"Countervailing": One of the "businesses" we're talking about is the worker who makes the goods. He was actually, in his historical state, the perfect illustration of the free market player acting in his self-interest - particularistic, atomized, pursuing utility. He played, however, in a sludged-up market where capital and the state had entered and colluded to distort the market such that the worker was not free to pursue his self-interest without risking life and limb. In order for this to be corrected, one of two things would had to have happened. Either the market would have had to be returned to its "natural" state - the monopolies of the Morgans and DuPonts would had have to be broken up, likely by the very hand of power that first nurtured them; or the worker would have to be given a leg up, pulled "up by his bootstraps," so to speak, in order for him to be able to pursue a "fair fight." Were he to organize, or move towards his own version of monopoly, he would need to be free to do so without being shot on the streets of Chicago or Boston for doing so. I believe the second was the only feasible action in the fully industrialized political economies of the west. Consumerism: Rational choice has to be at the heart of the question. If you presume it, then the guiding hand is the benign, if souless mechanism of balance. If not, then the market is subject to a whole host of distortions which may or may not get corrected over time. I don't think we're all that rational. Credit card buying belies the very notion of the "rational lifetime" model of consumption. Buying based on things like packaging or brand name, when these products are wholly inferior compared to other, more simply labelled or generic products, is impulse, irrational buying. If I'd prefer a red-labelled bottle of shite beer, compared to a good ale in a plain white label, then I am subject to market distortions. I don't think the market, in this instance, and in practice as I see it today, gets corrected. I think it simply gets inflated and renewed by an unceasing advertising assault designed to titillate and not convey value. If it is argued that consumer A chooses "red" over "taste," for example, then I think we have reduced the concept of utility to a useless, catchall (and religious, as it cannot be argued) term. I don't think we really like the 1500 toothbrushes lining the shelves. I think we have become accustomed to the notion that today will always bring a new toothbrush, no matter what it is, in substance. And we have gotten used to discarding today's toothbrush like yesterday's garbage. My problem is that the trash can is getting full.
Thanks all. I'm afraid that you're going to be inundated with my posts over the next few days as I strive to break the 25 barrier. [Pressure from work for results in link exchange and all that.] So just try to ignore the posts about my favourite fruit, summer vacation nightmares, etc.... Just kidding. But not about the pressure thing. Sorry, Wrong area for this.
Ahem. Getting back to the original reason for this posting, I just like to say as a Canadian that most of us up here find him as an excellent example of an economist with a heart. I will now go strap some pillows to my body in anticipation of the pummeling that I will now received at the hands of my hardline economic Southern Cousins who feel that there can be no middle course. JP
Every player has cheated. Not just "business" and "labor" cheating each other, but each individual business/labor entity trying to cheat everyone else. The absolute worst possible solution would be for government to try to "balance" all of this cheating with even more cheating. Can you imagine the monumental unfairness and inefficiency of such a system? Well, actually, we don't need to imagine it. We have historical experience. The right solution is for all parties to be denied government assistance. And no, I don't really care about yesterday. Yesterday goes back at least seven thousand years and most of those people are dead. I don't care who the labor unions killed in the past. I don't care who the government killed in the past. Those are just lame excuses to continue to do things the wrong way. I do not agree. I really honestly do not give a damn how my neighbor makes purchasing decisions. I don't care if he is rational or not. He can buy a blue dress, chartreuese high-heels and a Minnie-Pearl hat and go out on the town. What I care about is that he has the freedom to behave as he chooses. I am not a God, I do not have the right to decide what is rational and what is not rational for him. I have never walked a mile in his chartreueuse heels. What a control freak / fascist / patrician / tory like JKG would see as "distortion" is what I see as "free will." I've bought things because I liked the packaging. You know what, I've bought pretty packaging. Who cares? It's my money. That is not a market distortion. That is a choice. That is an expression of freedom and liberty. Maybe I buy beer because I like the bottle, or the label, or the name, or the girl who sold me the beer, or the girl on the TV commercial. I'm sure that I have done all of these things -- and that is my right as an individual. "Utility" is simply one reason we buy things. As we advance in wealth as a civilization, "utility" becomes less and less important. You may choose to maximize utility. That is fine for you. However, when you become the government and force everyone else to buy according to your tastes -- then we have a problem. My God man -- are you married? I don't think my wife has ever made a single purchasing decision with utility as the primary selection factor. And that is her right, as crazy as it often makes me. You may not like any or all of those toothbrushes. So vote with your wallet. Stop brushing your teeth. Stop spending money. Only buy generic. That's all good -- until you try to force your ascetic values onto others. Then you become a truly evil man on the order of JKG. Are you seriously making an environmental argument that we should abandon free market capitalism and embrace communism because it will be better for the environment? Have you done much research on the environmental impacts of communism in the former Soviet Union? I'll give you a hint: Government screws up everything and the environment is no exception.
Ahem. Your argument is that JKG was a good economist because he was Canadian and you're a Canadian? Or is your argument that JKG was a good economist because he wasn't really an economist at all, but instead a politician? And therefore, he's a good economist because you like politicans better than you like economists? What exactly is your argument? Or are you simply arguing that you like JKG, which is inarguable because it is completely irrational?
Will, I respect your opinion. I was about to go into a rebuttal, but I am afraid we will never agree, because we have fundamentally different priorities, views on personal liberty and societal well being. Also, unlike you, I cannot ignore yesterday, as the patterns and structures I discern from looking at history inform my view of the world I see now; "yesterday" gives modernity an analytical framework that I cannot ignore. We also place different weights on the actors in political economies. History has shown me, at least, that extra-market politics are often at least as critical in making equitable solutions, whether for the individual or the society at large, as purely market economics. For just a moment, and grossly simplifying, but by way, I hope, of illustrative and useful example, I'll look at interwar Europe, a period of interest. The failure of market forces culminating in Weimar Germany, Pre-Franco Spain, Fascist Italy, and the success of political solutions to the labor problem, post-WWI, in the Scandinavian countries, has given me a profound respect for the possible role of things other than purely market driven solutions when looking at problems of political economy. The Liberal experiment in the fascist countries was a grand failure. The willingness of socialist parties in the scandinavian polities to align with rural middleholders, abandoning the rural proletariat (it's natural class ally), meant that fascism did not take hold in Sweden, and like polities. This was a political solution, extra-market in cause and effect. Of the two - fascism, or social democracy - I'd have opted for the latter, obviously. But that is another subject. Suffice it to say that I do not think the edification of the individual or society can be so easily reduced down to the formula of the free market. I must say, however, that the trash can was an allegory. I was not arguing for a communist solution, and I am sorry this was misinterpreted. Many from my wife's family were wiped out by Stalinist policies towards the Baltic peoples and I am aware perhaps more than many what the Soviet system wrought. Ironically, though, as you bring it up - one of the largest problems facing the new market economies of the former Soviet republics is the incredible environmental crises facing them as they move into EU-enlargement industrial requirements. Partly, as you point out, inherited from a system that didn't have to answer to its people for industrial excesses, and partly from a "frontier-era" desire for growth, in excess of the desire for clean growth. But a problem it is, and without something more than a purely "market" solution, the Baltic Sea, among other resources, may become an ecosystem of the past. And that is my business. Best.
Umm, isn't 'evil' a tad too strong for a man who simply has an economic theory you disagree with? While Galbraith did not create a unified economic theory like Keynes, his contribution to the world of ideas is large. Galbraith explored themes in his writing about the lack of true competition, the power of industrial producers, the impact of advertising and the need for innovative thinking, rather than old formulas. I don't remember reading anything about infanticide or sending people off to gulags. "My God man -- are you married? I don't think my wife has ever made a single purchasing decision with utility as the primary selection factor." On this point, I do have to concur with you. In fact, thinking about it actually made me laugh aloud. It's odd how much marketing focuses on the distinctions between men and women, yet economic theory seems, to a great extent, to have ignored it. JP
Unfortunately, bad ideas have very bad effects. Lenin, Stalin, Hitler, Keynes, FDR, LBJ, Nixon, Galbraith, Pol Pot, Osama bin Laden -- these men all had the best of intentions. They all wanted to make the world a better place, and they all succeeded in screwing things up. So do we laud them for their good intentions? Does it really matter what they intended? I see it as more important to look at the effects of their lives -- the death, destruction, and poverty they left in their wakes as they made their ways through this world. It makes you really appreciate Jerry Ford.
Exactly, capitalism gets ineffective when you manipulate the "invisible hand". SEO, advertisment, spam, the human impulsefactor is some examples.
Not all needs are material needs. Many needs are emotional, and people spend a lot of money to meet their emotional needs. That is not a manipulation of the invisible hand, that is reflection of the fact that the invisible hand is a human hand.
Sorry, i just have to disagree with you there, me being hungarian. The biggest problem facing post-communist countries is corruption. In my opinion the general public does care about the environment and the wellbeing of others, but this is completely overshadowed by the governments who are still just as corrupt as they were 20 years ago, not to mention they own 90% of the media so it is impossible to get rid of them. Unfortunately, the majority of the ex-communist public (while having best intentions), is pretty dumb and easily manipulated. (of course, now that i think about it, its not just ex-communist countries, look at Italy)
One of the scariest conversations I've had in my life was with a young Russian-turned-Texan. We were discussing Russia and I asked him if he would ever be interested in returning to Russia to help fix things there. He replied "No, this is my country now." I then asked him what he believed it would require to fix the problems of government corruption in Russia. He thought about it and replied "You would have to kill everyone who ever worked in the government." I tried to talk him into every other sort of possible solution. He would not budge. He did not see it as fixable by any means short of that solution. By the end of the evening, he had me convinced.
Jó napot. (Afraid the only Hungarian I know was taught by a childhood pal, Tibor, who made sure to teach the bluer elements, so I'll say no more). Wholeheartedly agree. One of the reasons a good many American businessmen persist in wanting to do business with China over Russia. Between a virtually name-only communist state with the rule of law, and a newly-market economy with an almost pandemic state of lawlessness, many opt for the former. They won't get shot, for one thing. Just bringing up the environmental problem as "one" of the largest problems as it was mentioned in the context of communism. I don't think it is a "care" or "not care" issue - most human beings would say they want a cleaner earth. I think it is simply a symptom of explosive industrial growth, when checks are not in place to sustain cleaner standards - a "public good."
What do you think about spam? Most people that by a product from a spam advertisment will probably not be happy of the outcome. Scam companies is a major problem in our society. They say that they have something but give you something else, or nothing at all.