Did I ruffle a few feathers? :)
Chris M. Sciabarra
sciabrrc at is2.NYU.EDU
Fri Sep 22 17:28:42 MDT 1995
On Fri, 22 Sep 1995, Doug Henwood wrote:
> 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.
Well, you've got me there, Doug. I'm not too familiar with the
European case, but I'd venture to say -- and this is only a guess -- that
our ideas of what constitutes "free markets" are very different.
Corporations are like that as well-- many believe that it is a free
market if you don't regulate their profits or prices or wages, but please
give them subsidies, tariff protection, industrial codes to police
"sub-standard" companies (read: competitors), and regulatory agencies
staffed by former corporate executives from the same industry being
> >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.
It is just that there is simply no way to know what is
stabilizing and what is destabilizing. The railroads of the 19th century
were great beneficiaries of federal land-grants, subsidies, protective
legislation, monopoly grants and the like, and in the name of progress,
they pushed through the West, creating all sorts of havoc with farming
communities. Many of the lines eventually went bankrupt due to
overextension; the overextension was made possible because there was
state intervention on behalf of business. Was it progressive? In some
ways yes, in some ways no. But with less prodding, the market in
railroads may have evolved with fewer discoordinating consequences. I'd
prefer to leave progress to the rigors of a competitive market simply
because investors are less likely to be reckless with their own money.
The same can be said by the way, for nuclear energy in the 20th
century. The bastard industry of the atomic bomb project, nuclear
energy would have probably died a young death without market insurance
and private investors willing to take that risk. Was it worth it? I
think that on balance I personally don't like the risks of living in the
The only good thing about markets in this post-nuclear world is
that, in the absence of state prodding, they are more likely to convert
war-related technologies to peaceful uses, something the state seems
resistant to in most cases.
All this of course, reminds me of the broader Hayekian
worldview. Hayek maintained that those who favored the state as an
agency of control often objected to the market because it led, by its
very nature, to consequences that were not easily predictable. The
social economy, in Hayek's view, simply can't be known to any person or
group, in its entirety. It is an organic whole, for sure, and we can try
to form correct expectations regarding its behavior over time. But it is
an illusion to believe that we can control it, or plan it, or design it.
This is simply unbearable for some, because they believe that somehow, it
means that "we" are simply inefficacious.
We are not inefficacious; we just need to understand that our
ability to control the totality is limited, and that often, our attempts
to control it, lead to consequences that are diametrically opposed to our
progressive intentions. Hayek really, truly, genuinely sympathized with
socialists on questions of value; but he thought that socialists were
doing damage to their own values by relying upon the state to create a
Now, Doug, I know you are not a rabid central planner; and I know
that the issue is one of degree here, since we are living in a world with
an unstable interpenetration of market and state forces. Socialists are
going to have to find another way, in my view, because the state is
simply not going to give them the stability and control they so desire.
Dr. Chris M. Sciabarra, Visiting Scholar, NYU Department of Politics
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