Monday, December 22, 2008

Gods of the Market Place

In my Amazon post I got comments from people who seemed to think I was a disciple of free markets. Up to a point, I am. As a general principle, free markets seem a pretty good way of 'making us better off' - although that phrase covers a multitude of sins and ideas - what exactly is 'better off' ?

But only up to a point. People are not always rational. What JFC Fuller called the myth of the Heroic Man is to a greater or lesser extent always in conflict with the myth of the Economic Man. Neither myth is terribly healthy, as we're not all one thing nor all the other.

Unfortunately both major UK parties are full subscribers to the myth of Britons as Economic Men.

Labour see that 'you are what you have' - and it doesn't matter how you got it. Hence the idea that being poor is somehow in itself a stigma and disgrace - to be removed by state transfers of cash. Pretty much the direct opposite of their founding beliefs, that an honest working man, no matter how poor, could - and should - be able to look anyone in the eye. But it's a long time since Labour was the party of the honest working man.

Tories see that 'you are what you make' - and it doesn't matter how you make it. Wasn't David Cameron's previous existence spent doing PR for upmarket vertical drinking establishments ?

I'm more of Martin Kelly's mind (he's quoting here) :

"(Economics) has moved into the void left by the decline of religion and the moral consensus; and it is increasingly seen as the main preoccupation of public policy, a panacea for social ills, the source even of private contentment. From being a technical subject, explaining human society in the way that medicine explains the human body, it threatens to become an end in itself, laying down goals, motives, incentives."
Which, as he says, is how we end up with Billy Aitchison and Sonny Devlin.

It's not one or the other, it's more or less. Don't forget Heroic Man, don't forget Original Sin and don't forget Original Damn Foolishness - the unwise decisions of clever men are likely to impact us much more then the unwisdom of the stupid, because clever men will be in positions to make decisions which affect us all. Vortigern thought he was maximising his utility when he hired Hengist and Horsa, but it turned out they had their own ideas about utility.

The worshippers of the Gods of the Market Place should ponder the end that attended Gabriel Oak's dog George, shot in "another instance of the untoward fate which so often attends dogs and other philosophers who follow out a train of reasoning to its logical conclusion, and attempt perfectly consistent conduct in a world made up so largely of compromise".

Trouble is, we may by then have suffered the fate of his sheep !


Anonymous said...

I have to say that NuLabour has not shown anything other than contempt for its own voters. It seems geared only to getting itself re-elected by spinning whatever daft narrative its own brand of semi-retarded voters might possibly fall for.

It is a disgrace that a political party that purports to stand up for the working man has taken the option of labelling those that have fallen on hard times as "cripples" unable to do any work of any kind (whilst the really disabled are happily competing in the Olympic games). Is it any wonder that the families of those 2.7million people labelled to incapacitated to any kind of work at all, have simply given up all hope of making progress in this culture and have taken to creating a culture all of the very own?

Anonymous said...

Hi Laban

IMHO Economics is fascinating because it is so obviously so full of bullshit, and is used to further political agendas.

I did a little bit of economics at college and so have a basic grasp of some of it, but I do like to read books in this area that point out the bullshit.

In 'The Roaring Nineties' pp 151-153, Joseph Stiglitz lays into the rational markets hypothesis, he states "The political agenda of this work often seemed barely beneath the surface: If the rational expectations school was right, markets were inherently efficient, and there would be little if any need, ever, for government intervention."

He goes onto point out three, related and well researched arguments that demolish this bullshit, but the essence of these are obvious to anyone with a brain in that there exist information
asymmetrics and most people just aren't rational.

I am currently reading Boom Bust 2010 by Fred Harrison. Fred points out some fundamental flaws in current economic thinking that very much favour large landowners and land speculators in general which lead to our never ending boom bust cycle and the current screw up, and our over priced housing. He says Marx was a major myth maker and a big intellectual contributor to the prevailing idiocy. He suggests that some people are very happy with these flaws.

Fred also (jointly with Mason Gaffney) wrote a book called The 'Corruption of Economics' which I think I might take a look at after this one.

Anonymous said...

I wouldn't be too quick to write off Homo Economicus just yet:

Laban said...

alas that link wont work - blogger can't handle anything over 40-odd characters

Anonymous said...

Cut 'n' paste still works. Here's a tinyurl in any case.

togo said...

I have to say that NuLabour has not shown anything other than contempt for its own voters. It seems geared only to getting itself re-elected by spinning whatever daft narrative its own brand of semi-retarded voters might possibly fall for.

Could be equally said of today's
GOP in the US. It worked until 2006.

Anonymous said...

I think the idea that Labour subscribes to "Economic Man" is nonsense.

This is a party that has carefully thought about what language it can use to challenge the clear victory of the right over economics. It has therefore promoted the concept of market failure to explain why the free market fails to achieve nirvana without thousands of government drones to help. It believes in Central Planning just as much as the Atlee government but has to use different terminology to defend its aspirations.

Anonymous said...

"Fred points out some fundamental flaws in current economic thinking that very much favour large landowners and land speculators"

I think this is spot on. That is why the Duke of Westminster is still the richest Brit (we know about) despite the wealth being 1000 years old.

I run my own business and needed a plot of land to store some vehicles. I was charged an absolutely phenomenal amount of money for this land - 100x what it would have cost if it had been pure farmland. The planning permission - a bit of paper - had pushed the value of the land right up, just because land with planning permission is in limited supply. Why? Only 1% of GDP comes from farmland and so there should be an almost limitless supply of land for doing business. So is the land with planning permission priced "at fair value"? Fact is that land with planning permission is priced by looking at the potential income from the land and then increasing the value of the land until it absorbs most of the profit that can be made from that land. So really the price of land with planning permission is actually a form of tax on a company's profits. The land with planning permission is held in artificially low supply with the help of government, so that landowners can maximise the
benefit from it to themselves. My guess is the Sunday Times rich list only shows those people that have gone public with their wealth. The real rich are those that own vast tracts of urban land in our cities. They don't live in a shithole like the UK - they have long since moved to Switzerland and sit there coining in the money. The exception is the Duke of Westminster, who is public with his wealth as a result of his association with the Royal Family.

The Labour Party has always been run by and funded by the super-rich, who have infiltrated it to keep this land ownership nonsense afloat. Ordinary working people have died fighting to keep this land British but they are still struggling to scrape together the money to pay for the tiny plot of land on which their homes were built.

Once you understand the land issue then you understand that the whole history of these islands has been built on a lie that has been perpetuated for 1000 years. We are still serfs to the Norman invaders, still struggling to pay for our little plot of land that has been paid for a hundred times over.

Anonymous said...

I think I might have misled you with my first comment on the Amazon post. The economic objection is a valid one in the context (six sickies) but not the main objection, which I characterised as the personal degradation that inevitably follows from earning a dishonest living by being paid whilst quite likely pretending to be sick (the road to hell begins with a sickie). You have ignored this point completely and attacked the libertarian straw man instead.

I am not entirely clear what JFC Fuller means by Heroic man. To me the tension that stops us running over the cliff is between our interests as individuals and our interests as members of a group/tribe/nation. These interests are often at odds and a good thing too.

BTW, the first thing that went through Gabriel Oak’s mind when he lost his sheep was not “which unethical bastard can I make pay for this” but “I should have got insurance”, which is, if I recall, where I came in. Clearly Hardy got it.

BTW if I make good on my promise to switch from Amazon, could you recommend a good place to start with JFC Fuller

Anonymous said...

Ive come to think that the terms left & right have no real meaning anymore.

Supposedly rightwing parties espouse essentially left-liberal social policies. While supposedly leftwing parties espouse essentially right-liberal economic policies.