Absolutes/ efficiency

Mike Goldman damon at telerama.lm.com
Mon Jan 16 13:43:41 MST 1995


On Mon, 16 Jan 1995, Ron Press wrote:

> However could the efficiency of the market be assessed ( at a
> particular time, in a rough sort of way, relative and randomly varying
> but between limits), by a consensus of the majority.

I suppose this is as good a time to make an introduction to this list as
ever.

Hi.

Some of you may know me from my occasional postings on LEFT-L.  I am not
a Marxist, but I am interested in Marxism and related economic
philosophies, and how the perceptions of practitioners of such may view
issues which I consider important.

For a start, this message brought to mind many of my objections to
Neoclassical Economics (NCE) and its tremendous emphasis upon "efficient"
markets.

NCE attempts to be a "value-free" economics, it tries to analyze the
consequences of economic policies and decisions in terms of their
effectiveness in achieving the desired goals with a minimum amount of
undesired consequences.

But economics, like any study of human action, cannot be a value-free
discipline.  Any discussion of "efficiency" which does not consider the
perspective of all market participants is a false efficiency, it is more
properly expediency.

NCE then is the economics of expediency, and its originators and
practitioners have never been above expediency in defining their premises
in order to achieve their desired conclusions.  And this may even be more
fundamental.  For any scientist knows that if you know what you want your
results to be, and structure the experiment so as to achieve them, the
value of the whole exercise is absent.

Let me demonstrate how NCE *could* have been used had it been originated
just a century before, before proceeding to apply it in its own context.
Southern plantations require large amounts of labor to pick cotton, for
this they employ slaves.  Interference with the slave trade, then, would
create market inefficiencies which would in turn raise the costs of
cotton production, and consequently all products based on cotton, and in
turn rebounding in increased costs and inefficiency throughout the
market.

The fallacy inherent in this argument, but hidden from perspective, is
the treatment of the slave as a commodity, as a capital, possessing no
value but what he can produce for his master.  Inefficiency of the
marketplace herein is only an inconvenience to those who happen to be
fortunate enough not to be enslaved, those on the other end of the whip
would have an entirely different view.

But NCE did not treat slavery, as it was not created until after this
practice had been abolished from civilized nations like the United States
and Great Britain, from which its promoters came.  Rather, the central
concern of their day was the land question, particularly in Ireland and
many cities on the other side of the pond.  Land reformers came in
various stripes, proposing various remedies.  I have made it quite clear
in my postings that I hold most closely with the American economist of
that day, Henry George, though I refrain from calling myself a Georgist
(as there remain some significant differences upon which I need not dwell
here.)  George was particularly influential in this issue, his book
"Progress and Poverty" being the most widely read economic text of the
time, and his adherents were a strong political force.  Against these,
then, were the proponents of NCE arrayed.

Just as in my above analogy, where slaves were treated as a capital
commodity, as though this were a value-less judgment without consequence,
the NCEists in the early part of this century defined land as a capital
commodity.  The argument went something like this: Because productive
effort created wealth, and because that wealth was *invested in* land,
land became consequently a store of capital wealth.  This
transubstantiation of capital could have been applied as readily to the
purchase of slaves, but such a *reductio ad absurdam* would have
invalidated their standing with the public, and so it was never discussed.

By treating land as a form of capital, then, and applying the doctrine of
efficiency, private, unfettered ownership of land was promoted as the
solution which would maximize benefits to the public.  But of course,
this conclusion could only apply to the landowning public, and at that,
only those who possessed the largest amounts of land, just as the largest
slaveowners were the greatest beneficiaries of slavery.

I am interested, however, not merely in "knocking down" others, my
objective is not simply to invalidate NCE, but to promote economic
dialogue which is genuinely productive.  In that spirit, I would like to
suggest that the best results can be obtained by a scientific method, by
adopting only those premises which are real and meaningful, with no
reification of concepts like "capital", except as a conclusion to be
established by strict adherence to logical reasoning from earlier
fundamental premises.  Premises must be checked, and checked again, from
every possible perspective, to reveal unintended bias.  And our
conclusions should follow only as the premises permit, there should be no
fitting of facts to agree with a predetermined outcome.

If such a conversation would be unwelcome on this conference, or if a
more appropriate forum might be suggested, I am quite willing to remove
it.  But I have a particular interest in hearing these things discussed
from a perspective different from my own background, which, as I have
previously said on LEFT-L and elsewhere, was originally
Right-libertarian.  I have come to the Left by choice and by conviction,
because I could not reconcile my conclusions with the ideology of those
who favor liberty without questioning institutional factors, just as I
cannot accept the notion of efficiency which disregards those same factors.

In conclusion, I believe that efficiency and liberty are each good
things, but they are not unmitigatedly so.  If all institutional factors
were eliminated, if all our premises were in harmony with nature rather
than privilege, then we should ask for liberty, and efficiency, as much
as we can have.  But let us not demand either exclusive of demanding the
abolition of privilege.

--
Mike Goldman <damon at telerama.lm.com> and <A HREF="http://www.lm.com/~damon/">
"Nor will it invalidate his right [to land], to say every body else has
an equal title to it; and therefore he cannot appropriate, he cannot
inclose, without the consent of all his fellow-commoners, all mankind."
-- John Locke, Second Treatise of Government

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