Home > Regular Features > Monday Message Board

Monday Message Board

July 26th, 2010

It’s time again, at long last, for the Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language.

Categories: Regular Features Tags:
  1. Chris Warren
    July 26th, 2010 at 18:45 | #1

    Most middle class incomes illustrate Australia’s income inequality.

    In the case of academics, using the ADFA academic agreement at:

    http://www.nteu.org.au/rights/agreements/universities/act

    it is clear that as at December 2008, all academic rates – lecturer, senior lecturer and above, were over $75,000 and much higher than average ordinary earnings (ABS 6302.0) at $64,269 pa.

    Academic lecturers rates are also higher than most Commonwealth public servant rates which in Dec 2008, paid $75,000 and over only to their Executive levels (see

    http://www.deewr.gov.au/Department/DEEWRJobs/Documents/DEEWRPayScales.pdf

    While our tax scales my reintroduce wage justice, when you look at trades and general rates you can see just how divided Australia really is.

  2. gerard
    July 26th, 2010 at 21:08 | #2

    Who can point me to some nice resources on applied/computable general equilibrium modeling and DSGE?

  3. gregh
    July 26th, 2010 at 21:14 | #3

    @Chris Warren

    but this doesn’t take into account the actual conditions of academic staff – how many hours they work and how many academics are underemployed and forced to work at casual rates for less hours than they actually work. For example, my last academic job I worked between 70-80 hours a week on average. Most academics i’ve known work about 60hrs.

  4. Chris Warren
    July 27th, 2010 at 02:53 | #4

    gregh

    The same argument applies to executive level officers in the public service. For at least 10 years they have been suffering incredible cuts through an enforced “efficiency dividend” and staff cuts. They do not have easy access to flextime as do other staff and work whatever hours they need to do to get the job done.

    But there is also a principle – it is not ethical, or compliant with OHS, to compensate long punishing working hours through pay. This is the wrong response and in the 1990′s along with other factors, caused massive stress compensation claims.. IN some departments the compensation is achieved through extra leave called (“TOIL” leave). So expecting more pay, based on long hours, is not the best argument.

  5. gregh
    July 27th, 2010 at 05:41 | #5

    chris warren

    I wasn’t particularly thinking of income but more conditions of employment – that is, an acadmic not working those hours for that pay would find themselves not working in the future – ie contract not renewed.

  6. Michael of Summer Hill
    July 27th, 2010 at 06:03 | #6

    Update, Update, Update, Victorian Premier John Brumby announcement to shut down one of the nation’s oldest coal-fired power stations must be viewed as a step in the wright direction. And whether you are Labor or Green, the consensus seems to be shifting towards Brumby’s view that the time to act is ‘now before the costs escalate into the future’. Gillard must now show her true green credentials if she is going to win the election by agreeing to share the burden and cost of ramping down one of the nation’s oldest coal-fired power stations. No more ifs or buts for crunch time has come for Gillard.

  7. July 27th, 2010 at 06:56 | #7

    @Michael of Summer Hill

    25% only (one unit) and that largely by gas … a very modest step and well short of what is needed. Let’s not get too excited.

  8. jquiggin
    July 27th, 2010 at 08:27 | #8

    Chris, correct me if I’m wrong, but I have the impression that the “Executives” to whom you refer are middle-ranking officers in what used to be called the Third Division, and that there is a whole stratum in the Senior Executive Service whose salaries are substantially higher than those of any of the standard academic grades.

  9. Michael of Summer Hill
    July 27th, 2010 at 09:17 | #9

    No Fran Barlow, it has been reported that closing down two of Hazelwood’s eight power units will reduce ghg emissions by some 4 million tonnes a year, equivalent to about 3% of Victoria’s annual emissions and 0.7% of annual national emissions. It is a start.

  10. Fran Barlow
    July 27th, 2010 at 09:27 | #10

    @Michael of Summer Hill

    A tiny start, and one to be funded out of Federal funds which might or might not be available. I still haven’t seen the modelling on costs, so I don’t know what they assume about compensation for closing shy of 2031 — a Bracks mistake, as I recall. It was supposed to be shut down in 1992 and then again in 2005.

  11. Michael of Summer Hill
    July 27th, 2010 at 09:32 | #11

    Fran Barlow, a recent Environment Victoria report found shutting down Hazelwood completely by 2012 would cost $320 million a year and cut Victoria’s green- house emissions by 12 per cent.

  12. Fran Barlow
    July 27th, 2010 at 10:16 | #12

    Overall, Hazelwood accounts for about 9% of electricity emissions Australia wide so shutting it down completely and not replacing it or its output would save about 9% (or 4%+ of total emissions in Australia).

    However, replacing it with gas (while a step forward) would be much smaller than this. Straight CCGT might cut electricity emissions overall by to about 40-50% of 9%. Using wind or some other intermittent technology would require some OCGT so the cuts would be noit much greater (and perhaps not as much) but the cost much higher.

  13. Jim Rose
    July 27th, 2010 at 10:53 | #13

    @gregh
    The notion that the better paid might work hard for their money and many have spent many extra years on very low-pay studying for educational and other qualifications essential to do their jobs, and take career and business risks that might see them lose their savings and home are not a factor in left-wing rhetoric about equality.

    The possibility that inequality could be in everyone’s interest including the worse-off groups in society, such as suggested by John Rawls, because of the incentive effects to work harder, to save and to invest in human capital, and the capacity to use differences in wages to discover differences in talents and labour productivity and induce the reassignment of people with different talents and human capital to where they are most productive are also lost to left-wing rhetoric about equality.

  14. jquiggin
    July 27th, 2010 at 11:18 | #14

    Most of the leftwing discussions I’ve seen (most recently Cohen) take Rawls as a starting point (though they may disagree with him), which rather undermines your claim.

  15. Jim Rose
    July 27th, 2010 at 12:12 | #15

    Thanks John,

    The books you might be thinking of are RESCUING JUSTICE AND EQUALITY, by G.A. Cohen, 2008, and If You’re an Egalitarian, How Come You’re So Rich? 2001.

    Rawls’ practical influence on day to day politics is not well-documented and could be much less in Australia than elsewhere such as in the USA. What would his battle cry be?

    Analytical Marxists such a Cohen may be even less well known. I know more of the writings of Jon Elster since Geoff Brennan assigned Ulysses and the Sirens and Making Sense of Marx for a class I took.

    Middle class radicals may like Rawls because he professes egalitarianism with a distinctive twist. Faced with lessened incentives to work, save and invest, strict equality would hurt the poor.

    Behind the veil of ignorance, you might choose that it is better to be poor in a rich society than equally poor in a poor society. It is mistaken to insist on equality if an unequal distribution of income and wealth could actually improve the lot of everyone including the worse-off in society.

    So long as inequality benefits the least well-off class in society, Rawls’ difference principle interposes no barrier to any amount of inequality as long as it is to everyone’s benefit.

    Many middle class radicals had what they wanted: their consciences eased by a commitment to the worst-off, but they would have to surrender only a small part of their wealth.

    When the disincentive effects of higher marginal taxes are broached, at least a few on the Left succumb to chanting ‘supply-side economics, supply-side economics,’ rather than musing about implications of the difference principle. Do you know of any Australian discussions of Rawls and high marginal tax rates in this or other contexts?

    I prefer Tullock’s explanation for income redistribution: the desire of the recipient to receive the money.

  16. jack horner
    July 27th, 2010 at 12:45 | #16

    Jim Rose #13 & 15:

    ‘the POSSIBILIY that inequality could be in everyone’s interest… It is mistaken to insist on equality IF an unequal distribution of income and wealth could actually improve the lot of everyone… SO LONG AS as inequality benefits the least well-off …

    Lots of conditionals and hypotheticals here. So what is the truth of the matter? I was under the impression that at national comparison level more equality is generally associated with better social outcomes.

    How much inequality is needed to provide the incentives you want? More or less than we have at present? And is the incentive effective in leading to a desired outcome? Promoting the incentive to work has little utility if there is no work to be had (eg for the long term unemployed).

    Agree about disincentive effects of high marginal tax rates, but attacking this problem does not require embracing a general ideology that inequality is good.

  17. gregh
    July 27th, 2010 at 12:53 | #17

    I must say that the (admittedly space saving brevity required) argument presented here is not very convincing. Firstly one would have to show that inequality was the optimum way to achive the outcome and on the face of it that seems unlikely. Also I don’t believe that ‘work’ (as I think you are constituting it) is a good in and of itself, yet that seems to be part of what you are arguing for. I’m struggling to get a feel for Rawl’s idea as you present it Jim Rose – can you give me a simple concrete example?

  18. Jim Rose
    July 27th, 2010 at 13:20 | #18

    Gregh at #17,

    Rawls was interested in the implications of different institutions of his conception of justice as fairness. He followed his principle of justice as the first virtue of social institutions wherever it took him.

    For example, Rawls lent qualified support to the idea of a flat-rate consumption tax (see A Theory of Justice (Cambridge, MA: Harvard University Press, 1971), 278-79). He said “a proportional expenditure tax may be part of the best scheme” and adding that such a tax “can contain all the usual exemptions”.

    The reason why Rawls lent qualified support to the idea of a flat-rate consumption tax was these tax what people take out of the common store of goods rather than what he or she contributed. He also supported negative income taxes and other forms of social insurance. Rawls preferred a proportional expenditure tax over an income tax of any kind (see A Theory of Justice, p. 246 – see googe books)

    Of course, if I advocated a flat-rate consumption tax and a negative income tax as Rawls has done, and which I have on this blog, along with uniform regulation of all industries, for my troubles I would be denounced as a libertarian and a Friedmanite, which I was.

    Rawls was a profound thinker and open to different interpretations. It is hard to disagree with his ideas of equal liberty, equal opportunity, and such inequalities that are to everyone’s advantage.

    Rawls does not reject progressive taxation altogether as they may be necessary to preserve the justice of the basic structure with respect to the first principle of justice and fair equality of opportunity and forestall accumulations of property and power likely to undermine social institutions.

    Rawls seems to argue that you moderate inequality because this will make the worse-off better off, rather than because you do not like inequality. Redistribution that is not done to help the worse-off just treats some people as sources of money for others.

  19. Michael of Summer Hill
    July 27th, 2010 at 13:50 | #19

    jack horner, the truth is found in the Golden Rule’s corollary – ‘do not treat people in a way you would not wish to be treated yourself’.

  20. Jim Rose
    July 27th, 2010 at 13:57 | #20

    I suggest you look at left-wing writers on your questions because they would have carefully reviewed and weighted up the consequences of higher taxes for incentives before advocating them.

    The labour party’s opposition to Howard’s GST would have been backed with solid documentation in the rawlsian tradition.

    The NZ labour party’s decision to lift the top income tax rate from 33% to 39% in 1999, and promise to their return it to that level again when reelected will also have similar balanced discussions of incentive effects.

    The 1/3rd differences between European and US labour supply because of 1/3rd higher marginal taxes might be another good place to start.

    In Issues in the Comparison of Welfare between Europe and the United States, Robert Gordon attributed the poor economic performance of Europe to the tax/welfare explanation, employment and product market regulation and generous unemployment benefits.

    While Europe’s level of productivity almost reached the US level in 1995, its income per person never exceeded 75 percent and has since fallen below 70 percent.

    p.s. let’s consider the social outcome health: Professor Angus Deaton, a leading health economist, concluded that: “It is not true that income inequality itself is a major determinant of public health. There is no robust relationship between life expectancy and income inequality among the rich countries, and the correlation across the states and cities of the United States is almost certainly the result of something that is correlated with income inequality, but is not income inequality itself.”

  21. gregh
    July 27th, 2010 at 13:59 | #21

    thanks for the further information Jim Rose. It is hard to see how any unequal split of goods can benefit the worse off over and above an equal distribution, as any unequal split of goods reduces the status of those on the crummy end of the division.

  22. Jim Rose
    July 27th, 2010 at 14:28 | #22

    @gregh

    do you know of any developing counties that are using a equal distribution of income and wealth as their springboard to becoming a wealthy country such as like Australia?

  23. gregh
    July 27th, 2010 at 14:55 | #23

    @Jim Rose
    Not really Jim Rose, isn’t one of the problems of the developing world how unequal they are?

  24. 2 tanners
    July 27th, 2010 at 15:03 | #24

    It’s more the power equation, which means that the inequality continues, or more usually is accentuated. Interestingly there are often cultural pressures for some redistribution which lessens this effect, but not to the extent of preventing the rich from getting richer at the expense of the poor, or more normally, at the expense of the country’s resources.

  25. Jim Rose
    July 27th, 2010 at 15:27 | #25

    @gregh
    Your views on relative status may put you at odds with the Rawlsian tradition permeating the Left, as I am told.

    Rawls’ veil of ignorance deprives the parties to deciding what the social institutions of society of all facts about where they might end up in that society: their race, class, gender, age, income, wealth, natural talents, preferences, likes or dislikes, family and social commitments and more.

    Behind Rawls’ veil of ignorance:
    1. the parties are not motivated by envy – by how much citizens besides them end up with;
    2. the parties are not assumed to be either risk-seeking or risk-averse; and
    3. the parties must make a final agreement on principles for the basic structure – there are no do-overs after the veil of ignorance is lifted and the parties learn which real citizen they represent and where they end-up.

    One justification Rawls offers for excluding envy is principles of justice are chosen should not be affected by individual inclinations, which are mere accidents.

    Another and more important justification by Rawls is that parties behind the veil of ignorance should be concerned with their absolute level of primary social goods, not with their standing relative to others.

    Rawls also argued that background institutions (including a competitive economy) make it likely, in Rawls’ view, that excessive inequalities will not be the rule.

    Envy is most often felt toward those with whom the subject perceives himself to be in competition. great disparities in well-being are not envied. Envy is about dragging neighbours down, not far-away strangers.

    As the old Russian joke goes – when a peasant was given one wish by an Angel from heaven, the peasant asked the angel to shoot his neighbour’s cow!

  26. Michael of Summer Hill
    July 27th, 2010 at 17:05 | #26

    gregh, ask it to name those on the left.

  27. Jim Rose
    July 27th, 2010 at 17:30 | #27

    @Michael of Summer Hill
    see #14 that says “Most of the leftwing discussions I’ve seen (most recently Cohen) take Rawls as a starting point (though they may disagree with him), which rather undermines your claim.”

    I was not present for those discussions but I am sure they happened.

  28. Jill Rush
    July 27th, 2010 at 18:13 | #28

    Chris #4. It is hard to make these kind of definitive statements about rewards in the Public Service. The CPSU has undertaken significant research into the inequalities in pay that occurred as a result of the Howard Government allowing individual agencies to bargain with their employees. Those in Aboriginal Hostels receive far less than those in Dept of Finance at the same level and probably deal with far harder issues as well. However departments with a social welfare agenda are in almost every case more poorly paid than their peers in defence or taxation.

    The efficiency dividend has had a deleterious effect but not at the top of the public service where the decisions are made as to who is “surplus”. The cuts have been at the bottom as decision makers will get rid of two people doing the job at the bottom of the ladder rather than get rid of one of their own. It has not helped efficiency at all as it means that managers are often left with few staff to manage and have to flog those under them to deliver. That cuts are often made at state level means that governments have become increasingly isolated from the programs that are delivered.

    The SES on the other hand (tier 2 in Prof Q’s assessment) have done far better and secretaries (the top rung) particularly well. The distortions that have resulted from this are part of the reason that Ministers have been left dangling by departmental heads who aren’t prepared to admit failures in case it affects their annual bonus.

  29. Michael of Summer Hill
    July 27th, 2010 at 18:52 | #29

    gregh, tell ‘it’ that Libertarian Rawlsekians such as Will Wilkinson of the Cato Institute are now more interested in Rawls. But having said that I must admit there is nothing wrong with maximizing the minimum and improving the status of those in the lower rungs of society struggling to make ends meet and that was the reason why I fully supported Rudd’s Resource Super Profit Tax.

  30. Alice
    July 27th, 2010 at 19:51 | #30

    If the discussion here is about John Rawls, then I consider John Rawls much like Keynes…in the rush to greed, these were the people with the truly good and decent ideas, slighted.
    I dont have a lot of time for critics of either….now.

  31. Alice
    July 27th, 2010 at 20:08 | #31

    @Jim Rose
    Behind Rawls veil JR – the parties are naked as they should be. This is the starting point of the basic structure of society – what decency would you nargain with a person as naked as yourself – with nothing known about him or her and they know nothing about you? You are not ordinary Joe negotiating with Rupert Murodch. None of that is known. You are both naked. What would each negotiate as the basic rights and decency they would grant each other? That is the basis of what an humane society should afford its particpants.

    There are basic rights, basic access to protection, basic access to civil liberties…in a civilised society of which Rawls knew much more….Rawls also advocated a democratic process free of the meddling of donations and political lobbying by the powerful and the rich….the democratic political process funded publicly and collectively by each person in society.

    A basic change needed now if we are ever to recover and get the government we really want and deserve as voters.

    Right now.

  32. Alice
    July 27th, 2010 at 20:14 | #32

    It would be far far better if the left the middle and the right took Rawls seriously JQ, not simly as a starting point they want to dispute fine details with later.
    There always inferior intellects who follow and want to challenge great intellects that preceded them (ego).
    It doesnt mean we should discard the great intellect especially when a minor challenge is successful – test of time applies. Who is really remembered by most? Who is moved by most across time? Chances are they were right.

  33. Michael of Summer Hill
    July 27th, 2010 at 21:50 | #33

    Update, Update, Update, I just listened to the Bear bagging Labor over their spending spree but who could forget how disingenuous former Treasurer Howard was back in 1983 by not telling the public of the humongous $9.6 billion budget blowout.

  34. Jim Rose
    July 27th, 2010 at 22:24 | #34

    @Alice
    Your ideal election would have been the Tasmanian House of Assembly election in, as I recall, 1982

    No party campaigns, no TV or newspaper ads, no how to vote cars and all candidates could only solicited votes for themselves, not for others in their party or anyone else. That is my memory

    This was because a late legal opinion from the equivalent of the DPP was that any form of expenditure on co-ordinated campaigning and joint solicitation of votes would be added to each individual candidate limits of $1000 or so separately, as I recall.

    I remember this well because I forgot to vote.

    With no party campaigns, no TV or newspaper ads, no how to vote cars and all candidates could only solicite votes for themselves, the date of the election slipped my mind and I forget to get a postal vote before going inter-state for a holiday.

    The liberal party won in a landslide.

    The campaigning ban seemed to give an advantage to the party already leading because the party on the nose could not dig itself out of a hole in the campaign by pointing out that they may be bad, but, on closer inspection, the other side led by Robin Gray is worse. I do not know of any studies of this unusual election.

    What was the famous Louisiana bumper sticker: vote for the crook, it’s important.

  35. Chris Warren
    July 27th, 2010 at 23:04 | #35

    @jquiggin

    Yes, as cleaners are now called ‘sanitation engineers’ the old clerk class 9 – 11 were renamed as Executive levels 1 and 2. [Previously also senior officers C and B]

    The other Division (2nd division) which was once “assistant secretaries” then became ‘SENIOR executives’, and of course above these are now ‘CHIEF executives’. There is a vast pyramid in public service staff structures, and the work levels of ‘senior executives’ is comparable with deputy vice chancellor and up.

    Middle level concepts no longer apply because inpolicy areas, all lower grades have been removed unless there is a graduate trainee on rotation as part of their first year.

    Most work below executive level, is now piled-up into the workday of the el1, and el2s.

    In general the pay scales of public servants have all fallen dramatically wrt average wage and Henderson Poverty line. Most of the damage was done by Fraser by his “Wages Pause Act”.

  36. Jim Rose
    July 27th, 2010 at 23:27 | #36

    @Chris Warren
    you could accuse Fraser of a lot of things, but neoliberalism?

    there were many partial wage indexation adjustments for inflation betwen 1977 and 1983.

    the 1984 accord restored full-wage indexation in return for the unions not demanding more.

    the unions had not got anymore than inflatation, as a recall, in most years since the mid-1970s and often less, so the deal was a one-way street in favour of the unions.

    after a few years, flat dollars per week adjustments rather than percentage of wage adjustments were not unknow.

  37. July 28th, 2010 at 02:39 | #37

    Do other people have a list of what they think are the most important political policy issues? My list would include global warming, the Afghanistan involvement, a Federal Charter of Human Rights, and housing affordability.

  38. Chris Warren
    July 28th, 2010 at 04:29 | #38

    @Jim Rose

    I think “neoliberalism” is a meaningless tag. Fraser, or at least his Tory Cabinet, was a noxious capitalist regime, that used legislation to boost capitalism, such as;

    |THIS|

    One-way street? In favour of who? What evidence?

  39. Michael of Summer Hill
    July 28th, 2010 at 06:27 | #39

    Update, Update, Update, reports indicate that small business don’t like what they hear from the Coalition when it comes to industrial relations. According to one Yarraville small business owner, Iain Munro, ‘Tony Abbot flipping around about (Work Choices) leaves me unsettled’ and intends to vote for Labor and certainty.

  40. Jim Rose
    July 28th, 2010 at 06:39 | #40

    @wmmbb
    Thirld world poverty might rate a mention too?

  41. Chris Warren
    July 28th, 2010 at 07:13 | #41

    @Jill Rush

    What is the reference to the CPSU significant research on;

    the inequalities in pay that occurred as a result of the Howard Government allowing individual agencies to bargain with their employees. Those in Aboriginal Hostels receive far less than those in Dept of Finance at the same level and probably deal with far harder issues as well. However departments with a social welfare agenda are in almost every case more poorly paid than their peers in defence or taxation.

    I have read most things CPSU “researchers” have produced over a long period.

    The research you refer to was probably the excel spreadsheet developed by the DEST negotiating team during a past CA negotiations. It showed that various agencies were dudded compared to others as you indicate. The CPSU had no idea what was going on. It was subsequently emailed to a senior organiser in CPSU in Canberra. They were asked to continue with it.

    But it was not done by vague “CPSU researchers”.

    So what precisely is this research?

    .

  42. Jim Rose
    July 28th, 2010 at 09:22 | #42

    @Chris Warren
    Union power is not what it used to be if it depends on going cap in hand as supplicants to a government regulator.

    The union wage premium is supposed to be based on union power to collectively withhold labour, not regulatory capture of wage regulators and minimum wage law-makers. regulators and parliaments are supposed to be the tools of the all-powerful capitalist class?

    a wage pause for commonwealth employees is not what it seems.

    I started working a 19 day week during the wages pause when working at the commonwealth bank to get around the pause. the other banks had started opening outside of 10 to 3, and the state owned bank had to play catch-up.

    Banks being open from just 10 to 3 is another part of the good old days in the 1970s and 1960s that many social democrats long to see again.

  43. Jim Rose
    July 28th, 2010 at 09:24 | #43

    @Chris Warren
    typo alert: 19 day month.

  44. Michael of Summer Hill
    July 28th, 2010 at 10:22 | #44

    Guess what drongo said this, ‘Let me say WorkChoices did not cost the former government the election’.

  45. Jim Rose
    July 28th, 2010 at 12:24 | #45

    @Michael of Summer Hill
    Libertarian Rawlsekians!! rawls must be a broad church.

  46. Michael of Summer Hill
    July 28th, 2010 at 17:35 | #46

    Update, Update, Update, today Tony Abbott announced another me-tooism backflip policy on the run whereby the Coalition will lower the corporate tax rate to 28.5%. That is correct another me-tooism backflip policy on the run. Sounds familiar. It should be, and don’t believe a word of it for pensioners and families will end up paying for Abbott’s so-called paid parental leave scheme through the hip pocket.

  47. Chris Warren
    July 28th, 2010 at 17:55 | #47

    @Jim Rose

    Yes, obviously, wage setting, parliaments (via cabinets) and regulators are all driven by the needs of capitalism.

    You seem a bit scared of this fact so, as a tactic of last resort, you misrepresent this as “tools of the all-powerful capitalist class” hoping that when people by someone reject this ugly cartoon they will thereby, to some extent, be blinded to the underlying reality.

    There is no union wage premium. Over time more and more public servants have been falling below the Hederson poverty line, and the share of GDP going to labour is falling.

    So it seems capitalism thrives on a general workers wage-penalisation, that unions try to mitigate.

    Only capitalists see this as a premium, because they only want to pay forever less for labour. Any wage above serfdom, under capitalism is a premium.

  48. Jim Rose
    July 28th, 2010 at 20:52 | #48

    @Chris Warren
    Joan Robinson was the economist who took marxist economics most seriously, I hear. In 1942 Robinson’s An Essay on Marxian Economics concentrated on Karl Marx as an economist, helping revive the debate on this aspect of his legacy.

    What was the battle cry of the 1848 communist manifesto: rise up ye workers, rise up, for you have nothing to lose but your chains!

    Joan Robinson observed that “You have nothing to lose but the prospect of a suburban home and a motor car would not have been much of a slogan for a revolutionary movement.”

  49. Peter T
    July 28th, 2010 at 21:37 | #49

    It may just be because this is – mostly – an economics blog, but the almost total belief apparent that all issues are at root about money tells me that Marx was right to predict that in the last stage of capitalism everything would be commodified and reduced to a single monetary denominator. I wonder if those who think this is a good thing ever wonder if there is a possible downside (even if the proletarian revolution is nowhere in sight).

  50. Jim Rose
    July 28th, 2010 at 22:08 | #50

    @Peter T
    On the 100th anniversary of capital, Paul Samuelson wrote of Marx:

    “was Marx right as a prophet of the future of Victorian capitalism? The immiserization of the working class, which he thought to deduce from the labor theory of value and his innovational concept of surplus value, simply never took place. As a prophet Marx was colossally unlucky and his system colossally useless when it comes to this key matter…”

  51. Michael of Summer Hill
    July 28th, 2010 at 22:36 | #51

    Update, Update, Update, today Julie Bishop confirmed what everyone dreaded that the very generous paid parental leave scheme will be funded by imposing ‘a temporary levy on businesses with a taxable income over $5 million’. In other words, pensioners and families will be worse off under the Coalition as business pass on the costs in the form of higher prices for goods and services.

  52. Ernestine Gross
    July 28th, 2010 at 22:39 | #52
  53. Jim Rose
    July 28th, 2010 at 22:59 | #53

    @Michael of Summer Hill
    so pensioners and families are worse-off as a result of higher taxes notwithstanding the paid parental leave or other government expenditure increase.

    an excellent point worthy of general application.

  54. Michael of Summer Hill
    July 28th, 2010 at 23:53 | #54

    There are many ways to skin a cat but Labor’s scheme which would pay either mum or dad 18 weeks parental leave at the minimum wage of $543.78 per week is fair.

  55. Chris Warren
    July 29th, 2010 at 01:41 | #55

    Jim Rose :@Peter T On the 100th anniversary of capital, Paul Samuelson wrote of Marx:
    “was Marx right as a prophet of the future of Victorian capitalism? The immiserization of the working class, which he thought to deduce from the labor theory of value and his innovational concept of surplus value, simply never took place. As a prophet Marx was colossally unlucky and his system colossally useless when it comes to this key matter…”

    Samuelson is not a suitable authority. He never recognised that Marx’s theory was based on the “socially necessary labour theory of value”. Samuelson nased his understanding on Adan Smiths Labour Theory of Value.

    Also it was Samuelson who said:

    By means of appropriate monetary and fiscal policies, (capitalism) can avoid the excesses of boom and bust and can look forward to healthy progressive growth.

    He is not alone.

  56. paul walter
    July 29th, 2010 at 09:27 | #56

    Looks to me that the key sentence is “the socially necessary labor theory of value” refers to the social reproduction aspect of social theory.

  57. Michael of Summer Hill
    July 29th, 2010 at 11:19 | #57

    Update, Update, Update, the Coalition are running a phoney campaign and cannot fund the pork barrelling going on without going into the red. That is correct the figures do not stack up. Abbott is a fraud.

  58. Jim Rose
    July 29th, 2010 at 12:40 | #58

    @Chris Warren
    correct me if I am wrong, but you say that “Samuelson is not a suitable authority. He never recognised that Marx’s theory was based on the “socially necessary labour theory of value”. Samuelson based his understanding on Adan Smiths Labour Theory of Value.”

    Samuelson discusses the socially necessary labour theory of value in Marxian Economics as Economics. Paul Samuelson. American Economic Review, Vol. 57, No. 2, (May, 1967), pp. 616-623 at 619ff.

  59. Chris Warren
    July 29th, 2010 at 17:15 | #59

    @Jim Rose

    I will have a look at this, but if this is his well known paper on the “Marxian Theory of Exploitation”, then he definitely uses the example of labour needed to produce a deer and beaver – in the Adam Smith manner.

    I would be quite interested to see how Samuelson deals with the “socially necessary” factor as, in essence, all Marx’s concepts are socially expressed (eg Capital is a coercive social power), and economics only has its real problems within its social expression.

  60. Peter T
    July 29th, 2010 at 17:38 | #60

    Jim Rose

    Obviously Marx was wrong about the immiseration of the working class. But it seems he was right to predict that under capitalism all social values would be, as far as possible, commodified – we no longer regard people as complex social beings but as components in a utilitarian machine. Or at least much of the argument here and elsewhere has this tone (“what does this hospital/war/national park cost, and how much do we ant to pay?” is the typical form of the question).

  61. Chris Warren
    July 30th, 2010 at 04:15 | #61

    @Jim Rose

    Unfortunately Samuelson, in this 1967 piece (a tirade), though using the words ‘socially necessary’ did not particularly discuss this aspect.

    Certainly, to understand Marx, you have to assume competitive markets and equilibrium prices on average. As soon as you introduce monopoly, or a degree of monopoly, then relative prices diverge – as Samuelson cites Sweezy and Barran (p622).

    And as Samuelson was aware, in 1865 Marx specifically addressed this point about monopoly.

    So if the challenge to the socially necessary labour theory of value is based on the fact that monopoly power adjusts prices in different ways, then so what? Monopoly always distorts markets, and I do not think you can ever get fair prices with degrees of monopoly. If you have monopoly in society’s commerce then society needs some regulation in the market.

    As rude and crude as Samuelson’s AER 1967 article was, his 1971 was even more confused when he actually presented his understanding of Marx’s labour theory of value. Most people regard his efforts as embarrassing.

    This follows his earlier naive attempt in Amer. Ec. Rev. December 1957 where he played monkey mathematics, wrongly assuming from the outset, that output was a non-linear function of Capital and Labour. For Marx, capital was not productive after the market has adjusted. It only provided a competitive advantage to one capital compared to others to more competitively transfer wealth from labour.

    For Marx output = labour plus replacing circulating capital (raw materials, repairs, depreciation). L + C is linear unless the population expands or L is more heavily exploited or more cheaply obtained. The growth is all L and any capitalist “profit” is an expropriation from this L.

    Samuelson used his false premise to then try to understand Marx’s analysis.

    The 1967 paper was written for a special purpose and is best ignored. I have never seen it referenced.

  62. Jim Rose
    July 30th, 2010 at 09:32 | #62

    @Chris Warren
    Google scholar list 107 cites of the 1967 paper.

  63. Chris Warren
    July 30th, 2010 at 16:42 | #63

    Jim Rose :@Chris Warren Google scholar list 107 cites of the 1967 paper.

    When I searched on Google scholar for

    samuelson “Marxian Economics as Economics”

    I only got 16 citations as expected. What string did you search for?

  64. Jim Rose
    July 30th, 2010 at 17:38 | #64

    @Chris Warren
    I clicked on the JSTOR link to google scholar

  65. Alice
    July 30th, 2010 at 18:18 | #65

    @Chris Warren
    Chris – you cant even get fair prices with Oligopoly – which is what dominates many Australian sectors – (and it has ever been this way due to population size and tyranny of distance and exclusive agency deals made with overseas suppliers).

    If you dont believe me…price shoes (a womans first love)…then price the same brand in the US states. There is a difference that cant be explained by cartage plus a reasonable profit. I am taklking double the retail price between the US and heren and I know what I am talking about…because I like shoes!

    Now this is just one market. Im sure many import markets in Australia are the same. The price has not been lowered by “free markets”. There are deals stichted up within exclusive agency agreements.

  66. gerard
    July 30th, 2010 at 19:29 | #66

    thanks Ernestine

  67. Chris Warren
    July 31st, 2010 at 04:14 | #67

    Jim Rose :@Chris Warren I clicked on the JSTOR link to google scholar

    This is not the best way to use Google scholar as the defaults usually result in relatively broad and “fuzzy” searches.

    It is far better to enter your own search string with appropriate syntax.

    But even then you still get inflated counts as citations included also cover Samuelson self-citing himself.

Comments are closed.