Home > Life in General, Oz Politics > Goodbye 2010

Goodbye 2010

January 1st, 2011

Well, 2010 is over and it’s been a year of contradictions for me. In personal and family terms, things have gone very well, starting with the birth of my first grandson, James in March. Then there’s my literary offspring Zombie Economics, which seems to be going very well, and my election as a Fellow of the Econometric Society (quite a big deal in the academic circles where I move, if not exactly a barbecue-stopper among family and friends in general).

Politically on the other hand, it’s been a year of frustration.

The problems began in December 2009, with the half-baked compromises and evasions of the Copenhagen summit, followed by Malcolm Turnbull’s one-vote loss of the Liberal party leadership to Tony Abbott. But the real disaster came early in 2010 with Kevin Rudd’s unaccountable failure to go to a double-dissolution election over the Libs’ obstruction of the emissions trading scheme. From then on, Labor seemed determined to pile on the own goals, first dumping the ETS altogether and then dumping Rudd himself for Julia Gillard, who rapidly proved to be a policy-free zone. Things were just as bad, or even worse at the state level, where Labor governments’ desperate pursuit of privatisation and PPP schemes has proved politically suicidal in the past, and seems certain to do so for both the Queensland and NSW governments.

The story was equally depressing internationally. Despite the catastrophic failure of the financial system, and of the whole market liberal ideology, centre-left and social democratic parties seemed unable to put forward a coherent response, and instead we have had the disaster of ‘austerity’. Obama in particular has been a huge disappointment in this respect. In the 2008 campaign he seemed ideally suited to articulate a message of hope. But after negotiating an inadequate stimulus package in early 2009, he has barely mentioned the issue of unemployment, leaving it to the financial sector to take him from both sides, directly exerting its power while channeling the anti-finance anger into the Tea Party movement which has helped to elect pro-finance Republicans.

Still, there were some hopeful signs as the year ended. Despite the miserable performance of our political leaders, the evidence on climate change continued to accumulate and Australia still looks like getting some kind of carbon price. More importantly, global business seems to have concluded that a carbon price will come sooner or later, resulting in continued investment in renewable energy. And the long-hoped for economies of scale seem to be coming to bear at least, with sharp drops in the cost of solar PV and continuing falls in the cost of wind turbines.

As far as the broader issues of social democracy and market liberalism are concerned, the negative message of ‘austerity’ is a double-edged sword for the advocates of market liberalism. Advocacy of pain can work surprisingly well, in political terms, as a short-run response to crisis, but it has far less long-term appeal than the story that free markets would bring universal prosperity, a story discredited by the financial crisis. The British Conservatives have demonstrated beyond any doubt that they are the same old “nasty party” that was voted out in 1997. The US Republicans have gone ever deeper into Fox News delusionism on every kind of issue. And the European right now relies heavily on tribalist and xenophobic resentments, forces that are ultimately doomed by the fact that individually, we all want and expect the kind of mobility that generates those resentments.

Categories: Life in General, Oz Politics Tags:
  1. Jarrah
    January 1st, 2011 at 21:31 | #1

    “Despite the catastrophic failure of … the whole market liberal ideology”

    HAHAHAHAHAHAHAHAHAHA!

    “the story that free markets would bring universal prosperity, a story discredited by the financial crisis”

    Please show us the free markets that had a crisis, Professor. Oh wait, you can’t, because there weren’t any! Perhaps you meant the comprehensively-but-badly-regulated financial markets?

  2. jakerman
    January 1st, 2011 at 21:42 | #2

    Please show us the free markets that had a crisis, Professor. Oh wait, you can’t, because there weren’t any! Perhaps you meant the comprehensively-but-badly-regulated financial markets?

    That really the point, there can never be a free market, our only choice is which bits are freer than others. We did see rising inequality with rising deregulation, and this was not replaced by free markets as the Greenspan failed theory showed. It was replaced by self serving Ponzi shonks schemes.

  3. Jarrah
    January 1st, 2011 at 21:51 | #3

    “there can never be a free market, our only choice is which bits are freer than others”

    Could you elaborate? What prevents a free market ever existing? Why must there be freedom differentials?

  4. Robert in UK
    January 1st, 2011 at 23:02 | #4

    Nice round up, JQ. Other things to be slightly optimistic about in 2012: the EPA’s intention to regulate carbon-emitting industries, and what looks like the rise of social-democracy in South America. The latter doesn’t get mentioned enough.

  5. Chris Warren
    January 1st, 2011 at 23:23 | #5

    Jarrah

    Capitalists make greater profits if there is less competition.

    If there was true ‘free competition’ capitalist profits would be competed away.

    Therefore capitalism itself prevents free markets from ever existing.

    The answer you seek is right in front of you.

  6. Jarrah
    January 1st, 2011 at 23:35 | #6

    “If there was true ‘free competition’ capitalist profits would be competed away.”

    Close, but not quite. If there was perfect competition, there would be no profits (incidentally, this assumption underlies a lot of what Marx got wrong). Competition can’t be perfect, outside abstract models, so profits are never competed away entirely. Though it can get close in some industries.

  7. Fran Barlow
    January 1st, 2011 at 23:46 | #7

    @Jarrah

    Jakerman is right on this one Jarrah. In practice, free markets simply aren’t possible, because the contending parties need to be regulated. The stakeholders can never trust each other and as you acknowledge, perfect competition is never possible in practice.

  8. January 2nd, 2011 at 01:06 | #8

    The Econometric Society Fellowship is richly deserved for the strong contributions you have made to many branches of applied and theoretical economics. Congratulations John.

  9. Jarrah
    January 2nd, 2011 at 01:47 | #9

    “because the contending parties need to be regulated.”

    They do? Why?

    I think you are confusing free markets (ie unrestricted transactions) with lawlessness (or rulelessness), but I could be wrong. Like jakerman, you’ll have to elaborate.

    There are many ways to cultivate trust without regulation. Think bonds, guarantees, reputation effects, etc.

  10. paul walter
    January 2nd, 2011 at 02:29 | #10

    Congratulations, JQ, re your grandson.
    It is reassuring to know that good things also can happen for good people.
    As for the rest,I would have thought it pretty much disastrous too, both for world politics and the hope of the emergence of a democratic , inclusive, rational global and local economy.

  11. Alice
    January 2nd, 2011 at 07:59 | #11

    Im glad you are a fellow in the econometrics society John – perhaps you could now give instruction to some of your peers on how to use econometrics in an ethical sense (combining this post with these ideas below)
    http://rwer.wordpress.com/2010/12/31/got-ethics/
    I rather like the idea of econometricians and economists swearing an oath – “I swear on this day, I will not misuse my econometric skills for the sole benefit of the financial industry, excluding all others” etc
    2010 was rather depressing in the general economic policy sense, both here and overseas, and yes the hope brought by Obama has turned rather lukewarm as we saw that in the queue for the new presidents ear, the financial scions from Wall Street got their counsel first…little has changed there or in the UK, to bring any confidence.
    So I say goodbye to this year as being a year that did not bring real hope and did not bring real change.

  12. jakerman
    January 2nd, 2011 at 08:03 | #12

    Could you elaborate? What prevents a free market ever existing? Why must there be freedom differentials?

    Show me a free market and I’ll show you its transitory or an illusion.

    Competition, leads to winners, which stifles competition. Power becomes consolidated. Consolidated power (anti-democratic: especially in media) undemocratically influences power. Disproportionate power mixed with the profit imperative makes free markets impossible in the long run.

  13. Chris Warren
    January 2nd, 2011 at 08:18 | #13

    @Jarrah

    You make no useful point simply changing my “true” to your “perfect”.

    Where did Marx assume that competition would compete capitalist profits away?

    In fact this comes from Alfred Marshall’s Principles. So presumably you meant to say that this underlies everything Marshall got wrong, and we are now starting to suffer from today.

    If your statement “Competition can’t be perfect, outside abstract models,….” is relevant, then it also answers your own question: “What prevents a free market ever existing?”

    So why didn’t you mention this originally?

    Of course it is irrelevant – the amount of defacto capitalist accumulation that may result because of less than true competition is trivial, and is a necessary cost as markets move from one equilibrium to another.

  14. Ikonoclast
    January 2nd, 2011 at 09:28 | #14

    Prof JQ alludes to the depressing political events which only tend to confirm several of my specific predictions and general hypotheses. I said that;

    1. Global civilization would fail to address AGW.
    2. Corporate capitalism would not lose its control of the political-economic system until limits to growth caused a major world civilizational crisis and collapse.
    3. Experts can correctly predict certain macro disasters if we don’t change course.
    4. Humanity as a whole always ignores these predictions and behaves in a predictable pattern which renders arguments over human free will and self determination absurd and immaterial.
    5. Given the above, humanity never acts in time to avoid predicted macro disaster.
    6. Following all of the above, and having regard to the laws of the physical cosmos, humanity cannot control its own history. Our history is controlled by the laws of nature as are all other creatures.
    7. The notion that humans are special and exempted from the laws of nature by free will, ingenuity or special relationships with magical deities is, philosophically and scientifically speaking, unsupported by any evidence.

  15. Ikonoclast
    January 2nd, 2011 at 10:58 | #15

    Addendum to above.

    Generally speaking, the magical deities most believed in, in the West, are free markets and technology. Of course, these things are real but instead of their real properties, both capacities and limitations, being understood, in most cases people simply ascribe magical powers to them and essentially implement and worship them uncritically.

  16. Michael of Summerhill
    January 2nd, 2011 at 11:52 | #16

    Iconoclast, first up happy new year to all and spare a thought for all those in Sydney who have no running water on this hot summer’s day.

  17. Tony G
    January 2nd, 2011 at 12:19 | #17

    Mean while, the proponents of a carbon tax to maintain their excessive government utopia, failed to expel enough hot air regarding their AGW/CC fraud to keep the planet warm.

  18. jakerman
    January 2nd, 2011 at 12:37 | #18

    Mean while Tony G still has no argument, just names calling. Grow up Tony.

  19. Ikonoclast
    January 2nd, 2011 at 13:17 | #19

    Tony G and Jarrah both lack serious arguments. They reason from belief so there is no possibility of logical and/or consquential argument with them. I view such people as lost causes. Instead we need to better teach the next generation how to reason logically. That way we might have a chance of salvaging something from the collapse of corporate capitalism.

  20. Tony G
    January 2nd, 2011 at 13:28 | #20

    It is not a matter of growing up…It is a matter of growing (fabricating) an anomaly, only because you actually can’t tell what the average global temperature is Jackerman…. Hence the AGW fraud is now re-badged the AGW/CC fraud….meanwhile the fraud continues……

  21. Chris Warren
    January 2nd, 2011 at 13:44 | #21

    @Tony G

    There is no excessive ‘government utopia’, – Australia suffers from excessive ‘corporate executive utopia’ as they swim about in their fancy bonus payments and 6 figure salaries, plus the ever present bankers cancer.

  22. jakerman
    January 2nd, 2011 at 14:34 | #22

    Tony more name calling and still no argument. Grow up.

  23. jakerman
    January 2nd, 2011 at 14:38 | #23

    BTW Tony, I look forward to your paper demonstrating that GISS, Hadley, RSS and UAH plus a few others cannot average temperatures.

    I wait with baited breath for your demonstration that temperatures cannot be averaged, in the face of overwhelming evidence that directly contradicts you.

  24. Ikonoclast
    January 2nd, 2011 at 15:08 | #24

    @jakerman

    I agree, jakerman. On another issue, I will be humerously pedantic. :)

    It’s “bated breath” which means abated or stilled breath.

    http://www.phrases.org.uk/meanings/bated-breath.html

  25. Ikonoclast
    January 2nd, 2011 at 15:15 | #25

    Hoist by my own petard. I mispelled humorous or is it humourous?

    http://www.phrases.org.uk/meanings/hoist%20by%20your%20own%20petard.html

  26. Tony G
    January 2nd, 2011 at 15:24 | #26

    Jackerman,

    You’ll be waiting along time with baited (or bated) breath for NOAA to give you one as well.

    Can you point me to where anyone publishes a global average temperature?

    Because it seems even an estimate of global average surface temperature is difficult to compile. (6) That is why they have to make one up.

    It is quite clear you fraudsters can not even measure the temperature accurately enough to definitely assert weather it is warming or cooling; at least be honest about that;

    Also own up to your motives for a great big new carbon tax; which is solely to redistribute wealth.

    The problem with that is, when proponents of excessive government try to redistribute the wealth they destroy it.

  27. Michael of Summerhill
    January 2nd, 2011 at 15:28 | #27

    Tony G, you have me totally bamboozled are you saying Australia’s climate variability is not influenced by El Nino & La Ninia or are you just being mischievous?

  28. Tony G
    January 2nd, 2011 at 15:46 | #28

    MOSH,

    No one is saying the climate doesn’t change.

    Although, it is a fraud to say a carbon tax is going to change climate.

  29. Michael of Summerhill
    January 2nd, 2011 at 16:07 | #29

    Tony G, unless you understand the relationship between El Nino & La Ninia and its impact upon the land then I fail to see how you can make such irresponsible statements about scientists not knowing how to ‘measure the temperature accurately’ and/or the impacts humans have had on climate change.

  30. Ernestine Gross
    January 2nd, 2011 at 16:25 | #30

    Happy New Year, Professor Quiggin, and congratulations to you as well as Australia on your election as Fellow of the Econometric Society.

  31. jquiggin
    January 2nd, 2011 at 16:35 | #31

    Please, no feeding trolls on climate change.

  32. Tony G
    January 2nd, 2011 at 17:04 | #32

    Tony G, please take this to the sandpit I just created specifically for this kind of nonsense – JQ

  33. jquiggin
    January 2nd, 2011 at 17:13 | #33

    Thanks to all for kind wishes

  34. Jarrah
    January 2nd, 2011 at 17:44 | #34

    @Chris Warren
    “You make no useful point simply changing my “true” to your “perfect”. ”

    Actually, I do. ‘True’ is practically meaningless, but ‘perfect’ has well-defined characteristics and effects. One of the effects would be zero profits, as shown by abstract models (you know, the ones that lefties are always lambasting, never knowing how much their arguments rely on them). But since the conditions that result in perfect competition – large number of firms each with small market share, identical or near-identical products, no barriers to entry or exit, etc – can’t really exist, then the profit level never reaches zero.

    But getting back to your original point, free competition is not perfect competition. Free markets don’t have to be perfectly competitive, nor could they be. So I still don’t see why free markets are impossible.

    “Where did Marx assume that competition would compete capitalist profits away?”

    In constructing his LTV, he prepared the ground by starting with an ‘analysis’ of capitalism in a ‘pure’ state, where perfect competition eroded profits away to nothing.

  35. Jarrah
    January 2nd, 2011 at 17:56 | #35

    @jakerman
    “Show me a free market and I’ll show you its transitory or an illusion.”

    Undoubtedly. This is, in fact, my original point – criticising “free markets” (as JQ does in his post) doesn’t make any sense when we’re talking about highly regulated markets.

    “Competition, leads to winners, which stifles competition. Power becomes consolidated.”

    This used to be one of my arguments as well, but it’s wrong. If it were, the list of the top companies in the world (by any measure – capitalisation, profitability, market share, whatever you like) would never change. Since that’s not true, the simplistic argument must be wrong in some respect.

    Firms don’t like competition, so when they gain market power they do all they can to minimise it. On their own they can do very little – predatory pricing etc are not successful strategies – so they often turn to government and plead for regulation that just happens to entrench their power. No other method (apart from outright coercion) can prevent profits falling, if the firm is unwilling to compete on price or quality or whatever.

    So in a sense I am agreeing with you – free markets won’t last when special interests can bend governments’ coercive power to their own ends. This is not an argument against free markets, though.

  36. Alice
    January 2nd, 2011 at 18:05 | #36

    @jquiggin
    You deserve all kinds of kind wishes but somone needs to get over to MQ and straighten out their economics department who are heaping all kind of vile abuse on Steve Keen….

    Oh my god…how the once mighty (in economics) have fallen at MQ?

    What a total embarrassment for them given their once proud reputation in economics. You see – the world is a strange place – even whole economics faculties, after years odf a good reputation and a solid placing on the world ranking scale, can take a wrong turn and end up looking like blithering idiots.

    Somehow I dont think its ever going to happen to the Prof. Hated – yes, put down – yes, but no one will ever think you are a blithering idiot!

  37. ken n
    January 2nd, 2011 at 18:13 | #37

    I don’t think JQ is hated, Alice, nor that he hates.
    Like all of us, he is just sometimes wrong.

  38. Alice
    January 2nd, 2011 at 18:16 | #38

    @ken n
    I can assure you Ken – there are those that hate JQ, there are those that attempt to patronise JQ. He may be wrong sometimes, but he is less often wrong than others in mainstream economics.

  39. Alice
    January 2nd, 2011 at 18:18 | #39

    @ken n
    Oh and I never said JQ “hated” at all Ken just to clarify your misinterpretation of what I did say.
    But misinterpretation is an all too frequent occurrence here (sometimes I suspect quite deliberate).

  40. Jarrah
    January 2nd, 2011 at 18:20 | #40

    Alice, I don’t like vile abuse of anybody, but Keen is a bit of a crank.

  41. Alice
    January 2nd, 2011 at 18:26 | #41

    @Jarrah
    Its not just Keen – its what else MQ is espousing Jarrah….and they have seriously slipped in the rankings so perhaps they need to have a close look at the teachings coming from their econ department..

    No reason to question the quality for years?? Why now?? Gone off on some ideological bent that may not be good objective quality economics…is my suggestion.
    Anyway – any faculty needs to examine why ist failing doesnt it Jarrah? Isnt that what a good business model would do? (exceot in this case, because its a univeriy it may well be the business model that is causing the failure).

    I can think of far far worse and far more deserving of the crank label before I would suggest Keen Jarrah…Im surprised you make such a suggestion at all..

  42. Alice
    January 2nd, 2011 at 18:27 | #42

    Xcuze atrocius spelling

  43. Jarrah
    January 2nd, 2011 at 18:30 | #43

    “I can think of far far worse and far more deserving of the crank label before I would suggest Keen Jarrah…Im surprised you make such a suggestion at all..”

    Well, obviously there are crankier cranks than Keen, but his was the name mentioned so I thought it appropriate to mention ;-)

    And why the surprise? His unorthodox economics can be quite strange, and he was recently hilariously wrong on house prices. That normally wouldn’t mean anything, except his reason for being wrong was a fundamental theoretical one, rather than poor modelling or slipshod calculation.

  44. Michael of Summerhill
    January 2nd, 2011 at 18:40 | #44

    Jarrah, I’m not sure about your background but first year budding economists would have studied John D. Rockefeller, Standard Oil & the advent of US Anti-Trust laws when it comes to monopolies and competition. In Rockerfeller’s case, cornering the market benefitted consumers paying less for petroleum products but for other entrepreneurs in the market it was a disaster.

  45. Alice
    January 2nd, 2011 at 18:44 | #45

    @Jarrah
    says “Well, obviously there are crankier cranks than Keen, but his was the name mentioned so I thought it appropriate to mention ”
    Worthy of a chuckle Jarrah ..but how about a word against some real cranks (??monkton)
    I just dont want to raise Tony G from the dead….

  46. Alice
    January 2nd, 2011 at 18:46 | #46

    @Jarrah
    Still think he may have had his timing wrong but r/e prices here set for a correction

  47. Jarrah
    January 2nd, 2011 at 19:24 | #47

    @Alice
    Timing, but not scope? Remember he predicted a 40% drop. It’s possible that in 2011 we’ll see a 5% drop, or 50 years from now we could get a fall of 40%, but would we really chalk it up as a win for Keen?

    @Michael of Summerhill
    MoSH, there is some room for anti-monopoly laws and regulations, but theory and the historical record agree that private monopolies are rare and short-lived compared to the government-imposed ones.

    Bringing up Standard Oil in this context is a rookie mistake. Although dominant in oil production for a short period (and in fact was having its share substantially competed away before being split up) it did not abuse this position by charging monopolistic prices. So at a stroke, the key plank in the opposition to dominant firms – the risk of above-market prices being forced on consumers – is rendered moot. All we’re left with in terms of ‘negatives’ are the other oil producers. Forgive me if I don’t shed a tear for the state of their fortunes.

    Some extracts from an ideologically unsound website:

    Because of Standard Oil’s tremendous efficiencies, the price of refined petroleum had been plummeting for several decades, generating great benefits for consumers and forcing all other competitors to find ways to cut their costs and prices in order to survive. Product quality had improved, innovation was encouraged by the fierce competition, production had expanded dramatically, and there were hundreds of competitors. None of these facts constitutes in any way a sign of monopoly. … In a now-classic article on the topic in the prestigious Journal of Law and Economics, John S. McGee studied the Standard Oil antitrust case and concluded not only that the company did not practice predatory pricing but also that it would have been irrational and foolish to have attempted such a scheme. …The antitrust case against Standard Oil also seems absurd because its share of the petroleum products market had actually dropped significantly over the years. From a high of 88 percent in 1890, Standard Oil’s market share had fallen to 64 percent by 1911, the year in which the US Supreme Court reaffirmed the lower court finding that Standard Oil was guilty of monopolizing the petroleum products industry.

  48. Michael of Summerhill
    January 2nd, 2011 at 19:41 | #48

    Jarrah, you seem to be confused for the US Justice Department sued the group under the federal antitrust law and ordered its breakup into 34 companies for reasons Standard’s dominant position in the refining industry was due to various discriminatory and unfair practices.

  49. January 2nd, 2011 at 19:56 | #49

    Ikonoclast@ 14 has identified a real problem of collective stupidity. As an individual if I have a mind I can learn from experience or otherwise be open to correction by others. The only technology we have available is democracy, which does not seem to be working. But in my opinion, democracy is not just facilitating institutions, but also individual discipline.

    Otherwise, I would have thought that the release of the Wikileaks documents, was a river crossing (a bit like the Rubicon), if not in its context, in the reaction. Curtains may need to be drawn, but democracy is in essence an open government and an informed citizenry needs to see what is going on – and not thirty years later.

  50. Jill Rush
    January 2nd, 2011 at 22:05 | #50

    Congrats Prof Q for a productive and rewarding 2010. Happy New Year.

    We did have some odd political results in 2010 and it is hard to make sense of the privatisation and PPP push when it appears to be political suicide. If decisions appear odd from the outside it can only be that there are elements we are not being told about. If members of a government were looking post politics then the decisions seem far more rational for the individuals making them rather than for those that are meant to be benefiting. This is a real advantage of a functioning democracy (however imperfect). While damage on a large scale can occur with poor leadership at least there is some hope of trying to elect those who are less venal.

  51. paul walter
    January 2nd, 2011 at 22:15 | #51

    As usual, it is left to Jill Rush to shed some light on the subject. The two problems are the (profound) secrecy coupled with the utter- inexplicable, to me- stupidity of the perversely perservered with privatisations.
    If you are like me, you are likely overcome with a sense of foreboding, resulting from some unpleasant guesses about who is really running Labor these days and in whose interests they have been appointed, thru rigged selection processes and the like.

  52. Chris Warren
    January 2nd, 2011 at 22:25 | #52

    @Jarrah

    “True” is not practically meaningless. It is an adjective and gets its meaning from its noun and context.

    But surely, if what you say:

    But since the conditions that result in perfect competition … can’t really exist, then the profit level never reaches zero.

    is true, then this is yet another refutation of your own original question. :!: :?:

    As far as I am aware Marx did not start his analysis in a pure state where competition eroded capitalist profits to zero. What evidence do you have for this claim?

    By labelling others as cranks, you only demonstrate that the face at the bottom of the well is your own.

  53. Jarrah
    January 3rd, 2011 at 00:23 | #53

    @Michael of Summerhill

    “and ordered its breakup into 34 companies for reasons Standard’s dominant position in the refining industry was due to various discriminatory and unfair practices.”

    No, it ordered its breakup because there was the political will to change the laws to make it happen. The ‘unfair practices’ turn out to be not much more than vigorous competition and exploitation of market power. Since the only people to lose out under that scenario were other capitalists, I really don’t see a problem.

  54. Jarrah
    January 3rd, 2011 at 00:39 | #54

    @Chris Warren
    “It is an adjective and gets its meaning from its noun and context.”

    Definitely, but when I said ‘practically meaningless’ what I meant was when trying to use ‘true’ as a practical measurement of markets, it turns out to be meaningless. Practically meaningless = meaningless in practice in this context. Clear now?

    As for purported refutations, I am making none, so you must be terribly confused about what it is that I’m claiming or questioning. It’s quite simple – why can’t free markets exist? I can see why they can be undermined and taken over, and I acknowledge the socio-political forces that work against their survival, but for anyone to claim they are impossible, almost by definition, seems positively surreal.

    “As far as I am aware Marx did not start his analysis in a pure state where competition eroded capitalist profits to zero. What evidence do you have for this claim? ”

    Heilbroner, R. ‘The Worldly Philosophers’, revised 7th edition, discussing ‘Das Kapital’ on pp.155-6:

    For what Marx has set for his goal is to discover the intrinsic tendencies of the capitalist system … he erects the most rigorous, the purest capitalism imaginable … We enter a world of perfect capitalism: no monopolies, no unions, no special advantages for everyone … The stage is set and the characters take their places. But now the first difficulty appears. How, asks Marx, can profits exist in such a situation? If everything sells for its exact value, then who gets an unearned increment? … How can there be profit in the whole system if everything exchanges for its honest worth? It seems like a paradox. [blah blah labor-power blah surplus value blah blah blah].

    Pwned.

  55. Alice
    January 3rd, 2011 at 06:29 | #55

    Goodbye to 2010 and all the zombies…… and may you all resolve to join a damn union in 2011… (letter to editor Jan 3 Tele)

    “the public sector has a good union that fights for the rights of workers. It strikes deals to balance out a work life and home life. We are well paid, have great resources and provide a service as best we can to the taxpayer.
    If you dont like it perhaps you should stop listening to the right wing union bashing and sign up.
    You too could be at the beach with your family instead of selling your soul to your boss who, I bet, is here at the beach with his family.”

  56. Alice
    January 3rd, 2011 at 07:56 | #56

    More news on the reports Citigroup tried to bury….which I was farewelling Citigroup

    http://www.cps-news.com/wp-content/misc_pdfs/Citigroup_Plutonomy_Part_1_Oct162005.pdf

    Strangely RWER site put up a new link to report 2. It has also disappeared.

    So Ill just post the RWER links. I could not get report 2 from their “new” links.
    http://rwer.wordpress.com/2011/01/02/new-links-for-secret-citigroup-plutonomy-reports/

  57. Chris Warren
    January 3rd, 2011 at 08:22 | #57

    @Jarrah

    Unfortunately you have shown yourself “why can’t free markets exist?”

    You now create another label – “confused” – so wear it well.

    Where exactly in all that text from Heilbroner, you confusedly presented was their any evidence that Marx assumed [in Jarrah-speak] “there would be no profits”.

    In fact the Heilbroner quote says the exact opposite – clearly indicating that, in Heilbroners view, Marx assumed the existance of ‘unearned increment’. If this was not the case Marx would have had nothing to write about.

    So even relying on secondary sources, Jarrah misunderstood his own reading.

    No sensible person would attack a primary writer by misunderstanding secondary sources.

    So obviously, perfect, true, or uber “free markets” cannot exist. Capitalist profits rely on deliberate unfree markets.

    And obviously Marx did not make any (Jarrah-faked) “assumption”.

    All Jarrah can do is squabble over adjectives and secondary sources – both of which he totally misunderstands.

  58. jakerman
    January 3rd, 2011 at 08:42 | #58

    Undoubtedly. This is, in fact, my original point – criticising “free markets” (as JQ does in his post) doesn’t make any sense when we’re talking about highly regulated markets.

    I believe you are misinterpreting JQ. JQ criticises:

    the story that free markets would bring universal prosperity

    Jarrah writes:

    If it were, the list of the top companies in the world (by any measure – capitalisation, profitability, market share, whatever you like) would never change. Since that’s not true, the simplistic argument must be wrong in some respect.

    This is not an appropriate test of the hypothesis, firstly take media, consolidation of media. We know competition in news papers is barred via barriers to entry, and proactive nich filling by Murchoch, as well as anti competative pricing when a startup threaten. We also know that the papers largely set the agenda for broad cast news, and provide one of the few models to fund journalism.

    Despite lack of competition in press this does not result in things “never changing”. Rather people stop buy papers for the journalism ad by it for the TV guide. The extent that media is not further consolidated is only prevented by regulation.

    There is a breakout now with new technology of internet, which is not a free market, rather its freedom depends of regulation like Net Neutrality. And even this option for media is not sustaining journalism .

    So things change due to external forces despite lack of competition. And the competition where it does exist is enabled by regulation.

    So in a sense I am agreeing with you – free markets won’t last when special interests can bend governments’ coercive power to their own ends. This is not an argument against free markets, though.

    Yes we agree on that first part, and this is a reason to protect democratic process and fight inequality. But your later argument is redundant, as truly free markets cannot exist (see above). A market is more free with regulation than without.

  59. Michael of Summerhill
    January 3rd, 2011 at 08:43 | #59

    Jarrah, to cut a long story short the original text of the Sherman Act for Section 1 delineates and prohibits specific means of anticompetitive conduct, while Section 2 deals with end results that are anticompetitive in nature. In 1911, the Supreme Court found Standard Oil violated the 1890 Sherman Antitrust Act because of excessive restrictions to trade, and in particular its practice of buying out the small independent refiners and/or that of lowering the price in a given region to force bankruptcy of competitors and ordered the Company to be broken up into various entities which we know as Exxon, Mobil, Chevron, Esso, etc. No marks for being wrong.

  60. jakerman
    January 3rd, 2011 at 09:03 | #60

    the simplistic argument must be wrong in some respect.

    I like this point, especially it’s simplicity. There is some truth in it.

  61. Johncanb
    January 4th, 2011 at 11:07 | #61

    I don’t know John if you read the IMFs Fiscal Monitor document of November 2010 but it is depressing reading. The High Priests of capitalism are admitting that inappropriate fiscal tightening is required to satisfy the market’s irrationalities and that this will lead to lower economic growth and higher unemployment. Some extracts from p. 11 of the document below http://www.imf.org/external/pubs/ft/fm/2010/02/fmindex.htm
    ‘The debate on what fiscal policy should do in advanced countries in 2011 has been heated in recent months. Surely—argues one side—it is folly to tighten fiscal policy at a time when
    unemployment is at a record high. Surely—argues the other—it is reckless not to tighten
    fiscal policy when public debt is at a record high. …….An abrupt, front-loaded tightening is risky and should be avoided, except when market conditions make it inevitable. Fiscal tightening is likely to reduce GDP growth (the multiplier is small—0.5 to 1—but is not zero), compared to a situation in which fiscal policy is not tightened and financing continues to remain easy for the government. Thus, given the relatively slow pace of economic recovery, stepping on the brakes with excessive enthusiasm would not be appropriate unless there is acute market pressure.
    So why not delay fiscal adjustment altogether? There are two reasons …..First, markets could lose confidence in the willingness of governments to pay back their debt. Markets may now be too pessimistic about some countries, but that does not mean that risks can be ignored. ………But markets typically react late and abruptly (spreads on Greek debt were as low as 100 basis points just one year ago). The ideal course of action would be to avoid any tightening now, while also credibly committing to future tightening. ……Unfortunately some up-front tightening is likely to be needed to ensure that future plans are credible.

  62. Jarrah
    January 4th, 2011 at 12:50 | #62

    @Chris Warren
    So many errors in so few words – well done, Chris. I’ll keep my riposte short.
    1. You clearly haven’t understood Heilbroner, or Marx. You apparently missed the word ‘paradox’, or don’t know what it is. Marx was looking for profit but idealised capitalism has no profit. Trying to mistakenly resolve that paradox (instead of realising that ‘idealised capitalism’ is physically impossible) he invents an edifice of exploited labor-power surrendering surplus value to capitalists.
    2. Secondary sources? I’m sure you read all of Das Kapital, and in the original German too! Heilbroner is one of the most respected economic historians ever, and was “an outspoken socialist for most of his career” according to Wikipedia (before eventually acknowledging his error) so he was hardly an opponent of Marx’s teachings when he wrote about him.
    3. “So obviously, perfect, true, or uber “free markets” cannot exist.” All those adjectives refer to different kinds of markets. Free DOES NOT EQUAL perfect, or true. The closer to perfect competition the better, of course, but free markets don’t need perfect competition to exist.

  63. Jarrah
    January 4th, 2011 at 12:57 | #63

    @jakerman
    “This is not an appropriate test of the hypothesis”

    That wasn’t my response to JQ’s criticism, but to the contention that wealth accumulation and market power accumulation has a feedback loop that can’t be broken. To see my response to JQ, you only need look at the top of the first page of comments.

    “The extent that media is not further consolidated is only prevented by regulation.”

    This is true, but incomplete. Quite a bit of media regulation is geared towards preventing competition and diversification. See anti-siphoning, TV licenses, spectrum restrictions, etc.

    “as truly free markets cannot exist (see above)”

    I’m sorry, but I don’t see it. Perhaps we have different definitions of ‘free’, which I find is often the case in these sorts of discussions.

  64. Jarrah
    January 4th, 2011 at 13:02 | #64

    @Michael of Summerhill
    You get a B for effort, but D for everything else. I haven’t disputed the courts found what they did, so you gain nothing by repeating the judgment. I am saying a) the anti-trust laws (and the action against Standard Oil) were driven by special interests, not the state of the market or notions of competitive justice; and b) the courts erred in their findings, as demonstrated by the remarks I quote on the previous page.

  65. Michael of Summerhill
    January 4th, 2011 at 13:40 | #65

    Jarrah, I will end it here for you don’t seem to understand the significance of the case and what is meant by restraint of trade. Furthermore, the Court did not err but developed the Rule of Reason doctrine.

  66. Jarrah
    January 4th, 2011 at 17:38 | #66

    Of course the court erred. The concept they effectively championed was that the facade of competition was more important than the benefits that flow from it. Thus, despite the clear facts that SO’s market share was in decline, that consumers were not being gouged, that the market appeared very healthy in several respects, SO was still the bogeyman to be disbanded. By the court’s own standards – “Based on this review, the Court concluded that the term “restraint of trade” had come to refer to a contract that resulted in “monopoly or its consequences.” The Court identified three such consequences: higher prices, reduced output, and reduced quality” – SO was not engaged in consequential restraint of trade.

  67. Michael of Summerhill
    January 4th, 2011 at 19:18 | #67

    Jarrah, nonsense.

  68. Michael of Summerhill
    January 4th, 2011 at 20:24 | #68

    Jarrah, one could argue that Standard Oil was Janus faced just like our large supermarkets in Australia. On one side of the face Standard Oil would by lowering it prices forcing competitors to go to the wall and on the other side it acted as a monopolist raising prices where there was no competition. The end result was a unanimous decision whereby the Supreme Court affirmed the lower court’s judgment that the conduct of Standard Oil had violated both Sections 1 and 2 of the Sherman Act. (In 1909, the US Department of Justice sued Standard Oil under federal anti-trust law, the Sherman Antitrust Act of 1890, for sustaining a monopoly and restraining interstate commerce by:”Rebates, preferences, and other discriminatory practices in favor of the combination by railroad companies; restraint and monopolization by control of pipe lines, and unfair practices against competing pipe lines; contracts with competitors in restraint of trade; unfair methods of competition, such as local price cutting at the points where necessary to suppress competition; [and] espionage of the business of competitors, the operation of bogus independent companies, and payment of rebates on oil, with the like intent.”)

  69. Chris Warren
    January 5th, 2011 at 10:45 | #69

    Jarrah :
    @Chris Warren

    1. You clearly haven’t understood Heilbroner, or Marx. You apparently missed the word ‘paradox’, or don’t know what it is.

    Unfortunately Jarrah is not qualified to make this judgment.

    He has lost track of his own argument, which was a demand for people to elaborate specifically on “What prevents a free market ever existing?”.

    He has now been knocked senseless with replies, so is trying to cover his tracks with dissimulation by arguing about the meaning of various adjectives.

    He now seems to have fraudulently changed the question to:

    “What prevents a ‘not-perfect’ free market from existing?”

    I suppose it is his convenient bolt-hole.

  70. BilB
    January 6th, 2011 at 21:36 | #70

    Say hello to 2011.

    http://www.thenation.com/article/157434/peak-oil-and-changing-climate

    Something to relax with while contemplating how to tackle the new year. A series of discussions examining how climate change has been handled by business and government, in the presence of the new kid on the block, peak oil.

  71. Jarrah
    January 6th, 2011 at 22:32 | #71

    Chris gives up on debate, resorts to fabrication, still doesn’t realise free =/= perfect. Confirms his status as resident moron.

  72. Jarrah
    January 6th, 2011 at 22:37 | #72

    @Michael of Summerhill
    So, despite my assurance that you don’t have to repeat the judgment, with which I am familiar, your lack of logical arguments reduces you to parroting the court’s finding as if it were some sort of devastating comeback. Whenever you’re ready to debate facts about markets, including the oil market in SO’s time, I’m happy to continue. But since you haven’t shown an inkling of a position, other than as court reporter, I doubt you’ll take up the offer.

  73. jakerman
    January 7th, 2011 at 08:57 | #73

    Jarrah, your response is either evasive or nonsensical.

    “This is not an appropriate test of the hypothesis”
    That wasn’t my response to JQ’s criticism, but to the contention that wealth accumulation and market power accumulation has a feedback loop that can’t be broken. To see my response to JQ, you only need look at the top of the first page of comments.

    Huh? I didn’t conflate your response to JQ with your inappropriate tests of my hypothesis. You misrepresented JQ as I showed you .

    Let me put the quotes together for you:

    Jarrah cites me and wrties:

    “Show me a free market and I’ll show you its transitory or an illusion.”

    Undoubtedly. This is, in fact, my original point – criticising “free markets” (as JQ does in his post) doesn’t make any sense when we’re talking about highly regulated markets.

    To which I said and cited JQ:

    I believe you are misinterpreting JQ. JQ criticises:
    ”…the story that free markets would bring universal prosperity”

    Then in the next paragraph I gave an examples of how lack of stagnation in the share ranking of the top few corporations is an inappropriate test of my hypothesis that:

    Competition, leads to winners, which stifles competition. Power becomes consolidated. Consolidated power (anti-democratic: especially in media) undemocratically influences power. Disproportionate power mixed with the profit imperative makes free markets impossible in the long run.

    You agree that my example shows that media would be even more consolidated without regulation. But your claim that spectrum regulation are anti competitive are bizarre. How well do you suppose the spectrum could be used by anyone if everyone was broadcasting anywhere and on any spectrum? It would be dysfunctional, and regulation is necessary to enable the spectrum to be as useable as it is.

    Then perhaps you could explain how anti-siphoning regulation restricts diversity and competition? I think you’ll find it does the opposite and prevents monopolists like Fox increasing their monopoly. And anti siphoning laws do not restrict diversity. Of the 12 sports covered by the regulation, they are all delisted 12 weeks before the event starts, so that any rights to listed sporting events that are not acquired by free-to-air broadcasters are available to pay TV.

    I.e. it prevents Fox monopolising existing events, and does not restrict them creating new content. Thus it promotes diversity.

    “as truly free markets cannot exist (see above)”
    I’m sorry, but I don’t see it. Perhaps we have different definitions of ‘free’, which I find is often the case in these sorts of discussions.

    Double Huh?

    You’ve not made a single point that show free markets can exist. And you’ve agreed with several points that demonstrate free markets don’t exist. All you have done is attempt to change the definition of free market to included pseudo free markets that have consolidating anticompetitive characteristics.

    If you are happy to include pseudo-free markets, then what is your problem with government regulation? Markets with government regulation are also pseudo-free markets, just with more competition.

  74. Chris Warren
    January 9th, 2011 at 09:45 | #74

    OK – slow learners – pay attention ….

    Jarrah demanded;

    1 – show us where free markets had a crisis….

    2 – what prevents a free market from existing …..

    He received several replies, including that capitalist competition prevents free markets from existing. The main issue being that capitalist profits only exist if true (or perfect) ‘free competition’ does not exist.

    Whether the adjective is ‘true” or ‘perfect” does not matter. This has been explained to Jarrah, who has yet to digest this point.

    Jarrah was asked to provide evidence for his claim that Marx assumed that competition would compete capitalist profits away – we are still waiting. (Marx did not assume that competition would compete capitalist profits away).

    So now Jarrah waves his hands madly claiming:

    “free markets don’t need perfect competition to exist.”

    This is capitalist dogma. For the rest of humanity – any example of a so-called free market that had no perfect competition, would automatically be un-free.

    Capitalist so-called ‘free markets’ are not based on perfect competition. But then they are not truly free anyway.

    Capitalists (and fellow-traveling academics) use the word ‘free’ as propaganda. It is part of the smoke and mirrors necessary to camouflage the real source of capitalist profits (or ‘unearned increment’ in Marx’s terminology).

    In general, free markets must coexist with perfect competition. You cannot have one without the other.

    Except in the world of Jarrah.

  75. jakerman
    January 9th, 2011 at 11:50 | #75

    Good points Chris, Jarrah should now use accurate language rather than propaganda. Jarrah is arguing in favor of “anti-competative markets”, not “free markets”.

  76. Michael of Summerhill
    January 13th, 2011 at 15:22 | #76

    Jarrah, I was just interpreting what was law in 1911 in respect to imperfect markets, price fixing, barriers to entry, and the effects of horizontal and vertical integration, etc. none of which you seem to raise but like to rave on. And speaking about markets, the news just gets better and better for NSW Labor as the latest job figures show the state unemployment rate to be at 4.6 per cent.

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