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Weekend reflections

January 9th, 2010

It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. Civilised discussion and no coarse language please.

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  1. Rationalist
  2. Chris Warren
    January 9th, 2010 at 11:45 | #2

    Marxist Value – Produced by Labour not Capital

    The theory that labour is the source of value has a long history. Adam Smith and David Ricardo both supported a labour theory of value, but they did not recognise the effect that society has on determining the amount of labour needed to produce any commodity. In contrast, Marxism recognises that it is only the amount of ‘socially necessary labour’[1] that produces (or introduces) the value of any commodity.

    Some commentators claim that capital also creates value and therefore must earn a profit. This is not so, and if capital appears to ‘generate a return’ this is only because of an artificial circumstance arranged by political interference.
    Particular exploitative political arrangements are needed to allow capital to accumulate value. As today’s collapse of capitalism is caused by the demand of capital for maximum return, and some cantakerous comments by bloggers, it is worthwhile examining this issue further, based on primary materials.

    Robinson Crusoe – Law of value

    Defoe’s tale of Robinson Crusoe is often used to simplify complex socio-economic issues. Crusoe owned all that he produced and when using tools, he increased his productivity. This demonstrates that without society (and therefore without capitalism) tools and improved technology still increased the productivity of labour. As Crusoe improved his tools and techniques he produced growth, a higher wage and he lifted his standard of living. So clearly these functions pre-existed, and are independent of, capitalism.

    Robinson Crusoe did not divide his income, one part as a wage, and another as a so-called ‘return for his tools’. This would have been an alien concept to him. The time needed to create new, or maintain old tools, was covered by his resulting wage. If Crusoe’s new tools enabled him to expand his production from 10 fish per 10 hour day to 20 fish per 10 hour day, his wage rose from 1 fish per hour to 2 fish per hour irrespective of the fact that he may only fish for 8 hours and repair and construct capital for 2 hours. All hours are paid the same[3].

    When we move into a society, matters take on a new guise as producers now organise production based on exchange value. Exchange value emerges in a society as producers recognise their differing skills and resources and find it beneficial to exchange some goods instead of having to rely on what they can produce themselves. In a self-sufficient society, producers made a basic livelihood from their own capacity for undertaking all the effort needed to obtain each of several useful products. The amount of use-value each product had, relative to the amount of effort required, determined how much of each article was in fact produced. This is the original Law of Value[4].

    Even though tools may alternatively be, or not be, involved, the relative value of each specific manufacture is entirely equated by the proportionate labour-time allocated from the total stock.

    Modern Production

    Modern production requires means of production (tools and ingredients) and labour. As an example, we can envisage a lemonade producer who needs raw materials (lemons, water, sugar), tools (a table, cups bottles etc), a workplace, and labour. Production continues indefinitely if the lemonade is sold at prices covering replacement of raw materials, a wage, and whatever is needed to replace and repair the tools and equipment. Provided there is a free market, any vendor who tries to charge higher prices, to collect profit supposedly due to “productivity of capital” (in addition to productivity of labour) would go out of business as other producers would easily undercut their prices.

    This is not to say that private ‘petty-profits’ may emerge if, for example, one producer finds a cheaper way of extracting lemon juice. Initially this producer’s private costs will be lower than the general price prevailing in society. This creates private profit. However when this new method is used by all, a new social price is established and any individual producers private profit disappears. To the extent that labour and production are truly social any incidental private economic advantage within society is soon shared by all and therefore effectively eliminated. All workers can use improved tools and thereby increase their profits from their labours.

    There is another aspect to the involvement of capital in production. If we have three lemonade producers, one using a table and beach umbrella worth $50, one using a weatherboard shop worth $500, and a third using a brick building worth $5000, it falls to the prevailing social conditions of production to determine which is the most efficient quantity of fixed asset. The beach umbrella and table may be too little as it offers no protection from wind and rain and the brick building may be overkill. In this case, over time, all producers would learn that they require $500 fixed asset – no more, no less. This asset would only require earnings to cover maintenance and long-term replacement. Any producer using more than $500 fixed asset will not be able to charge higher prices for lemonade as the prevailing social price (exchange value) only includes enough to cover depreciation for $500.

    Capitalist Return – via Monopoly

    Of course once a society of exploitation is established, a huge commercial war and social squabble erupts as to who claims surplus value (the value created by wage-labour but not received by workers). In a capitalist society, fighting capitalists will use any means to accumulate more wealth. For example, large more efficient capital can outcompete and ruin smaller capitalists and therefore increase market share. This introduces extra profit which masquerades as ‘productivity’ and for some, this suggests that capital is productive.

    Rent

    Workers do not always own their tools or means of production. They can rent them. Provided this renting occurs socially and the expanded value is accumulated socially, rent will be restricted to socially necessary levels. This continues the operation of the Law of Value in new, social circumstances (ie beyond Crusoe’s world). In this case, any owner of means of production will be unable to capitalise on their ownership of useful assets. However if owners can make agreements to fix rents, then their assets can serve as capital and accumulate surplus value.

    Higher incomes can fall to those who possess natural advantages or are given a special right such as a toll-keeper on a bridge. But these phenomena existed under fuedalism and do not, at this stage, represent capitalist rent or a capitalist “return on Capital”.

    So for Marxism, only social necessary costs are included in exchange values. Exchange value becomes visible as the price prevailing in society in equilibrium. At equilibrium, according to Marx, the price is the money-name of the socially necessary labour realised in a commodity[5]. Workers continue manufacturing lemonade provided the market selling price covers replacing asset depreciation (ie necessary wear and tear), used up ingredients, and the socially necessary wage. In the absence of monopoly, this ensures that no extra funds can be extracted to represent a return for remaining capital. This means that capital is not a value-creating “factor” in production. Capital is nothing but an intrusive social power that uses coercion to accumulate value produced by workers[6].

    Footnotes
    1 “Socially necessary” is at the time of exchange not as in the past during earlier transport and manufacture. Fluctuating exchange values also adjust the amount of socially necessary labour – but we ignore this complication here.

    3 Marx, K. Capital v I, Progress Publishers, Moscow, [1954] 1977, See p53f.

    4 Marx’s explanation is terse and to the point: “… the amounts of products corresponding to the differing amounts of needs demand differing and quantitatively determined amounts of society’s aggregate labour. It is self-evident that this necessity of the distribution of social labour in specific proportions is certainly not abolished by the specific form of social production; it can only change its form of manifestation. Natural laws cannot be abolished at all. The only thing that can change, under historically differing conditions, is the form in which those laws assert themselves. And the form in which this proportional distribution of labour asserts itself in a state of society in which the interconnection of social labour expresses itself as the private exchange of the individual products of labour, is precisely the exchange value of these products.” Marx to Kugelmann, 11 July 1868. Marx’s earlier comments are at Capital vI, p104.

    5 “It suffices to say that if supply and demand equilibrate each other, the market prices of commodities will correspond with their natural prices, … with their values, as determined by the respective quantities of labour required for their production”, Marx, K., Wages, Price and Profit, Progress Publishers, Moscow, 1947 [1974], pg 30. Also: “Price is the money-name of the labour realised in a commodity”, see Capital v I, Progress Publishers, Moscow, [1954] 1977, p103.

    6 “Capital is productive of value only as a relation in so far as it is as a coercive force on wage-labour, compelling it to perform surplus-labour, … (capital) functions productively in the labour-process, in the production of use-values, but it is never a source of value. It creates no new value, and only adds exchange-value to the product at all in so far as it has exchange-value, that is to say, only in so far as it itself consists in materialised labour-time, so that labour is the source of its value. Lauderdale is right in this respect—that Adam Smith, after explaining the nature of surplus-value and of value, wrongly presents capital and land as independent sources of exchange-value … Capital is therefore productive: (1) as a force compelling surplus-labour, (2) as the absorber and appropriator of the productive powers of social labour and of the general social forces productive forces, such as science.” Marx, K., Theories of Surplus Value, Pt.1, [1861-3], Progress Publishers, Moscow, 1975, p93 and p392.

  3. nanks
    January 9th, 2010 at 12:06 | #3

    nice post Chris – very useful and clear explanation. Thanks

  4. TerjeP (say Tay-a)
    January 9th, 2010 at 13:06 | #4

    Chris – nice article but you have Marxism and capitalism the wrong way around. It is marxists that want political interference and the creation of monopolies.

  5. Tim Peterson
    January 9th, 2010 at 17:03 | #5

    @Chris Warren

    You still haven’t answered my comment in the Marx thread.

    The labour theory of value entails that

    Y=L+delta*Lk, (1)
    where Y is output,
    L is direct labour inputs,
    delta is the rate of depreciation
    and Lk is the labour content of the capital stock.

    Now total costs are
    C=W*L+W*(1+Pi)*(1+R+delta), (2)
    where W is the wage rate,
    Pi is the markup in the capital goods producing sector,
    and R is the real interest rate.

    Now simply putting (1) and (2) together we have the optimal cost saving capital stock at
    -Infinity, or if we constrict it to be non-negative, zero.

    Positive investment occurs only if putting a unit of labour into the capital stock yields more than (1+Pi)*(1+R+delta), contradicting the labour theory of value.

  6. Tim Peterson
    January 9th, 2010 at 17:04 | #6

    I meant to say,
    “C=W*L+W*Lk*(1+Pi)*(1+R+delta)”

  7. Alice
    January 9th, 2010 at 17:16 | #7

    @Tim Peterson
    Fascinating Tim – now would you mind speaking english for the natives? Dpreciation on what? How is LK worked out? Why doesnt the mark up in the capital goods sector not look like the surplus generated by labour to you (that Marx understood) seeing you have it here as W * (1 + P1)*(1+R+delta).

    Damn well looks like labour surplus value to me…then just multiplied by the real interest rate plus the rate of depreciation – yeah capital costs to buy but its still a labour surplus isnt it?

    Anyway – for the natives you might quote your source at least instead of playing with equations here.

  8. Chris Warren
    January 9th, 2010 at 18:03 | #8

    Tim Peterson

    Can you please provide the source of your formula and the units you are expressing your variables in.

    It is very difficult to have wages and labour in the same equation, as they are in-separately linked through the wage rate (and in essence represent the same thing).

    Marx may have just used his “V” for your w*L.

    Your R appears to be exogenous. For Marx, this so-called R is a share of his “S”, and is endogenous.

    Your “Pi” for Marx, is a share of his “S” (which normally doesn’t exist).

    I have seen a lot of these equations in the past, and they usually fall apart once you identify their assumptions and exogenous factors.

  9. Jamie Johnson
    January 9th, 2010 at 18:38 | #9

    A labour theory of value is all very nice and academic but it would appear that the changes brought on by financial deregulation have triggered a redistribution of income away from the professional, manufacturing and trades based industries to the financial sector.

    While governments of the twentieth century slowly increased progressive tax rates leading to better income and wealth distribution, and then in the latter part of the century started to rapidly rescind those changes leading to increasing income and wealth inequality (a transfer of wealth up the income tree), the process of deregulation introduced concurrently with more regressive taxes has served to transfer income within sectors (a transfer of wealth across the income tree).

    It appears to me that the lost decade of income growth suffered by the middle class in the US is a direct result of these two redistribution effects, and that now with increasing amounts of national income captured by the finance sector the prospect of reasonable growth in the economy may at best lead to the vast majority (we’re all middle class now) holding their standard of living (however that is defined), and a slowing of growth in the economy will lead to that standard of living falling, as is now the case in the US.

    Of more interest is the complete lack of political will by ‘progressive’ governments to deal
    with this, the lack of outrage amongst the ‘chardonnay socialist’ set who are net losers (despite their superannuation or 401k sops), and the continued support for the capitalist ideal by the free-market and reward-for-effort romantics that failed to notice the pirates hijacking the ship.

    While I don’t have supporting numbers at hand for this (I’m not an academic), it would appear to me that redistributional effects are as corrosive to income and social cohesion and hence economic efficiency as that current fad bogey of economic injustice, inflation. That out government is so blind to these other sources I would contend is not a conspiracy but the failure of academic economists to make any sort of coherent contribution to real world economic behaviour. There are plenty of theories out there on the ‘capture’ of economic schools of thought for nefarious purposes, but my preferred take on the Chicago School is that subject matter is incidental to evil intent.

    Rome failed due to its government’s loss of ability to filter information, make appropriate and advantageous decisions for the benefit of the empire and then have those decisions implemented efficiently. The US appears to have caught the disease.

  10. Peter T
    January 9th, 2010 at 19:10 | #10

    Imagine an ecology with just two sorts of creature – one lives off sunlight and the other lives off the first sort. One would be able to capture their interactions (so much sun, so much chance of being eaten, so much chance of eating…) in some interesting equations.
    Now imagine a tropical jungle. Then tell me which, if any, of the equations explains the interactions between, say, tree sloths, lemurs, army ants and mahogany trees. Put simply – society does not scale neatly (if at all) from gatherer bands to Wall St, nor is the economy in any sense more “basic” than politics, physical ecologies and various forms of exploitation and so on.

    Just trying to say that the intelligent onlooker might not expect the labour theory to actually be applicable to the real world, however beautiful it is in itself.

  11. Chris Warren
    January 9th, 2010 at 19:46 | #11

    Peter T

    If tree sloths had to construct means to climb trees, if army ants choose where to go based on comparative advantageopportunity costs, then it would be easy.

    If humans simply grazed on vegetables, dead animals and oysters, in a situation of abundance – then there is no labour value.

    So the real intelligent onlooker would expect to construct a theory that is applicable to the real world, and may well be a beautiful theory.

    What this theory is, may be contestable.

    By introducing non-economic modes of existance (sloths, lemurs, ants) – you have demonstrated you have COMPLETELY missed the entire point.

  12. Alice
    January 9th, 2010 at 20:12 | #12

    @Chris Warren
    Chris – exactly…but with no source and no accompaying explanation…it means very little.

  13. Chris Warren
    January 9th, 2010 at 20:18 | #13

    From little things – big things grow.

  14. Alice
    January 9th, 2010 at 20:20 | #14

    @Jamie Johnson
    Jamie – I coukdnt agree more with some of your comments “While governments of the twentieth century slowly increased progressive tax rates leading to better income and wealth distribution, and then in the latter part of the century started to rapidly rescind those changes leading to increasing income and wealth inequality (a transfer of wealth up the income tree), the process of deregulation introduced concurrently with more regressive taxes has served to transfer income within sectors (a transfer of wealth across the income tree).”

    ButI disagree with “we are all middle class now”. Some of us may be but more are falling through the cracks to the renter classes. In Sydney we now see combined and extended families (sometimes informally extended ie not related) seeking rental accommodation. 4 and 5 bedroom houses are much in demand. Why? You can have grandma, offspring and a grandchild or two and a family friend all outting in to pay rents

    People are combining resources to be able to pay the rent.

    That tells me that neither rents nor houses are affordable. No – we are not all middle class now.

  15. Alice
    January 9th, 2010 at 20:21 | #15

    sorry – all putting in to pay the rent

  16. Alice
    January 9th, 2010 at 20:23 | #16

    @Peter T
    Thankyou Peter – you put that so beautifully!

  17. Alice
    January 9th, 2010 at 20:25 | #17

    @Chris Warren
    Chris – then why do I think Peter T actually gained the pint so entirely? I dont think he missed the point at all ..really. I think Tim is missing the point more by posting such a narrow definition without any accompanying sources or detail as to the variables. Im not to swallow that without a lot more detail.

  18. Alice
    January 9th, 2010 at 20:28 | #18

    Pint should read point sorry (I keep meaning to check my own pathetic spelling – its typing too fast with two fingers – Id better make it a NY resolution). I dont mean to say Peter T gained a pint! Someone might think I was commenting on his social habits.

  19. Alice
    January 9th, 2010 at 20:35 | #19

    @Jamie Johnson
    Oh thats it – Ive now fallen in love definitely with Jamie (as well as SAM) who both make perfect sense to me along with JQ of course…

    “While I don’t have supporting numbers at hand for this (I’m not an academic), it would appear to me that redistributional effects are as corrosive to income and social cohesion and hence economic efficiency as that current fad bogey of economic injustice, inflation. That out government is so blind to these other sources I would contend is not a conspiracy but the failure of academic economists to make any sort of coherent contribution to real world economic behaviour. There are plenty of theories out there on the ‘capture’ of economic schools of thought for nefarious purposes, but my preferred take on the Chicago School is that subject matter is incidental to evil intent.”

    Could not agree more. So why did their careers progress so far, the b*******?

    Dont answer – its too creepy for words. At least one economist named it. Self interest (as if it is or should be the be all and end all…regardless that lot tried very damn hard to convince us self interest was all that mattered – ha ha – models built on guilty consciences???).

  20. Tim Peterson
    January 9th, 2010 at 21:35 | #20

    @Alice

    Depreciation on the capital stock, ie detla=1/T where T is the average life of the capital good.

    Lk is simply the labour input into the capital stock. If we assume the labour theory of value (eg output is proportinal to the sum of direct labour and indirect labour inputs into capital goods) then its cost minimising feasible value is zero.

    If cost minimizing capital is to be non-zero, then the surplus value of labour put into producing capital goods has to be more than (1+PiK) by a factor of of (1+R+delta), where PiK is the markup in the capital goods sector. This is how the surplus has to be shared between producers and consumers of capital goods to get non-zero optimal capital. Surplus value of labour put into consumer goods production is less. If it were equal, then there would be no cost cutting incentive to have a capital stock of more than zero.

    And since capital is non-zero, and the surplus on labour embodied in capital is greater than the surplus on direct labour, the labour theory of value is false.

  21. Tim Peterson
    January 9th, 2010 at 21:52 | #21

    @Chris Warren

    With Y=L+delta*Lk,
    Y is an sectoral measure of output treating consumption goods as the numeraire,
    L and Lk are measured in labour units. I should have said Y(i)=L(i)+delta(i)*Lk(i) to make it obvious that it was sectoral output.

    W and R are endogenous, as in Arrow-Debreu GE theory (no need for capital aggregation).

    It is pretty obvious that Marx’s S is bigger for indirect labour inputs (labour used to build capital goods) than for direct labour inputs into producing consumer goods. As I said above, if the productivity of the indirect labour inputs was not larger than the productivity of direct labour inputs, then cost minimizing capital would be zero.

  22. Tim Peterson
    January 9th, 2010 at 22:13 | #22

    Alice :@Tim Peterson Fascinating Tim – now would you mind speaking english for the natives? Dpreciation on what? How is LK worked out? Why doesnt the mark up in the capital goods sector not look like the surplus generated by labour to you (that Marx understood) seeing you have it here as W * (1 + P1)*(1+R+delta).
    Damn well looks like labour surplus value to me…then just multiplied by the real interest rate plus the rate of depreciation – yeah capital costs to buy but its still a labour surplus isnt it?
    Anyway – for the natives you might quote your source at least instead of playing with equations here.

    If the surplus on capital goods were only (1+Pik) then why should a firm buy capital goods? The seller has already extracted all the surplus; if you subsitute direct labour for capital you get to keep all the surplus yourself and cut out the interest cost.
    If indirect labour yeilds more surplus than direct labour by the factor (1+R+delta), enough to make capital accumulation worth while, then it certainly starts to look like capital is generating the surplus (assuming heterogenous labour, the only difference between the high surplus generating indirect labour and the lower surplus generating direct labour is the use to which it is put and the time horizon over which the benefits are reaped).

  23. Tim Peterson
    January 9th, 2010 at 22:20 | #23

    When I say that W and R are determined in a GE model this is only a first approximation; a general disequilibrium model with sticky prices and an interest rate policy reaction function would of course be more accurate.

  24. Tim Peterson
    January 9th, 2010 at 22:25 | #24

    @Jamie Johnson

    Actually, governments rapidly increased progressive taxes to pay for WW2, then spent the next 60 years cutting them.

  25. Alice
    January 10th, 2010 at 10:15 | #25

    @Tim Peterson
    More than one person has asked for your source Tim – I note you have pointedly ignored all requests.

  26. TerjeP (say Tay-a)
    January 10th, 2010 at 10:21 | #26

    In fact federal income taxes were sold to us on the basis that they would be temporary only until such time as the war was won. In short we were conned by our political masters and the yoke is on us.

  27. iain
    January 10th, 2010 at 10:33 | #27

    @Chris Warren

    The dialectic between commodity value and socially necessary labour time is definitely important.

    The shock and outrage on sweatshop worker’s faces when they are told of the actual selling price (money form, exchange value) of the goods that they are forcibly coerced to assist with manufacture is a useful reminder of this point.

    The issue of the price of a lot of labour (money form, exchange value) being less than the related price of corresponding products (money form, exchange value) is probably still not effectively resolved.

    Conversely, in overpaid (and relatively un/counterproductive?) developed countries (so-called) this point may have just as serious consequences (Iceland being a possible current example) as it is in underpaid (so-called) developing areas..

    As a general observation (not directed at Chris), it may be useful not to confuse terms such as price or value with understandings of true wealth. Labour is not the source of all wealth. Marx, and any systems ecologist (eg Howard Odum), will well tell you this.

    The real source of true wealth (nature, particularly societal net energy availability) may very well currently be at risk.

  28. Chris Warren
    January 10th, 2010 at 10:57 | #28

    Tim Peterson

    All such GE models are based on assumptions.

    The GFC has demonstrated the essential irrelevancy of such models.

    The whole area is under fundamental (and convincing) attack – see

    _Arrow Debreu_

    I like the idea that some method for modelling a economy may emerge, but any model, based on a proportionate rate of return on capital, and fixed wages (ie fixed final consumption fund) will always collapse.

  29. Tim Peterson
    January 10th, 2010 at 11:09 | #29

    @Alice
    The Collins dictionary of economics is my source for the Marxist production function.

    If the labour theory of value does not entail that
    Y=L+delta*Lk, (1)

    eg output is proportinal to total labour input,

    then in what sense is it a labour theory of value? A labour theory of relative prices? This would assume that (1) is correct as well.

  30. Chris Warren
    January 10th, 2010 at 11:10 | #30

    Iain

    Yes, one should not confuse price and value with true wealth or your possession of useful things (however defined).

    Price, wage, value concern only “economic” wealth.

  31. Tim Peterson
    January 10th, 2010 at 11:11 | #31

    @Chris Warren
    Like I said, GE theory to a first approximation, sticky prices/wages and general disequilibrium for a better approximation.

  32. Alice
    January 10th, 2010 at 13:34 | #32

    @Tim Peterson
    Tim – maybe you had better read this one in Palgraves economic dictionary instead

    http://homepage.newschool.edu/~AShaikh/pal7.pdf

  33. Tim Peterson
    January 10th, 2010 at 14:23 | #33

    @Alice
    The article you mention is about the pitfalls and practicality of neoclassical aggregation, NOT Marx’s theory of value.

  34. Alice
    January 10th, 2010 at 14:48 | #34

    @Tim Peterson
    Its about production functions in general as well Tim if you read it.

  35. Tim Peterson
    January 10th, 2010 at 18:01 | #35

    @Alice

    Yep, Alice. It looks interesting. I had heard the result that Cobb-Douglas fits simulations where the capital share in income is constant. I will read it when I get the time.

  36. Ernestine Gross
    January 10th, 2010 at 20:31 | #36

    @Chris Warren

    Chris Warren, you reference a paper by David Ellerman, World Bank, titled “The Arrow-Debreu Model: How Math Can Hide a Fatal Conceptual Error”

    I’ve come across Ellerman’s paper before. It is freely available on the net. May I point out that David Ellerman is criticising his own invention or the invention of those who identify capitalism with market economics. No-where is there a claim made by Arrow or Debreu that they are modelling any form of capitalist economy.

    To relate the Arrow-Debreu model to the GFC is, if I may say, silly because there is no financial sector in the model at all. There is also no government and therefore there are no corporate laws and in particular no different regulatory systems.

    To use the Ellerman article to reach the conclusion that GE models are useless is an extraordinary jumpt to conclusions.

    Let me know when Ellerman has progressed to the Dreze model.

  37. Alice
    January 10th, 2010 at 20:40 | #37

    @Ernestine Gross
    Ernestine – tell us more about Dreze’s contribution.

  38. Ernestine Gross
    January 10th, 2010 at 21:15 | #38

    @Alice

    Alice, the following wiki entry has extensive references and it provides an overview of J. Dreze’s work.

    http://en.wikipedia.org/wiki/Jacques_Dr%C3%A8ze

  39. January 10th, 2010 at 22:19 | #39

    As I promised in the “QR sale plan off the rails” forum, I have written an article to argue why people should sign my e-petition calling for new state elections. The teaser is as follows:

    Why Queenslanders must demand new state elections

    In the March 2009 Queensland elections, called early and conveniently before the Auditor General’s damning reports on Health and Transport, Labor clung to power by concealing the likely privatisation of publicly owned assets and promising to maintain the state fuel subsidy. Regaining office, the fuel subsidy went, charges for registration and public transport rocketed and a $15 billion public asset fire sale was announced – although opposed by 79% of the Queensland public – to pay for the cost of government-engineered population growth – again, without consultation.

    This is not democracy. This is not honest. It is not even polite. Help create a ground-swell by signing the E-petition calling for a new election. Not sure? Read why in this article.

  40. paul walter
    January 11th, 2010 at 01:18 | #40

    Beggars me the attacks on Daggett when he only tells the truth, after all.
    What turns his stomach, turns mine.
    I suppose I will be comsigned to the same social leper colony where some would banish him, for also being gobsmacked at the nature and scale of treachery and deceitfulness of Bligh and hidden rightwing stringpullers, led by that unspeakable creature you have as treasurer up there before, during and after that election.
    Democracy, RIP…

  41. Chris Warren
    January 11th, 2010 at 08:16 | #41

    Ernestine Gross

    I did not “reach the conclusion that GE models are useless “.

    Your comprehension skills are inadequate for your activities.

    And in fact I said the opposite: viz;

    I like the idea that some method for modelling a economy may emerge, but any model, based on a proportionate rate of return on capital, and fixed wages (ie fixed final consumption fund) will always collapse.

    I fully expect a GE model of market socialism to be feasible and desirable.

    Current GE models do not work because they assume capitalism. They rely either on beneficial exogenous factors, or worsening endogenous countervailling tendencies.

    However there is also a major problem with all GE models. Noone has found a way to predict exchange rates. Therefore what is the point of GE models?

    GE modellers assume the economy is based on economics. It is not. The economy, and the distribution of wealth, is determined at least to some extent, by politics.

    There are several other issues, but I do not have the time …..

  42. January 11th, 2010 at 10:18 | #42

    Elderly at risk from heat stress!!! Read and discuss

    Today the Australian Medical Association (Victorian branch) made a powerful plea for compassion, justice and common sense. This statement was made in light of extreme heat conditions recently – which have seen appalling rates of death amongst the aged and the infirm.

    See:

    http://www.facebook.com/l/935f3;leftfocus.blogspot.com/2010/01/protect-aged-this-summer-stop-deaths.html

    Please feel welcome to discuss these issues at the Left Focus blog itself – and/or at the Left Focus Facebook group – or otherwise here at this thread you’re reading right now!

    sincerely,

    Tristan Ewins (Left Focus moderator)

  43. Ernestine Gross
    January 11th, 2010 at 10:59 | #43

    @Chris Warren

    Chris Warren,

    I am replying to your post @41, which is your reply to my post @36, which is my post regarding your post @28.

    Your post @28 reads:

    “All such GE models are based on assumptions.

    The GFC has demonstrated the essential irrelevancy of such models.

    The whole area is under fundamental (and convincing) attack – see

    _Arrow Debreu_

    I like the idea that some method for modelling a economy may emerge, but any model, based on a proportionate rate of return on capital, and fixed wages (ie fixed final consumption fund) will always collapse.”

    @41 you write:
    ” I did not “reach the conclusion that GE models are useless “.

    Chris Warren, are you sure you comprehnd yourself?

    But I grant you that you have not reached a conclusion but rather made an apparently uninformed assertion because:

    I have no information which would lead me to the conclusion that you have ever read the Arrow-Debreu model, in particular the 1954 paper in which the method of proof of existence of an equilibrium for the specified model involves a “social market system”. And, as I said, it does not aim model ‘capitalism’ (as observed during the 19th century or at present) and, as I said, it does not have a financial market and therefore cannot be used regarding the current GFC. (The model does not aim to model ‘marxism’ – whatever this means – either.)

    Clarification, not obfuscation (deliberate or otherwise), is the game, Chris Warren.

  44. Chris Warren
    January 11th, 2010 at 13:36 | #44

    yes

    I am sure I comprehend myself.

    I have not made such as “uninformed assertion”.

    Is this the clarification you need.

  45. Alice
    January 11th, 2010 at 19:57 | #45

    @Ernestine Gross
    I rather like Dreze’s approach here Ernestine

    “In the 1980s and early 1990s, Drèze wrote about the policy front, campaigning for two-sided policies of demand stimulation and supply-side restructuring (100). With Edmond Malinvaud, Drèze organized a group of thirteen Belgian and French economists who wrote “Growth and employment: the scope for a European initiative” (103, 104): This position paper advocated an ambitious program of public investments coupled with elimination of social security contributions by employees on minimum wages. That paper has influenced the programs of reduced contributions on low wages introduced recently in several countries, especially France and Belgium.

    It seems quite balanced to me and not so poisoned by an ideological divide that is more than apparent in other schools of economic thought.

  46. Alice
    January 11th, 2010 at 20:27 | #46

    You may find this link historical JQ. Personally…I rather preferred Wheelright and Stilwell over Warren Hogan….but warrior for conservative neoliberal market ideology is an apt description…. the legacy continues.

  47. Alice
  48. Alice
    January 11th, 2010 at 20:43 | #48

    I might just add…Warren Hogan disnt just split his own economics department. He contributed to an ideological split in the entire profession and made it much narrower than it was before. That is my opinion. He brought to econmomics an unacceptable level of intolerance and saw his role as helping corporate institutions not the economy as a whole. He may as well have stood on a dais thirty or forty years ago and announced “political economy doesnt matter.”

  49. paul walter
    January 11th, 2010 at 21:54 | #49

    Thanks to Chris Warren for framing the terms of this conversation, then others for further explication. Much to chew over.

  50. robert
    January 13th, 2010 at 15:36 | #50

    I went to sign the E-petition that Daggett mentioned, but unfortunately one needs to be either a current resident of Queensland or a former resident of Queensland in order for one’s e-signature to be accepted. And I fall into neither of those categories.

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