanwhile, those on the fashionable ‘liberal left’ maintain a respect for diversity and for liberal human rights on the one hand, while abandoning any pretence of egalitarianism, or substantial policies in the way of progressive taxation, labour market regulation and social expenditure to eliminate poverty and provide for real social justice. It’s a matter of just how far the relative centre has shifted in recent years that traditional social democracy is derided as the politics of ‘Old’ (and hence irrelevant) ‘Labor’, while the so-called ‘cultural left’ entertains the notion that ‘anything goes’ – except the upper middle class intelligentsia have to pay a fair degree of tax to help provide for the welfare state objectives that, for a while, under Whitlam, were considered mainstream. And you’re right – it is a matter of FASHION. For instance, it is fashionable these days to refer to almost any progressive utilisation of state power as ‘statism’ – and amongst today’s fashionable liberal cultural ‘left’ this is a definate ‘no-no’. Of course, this involves abandoning traditional social democratic policies such as redistribution through the tax transfer system, progressive cross subsidisation through public infrastructure and GBEs, universal provision of infrastructure and services in communications, banking etc that the market does not cater for – but the neo-liberal ideology is hegemonic – and the fashionable ‘left’ dares not challenge it in any serious way. And it is for the sake of pandering to this FASHION: of not taking the risks associated with a commitment to liberal socialism, and the work of argument and persuasion this involves: of SHIFTING the relative centre rather than opportunistically adjusting to it to reap maximum political advantage – that we now see the wilful and deliberate liquidation of socialist tradition, and the closure of that small space that remained in the public sphere for the discussion of socialist and social democratic ideas.


    As for exploitation – even under a regime of wage earner fund socialism, the captial invested in wage earner funds would involve the extraction of surplus value from labour. And yet, I think, this is one of the best viable scenarios I can imagine. Even in a best case scenario, the elimination of exploitation is almost unimaginable. My recognition of this political reality, I think, leaves my arguments in a very relevant position. But exploitation is still exploitation, and should be identified as such.

  27. gordon
    September 15th, 2006 at 23:00 | #27

    Tristan, the centre is certainly shifting. I tentatively identify two ways of marking the shift. First, the idea of public interest is either dying or being radically redefined. It used to be commonly assumed to exist (you didn’t have to redefine it every time you mentioned it) and arguments were had about whether particular proposals were “in the public interest” or not. This no longer seems to occur, or when it does the whole discussion degenerates into pointless hair-splitting arguments about what the public interest means.

    Second, the idea of a government which governs (in the public interest) seems to have been abandoned in favour of a concept of government as a sort of United Nations of vested interests dominated by a kind of Security Council of the most powerful ones. Everything by negotiation and no really powerful interest ever offended. Only a political scientist would regard such a government as democratic on any definition.

    Behind the decline of the public interest one may discern the constant boosting of the individual, conceived as a sort of franchisee of globalisation, borrowing his/her chips from the finance capital franchisor and playing the game that he/she will almost certainly lose, but, as we always say, “you’ve got to be in it to win it”. We have forgotten that it’s not (necessarily) the only game in town.

    It is curious that Australians should find it odd that Pauline Hanson should simultaneously embrace racism and “…policies such as the re-establishment of a peoples’ bank. This side of One Nation is something you rarely hear discussed – the populism of Pauline’s appeal…” One Nation’s policies had a marked resemblance to mainstream policies of the early years of the 20th century. Why the surprise?

  28. September 16th, 2006 at 11:12 | #28

    I suspect that, having swallowed the mantra of socialism whole, you have not emerged sufficiently from academia (or some other world divorced from reality) sufficiently to realise that what you call “exploitation” is just what happens when people happen to work together or for each other.
    Our good host here well knows that the processes of people freely agreeing to interact economically with each other (a process often termed “the market”) can and does provide many of the answers to economic problems. Lose your evident prejudices against it and your analysis may be improved.

  29. September 16th, 2006 at 12:20 | #29

    Andrew – exploitation of labour is understood in two ways. Firstly, there is the view that exploitation of labour simply involves unfair or unjust working conditions or wages. Secondly, there is the view that exploitation involves the expropriation of a surplus. The second definition is not very fashionable given its origins in Marxist economic thought, but I do still believe that an expropriation of a surplus occurs – and that this is a useful mechanism for understanding this process. As I’ve said before, though, I don’t believe there is any simple remedy to this problem. Universal state ownership stifles innovation and competition. Co-operativism and mutualism provides one response – but in order to remain competitive there are great pressures for organisation to de-mutualise or abandon co-operative ownership in mergers aimed at securing better economies of scale, and greater inflows of capital. Even the solution of wage earner funds, while democratising the economy, sees the expropriation of a surplus by workers from other workers. That’s why I don’t believe the Marxist dream of ending exploitation once and for all is feasible. I do believe, however, that the pursuit of a mixed economy; involving GBEs, public infrastucture, strucutural support, financial support and tax incentives for mutualist and co-operativist enterprises, the establishment of democratic pension funds, the establishment of works councils in business enterprises: all ameliorate the problem, and are policies worth pursuing – to further the ends economic democracy.


  30. September 16th, 2006 at 16:03 | #30

    Just to be clear. Are you using the terms “exploitation” and “expropriation” with negative connotations? I assume you are. If not, please let me know and ignore the following.
    I see “exploitation” and “expropriation” happening when the individual has no real choice between economic (or non-economic) options. The marxist “dream” as you put it is, therefore for me at least, the ultimate in “exploitation” and “expropriation”. I also see GBEs, public infrastucture (for the most part), strucutural support, financial support and tax incentives for mutualist and co-operativist enterprises, the establishment of democratic pension funds, the establishment of works councils in business enterprises all as further examples of “exploitation” and “expropriation”.
    A government, if it is operating reasonably effectively, essentially enforces a monopoly on the use of force. To use that monopoly to limit my choices as an individual, except where my choices effectively limit others choices as wrong.
    Government business enterprises are particularly pernicious. Typically, and almost universally, they are less efficient than an equivalent private sector enterprise as they do not have the disciplines that come with having to operate with competition. Governments then have to prop them up or declare a monopoly, further harming the situation. Telstra is a great example – a mightly monolith that held back telecoms in this country for years and taking advantage of its monopoly power to hold things back. They are still doing this through sheer market size.
    I have no problem with mutuals or other such structures. In many cases they do a great job. If people have a free choice to use them or not then perfect.
    The seeds of the understanding of my perspective are within your statement that

    “in order to remain competitive there are great pressures for organisation to de-mutualise or abandon co-operative ownership in mergers aimed at securing better economies of scale, and greater inflows of capital.”

    If a mutual cannot achieve sufficient inflows of capital to grow, why is that? Think about it. Capital, like the other factors, requires a decent return – as does enterprise (which I prefer to refer to as the ability to organise the other factors) as does land. There is no real reason why a mutual structure cannot achieve that return in exactly the same way – yet your line essentially says they cannot. Why is this?

  31. September 16th, 2006 at 17:58 | #31

    How can setting up a co-operative where workers elect from their own ranks accountable and recallable directors, and take part in the running on their own enterprise, be seen as ‘exploitative’ and ‘minimising choice’? Furthermore, what ‘choice’ does the domination of many industries and sectors by multinational oligopolies enhance liberty and choice?

    Now Marxism supposed that all productive activity would be centralised under the state, but that workers would also directly take part in these decisions, and in the day to day running of these enterprises, coming together in a democratic fashion to plan entire industries. As it turned out, we know attempts to centralise production in the hands of the state led to bureaucratisation, supression of price signals, and the ossification of worker’s representative bodies. (ie: the soviets)

    Surely, there is a middle road between capitalist monopolism and the supression of market mechanisms and price signals.

    For me, this implies a mixed economy. Government can provide infrastructure efficiently, without wasteful duplication and on a universal basis, and does not have to worry about maximising share value, hence cutting programs (such as broadband rollout, regional bank branches and infrastructure etc) that, while necessary, are not, in the short term, profitable. Mutual societies, meanwhile, are directly accountable to their members, and co-operatives are democratic in structure, while nevertheless operating in a market environment. Finally, GBEs can provide extra choice and competition, undermining possible collusion within oligopolies – as was the intention with the establishment of Medibank Private. Progressive cross-subsidation for the poor and needy also provides additional ‘positive choice’ who otherwise might have been excluded from the market. Finally, wage earner funds, organised on a regional basis, and enable democratic bodies to systematically invest in economically viable and socially useful activities, infrastructure, services, industries, creating jobs and providing for real popular participation in economic decision-making, instead of leaving the administration of pension funds to an unaccountable financial elite.

    At the same time, in a democratic mixed economy, these co-operativist, mutualist, and pension-fund run firms compete against private enterprises which, also, might be the subject of employee share ownership schemes, works councils and the like. Choice through market mechanisms remains strong, democracy in the economy is enhanced, and investment is determined not only by the maximisation of share value, but by the use value of the services and infrastructure to which it is directed.

    As for your comments about my comment that mutualist and co-operative enteprises might be driven to issue shares, demutalise etc – it depends on the ambitions of the individual enterprises. Sometimes it is easier to rapidly expand one’s activities by issuing shares to raise capital – but this can undermine the democratic structure of such enterprises. Sometimes the capital necessary for expansion, for instance, cannot be gained from such enterprises’ profits, or from its exisiting members. In recognition of this, such enterprises should be supported by government, including through the provision of low-interest loans. This would expand the choice available to mutual societies and co-operatives, without driving them to de-mutualise or cease operating as co-operatives – in order to attract capital.


  32. September 16th, 2006 at 20:03 | #32

    I have, as I stated, no problem with entities such as those. In fact, I work for one and with several others. The problem I have is where they get financial support and tax incentives. By artifically giving them support you reduce choice by the forcible expropriation of funding to support them (tax revenue) if you use financial support and increased tax payments from others if you give them tax incentives. I do not believe that the government should give artificial advantage to one set of entity structures over any other.
    On the multinationals – from a simplistic, static view of market processes there may be a few that are able to behave like oligopolies – for short periods. If they fail to satisfy consumers or someone else can do it better, how long do you think that they would be able to survive? Capital is sufficiently amoral to follow the scent of higher profits and a competitor will always move in, given some time. The world is littered with he husks of companies, large and small, that tried to dominate in this way. The only ones to survive and do damage for any length of time were the GBEs that had an enforced monopoly.
    Broadband in Australia is a great case in point. Telstra, by abusing its effective copper monopoly has artificially hobbled ADSL 1 to 1.5 Mbps and, until recently, effectively ruled out ADSL 2 or 2+. This (IMHO) would have been impossible in a competitive market. The price we have been paying for a very long time was the manifestly excessive call costs, antiquated technology and stone age customer service we used to have to put up with.
    The duplication you see as “wasteful” is the greatest source of innovation and competition. Trying to eliminate it through legislative fiat has resulted in some of the biggest cock ups of all.
    Your last paragraph shows the weakness of your argument – you seem to believe that these entities cannot survive, or at least grow, without government handouts – again, with the revenue expropriated from the taxpayer by force or its threat. If I choose to support this business form, as I do, it should be without force, not by government action. A low interest loan is the same as a handout, just dressed up differently.

  33. September 16th, 2006 at 21:18 | #33

    A couple of points:

    a) if the party political system works as it should, then political parties ought be able to hold each other to account to ensure the modernisation of infrastructure – and if such matters fail to attract sufficient attention, then it is a failure of the public sphere. Under conditions where political parties hold each other to account, and whereby those parties themselves are held to account by the public sphere, there is no reason why sufficient pressure cannot be brought to bear to ensure the ongoing modernisation and efficiency of public infrastructure.

    b) re: tax incentives and low interest loans for co-operative enterprise. If you’re opposed to incentives to promote economic democracy, I wonder what you think of ongoing company tax cuts, capital gains tax concessions, R&D grants etc… (personally, I feel some of this is corporate welfare – although I do agree with R&D grants as a matter of attracting high wage, high skill industry)…

    I do, however, think that government needs to be pro-active in pursuing its vision of ‘the good society’… Co-operatives simply are not arising spontaneously.. The workers concerned are not organised, and in any case do not have access to sufficient capital… What is necessary – and I think it could be paid for by reducing some of that ‘corporate welfare’ – is firm action to creating incentives for shifting to a co-operative model – and the right infrastructure in terms of finance, advice, and structural support through the tax system – to make a broad shift towards economic democracy a reality. What we get in return is an economy where workers have a direct say in the future of the enterprises they work in, and a direct stake in the future of those enterprises. Personally, I think such an extension of democracy into the economic sphere is something worth pursuing: and I don’t mind the process being subsidised by non-democratic enterprise.

  34. September 17th, 2006 at 02:00 | #34

    I agree on corporate welfare – it should all be removed – along with all company taxes, which are just income taxes brought forward.
    So, now we get to the root of the perceived problem – corporations are not “democratic”.
    A corporation is a legal construct, intended to allow investors in them to obtain limited liability. This is why they, unlike natural persons, have to publish accounts so that those who deal with them know that the credit stops at the company and does not go futher. The only real difference between an incorporated mutual (as many of them are) and a normal shareholder owned company is the voting system at the AGM. A mutual has one vote per shareholder and a non-mutual having one vote per share. Some mutuals also require you to have some other connection to the company – like working for it for example.
    Is this really why you believe mutuals should be advantaged? Because of the voting system at AGMs?

  35. September 17th, 2006 at 14:44 | #35

    The difference between ‘one vote per shareholder’ and ‘one vote per share’ is significant. Just consider if liberal democracies were considered to be corporations, and instead of ‘one person, one vote’, we had a number of votes in parliamentary elections proportionate to our wealth.
    Also, in co-operatives, the people working on the shop floor are those same people who hold directors accountable, and a system is even imaginable where directors elected from the shop floor could be immediately recallable. The difference is not minor, but very considerable indeed.


  36. melanie
    September 17th, 2006 at 15:28 | #36

    “The returns to each reflect, correctly, their relative scarcity and importance to the productive process.”

    How do you know this?

  37. September 17th, 2006 at 18:52 | #37

    That is why they have trouble accumulating capital – because they do not reward its contribution – either by way of dividends or influence. The return to labour is wages or salaries, the return to land is rent, the return to enterprise is a higher salary – what does capital get in a mutual? Not even a proportional say in the management of their investment, never mind a return on the risk of its contribution.
    In the absence of some enormous, long lasting conpiracy, simple demand and supply does that. The only time it fails to do so is in the event of government intervention – like the imposition of a minimum wage causing unemployment.

  38. gordon
    September 18th, 2006 at 10:37 | #38

    Back on 6/3/04, Prof. Quiggin discussed the pros and cons of privatisation in relation to the equity premium and the efficient markets hypothesis (which A. Reynolds seems to support) and said this: “If the advantages of privatisation outweigh the difference in the cost of capital, and assets are sold in a competitive market, then the government should come out ahead by selling assets and using the proceeds to repay debt, thereby reducing obligations. In fact, this is rarely the case.� He goes on to say: “…the kinds of enterprises where government ownership is common are, in general, those where you would expect the balance of considerations to lean towards public ownership. They are capital intensive, so a lower cost of capital is important and excess labor costs (for example, due to overstaffing) are not. In addition, they are often subject to fairly tight regulation for natural monopoly or essential-service reasons, which reduces the reward to entrepreneurial innovation.� He finishes up that post by saying: “So, it turns out that the equity premium provides a case for the mixed economy, rather than for comprehensive socialisation. Given the generally successful performance of mixed economies (most notably between 1945 and 1970), there’s nothing paradoxical or surprising about this.�

    If Andrew Reynolds is right, then Prof. Quiggin’s views on public ownership and the mixed economy are wrong. Tristan Ewins, Prof. Quiggin and I are all in the mixed economy camp. But I think we can all agree on a comprehensive review of corporate welfare.

  39. September 18th, 2006 at 11:37 | #39

    To summarize PrQ’s position, as given by Gordon:
    Under the following conditions, an industry should be in public ownership –
    1. Capital is cheaper for government than private.
    2. Labour is cheap compared to capital cost.
    3. Natural monopoly or essential service conditions means regulation is going to occur anyway.
    Due to the ability to force people to give up their money, something no private company can do, credit risk on lending to a government is almost always going to be less than to a private company in the same economy. This is why point 2 is important – otherwise, it is an argument to nationalise everything.
    The problem with point 2 is that overstaffing becomes rampant, as it naturally does in any bureaucracy. If you are in any doubt, read Parkinson’s Law. Very short book, but once you have worked in any bureaucracy, as I have, you will see how right it is.
    Point 3 is a furphy, as I argued further up the thread. “Natural” monopolies occur only where competition is legislated out – meaning they are decidedly unnatural.

  40. Hank Reardon
    September 18th, 2006 at 13:44 | #40


    The discussion thread seems to have evolved substantially since I left it on Friday for a busy weekend but the answer to your question about the legitimacy of rights remains largely unanswered.
    Are you able to present a test to apply to a “right” to establish it’s genuine nature. From where I’m sitting I can’t apply any logic to your assertion that the two categories of rights stated can possibly both be classified as rights.

  41. September 18th, 2006 at 19:01 | #41

    Dear Hank,

    I think the best ‘test’ for a right, is to ask oneself in the application of such a right, whether or not you ought consider it a universal law. I’m no expert in Kantianism, but this much I agree with. That said, rights are contextual. The idea of a right comprising a universal law must also consider the context in which that right is applied. That said, as stated earlier, I see no contradiction between ‘civil liberties’ and ‘social rights’.

    If one considers the constructed right of private property to be absolute, however, then yes there is a conflict between right of private property in certain contexts, and the idea of ‘social rights’. This does not really concern me, however, because as a liberal socialist I feel the means of acquiring private property is often injust – and this bolsters the case for redistributive policies. (eg: progressive taxtion including inheritance taxes, the welfare state, subsidies for democratic enterprise etc)


  42. September 18th, 2006 at 19:09 | #42

    Shorter Tristan: Your rights are what I say they are.

  43. melanie
    September 18th, 2006 at 19:57 | #43

    Have you read the Cambridge capital controversies?

  44. September 18th, 2006 at 22:00 | #44

    Fascinating mathematics. Reminds me of a proof from high school that 1=2. I think the CCC has been ignored because no one has yet been able to demonstrate a realistic situation where it could occur.
    Perhaps you should read Harcourt on this:

    …modern writers have been most careful to stress that their analysis is essentially the comparison of different equilibrium situations one with another and they are not analyzing actual processes.

    Geoffrey. C. Harcourt, Some Cambridge Controversies in the Theory of Capital (Cambridge: Cambridge University Press, 1972), p. 122f.
    Have you read The Road to Serfdom?

  45. Hank Reardon
    September 19th, 2006 at 14:02 | #45


    It must deeply sadden you when you hear figures like that 70% of Australians own or are paying off their own home.

    Given your previous response I’m of the opinion that you are actually misusing the word “rights�. A “right� that is not absolute and inalienable to all men cannot be called a “right�. It’s more intellectually honest to just be upfront and say that as a socialist, rights don’t exist. Instead what you are proposing should be called something like “privileges� that would be doled out by whoever is the ruling party.

    To bolster the case for the far reaching redistributive policies you mention such as progressive taxation, inheritance taxes and a cradle to grave welfare state you must firstly identify at what stage of human interaction the injustices occur.

    Hypothetical Case Study:

    Person A accumulates enough wealth and skills through hard work and honest endeavour to establish his own profitable business making widgets. Buying land and equipment at market values, widgets sold for market value. Person A earns $50K per year in profits

    Person B approaches or is approached by Person A to work for an agreed rate and set of working conditions. Person A and Person B forge relationship agreeable to both parties. Person B earns $35K per year

    Person C for whatever reason cannot or chooses to not to exchange his value, skills and labour with either Person A or Person B. Leaving Person C with significantly less than what either Person A or Person B have. Person C earns next to nothing.

    Tristan in this example who has committed the injustices and what happens with Person C according to how you would apportion “rights� or “privileges�??

  46. gordon
    September 19th, 2006 at 16:17 | #46

    Andrew Reynolds’ world is obviously not the one I or Prof. Quiggin, or Tristan Ewins are living in. First, the taxing power by itself doesn’t guarantee Govt. debt. There are lots of examples, over hundreds of years, of Govts. with taxing powers which have defaulted on sovereign debt. Second, Parkinson’s Law applies as much to private as to Govt. bureaucracies, with the added risks of fraud and corruption at the top of private businesses. We have seen plenty of that over the last decade or two. Quite enough to be sure that helpless capitalists are not being regularly plundered by rampaging socialists. And third, there are lots of monopolies and oligopolies which Govts. have not created. As JKGalbraith once said, “The problem with competition is that in the end somebody wins�.

    When Robinson Crusoe was first wrecked on his island, he tortured himself with fears of wild beasts and cannibals. He fortified his dwelling with a double palisade, went abroad armed and had difficulty sleeping at night. In a similar way, Andrew Reynolds appears to be torturing himself with fears of Stalinists about to attack him any minute from every direction. Eventually, Robin’s greatest threat turned out to be pirates of his own nation (this is an appropriate reference on Talk Like a Pirate Day, mateys). It is the corruption and ruthlessness and occasional disastrous collapse of unregulated private enterprise itself which renders regulation and appropriate Govt. enterprise necessary; these things are not the fruits of some omnipresent Stalinist conspiracy.

  47. September 19th, 2006 at 17:27 | #47

    I am not sure which world you are living in – I do not presume to speak for the others – but it seems that it is filled with strawmen of your own creation. Oz springs to mind – the one with Dorothy in it.
    Precisely which part of this – “credit risk on lending to a government is almost always going to be less than to a private company in the same economy” indicates that governments are credit risk free?
    “Rampant” capitalists are destroyed when they do not meet consumer demand. Companies collapse regularly, have to be restructured etc. etc. etc. Have a look at Ford if you want an example. Socialists, thankfully, have been relegated to the sidelines because of their many and manifold errors.
    As for Galbraith, like most people who are arrogant enough to imagine they can run an economy as if it were a machine with levers and knobs, he was wrong on so many points it is not funny – as he is on this. When does the competition end, precisely? Is there a fixed date? Or is it when a triumphal parade occurs down Main Street?
    The last part is simple twaddle. Have I once mentioned Stalinism? The danger with more government interference is underperformance, not Stalinism.
    Try again; this time read the arguments and compose a response based on them rather than on your own fevered imagination.

  48. Terje
    September 20th, 2006 at 09:51 | #48


    When the finance community invents a concept called the “risk free rate of return” and bases it on government bonds (which quite amusingly assumes that governments never default on their debts) then what do you expect people to think. I do wish Costello had closed down the market in government debt just to see how the finance community might have adapted this concept.

    We also have managed interest rates (ie they are the target of open market operations) so the market can not even price debt freely. The monetary base is manipulated to ensure that the price of short term debt meets up with the latest RBA plot.


  49. September 20th, 2006 at 12:11 | #49

    It is called “risk free” because it is less of a mouthful than “closest to risk free we can really get in this economy.
    In practice, for a AAA rated government like Australia out to a 10 year horizon the debt is as close to risk free as possible – normal estimates of the probability of default on a AAA rated government paper is less than 0.03%. I say estimated only because it has not happened since ratings started.
    Still waiting for gordon, melanie or Tristan to respond to Hank or me – but i guess we will be waiting a long time.

  50. Ernestine Gross
    September 20th, 2006 at 12:48 | #50

    Terje, you do have a point about the ‘finance community’s behaviour’ as you described it. However, IMO, the point is not relevant to the heading of the thread, so I shall not expand on it.

  51. gordon
    September 20th, 2006 at 14:43 | #51

    Andrew Reynolds’ faith in free markets certainly rivals Dorothy’s faith in the Wizard. One day, maybe he will arrive in Oz and discover that the Wizard is only an illusionist. One can only hope that regularly participating in this blog is part of his Yellow Brick Road.

    Prof. Quiggin’s Submission to the Productivity Commission Inquiry into the Socio-economic consequences of National Competition Policy (Sept. 1998) summarises many of the reasons why it is unrealisic to believe that unrestricted competition is always and in all circumstances the best economic regime. In that Submission, Prof. Quiggin remarked: “In the standard economic framework, competitive markets are not regarded as an objective in themselves, nor is it supposed that competition promotes technical efficiency. Competitive markets are seen as desirable because, under certain ideal conditions, the price signals they generate ensure that resources are allocated to the use in which their value is greatest. However, these assumptions are not always satisfied.� Prof. Quiggin reviewed these assumptions in the submission, but I will not go into them here beyond noting that “In economic analysis, a market is competitive only if it contains a large number of firms, each of which is too small to affect the market price�. That itself doesn’t sound much like our world. A review of the further assumptions listed in the Submission removes it even further.

    It is important is to note that even if the ideal conditions obtain, a purely competitive regime doesn’t necessarily promote technical efficiency, nor (though Prof. Quiggin’s Sub. doesn’t mention this point) does it necessarily promote a decent standard of living for all.

    In the more familiar circumstances of markets containing only a few firms, Prof. Quiggin said: “In economic analysis of strategic interactions between small numbers of firms, there is no presumption that competition for market share will yield long term benefits to consumers. Where competition among a few firms involves a struggle to dominate strategic areas of the market, it is likely to involve a waste of resources, and the adoption of pricing policies that are not closely related to costs�.
    I suppose in the present circumstances it is necessary and worthwhile to review the reasons why there is a need for Govt. regulation and sometimes ownership of economic organisations, though it still seems odd to me to have to argue so strongly for what seems a very moderate position. Times do indeed change, though it would appear that I am far from alone. Opinion polls seem to indicate that lots of people prefer Govt. provision of social services over reductions in tax, and by 2003 public confidence in corporate Australia was far lower than in the pre-microeconomic-reform era.

  52. September 20th, 2006 at 15:19 | #52

    You have comprehensively failed to address any of my points – relying instead on sweeping generalisations and further strawmen. Your faith in governments’ abilities to do the right thing is what comes from Oz.
    Even if (a point I do not concede) there is extensive market failure the next question must be “Well, can a government fix it and what consequences will that fix have?” This boils down to “Will the purported fix be worse than the problem?”
    Before you go off constructing yet another strawman, I am not, and never have been saying, that there is no role for government. There is – just as there is a role for private charity. To me, though, government action, using as it does wealth taken from people by force or its threat, should be backed up by a rigorous cost / benefit analysis. I am not confident that the bulk of current government spending would even come close to meeting such tests.
    Oh, and the majority of the world’s population used to believe the world was flat. Please argue the point, rather than arguing that the conventional wisdom is X, therefore X is true. In any case, public confidence in corporate Australia should be low – we do not have to trust the people in it for the system to work. The real worry is the trust ratings for Federal and State MPs in the linked survey – given the legal powers they have the ability to trust is important. To me, that survey indicates we should be reducing the power of the politicians and increasing the power of the people. A free and open market comes closer to meeting that objective.

  53. September 21st, 2006 at 07:33 | #53

    Dear friends and comrades,

    I have decided to change my amendment to the Fabian Society ‘Statement of Purposes’ to an amendment of the motion being moved by the National Executive. While I wanted to proceed with the motion I originally listed here, I have to work today, and at short notice don’t have access to a photocopier. I have therefore organised a much shorter motion which I have been able to print on mass at home. I hope you agree that the new motion has a similar effect to that I previously suggested, with the benefit that it is much easier to understand and thus, I hope, is more likely to be passed.

    It reads as follows:

    Motion: To amend the motion endorsed by the National Executive to alter the Statement of Purposes to also include the following:

    f) to provide a forum for the discussion of democratic socialist politics, ideas and principles, and a vehicle for agitation for these politics, ideas and principles, including the tackling of stratification, exploitation and disadvantage based on class, and advocacy for a democratic economy, including strategic socialisation of infrastructure, services and enterprises, and the promotion of mutualism, co-operativism and democratic wage-earner funds as vehicles for economic democracy.

    moved: Tristan Ewins

  54. gordon
    September 21st, 2006 at 10:25 | #54

    Andrew Reynolds, who doesn’t trust Governments, thinks that “government action…should be backed up by a rigorous cost / benefit analysis”. I agree. That’s why we have Budgets and elections. I also agree that many Govts. are more or less corrupt – a possibly useful “quantitative scorecard of governance practices in each country” is offered by an outfit called Global Integrity, about which I know nothing. I think other such rankings are avaliable from other sources. So some Govts. are worse than others.

    And some firms are worse than others, too. Back in Nov. 2004, Business Week editorialised as follows: “The truth is economists don’t usually compute the tax that is imposed on economic growth by corruption. They should. In the past few years, we have witnessed conflicts of interest and manipulation within the initial public offering, mutual-fund, investment banking, and insurance markets. These rigged markets stifle innovation, erode discipline in the markets, channel money into less productive activities, add expense, and undermine national competitiveness.

    We know that government regulation places a heavy burden on America’s companies. We should recognize that market corruption may place an even heavier burden on the nation’s economic growth”.

    I suppose we could get into an argument about whether Govt. corruption is responsible for business corruption or vice versa, but I doubt whether that would lead anywhere. It is probably more important to realise that complaining only about one sort of corruption is one-sided. Govts. are not perfect, though some are better than others. Firms and markets aren’t perfect either, and again, some are better than others. So it seems more sensible to attack corruption wherever found, rather than only in Govts. I don’t see any other way of increasing the power of the people (as Andrew Reynolds wants to do) except by living in a permanent state of Orange Revolution which, though exciting, might not be very productive.

  55. September 21st, 2006 at 11:36 | #55

    Do you exist in a world where speeches are the main means of communicating? Strawmen, rhetoric, third person addressing. Wonderful. I am waiting for your “I Have a Dream” moment – but I somehow doubt there will be as much real content in your next comment as in a Martin Luther King speech. I will try to find you on the next soapbox I come across.
    Try addressing, well, any of my points or questions. Where did I mention corruption for example? While corruption is a problem, even without that the main problem is still there – information. Try reading a basic starter on Austrian economics, like “The Road to Serfdom” and your understanding of the problem would improve enormously.
    Even if you disagree, at least you will know what I am talking about. At the moment all you are doing is writing speeches in a vacuum.

  56. Hank Reardon
    September 21st, 2006 at 12:38 | #56


    I’m not entirely sure why you have chosen to amend your motion but I would honestly love to see a response to my post regarding rights and some sort of explanation of what would likely happen to the three parties in the simple case study I posited.
    One must wonder if that simple case study can sit on this site for a few days and be passed over for a response that only involves three entities, one must wonder at the difficulty that would translate into applying your beliefs across a whole society.

  57. September 21st, 2006 at 17:46 | #57

    Just to finish this off. I was reading this post on catallaxy and it pointed me to a monograph on the letter to The Times newspaper in 1981 by 364 economists about the policies of the Thatcher government. In that monograph was this passage (on page 100), which I feel is worth repeating in full.

    If I were to identify one area of economics where teaching is as poor as the teaching of macroeconomics was 25 years ago, it would relate to the concept of ‘market failure’. A typical approach would be as follows. The concept of perfect competition and a perfect market would be introduced in a microeconomics course. The assumptions would be spelt out in detail. The way in which those assumptions do not hold would then be discussed, thus leading to the concept of ‘market failure’. The course would then go on to show how government can respond to ‘market failure’ by taking actions that would lead services to be delivered so that marginal social cost would equal marginal social benefit and so on.
    There are several weaknesses in this approach. The first is that, in the absence of a perfect market, there are undiscovered opportunities for improving welfare. The whole point of a market economy, however, is to discover such opportunities and, if they are undiscovered, they cannot be discovered by government. In other words, if there is not a perfect market, the government would not know what the outcome of the perfect market would have been and therefore cannot achieve such an outcome through intervention. The second weakness is that public choice economics is rarely considered explicitly. Government cannot correct market failure because it is itself imperfect. Governments fail. Governments have imperfect information. Governments impose social costs. Governments do not respond omnisciently and beneficently but can often act to maximise the welfare of specific voter groups, politicians and bureaucrats. Unlike markets, governments are not constrained by freedom of contract. The problem with teaching in this area is very similar to the problem of macroeconomic teaching 25 years ago. Markets are not adequately analysed and the assumptions that governments have perfect information and act without regard to the interests of voter groups, politicians and bureaucrats often remain hidden from the view of the student. Once these assumptions are made explicit, and once public choice economics and Austrian notions of competition are integrated properly into teaching, one can have a serious, rigorous debate about the best approach to dealing with specific economic policy problems. Today, like the relationship between fiscal and monetary policy and the idea of crowding out in the 1970s and early to mid-1980s, public choice economics, Austrian ideas of competition theory, government failure and market-generated solutions to problems of so-called ‘market failure’ receive occasional mentions when they should be fully integrated into the exposition of the subject.
    As a result of this, it is rare to find intelligent graduates who believe in free markets who do not then go on to say, ‘But we need the government to intervene to correct market failures.’

    Nothing more need be said.

  58. Ernestine Gross
    September 21st, 2006 at 20:11 | #58

    Andrew Reynolds, would you please tell the audience what happened to Margaret Thatcher and her v. Hayek inspired economics?

    PS: I learned from a post by Terje some months ago that Thatcher was very much influenced by those who promoted v. Hayek.

  59. September 21st, 2006 at 20:25 | #59

    Happy to, Ernestine. The UK successfully pulled themselves out of the morass into which they were sinking. Inflation dropped, unemployment dropped (after the expected lag) and wealth has increased. Or was that not quite what you were looking for?

  60. September 21st, 2006 at 20:33 | #60

    I should add though, that she was not strictly Austrian. A dose on Monetarism was there, mixed in with some political realism. The political realism faded towards the end.

  61. September 21st, 2006 at 22:32 | #61

    nb: since this thread was originally about Fabianism, I thought I’d let readers know that there was some confusion. Tonight was the state AGM, but the National AGM, where the decisions will be made, is not until 5:30pm next Thursday. (a pretty bad time if you ask me – give some of us work) There’s still the possibility that someone will try and move that the changes be passed, but a motion of the State AGM recommended that the decision be put off until 2006, and only after extensive and inclusive debate. It is most likely that a decision on the inclusion of socialism, commitment to public ownership and to class politics in the Statement of Purposes will now be put off until next year. I’m hoping there will be such an upsurge of sentiment against the changes that either the changes will fail, or only pass with significant amendment.


  62. September 21st, 2006 at 22:33 | #62

    sorry, I mean 2007, not 2006

  63. Ernestine Gross
    September 22nd, 2006 at 00:03 | #63

    Tristan Ewins, you are perfectly right in objecting to deviations from the topic of the thread. I apologise.

  64. September 22nd, 2006 at 11:50 | #64

    Yes, when discussing Fabianism, it is important not to look at whether the positions of Fabians make any sense at all. I apologise too.

  65. September 22nd, 2006 at 12:32 | #65

    I’m not objecting to deviations in the thread – I think the discussion has been healthily wide-ranging – but I thought, given the original line of the thread, it was important to keep readers informed.

  66. Hank Reardon
    September 22nd, 2006 at 14:38 | #66

    I agree the debate has been healthy but I was hopeful you or somebody else would step up to the plate and explain away my three person case study, who get’s what? And what injustices have been committed and by who? I’ve been asking similar questions of people of your philosophical belief structure for a good part of my life and have developed a cynical assessment of why you and others choose to opt out on answering them.
    If pages and pages of dogmatic “Statements of Purpose� can be thrown together it seems a bit suspect as to why it is so difficult in applying them, especially in such a simple example.
    Perhaps you’ve been somebody that has fallen blindly in love with the warm and fuzzy objectives of socialism without ever wanting to consider it can’t work.
    Prove me wrong! From before:

    “To bolster the case for the far reaching redistributive policies you mention such as progressive taxation, inheritance taxes and a cradle to grave welfare state you must firstly identify at what stage of human interaction the injustices occur.

    Hypothetical Case Study:

    Person A accumulates enough wealth and skills through hard work and honest endeavour to establish his own profitable business making widgets. Buying land and equipment at market values, widgets sold for market value. Person A earns $50K per year in profits

    Person B approaches or is approached by Person A to work for an agreed rate and set of working conditions. Person A and Person B forge relationship agreeable to both parties. Person B earns $35K per year

    Person C for whatever reason cannot or chooses to not to exchange his value, skills and labour with either Person A or Person B. Leaving Person C with significantly less than what either Person A or Person B have. Person C earns next to nothing.

    Tristan in this example who has committed the injustices and what happens with Person C according to how you would apportion “rights� or “privileges�??�

  67. Ernestine Gross
    September 22nd, 2006 at 15:38 | #67

    Hank, your hypothetical case study is not interesting. For example, you don’t even exclude the case where all three of them, A, B, C, die of starvation because the highest income of $50 is not sufficiently big to sustain life (the mere mentioning of ‘market prices’ does not constitute a sufficient condition to exclude this outcome). Alternatively, if ‘next to nothing’ is big enough to survive, then all you are giving are three examples of different preferences. My usage of the word ‘sustain life’ can be interpreted in social contexts such that it is quite consistent with the notion of ‘decent living wage’. Hope this suffices in answer to your question.

    Tristan, in case there is any doubt, my apology was sincere – I had overlooked the heading of the thread.

  68. September 22nd, 2006 at 16:41 | #68

    Of course it does not answer the question – but I had not expected more. I would have thought that it was obvious that the income was sufficient to sustain life if person A has accumulated capital on the back of it and has employed another person. Person A would hardly do that if he or she was dying of hunger.
    Arguing the trivial to try to discredit the general case is not edifying.

  69. gordon
    September 22nd, 2006 at 16:55 | #69

    Andrew, I think we have both made our positions clear. I’m happy to leave it at that if you are.

  70. Ernestine Gross
    September 22nd, 2006 at 18:00 | #70

    Andrew Reynolds. I replied to the question as posed by Hank. If you wanted to reply to Hank, you had ample opportunity. I am not into implicit theorising or, alternatively put, the generation of ideologies.

    As for your characterisation of Thatcherism, I do think you forgot to mention the ‘big bang’, the 1997 stock exchange crash, and the negative equity of people in the housing market – hardly an illustration of ‘wealth creation’ – and that Geoge Soros make 1 billion pound on financial transactions which demonstrated that he understood the logic of the system and that it doesn’t work the way some people wished it worked.

    However, you are entitled to chose whatever information you wish to select to make you happy.

    I am happy to leave it at that, if this is fine with you.

  71. September 22nd, 2006 at 18:38 | #71

    I saw no reason to reply to the question – it was not posed to me nor did I disagree to the position from hich it was put. I did not consider what you left there to be an adequate response. Nor do I consider that you have even attempted to answer it. Perhaps it is too dificult?
    The ‘big bang’ was an unqualified success, the 1987 stock exchange crash, a global event, can hardly be blamed on the policies of the UK government. Negative equity was caused by a mis-timed announcement of a tax change and the mis-information put forth by the Labour Party – sad, but hardly the fault of the correct policy.
    As for George Soros – check your calendar. At what point precisely during Maggie’s time as PM did this occur? Even though the decision to go into the ERM was taken during her period as PM (1 month before it ended) this was clearly a John Major decision as he was Chancellor at the time. But yes, governments interfering to fix the exchange rate is wrong.
    Perhaps you should check your own selective use of information and understand that there are things you do not know. It may reduce the appearance of arrogance that inhabits your comments.
    I am happy to leave it at that if you are.

  72. Ernestine Gross
    September 22nd, 2006 at 20:09 | #72

    I do hope you feel better now, Andrew Reynolds.

  73. September 22nd, 2006 at 21:28 | #73

    As usual, avoid the issues. Looks like we will have to leave it there.

  74. Hank Reardon
    September 23rd, 2006 at 12:41 | #74

    Well I’m not happy to leave it there but I do realise that getting any objective logic out of the left wing is like getting blood out of a stone.
    Answering questions like I posed would make clear the true socialist agenda which nobody through choice is going to accept, unless they think they’ll be ones calling the shots.
    Adios, until the next battle, then you can scurry for cover again just like cockroaches when the light of logic is shone upon you.
    Answers: Under socialism absolute inalienable rights do not exist.
    And in the my case study Persons A+B must submit their indivualism to the collective and are stripped of their earnings to the degree necessary to give Person C an equivalent outcome consistent with Marx’s creed “From each according to his abilities, to each according to his needs.”

  75. September 23rd, 2006 at 14:18 | #75

    Dear friends,

    Here’s the latest draft of points for inclusion in the Fabian ‘Statement of Purposes’ that I’ve produced. Feel free to discuss if you like. I’ll be proposing these for inclusion in the Fabian constitution whenever a decision is made:

    • to provide a forum for the discussion of democratic socialist politics, ideas and principles, and a vehicle for agitation for these politics, ideas and principles, including the tackling of stratification, exploitation and disadvantage based on class, and advocacy for a democratic economy, including strategic socialisation of infrastructure, services and enterprises, and the promotion of mutualism, co-operativism and democratic wage-earner funds as vehicles for economic democracy.

    • To promote an open, inclusive and participatory public sphere, including a variety of participatory and alternative media, the provision of civic public space, and public meetings, conferences and forums

    • To agitate and struggle for the realization of liberal rights and principles such as: equality before the law, pluralism, freedom of speech, assembly and association, equality of opportunity, and the right to collectively bargain and withdraw labour

    • To promote and provide a forum for the discussion of policies favouring co-existence with and preservation of the natural environment

    • To support struggles and policies which seek to overcome oppression and exploitation in its manifest forms: whether based upon class, gender, sexual orientation, race, nationality, religion or ethnicity

    • To promote and discuss the establishment and sustenance of a progressive welfare state and social wage, including: the universal provision of quality services in health, education and aged care, and the funding of welfare, services and infrastructure through a comprehensive regime of progressive taxation

    • To promote and discuss the aim of progressive and egalitarian labour market regulation, including a comprehensive regime of minimum wages and conditions across all occupations and industries, and occupational health and safety provisions

    • To further the principles of democratic socialism, liberal democracy and social democracy, and the education of the public in these principles by the holding of meetings, lectures, discussion groups, conferences and summer schools, the promotion of research into political, economic and social problems, appropriate international exchange and co-operation with like-minded social movements globally, the publication of books, pamphlets and periodicals, and by any other appropriate means.

  76. September 23rd, 2006 at 14:45 | #76

    re: the model of three individuals and their relative wages

    Firstly, you have to ask the question: WHY should the government intervene in the labour market, and in redistributing wealth through progressive taxation and provision of a social wage?

    To begin with, it is a matter of compassion. No one ought go without quality aged care or health care, a minimum income, shelter and nutrition, basic necessities for social participation such as transport and telecommunications services, or should be disadvantaged in their educational prospects because of disability, lack of skills, low wages, being born into relative poverty etc. Regardless of one’s skills or bargaining power, no-one should have to live in poverty. It is a matter of a society’s basic decency and compassion that no individual lack provision of such basic services and opportunities.

    Secondly, there is the question of social justice. Competing in the labour market, receiving returns in keeping with our skills or our bargaining power (including the strength of organised labour), there is no garauntee that the market will deliver a fair or just recompense. Arguably, skills and bargaining power ought not be the sole determinant of income: where many labourers work hard for relatively small returns. Also, in the public sector, the relative fiscal crisis of the state puts downward pressure on wages, with the consequence that some workers: teachers for instance, experience a relative depression of their wages. A progressive income tax system and social wage ‘irons’ out unfair inequalities that arise in the labour market as a consequence of supply and demand and unequal bargaining power: providing for the basic needs of all.

  77. September 23rd, 2006 at 15:00 | #77

    Why do you believe compulsion is needed to achieve this? Do you also believe that assets compulsorially acquired like this will be distributed fairly and equitably when do so by a government whose agenda may differ from these objectives?

  78. Hank Reardon
    September 23rd, 2006 at 16:46 | #78


    You must realise that according to socialists we are all mindless beasts incapable of making “the right” choices that must be ruled by force and compulsion by people(them) that have some mystical knowledge.

    Each of every entity that exchanges value for value have elections every day of the year and minute of the day. If they fail to produce what individual members of society want or need in the most efficient way possible then they will flounder out of existence. This is what drives humanity forward and gives everybody a wonderful standard of living. How you can possibly believe or attempt to justify that the free choices that millions of people make on a daily basis is flawed and inferior to the “antfarm” approach societal models from socialists at the Fabian Society I have no idea.
    You seem to want to use compassion as justification for massive redistribution. Whose compassion? Once again socialists arrogantly believe that individuals are incapable of private charity with this mystical knowledge kicking in again removing their possesions by force.
    Socialisms’ objectives certainly sound nice to some in theory but unfortunately have never been delivered in practice and never will be. Instead poverty, oppression, terror and shattered lives have followed socialism wherever it has been tried. Capitalism delivers the needs of humanity and essentially makes each of every person their own king or queen.
    My advice to socialists is if you are hellbent on controlling the lives of something go get a pet dog. Drop your envy emotions and start showing some respect to your fellow man who is quiet capable of making their own decisions in life.
    If this is impossible simply explain your mystical superior knowledge, move yourself to an already established socialist collective like North Korea or Cuba otherwise keep your mitts off my property and life.

  79. Ernestine Gross
    September 23rd, 2006 at 18:43 | #79

    Hank Reardon,

    I answered your question on your hypothetical case study. I told you the reasons why your hypothetical case study is not interesting from the perspective of the theoretical framework of ‘free markets’. That is, I applied the logic of the theoretical framework of ‘free markets’ and showed that given the information you made available in your ‘hypothetical case study’ one gets two uninteresting solutions; ie the question of justice does not even arise.

    Not very impressive if you don’t even know the logic of the theory of ‘free markets’.

    Andrew Reynolds, you didn’t pick it either.

  80. September 23rd, 2006 at 21:10 | #80

    I should think that the examples of social democracy in Western Europe, including Denmark and Holland, as well as the experience of social democracy in Sweden, Norway and Finland – demonstrate that your caricature of socialism (in my opinion socialism and social democracy are one and the same movement) – is, to put it kindly, not borne out by the facts.


  81. September 24th, 2006 at 01:15 | #81

    Perhaps you could let us know why you believe compulsion is required.
    The day you give a straight answer to a straight question is the day I give an expression of extreme surprise. In any case, you gave one very uninteresting non-answer to the point put, you did not show “that given the information … made available in [the] ‘hypothetical case study’ one gets two uninteresting solutions”.

  82. September 24th, 2006 at 10:32 | #82

    Andrew – do you suppose we’d be able to fund anything if tax were ‘optional’?

  83. Ernestine Gross
    September 24th, 2006 at 11:03 | #83

    Andrew Reynolds, Where is the straight question to which you think there is a straight answer? You didn’t like my answer. That’s all.

    Tristan Ewins is asking you a question which seems tome to be ‘straight’. I look forward to see what your ‘straight’ answer is.

  84. September 25th, 2006 at 11:42 | #84

    Why do you seemingly believe that we need to fund these objectives out of compulsorially acquired funds? Why do you believe that only taxation can provide answers to the following:

    …it is a matter of compassion. No one ought go without quality aged care or health care, a minimum income, shelter and nutrition, basic necessities for social participation such as transport and telecommunications services, or should be disadvantaged in their educational prospects because of disability, lack of skills, low wages, being born into relative poverty etc. Regardless of one’s skills or bargaining power, no-one should have to live in poverty. It is a matter of a society’s basic decency and compassion that no individual lack provision of such basic services and opportunities.

    You use the word “compassion” several times in there. Do you think that the only “compassion” in society consists of forcing money out of people so that the ones who forced it out of them can then waste much of it and then give the rest away? This is the Robin Hood complex, with waste thrown in.
    If so, I do not concur with your dismal view of human nature.
    The straight question you avoided was Hank’s.
    If you choose not to answer it, fair enough, but to just treat it the way you did either indicates outright rudeness or a desire to avoid the consequences of a straight answer.
    I hope you are politer in real life than you appear to be when answering questions from those you evidently disagree with.

  85. Ernestine Gross
    September 25th, 2006 at 19:48 | #85

    Andrew Reynolds (Hank)

    If you wish to have only the ‘answer’, which you consider ‘straight’ or ‘not rude’, then the efficient way of achieving this is by you providing the answer together with the question.

    Incidentally, Hank’s question is not ‘straight’, where ‘straight’ is defined as only one possible answer to the question. On the contrary, one of the sub-questions has an ‘or’ in it. But, I suppose, I am being rude in your eyes for stating the obvious.

  86. September 25th, 2006 at 22:16 | #86

    Your original attempt to answer the question was, as far as I can work out, was “…all you are giving are three examples of different preferences” when the question was clear “…who has committed the injustices and what happens with Person C according to how you would apportion “rightsâ€? or “privilegesâ€???â€?”
    I, being a (I hope) reasonably sensible person, would expect an answer that indicates whether an injustice has been committed, what happens to person “C”, and how the “rights” and “privilegesâ€? discussed earlier were to be apportioned. You know, a straight answer. Indicating that there are three examples of differing preferences does not quite answer the question.
    Tristan, care to answer the questions that were actually originally directed at you?

  87. Hank Reardon
    September 25th, 2006 at 22:47 | #87


    Bad luck for you hoping that Andrew Reynolds and myself are the same person. Worse still for you there are thousands of others that share our viewpoints.
    Now, I thought my questions were amazingly straight forward, you only had to break down how much money was appropriated from each of the parties and state who had committed injustices warrenting the forcible removal of their property to be given to another.
    If however you are only capable of answering questions with one possible answer have a crack at these for us.
    Do I have the right to live for my own sake?
    Do you know how to spend my earnings better than me?
    Does anybody have a greater right to my earnings than me?
    Do individual, absolute inalienable rights exist under socialism?
    Do socialists have a superior knowledge of all things justifying them to have control of peoples lives?
    Have you ever taken steps towards migrating to a socialist country?
    Are the majority of people mindless beasts that must be ruled by force?

    Just to fair too, you can level whatever questions you want to ask my way.

  88. Hank Reardon
    September 25th, 2006 at 22:54 | #88

    Of course the above is open to all-comers, not just our good comrade Ernistine. Why don’t you have go at these ones Tristan?

  89. Ernestine Gross
    September 26th, 2006 at 12:38 | #89

    Andrew Reynolds and Hank Reardon,

    I think things are getting a little out of hand. You write a lot of ‘stuff’, interlaced with what seem to be your assumptions about motivations and asssumptions about assumptions and ‘stuff’ I find difficult to extract any meaning. If this is the way you like it, go for it, but leave me out of it.

    To put you in the picture, I am not into politics at all. Andrew Reynolds should know this by now.

    Ernestine Gross

  90. September 26th, 2006 at 13:04 | #90

    OK, Ernestine, I will have to take a non-answer as your answer; but given your obvious intellectual talents I would have thought you could sort through it.

  91. Hank Reardon
    September 26th, 2006 at 14:37 | #91


    Perhaps there is a little integrity in waving the white flag. Ernistine you’ve done better than the people that have sat back afraid to put their beliefs and thoughts onto this forum or those that started and then went into hiding.
    None of my questions had little to do with politics though. They are fundamental questions about how we want to live our lives. More philosophical than political but asking them uncovers the dark and ugly side of socialism that dictates that individualism is evil and all thoughts, dreams and possessions must be given to one big collective administered by a ruler under the use of subjective force.
    If I had to guess Ernistine I would think you’d be quite young that has been sold the falsehoods of socialism.
    Ask yourself those questions and then go ask those questions of the person that sold you copies of Green Left Weekly.
    Perhaps you can grow to embrace the notion that human happiness comes from having freedom both personal and economic and having inalienable the same as any other man.
    This deceptive socialist mantra that some all knowing mystic can make better choices for everybody and we all live happily ever after is fanciful rubbish. History has proved it again and again that it always ends in poverty and pain.

    What do you think Prof Quiggin, Tristan Ewins??

  92. Hank Reardon
    September 27th, 2006 at 20:18 | #92


    Where did they go?
    Was it something I said?

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