Did I ruffle a few feathers? :)

Chris M. Sciabarra sciabrrc at is2.NYU.EDU
Sat Sep 23 13:22:45 MDT 1995

On Sat, 23 Sep 1995, Doug Henwood wrote:

> 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.

	I still don't know what you mean by "misprice" -- you seem to be
operating on the premise that markets are some kind of Walrasian
equilibrium in perfect competition, and that any price which diverges
from the "equilibrium price" (which doesn't exist) is a "misprice" . . .
If there was so much mispricing, then the world would ground to a halt,
much like the Eastern European and Soviet bloc countries did prior to
their liberalization.  No one is denying the presence of disequilibria in
markets; but they consistently deliver the goods, even when they are
laden with some distortions.  Disequilibria is precisely what drives the
dynamism of the market, and the market's fluidity and responsiveness,
even under distorting conditions, is such in ways that planning simply
can't even mimic.  Prices change constantly, reflecting all sorts of
subtle changes in market, production, distribution, and consumption
patterns, even when distortions are there.  The good entrepreneurs are
the ones who can weed out market information even from the most distorted
prices.  And again, it is not mere regulation that is responsible for the
distortions, and you simply can't pick and choose examples external to
any institutional context.  We live in a global system that is affected
every day by nation-state and multinational monopolies which benefit from
state action, local and international neofascist and corporativist
structures and institutions, and the most insidious of political and
economic webs.

> 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?

	My model is historical -- even Marx recognized the tremendous
productive power unleashed by competitive markets and their potential for
transforming the world as an engine of progress.  Has the engine
developed some problems?  You bet.  You blame the problems on markets per
se; I blame them on institutional factors.  But in essential terms, I
simply believe that a dialectical analysis of the situation demands that
we not abstract parts from the whole.  We must understand markets IN THE
CONTEXT of their institutional conditions.  Then we can try to locate
problems in an entirely historical, non-abstract manner.

> 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.

	I am not saying that life need be chaotic.  Human beings have
been pretty effective at planning institutional contexts.  They may not
be able to control spontaneous ordering processes, but they can affect
them in profound ways.  I simply believe that we should tinker with the
context, and not try to "plan" or "design" the spontaneity of human

> 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.

	But the problem with most such schemes is that they ultimately
rely upon the massive power of a larger state apparatus, and all too
often, they can degenerate into regional planning bodies that guard the
parochial interests of the people they represent, rather than the
"collective" interest of the society at large.  This is a state dynamic,
a political dynamic that has come back to haunt too many good-natured and
well-intentioned planners.
	Well, take your best shot... I shant be available till Wednesday
to respond.			- Chris

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