Did I ruffle a few feathers? :)

Doug Henwood dhenwood at panix.com
Fri Sep 22 15:47:09 MDT 1995

At 3:28 PM 9/22/95, Chris M. Sciabarra wrote:

>Fully agreed that class analysis is essential.  My only point was that
>markets have had a better record in delivering the goods than non-market
>systems.  I know Doug, for instance, is unhappy to hear about prices as a
>signalling mechanism.  He points to "financial markets" as the freest
>imaginable, and wonders why such markets have persistent mispricing.  I'm
>not an expert in financial markets, but they certainly are not the freest
>imaginable.  They are fully regulated and controlled.

If there is a less regulated and controlled market than the London-based
Euromarkets then I can't think of it. These are as close to pure free
markets as it's humanly possible to get.

>The fact is that prices are enormously complex mechanisms for the
>transmission of information.  It is difficult to discern WHAT is being
>transmitted simply because one cannot remove the signal from the context
>within which it is transmitted.  Secondly, prices are not static, they
>are fluid and dynamic.

And often chaotic and destabilizing. The various interventions to stabilize
markets are attempts to impose some predictability in a very uncertain
world. I hate to start sounding like a post-Keynesian, but uncertainty can
inhibit investment. A Hayekian might reply that this is unworthy
investment, but it's often the case that investments that aren't privately
profitable are socially useful. Industrial pioneers often go bust, but
society can benefit from their undertaking.



Doug Henwood
[dhenwood at panix.com]
Left Business Observer
250 W 85 St
New York NY 10024-3217
+1-212-874-4020 voice
+1-212-874-3137 fax

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