People complaining about government spending will often make the statement that government doesn’t grow the economy, it only consumes resources. The question that this has brought to my mind is why that would be the case. The common answer is that government doesn’t have to run things effectively because it is a non-profit funded by taxes. However, the fact that an organization has a non-profit based revenue stream does not mean it can’t still be effective. In fact, stock selling is a way that most companies raise capital without selling a product. In exchange for a partial ownership in the company, people contribute money for no actual product. The only reason any company has to be effective is because its owners require it to be effective. In this analogy, government is obviously owned by the taxpayers (who in a democracy also do so in exchange for a vote in how the company is run) and therefore if it is not effective in its goals the cause isn’t any level of inherent inability but rather a lack of expectation of effectiveness by the owners (voters/taxpayers).
The TARP bailout is an interesting example of government ineffectiveness. A year ago banks were in serious trouble due to poor lending policies having caused them to become overextended. Worse, because large banks were failing nobody wanted to lend money to allow them time to unwind their mistakes. This was potentially a huge opportunity for anyone with access to vast amounts of debt. Warren Buffett at the time claimed that someone with access to hundreds of billions at a low interest rate could make massive profits by assisting banks in extracting themselves from the mess. There are two things that a large stable government can do better than most private sector institutions. One is apply physical force to a situation, and the other is borrow large sums of money at lower than normal interest rates. The TARP bailout should have been an opportunity for the government to not only avert economic turmoil, but to do so in a way that presented a longer term profit rather than a loss.
So why are we now hearing that the profits from the loans aren’t even expected to exceed the losses? The answer is because we as owners of the government haven’t expected or demanded it, and the board of directors we hired are stable in their jobs even if they lose us money. The majority of banks are doing much better now, and are repaying their emergency loans. Those that are not doing well are going under, and the government is going unpaid. Why is this? Because the money paid out in emergency funding was often in the form of stock purchases or low priority debt in a bankruptcy. This seems the exact opposite of what one would do when loaning emergency funding to a troubled company. The ONLY form of funding that should be provided to a troubled company would be the kind that gets first priority in a bankruptcy, and all loans should have been at interest rates that more than covered the cost of the program.
People from a more “progressive” standpoint will tend to suggest that government spending should not be intended to be profitable, but that it is charitable spending that we should expect to never see a monetary return for. The problem with this approach is that it leaves no way to determine the effectiveness of the actions taken. Looking at the TARP loans, we have no way of knowing today whether the money was well spent or wasted, because its direct economic return was negative. Had it been profitable, it would have demonstrated that the money loaned out was multiplied by the borrower to create more wealth that was used to make the loan. When the borrow doesn’t pay back as much as was loaned, there is no way to know if what was done was positive.
I’d like to see this pattern of lending used in more cases as well. Someone needing health care might not be able to afford it out of pocket, but they are more likely to be at least a little more responsible in their spending if they know they will be expected to at least try to repay the costs at some later point. Obviously it doesn’t make sense to crush someone struggling financially under monthly payments, but once we help them back up doesn’t it make sense to prove we’ve actually made a difference by expecting repayment? The same is true of unemployment benefits and other welfare. Only expecting repayment on an “as able” basis is charitable, but not requiring any kind of repayment encourages abuse.
To summarize, I really don’t see any good reason why government CAN’T be effective, other than the fact that we don’t require it to be so. Using a more “corporate” governance policy for government charitable spending seems like it would be a good way to start.
I definitely find some difficulty with aspects of this. However, I acknowledge that I may not be reading this correctly – so please forgive any misreadings.
It sounds like the inherent (perhaps you might debate this adjective) ineffectiveness with any government program (in this case, lending and economic planning) is being ignored – that this could be fixed if we ultimately just had better managers: government leaders who had demands put on them by rational, informed and wise citizens. I find this a complete pipe-dream. The problem is not with the managers – but with the system itself.
If you believe that government is “like” a business or even itself a business – then this of course follows. However, I would encourage you to check your premises (surprise… I know). Government cannot be effective – it can be “more” effective – that is “closer” to effective, but it can never be as effective as a voluntary entity providing the same services. We can put business leaders in charge of government, we can educate the citizens, we can set up checks and balances, we can try and install a profit motive, we can insist on “business-like” ethics or rules – but none of these can overcome the fact that government is government. Making these adjustments with market entities makes sense because they fall under market incentives and systematic operations – but the government incentives and system is a different creature, with different rules, incentives and even a different “nature.”
Of course, if the government is a market entity – then your argument makes perfect sense. Yet this “government business” seems to always be stymied, seemingly unexplainably, magically, by forces which don’t seem to affect “other” market entities: traditional voluntary or market organisations.
This is and has been our primary disagreement. You view government as some kind of mystical white whale that operates under a different reality, while I view government as nothing more than a massive organization of individuals who operate under a mutually determined set of rules. Functional failings of governments are based on specific economic mistakes and misunderstandings, rather than any inherent difference in nature. Like any other economic entity, a government can operate morally or immorally, and effectively or ineffectively.
The only advantages that government has over any other market player are size and the stated goal to more generically seek the best interests of its owners (rather than simply profit). A market entity does not HAVE to set profit as its primary goal, that is simply the most common goal for which people create market organizations. For example, most charities don’t exist for the primary purpose of generating wealth. In fact, small businesses and sole proprietorships also often exist for reasons beyond profit. My argument is that even organizations such as charities and governments whose primary goal is not profit can still benefit from implementing market based incentives as a means of judging effectiveness.
When used justly, government oversight is nothing more or less than the protection of the moral rights of its membership (and possibly others). Government regulations regarding things like contracts and safety standards are not forcing its will on others, but a corporate agreement by its members regarding the rules under which they will engage in business with others. Unless based on a primary human right which was previously not codified, retroactive laws are therefore immoral since they alter previously determined contracts. When a primary human right is involved, codification is merely the recognition of already existing moral rights and therefore can be morally enforced with or without the existence of a specific law. Adding such a law retroactively merely clarifies the already existing moral imperative.
I need some clarification, Colin. You write,
This sound like you’re trying to say that effectiveness isn’t effectiveness if it originates in government. Is that a correct interpretation of your point? If so, why differentiate between ‘effectiveness’ (as a general sense) and ‘effectiveness’ (in terms of government)? Sure, government may have different rules, but people can claim that XYZ is effective, just as people can say that a shotgun lineup on 2nd down (US football) is effective (or not). Should we be interpreting your argument as something along the lines of ‘(1) Effectiveness is maximised profits with minimised expenditure; (2) Governments do not make profits; therefore (3) Governments cannot be effective’?
My own usage of “effectiveness” is achieving the intended goals with a minimal cost of other resources. A charity designed to feed the hungry is entirely ineffective in nobody gets fed. If they feed the hungry at an extremely high cost, they are effective, but in an inefficient way. For any institution to add to the economy it must produce wealth. Producing wealth means creating more value than the cost of inputs. I see no reason why government cannot create wealth, by allowing a large collective of contributors to cooperatively work for their mutual benefit. Nobody is forced to live in the US or remain a citizen. People WANT to get in though because the rules followed here have resulted in superior economic opportunities.
I fully agree that all new citizens should have the opportunity specify whether they want to be a citizen with all rights and responsibilities, but in the US nobody is required to remain here or remain a citizen if they don’t want to do so. Becoming a citizen might not be a choice for everyone, but remaining one is. The US government may at times act immorally, but this is also true of all other market entities. At least compared to many current and historical governments, the US government now allows itself to be sued for wrongdoing. This is a move in the right direction, with even laws capable of being overturned. Current governments may still have moral issues, but government itself is not inherently immoral.
And to clarify: Government should not commit moral offenses against anyone whether citizen or non-citizen. Government can choose whether to protect the moral rights of non-citizens but has an obligation to do so when the offense is committed by citizens or to allow others to pursue just retaliation. And government can additionally choose to provide non-justice related services to citizens or at its discretion to non-citizens.
Atanamis,
Government cannot be effective (by your own definition of effective, achieving intended goals with minimal costs). The primary reason for this is, by their very definition, government actions exist outside of any market. Without a market for products and services there is no “price” (price being the number arrived at through competition for resources and demand for products/services) Without a price for products and services there can be no calculation of profit and loss. Therefore the government has no way of knowing how much is too much to spend on resources and which resources are of the greatest priority according to consumers. P&L and consumer preference are the functions that are provided by the price mechanism. This inherent inefficiency in government is one of the main reasons socialism must fail. Mises showed this in “Socialism: An economic and Sociological Analysis” and as far as I am aware, he has not been refuted on this subject.
To address your comment that “Government should not commit moral offenses against anyone”. The very existence of government requires moral offense against, at the very least, a portion of the population. Government cannot be completely voluntary because it represents either the majority will at the expense of the minority, or the will of an elite ruling class. Therefore the funding for government (taxes), which are involuntary, is theft against anyone that would not have chosen to fund whatever the government decides is worth while. If the government were funded by voluntary contributions it would by definition be a non-government entity competing in the free market for customers.
Yes, Chris, I worried that was shaky when I wrote it. I mean the same thing as Atanamis clarifies (I think). That is “effective” as a noun – an absolute of effectiveness, if you will. Hence government can do things which “approach” or are “towards” effective, but, by their nature, they will not be effective because I believe that the standard of “effective” is embraced by what Ike has mentioned – the price system (although used as logical device, not merely an economic one).
Atanamis, obviously we’ll have to agree to disagree on the big issue until you decide that I’m right.
On this:
This is where I think your analysis goes awry. Market-based incentives are systematic, not managerial. The incentive exists in the structure of a thing – the unseen, aprioristic rules by which it operates. An apple cannot act like an orange. It is an apple.
Doesn’t this faith that the free market will mediate values such that things tend towards an equilibrium of value require the premise that humans are inherently either (1) logical, (2) moral/ethical, or (3) rational? If ‘price’ is nothing but a passive synthesis of supplies and demands at a given moment, why is government somehow worse off than a for-profit corporation at discerning this magical number? That is, why is a government body treated as a inferior agent to determining supply and demand in order to judge whether it has overbought or oversold something? Is it simply because it isn’t acting like a selfish entity would act, thus always being mistreated/abused by the unforgiving market?
< rant >
I would agree tentatively with Ike’s mention that ‘socialism’ must fail if that is qualified with a framework of valuation such as seen in Western capitalism. However, that is exactly why Marx critique capital and the entirety of capitalism and its valuation (not just the economic forces)! A truly socialist economy would not have a master signifier (as in capitalism) except as empty signifier (and this is why some of the early political work of Zizek favoured constitutional monarchy because the monarchy occupied the position of master signifier while being devoid of any power of valuation).
Further, it is the French socialist psychoanalysts (I have in mind the plethora of post-Marxists involved in May ’68) who have provided compelling arguments that government is always formed illegally (take for example when the Constitution was first ratified: only 9 of the 13 colonies needed to accept it and it would be binding on all 13) because in the creation of a new legal system, it must first violate the previous laws. And this is why I think many ‘capitalist’ responses to socialism fail as they don’t see the radical break socialism suggests and, instead, sees socialism still within the framework of capitalism.
< / rant >
Chris, to answer the question of “faith” in the market – it does not require any of the three. This is for the same reason I disagree with Atanamis – the market’s rules are not managerial – that is, they don’t depend on human logic, morals or rationality (or capability or even understanding of these rules). They are a systematic framework that has been discovered, not imposed. They are “natural” rules as it were which act completely independent of human manipulation. Think of the phrase “natural market forces.” I mean, a government or even a private entity can attempt to thwart these forces, and might appear to do so for a time, but these forces are inescapable by such means. This is why government is “worse off” or “farther from” efficient. It is an entity that flows contra these rules by definition. Whereas voluntary organisation operate with these forces (at least in a definitional way – but not always in a managerial one).
Colin, since when did a man-made creation become a natural, living entity? Are you saying that the market is one of the first artificially-created life-forms? And, again, why would that be different from others (e.g. religious institutions, governments, etc)? Oh wait, I know why. If someone were to talk of ‘natural political forces’ (or religious, educational, linguistic, etc), he’d be laughed at. I think I am strongly disagreeing with you that the market acts independent of human manipulation. Perhaps it acts in manners not expected by individual human manipulations, but that’s still a long jump to a natural, independent force.
Chris, “the market” is a term which describes a system of existing phenomena which has been discovered, not created. Someone can talk about “natural market forces” in the same way one can talk about “biological forces” or “cosmic forces.”
This is different then “the market” in the sense of a marketplace (local, national, etc…) – which is created. It is unfortunate that these two meanings (and additional meanings) share the same word.
NOTHING exists outside the market. The market BY DEFINITION encompasses everything that is possessed, bought, or sold. Every action of every participant is PART of the market. One might as well define charities or looters as “outside the market”. In reality, every element is part of the market, and behaves morally or immorally as part of the market.
A charity is “part of the market” with voluntarily contributed dollars. Its goal isn’t profit, so its effectiveness is measured not in how much money it makes but in the gross amount of non-monetary benefit it is able to produce for inputs provided. A charity that can feed two people for the cost that another feeds one is likely more effective UNLESS there are other intangibles that make the second more effective.
A looter is “part of the economy” in that they will not normally steal if the risk is considered greater than the reward. Their actions are immoral (taking what does not belong to them), but they are still part of the economy that can be considered under market based rules. This mentality that government is some kind of mythical creature that can exist outside the market is simply absurd.
“Price” is the number that a seller and buyer agree to for a product or service. Nothing more, nothing less. If I choose to sell my dog to a neighbor for a fraction of what I could sell it for on the open market, that IS the fair selling price of my dog. If I choose to hand a sandwich to a homeless man for free, that too is the fair selling price of the sandwich. A seller is under no moral obligation to seek the highest possible price for their good or service, and neither is the government. The entire point of my article though was that there is also no reason government CAN’T sell goods and services at a break even cost level, and that doing so would go a long way toward reducing corruption.
Look at the mail service as an example of a government service that operates on a break even principle. While I agree that the mandated monopolies it has in some areas are immoral, by requiring that the post office fund itself we get a more effective and efficient service. In areas where the post office DOES compete directly with private enterprise, it is forced to do so on price and effectiveness just like any other enterprise. What then is the benefit of it being a “government” service? The benefit becomes purely that all citizens get to have a hand in setting the rules for the service.
It may be your argument that this will never match purely market based guides toward effectiveness, but in reality no company is purely market based in its rule making. ALL companies make irrational decisions based on the emotions of its owners. With a government service you still get the same irrationality, but it becomes the net irrationality of the entire nation (which MIGHT sometimes produce a service people prefer to buy).
As do most corporate ownership boards, clubs, and homeowners associations. The key thing you are choosing to ignore is that at least in most western countries people are here voluntarily. Let’s look at my homeowner’s association as an example of compulsory obligations. I bought my house four months ago knowing it had a homeowners association. Before buying, I reviewed the rules that said I had to pay $200 a year in fees, and potentially more in a special assessment if the homeowners association decided to buy anything big. If I ever refuse to do so, they can seize my house to sell it and take their fees from the profits. Decisions on what are purchased are made by majority votes of the directors, who are elected by the homeowners. Basically a majority of homeowners in my neighborhood could force me to pay for goods/services I don’t want. However, I chose this by buying into the neighborhood and can escape it by selling.
Government isn’t QUITE as moral in this respect. Those who are born outside the country must agree to abide by the rules when they enter or become a citizen, so in their case it is exactly the same. In the case of someone born here though, it is more like my child born into the homeowners association. While living here, they would be expected to abide by neighborhood rules even though they never agreed to them. Buying or inheriting property here though would definitely obligate them. In times past, only property owners voted, and only property owners SHOULD have been taxed. Today, government SHOULD offer everyone at 18 the option to agree to citizenship or get a bus ride out of the country. Instead, they make it very easy to denounce citizenship. All it takes is walking into any US embassy in another country and explicitly requesting to renounce citizenship. For people worth more than several million dollars, the government (again immorally) demands some exit taxes.
If you are still here today though, it is because you chose to remain. Citizenship for people born here IS immoral in that it is opt out rather than opt in, but it is something that anyone can escape with minimal effort. The ONLY thing the US government forces you to do is leave the country and visit an embassy if you don’t want to be a citizen. Everything else results from not making that choice. I’d definitely prefer if they explicitly made that offer to everyone at 18, but feel this is a relatively minor offense compared to most human rights violations. I also strongly believe that if offered such a choice almost nobody would choose to be deported, meaning that nearly everyone here WANTS to be here and has CHOSEN to abide by the rules in place. This is definitely true for all property owners, who purchased property with full knowledge of the rules they were agreeing to.
Colin, the fact of the matter, which is what I’m getting at, is that ‘market forces’ are not natural. The ‘market forces’ in pre-capitalist economies were different — even if minutely so — and they only exist if the ‘market’ itself exists. Remove humans from the picture and there are no ‘market forces’ that would continue to exist in the same way as gravity, centripetal force, or the Krebs cycle. Neither unpredictability nor inability to measure all variables makes a causal relationship a ‘natural force’. I don’t think ‘Market forces’ are anything more than the combined aggregate sum of external forces on the ‘market’. I would agree that it is an observable relationship, but I wouldn’t go so far as to say that it is independent.
But also, I cannot agree with Atanamis universalisation of the ‘market’. It is an institution that has emerged over time, but it is not all-encompassing. That’s the same sentiment I hear from the folks saying Christianity will follow capitalism into China, which strikes me as odd on two counts: (1) Christianity has been in China for centuries and (2) Christianity isn’t a market.
A market is a place where people voluntarily exchange goods. Markets have existed as long as people have. Even the threat of force is a “market exchange”, since someone being threatened can weight the cost of buying protection against the likelihood of pain or suffering. “Market forces” are simply observations of what causes people to make the purchasing decisions they do. I wouldn’t call them “natural laws”, but they are actually little more than applied psychology making observations about human nature.
Capitalism is a form of market management (just like communism). Neither negates the existence of a market as people still make voluntary exchanges, but they are different philosophies on how force should be used and what constitutes “fairness”. Capitalism observes that people tend to work harder when they personally benefit from doing so, which can result in increased output. Communism believes that people working for the good of society will find the area where they can do the most good and serve voluntarily for the benefit of others.
Capitalism fails because market participants are dishonest and use force to coerce others into deals which are not mutually beneficial. Communism fails because people tend to be lazy and have a hard time determining how to “best serve” society without some kind of point system. In practical application it has also tended to be implemented as a command economy where the people at the top tell everyone what to do. This fails because of the inability of any person to fully understand the markets needs and because of greed of those running the system.
Neither system makes the market go away, they normally only force them underground. The surest sign of a command economy is a black market. Black markets seek to fulfill demands that are banned or taxed at the lowest possible cost. They are therefore the clearest example of an “anarchistic” market. Buyers buy only from people they trust since there are no regulations over the product, and both sides enforce their contracts with purchased force. Black markets are the direct result of government trying to close a market, and demonstrate the impossibility of fighting or negating market forces.
Chris,
I would rephrase your last statement to say, not that “market forces” in pre-capitalist societies were different, but that these forces remained largely undiscovered. For example, there is no such thing as “economics” in the Greco-Roman world – yet there are still market forces operating (Gresham’s Law, Quantity Theory of Money, etc…).
And (perhaps we agree here, but my wording is different) I would say that men are needed for these forces to be observable, because they are forces that act on the choices of men. The same way we wouldn’t call a universe without mass a world that is “pre-gravity” – gravity still exists, but it needs bodies in order to observe it (though this may be a poor illustration, but perhaps you can still understand what I am getting at?).
I think both of you, Colin & Atanamis, still see ‘markets’ in terms of capitalism such that there can be no other economic discourse. If ‘markets’ are only forums of economic exchange of goods based on a single signifier (in this case, money). Any and every ‘market’ must adhere to this principle of interpretation. Just as I mentioned in an earlier comment that most capitalists (libertarians include) just don’t ‘get’ Marx’s critique of capital: they still see and think in terms of capitalism. Marx’s alternative to capitalism isn’t another form of market management but a radicalisation of the market itself such that the value of money is itself rejected as the foundation of the economy.
Any attempt to view economics in terms of a single signifier is doomed to failure. This is not what capitalism claims to do. The fundamental difference between capitalism and communism is the reward structure for doing work, and how needs are communicated though the market.
In capitalism a worker is rewarded by a higher return for their product, in communism they are rewarded by the feeling that they have helped others. In capitalism higher prices indicate increased need, in communism lower availability indicates increased need. In capitalism anything that is needed will be produced (to get the desired profit), in communism you have to wait for someone to notice the shortage and who is willing to fill the shortage out of the goodness of their heart.
Communism is a great system for a close network of friends who know one another’s needs well and want to help out the network. Capitalism has benefits when participants are greedy or lazy, or when the network grows too large to easily know who needs or wants what and how much.
That’s a really narrow (and poorly defined!) view of Marxism, which is what I have been using as the basis for communism. If your line of reasoning were correct, then you are unable to account for mainland China’s rise to industrial strength before switching to a capitalist economy within a communist government. You’re making a false image of communism in order to support your own pet theory of why capitalism is better. And, yet again, by thinking in terms of reward, you’re still looking at things in terms of capitalism. In other words, by looking at this through capitalism, you have your conclusion (i.e. that capitalism works and is superior to any alternative) before you begin the discussion.
Are you seriously suggesting that either Stalin or Mao implemented Marxism as Marx envisioned it? The strongest argument FOR communism has always been that most “communist” governments aren’t truly Marxist. The vast majority of China’s economic rise has been strictly capitalist in nature. I’d be interested to see an explanation for China’s economic rise though that is based on its proper implementation of Marxist ideology.
Chris, I definitely disagree on your interpretation of Marxism. In fact, I would classify Marx as a Smithian – in that he accepts the most important ideas of Adam Smith. Marx built his ideas – which ended up contra to many of Smith’s and other neo-classical economists – on this same framework. But that is a diversion…
The main question is what “the market” means. My argument definitely is not that it is (they are) “forums of economic exchange of goods based on a single signifier.” As I said earlier – it is a system of underlying forces which exist in nature and are seen through the choices of men interacting (and in some cases only require one man).
NOTHING exists outside the market. The market BY DEFINITION encompasses everything that is possessed, bought, or sold. Every action of every participant is PART of the market. One might as well define charities or looters as “outside the market”. In reality, every element is part of the market, and behaves morally or immorally as part of the market.
Government services are not bought or sold. Citizens have their money stolen from them, then after they have been forced to pay for services, they are offered (or in some cases told) to receive those services. This is not a market transaction and as such cannot have a “price”. Prices are the function of Supply and Demand. Supply affects the price by the availability of resources needed to product goods/services, the number of producers, and the efficiency of those producers. Demand affects the price by the number of purchasers and the individual valuation of purchasers with regard to the good/services. The cost of government goods/services to the consumer does not reflect the market function of price because it lacks the inputs necessary to calculate price.
In the case of charities, the purchasers are those that donate their resources (volunteers and donors) and the recipients of charity are beneficiaries of the transaction. Again charities are kept more efficient by competition amongst charities to provide the best value for the purchasers with each resource they give (whether it is money, goods or time). Purchasers are free to choose which charity is the best option, or to not donate at all.
As do most corporate ownership boards, clubs, and homeowners associations. The key thing you are choosing to ignore is that at least in most western countries people are here voluntarily. Let’s look at my homeowner’s association as an example of compulsory obligations. I bought my house four months ago knowing it had a homeowners association. Before buying, I reviewed the rules that said I had to pay $200 a year in fees, and potentially more in a special assessment if the homeowners association decided to buy anything big. If I ever refuse to do so, they can seize my house to sell it and take their fees from the profits. Decisions on what are purchased are made by majority votes of the directors, who are elected by the homeowners. Basically a majority of homeowners in my neighborhood could force me to pay for goods/services I don’t want. However, I chose this by buying into the neighborhood and can escape it by selling.
Government isn’t QUITE as moral in this respect. Those who are born outside the country must agree to abide by the rules when they enter or become a citizen, so in their case it is exactly the same. In the case of someone born here though, it is more like my child born into the homeowners association. While living here, they would be expected to abide by neighborhood rules even though they never agreed to them. Buying or inheriting property here though would definitely obligate them. In times past, only property owners voted, and only property owners SHOULD have been taxed. Today, government SHOULD offer everyone at 18 the option to agree to citizenship or get a bus ride out of the country. Instead, they make it very easy to denounce citizenship. All it takes is walking into any US embassy in another country and explicitly requesting to renounce citizenship. For people worth more than several million dollars, the government (again immorally) demands some exit taxes.
Atanamis, you laid out the exact difference between government and any other institution you mentioned. All of them require you to opt into a contract in exchange for some perceived benefit. Government is forced upon you in some way no matter where you go. Also, no system which is in any way ethical can require a person to leave the natural state in which they were born (physically, emotionally, geographically, etc) to “opt-out” of aggression against their ethical rights. Government is not less moral than other opt-in institutions, it is amoral.
Sorry for the poorly formatted response. I tried to use quote tags, but apparently did not succeed.
Ike, I’d like to see you try to negotiate a plan with an insurance company…or negotiate a price with any shop regarding products. A ‘real’ market is one that allows actual negotiations with the buyer, not an immutable price. The sad reality of ‘actual existing capitalism’ is that consumers are forced just like political subjects. It’s not based on some kind of actual dialectic between ‘supply and demand’ but between the limits of which one can charge for a product, regardless of quality.
It is this rhetorical ploy that I reject. Stalin (or Mao or Lenin or…) did not ‘betray’ Marx. This shows up in Christianity as well (such as ‘Christianity was developing nicely until Catholicism screwed it up’). I take Zizek’s Hegelian turn in that the ‘Fall’ of a system is to be inscribed in its very origins. In other words, we must take full responsibility and not pass off faults to foreign intruders. I do not contend that Communism has gone horribly wrong, but it isn’t simply because these figures weren’t ‘good’ Marxists. In fact, it’s because they were too good at being Marxists — that they saw and embraced even the flaws and failures of Marx. Marx’s greatest flaw was that he was, ultimately, idealistic and foresaw a utopian higher social order while still staying within the framework of capitalism. I would go so far as to say that Stalin and Mao weren’t Communist enough because they amounted to an inefficient state-run capitalism.
China’s economic rise can’t be attributed simply to a turn to capitalism because its rise to economic power is based on a communist appropriation of ‘capitalism’. It is very much communist with state-run market measures, but in some ways, it is capitalism-esque without being what traditional capitalists would consider capitalism (prior to its more recent embracing of capitalism).
Ike, I’d like to see you try to negotiate a plan with an insurance company…or negotiate a price with any shop regarding products. A ‘real’ market is one that allows actual negotiations with the buyer, not an immutable price. The sad reality of ‘actual existing capitalism’ is that consumers are forced just like political subjects. It’s not based on some kind of actual dialectic between ’supply and demand’ but between the limits of which one can charge for a product, regardless of quality.
Cchris, please don’t think that my statements regarding the invalidity of government are a promotion of American “capitalism”. The current American model is far from a free-market BECAUSE of government intervention. As for insurance companies, their lack of competition and high prices are directly caused by government intervention into all forms of healthcare and insurance.
Shops which exist within any relatively free-market do reflect free-market prices. The price does not have to be negotiable on the spot to reflect a free-market price. Your statement assumes that goods and services should be priced based on absolute value. When in fact values are subject to the individual desires and needs of consumers. You cannot reference “quality” as the standard for price, except in it’s ability to meet the demands of the consumer. Since no two people value anything exactly the same, the price offered by seller is an attempt to meet the market determined optimal price (ie the price that maximizes benefit to both seller and buyer). The seller that offers a good/service at the point closest to the market price is the most successful (this assumes all other things are equal between sellers, ie: location, distribution, customer service, etc). This process has negotiation built into it as the optimal price has as one factor the ability of suppliers to undercut each other for business. If a seller is priced too low they will cut into potential profits, if he is priced too high he will be undercut and will reduce effective demand for his product. Quality concerns, as they affect the consumer’s perceived benefit, will affect price as demand will decline when consumers are disappointed.
The issue, though, is that the prices are not negotiable at all for individual ‘consumers’. For example, it costs less than a dollar to manufacture a DVD, yet they are marketed at a standard price ($10 and $15). I do see royalties and adverts (which produce the very desire that influences price, btw) increasing the price. And here’s the rub: the ‘market determined optimal price’ is determined by the seller not the buyer; it is the combination of manufacturing costs, royalties, marketing, and the ethereal ‘consumer’ desire (determined by the marketing!).
In other words, the ‘consumer’ is an empty placeholder in the game of signification that arrives at a monetary value for a product. There is no negotiation and the illusion that such exists fuels the entire system. The buyer is a passive subject in the game, not an active participant. By trying to abstract the economy to some universalised market, it has been assured that any individual and any connection to reality is lost. There is no ‘individual desires’ in a universalised marketplace, which is what determines the illusion of value (i.e. price). The best marketing scheme has been that a person is an individual subject with individual tastes/preferences and can purchase individualised products. Everything is mass produced, mass marketed, and even sold in massive quantities (e.g. the Buy-in-bulk stores like Sam’s Club and Costco). Today’s market has seen the erasure of the individual to be replaced with a set of passive desires and consumption that is cultivated by yet more marketing. The market has been reduced to a mantra of ‘Desire! Buy! Consume!’.