Did I ruffle a few feathers? :)
dhenwood at panix.com
Sat Sep 23 09:44:41 MDT 1995
At 7:28 PM 9/22/95, Chris M. Sciabarra wrote:
> 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 Euromarkets aren't really "European" - though based in London, they're
stateless and almost entirely unregulated.
My point, which you seem to be avoiding a response to, is that the freest
markets in the world systematically misprice. Actually, the US Government
bond market, the world's largest financial market, is so lightly regulated
that you can ignore the regs for both practical and theoretical purposes.
Exchange-traded instruments, like stocks and options, are somewhat more
regulated, but barely so. But I chose the Euromarkets because there isn't a
regulator in sight.
> 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
So what's your model? How do you know what free markets are like if the
historical real world examples are so laden with distortions? Are they just
"neat ideas" that come out of the heads of libertarians?
Marxians are always forced to take a position on formerly existing
"socialist" societies as if the gulag were the real truth behind the Old
Man's prose. When you try to get a libertarian to talk about actually
existing capitalism, we always hear that these aren't truly free markets.
If the 200, or 400, or whatever hundred you wanna pick, year history of
capitalism is just a series of distortions of the pure original thing, then
what the hell are we talking about?
> 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.
This surrender of human society to complete chaos and unpredictability is
nihilistic and terrifying. We just couldn't live under those conditions -
it would drive most people mad. Just because *everything* can't be planned
doesn't mean that nothing should be planned. This is utter madness.
> 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.
There are many other instruments of collective control besides "the state."
And there are many levels of the state. There's worker ownership, organized
consumer groups, regional planning bodies, etc.
I like Diane Elson's idea, presented a few years ago in New Left Review, of
"socializing the market" - which meant, in one aspect, opening up the
process of price setting, removing it from corporate secrecy, and making
the whole affair public.
[dhenwood at panix.com]
Left Business Observer
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New York NY 10024-3217
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