Cutting wages, solving (economic) contradictions and workers against the Bolsheviks

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This blog is going to be a mixed bag. Some may say, as usual and they would be right! However, this is going from Paul “I’m a Keynesian” Krugman against Keynes on cutting wages, via solving Economic Contradictions, to worker resistance to Bolsheviks. The first is important now, in our resistance to austerity, while the history of Russian labour protest is all about learning from the past.

Neo-liberalism, with its inequalities and worship of “the Market”, got us into the current crisis. There was a time when it looked like there was an opening for alternative perspectives on economics and solutions to our problems. How it appears that has to have passed. In the UK we have a Tory government (with Lib-Dem aid) set on imposing austerity and continuing the Thatcherite/Blairite privatisation mantra (although covered with invocations of “progressive”, “fair” and even “mutualism”!). In America, the so-called “Tea Baggers” have been the focus of much of the anger felt at the results of three decades of neo-liberalism – anger demanding more neo-liberalism, more inequality (and all funded by propertarian billionaires and helped by Faux News).

Why? Well, there are many very rich people who have spent lots of money framing the debate (thanks to “think tanks” and such like). Then there is the awkward fact that neo-classical economics is so predominant. It may have no relation to reality, but its conclusions are so boss friendly that it skews (as intended) the whole debate. Even those who question aspects of it are caught up in its assumptions. This can be seen when Paul Krugman, almost, but not quite gets it right as regards cutting wages as a cure for unemployment. He discusses this in a blog posting entitled Wages and Employment, Again (Wonkish):

“I occasionally mention here that recognizing the reality of wage stickiness is a key part of demand-side economics, but I’ve also argued a number of times that cutting wages now would probably make the slump worse, not better.”

Okay, the first part of that sentence is not Keynesian – if we take “Keynesian” to mean “what Keynes argued.” Keynes was very clear that he took wage flexibility as his starting point -- the notion of "wage stickiness" was added after his death by certain neo-classical Keynesians to squeeze Keynes's into the orthodoxy. The second part IS correct, which was why Keynes took the notion of perfect wage flexibility as his starting point. He argued that if wage were cut, then this would shift the supply curve for labour as well as the real-wage and so not have the impact planned. I’ve discussed this in both An Anarchist FAQ and in an article written for Anarcho-Syndicalist Review and (in edited form) Black Flag: Would Cutting Wages reduce unemployment?

Indeed, the whole notion of a “labour market” is questionable as labour is simply not like a commodity, like say steel, TVs or beans – although embracing that fiction ensures that we get paid beans… Anyway, back to Krugman:

“The point is that making wages somewhat more flexible, as opposed to perfectly flexible, is not a good thing. And this in turn means that people arguing that what we need right now is more wage flexibility are actually pushing for a policy that would make things worse.”

And this from the world’s so-called leading Keynesian! Keynes argument was premised on the prevailing orthodoxy (flexible wages will produce full employment) and showing why it was wrong. In fact, he postulated that wages not being perfectly flexible was a good thing as it stabilised the system. However, this insight of Keynes was lost when he was squeezed into neo-classical economics – which he tried to escape from, but only partially. Krugman is, as I've noted before, one of the better neo-classical Keynesian but he is still stuck in the orthodoxy and so the ideal is, of course, “perfectly” flexible wages...

His conclusion is right, though, in-so-far as attempts to cut-wages will cause more problems... although “eventually” things may get better... But as Proudhon rightly noted:

“The economists admit it: but here they repeat their eternal refrain that, after a lapse of time, the demand for the product having increased in proportion to the reduction of price, labour in turn will come finally to be in greater demand than ever.

“Undoubtedly, WITH TIME, the equilibrium will be restored; but, I must add again, the equilibrium will be no sooner restored at this point than it will be disturbed at another…”

And I should also note that neo-liberalism has been busy making wages flexible DOWNWARDS... any rise in wages has been meet with raising interest rates to maintain the “natural” rate of unemployment and so push wages down... To quote AFAQ:

“So while this attack on the wages, working conditions and social welfare is conducted under the pre-Keynesian notion of wages being ‘sticky’ downwards, the underlying desire is to impose a ‘flexibility’ which ensures that wages are ‘sticky’ upwards. This suggests a certain one-sidedness to the ‘flexibility’ of modern labour markets: employers enjoy the ability to practice flexpoilation but the flexibility of workers to resist is reduced.”

Compared to the neo-classical (and Austrian) perspective (namely, blame the workers first, last and always), Krugman is on the side of the Angels but that does not excuse a Keynesian ignoring Keynes arguments! Ah, it will be objected, economics is a “science” and so its conclusions just appear consistently anti-worker. Well, it must be the only “science” which ignores reality in favour of postulating the various assumptions required to justify the desired “just-so” story required to defend the wealthy! Science, well, of class warfare! After all, what else can you conclude when a “science” proclaims that the problems caused, in part, by a vastly unequal society is to cut the wages of those doing the actual work so increasing inequality?

I would also suggest that Krugman does not stress another of Keynes great insights enough, namely the importance of uncertainty. So it would also help if he framed the whole state welfare benefits, etc., in terms of reducing uncertainty by maintaining demand for goods and services and so giving firms more of a reason to invest. State intervention in terms of funding investment projects also reduces uncertainty by ensuring that such work is done and so workers have money to spend and companies have firm orders (not to mention the much more important issue of meeting needs which exist but not expressed in the market due to lack of money). But invoking uncertainty is something neo-classicals rarely do (something else, like time and production they abstract from). The issue of uncertainty is one I’ve discussed in relation to (libertarian) communism and it is an important one, one which is rarely stressed in radical economics (some on the right do, namely the Austrians, but as I’ve noted in AFAQ they fail to think through the implications of their lip-service to it).

It could be asked why is an anarchist providing arguments for state intervention? Well, first off I don’t see the job of libertarians as one of making things worse for people – that can be safely left to the ruling class, their politicians and their ideological defenders. The whole “the worse, the better” perspective is one I object to – if it were true, America would have the biggest radical labour movement in the world! Second, the politicians are not going to actually implement any social investment unless forced to by outside pressure by the people, pressure from below. Third, the underlying premise of modern politics is austerity for the masses, state aid for the elite. It would be remiss for us not to explain why this makes things worse. If cutting wages is a bad idea, cutting what is called “the social wage” (the various welfare measures won from previous struggles) is just as bad. It does not mean, of course, that we forsake building our own alternatives to those actually useful services and goods which the state (and capitalist) firms provide nor think that we can leave reforms to politicians to mess-up and/or water-down for us.

Of course, the state/government is the enemy of the people. It exists to maintain capitalism, the current class system. It is a body external to the mass of people and governs it in the interests of itself and the economic elite. What the conservative/propertarian right oppose is any government action beyond this -- sorry, beyond defending/imposing capitalist property and property rights (and usually, but not always, “traditional” morality – funny how “big government” is not an issue when telling women what to do with their bodies, or what people do in their beds, etc.). And the modern state does more than just defend property – due to many factors (public pressure, need to maintain both society and economy, and so on) it can and usually does provide some socially useful services and goods (along with many which benefit the elite).

An obvious example, the NHS here in Britain -- only a particularly clueless libertarian would be supporting the Thatcherite/Blairite/Cameronite attempts to privatise it (note for US readers, over here politicians drum up support by arguing the Tories wish to create a US-style private health system). Yes, we aim for a genuine socialised health system rather than the current nationalised one but that does not mean that a government-corporation imposed privatisation is closer to our ideal! At the very least, as anarchism is anti-capitalist as well as anti-state, we are against privatisation just as much as we are against nationalisation.

Equally, anarchists argue that capitalism is an enemy of the people, that wage-labour (like the state) is exploitative and oppressive. That does not mean that we oppose attempts to make wage-labour less oppressive and exploitation. Far from it, we should be fighting for better pay and working conditions. The same applies to the state -- it is an oppressive and exploitative institution of class rule but we can and should try to make it less oppressive and exploitative. That is, surely, commonsense?

So, I'm arguing for a dual approach based on a recognition of reality is called for – along with the recognition that social change does not happen overnight and requires strategic thinking. Chomsky gave a good analogy, arguing that social struggle is like a Chess game and that too many radicals get annoyed when they discover they cannot checkmate the King in their first move! Now, I cannot find were I read that so if anyone goes have a link to that article or interview, please let me know!

And, anyway, capitalism has always been marked by state interventionfrom the start. Having people who defend that system witter on about the evils of “state intervention” (i.e., social welfare measures) stinks of hypocrisy.

As far as Keynes goes, there is a good paper by post-Keynesian economist Paul Davidson entitled Real World Macroeconomics: Financial Market Liquidity and Money Contract Obligations (pdf) The other conference papers (including one by Steve Keen – pdf) can be found here. I would also be remiss for not mentioning my previous discussions on Krugman’s economics and politics.

And talking of economics, This is good: A code of ethics doesn’t go far enough For example, “The whole body of mainstream economics needs to be trashed” and “Many of their models are internally inconsistent (for example, all those that deal with income distribution and production) and none really stack up against empirical realities.” Not to mention:

“I think a call for a code of ethics should be broadened for a major closure of economics programs around the world and a new approach to the study of economics . . . incorporating sociology, psychology, anthropology, and a more reasoned view of firm-based operations in the context of a class-based economy – where workers want to work less and be paid more and bosses want them to do the opposite.”

It mentions the Cambridge Capital Controversies which refuted marginal productivity theory and how this, and neo-classical economics in general, was in response to the rise of Marxism. I've added a comment about over-egging the influence of Marx, pointing to both Proudhon and the British Ricardian socialists as more pressing concerns for the founders of neo-classical economics. But, then, I would... :)

And talking of Proudhon, I’m sure that everyone is on the edge of their seats waiting for Property is Theft! to be published (well, I know one person other than myself is!) The situation is that the final proof-reading is going on and I've been asked to do a short biography of Proudhon (part of the whole “definitive” thing). I’ve done that now, and sent it off to someone for comments (that one other person!). The book should be out next month. The biographical sketch is doubling-up as a justification of what I’ve included in the book, plus a summary of works I missed – namely War and Peace and The Social Revolution Demonstrated by the Coup d'État of Second of December 1851 as these are particularly misrepresented. I’ll make an announcement when the book is out – once the biographical sketch has been sent to AK Press I'll post it on the Property is Theft! webpage.

I’ve also included a few interesting quotes as well. Regarding General Idea I've included a bit from a letter which states it was “the scientific and positive conclusion which System of [Economic] Contradictions was only the preamble.” (Correspondance, vol. 3, p. 377) And in that book he argues that workers' associations “furnish the solution of two important problems of social economy, that of collective force, and that of the division of labour.” I’ve also included a couple of quotes from a page of Justice in the Revolution and in the Church (Oeuvres Complètes, vol. 22, p. 264) which sum up things well – particularly the reference to “contradictions” within society and economics (contradictions which express themselves in regular crisis inequality, poverty, exploitation, etc):

“Thus labour, reconciled by its free nature with capital and property, from which wage-labour banished it, cannot cause a distinction of classes any more, which breaks the vicious circle and puts society, as well as [economic] science, safe from any contradiction.

“Then, add the innovators, the ideal dreamed by the first economists can be carried out:

“The land to those who cultivate it;

“The profession to those who practice it;

“Capital to those who use it;

“The product to the producer;

“The benefit of the collective force to all those which contribute to it, and wage-labour changed by participation;

Parcellaire labour combined with the plurality of trainings in a series of promotions;”

This passage is very suggestive, although not as strong as I would prefer (wage-labour “changed”/”altered” rather than, as he suggests elsewhere,  “abolished”, labour and property “reconciled” rather “re-united”). It does sum up things very well, in that it shows labour would be self-managed and workers would control both the means of production used and the product of their labour. That way, the “collective force” would remain in the workers’ hands rather than appropriated by employers. This solution, of course, fits exactly into his analysis of 1846 in System of Economic Contradictions (hence the “safe from any contradiction” – as I suggested in my recent review of that work). As Proudhon put it in one of its sketches:

“Well! I am willing. The remedy for competition, in your opinion, is to make competition universal. But, in order that competition may be universal, it is necessary to procure for all the means of competing; it is necessary to destroy or modify the predominance of capital over labour, to change the relations between employer and worker, to solve, in a word, the antinomy of division and that of machinery; it is necessary to ORGANISE LABOUR: can you give this solution?”

I also liked this being based on labour’s “free nature”, namely that labour by its inherent features as an expression of an individual's self-activity should manage itself and so needs free access to the means of life to do so (that feeds into my comments on liberty as being the basis for anarchist analysis in my last blog).

I discovered this passage I was looking through Robert L. Hoffman’s Revolutionary Justice: The Social and Political Theory of P-J Proudhon while looking for material for the biographical sketch. But, then, I’ve discovered quick a few important letters and articles by following up references in other works (sometimes just passing references – such this 1849 letter to Pierre Leroux which came to my attention via an end note in a book on the history of the syndicalist IWA). I feel sometimes people did not appreciate the importance of some of the works they quote!

I must state that I’ve tweaked the translation a bit to make it more readable and less likely to be abused and misused. I’ve translated “Le capital à celui qui l'emploie” (etc.) as “Capital to those who use it” rather than the literal “Capital to the one who uses it” Why? because the literal sounds very posh and, more importantly, I don’t want some clueless Marxist proclaiming Proudhon favoured ownership of “small-scale” industry run by “one” person! I'm sure some Marxist would do that, in spite of the reference to “collective force” in the same extract and Proudhon’s support for co-operatives. After all, abolition of “la salariat” (wage-labour; wage-workers) was a constant theme of Proudhon’s works which makes Marx’s proclamation in 1847 that Proudhon’ “whole system rests on the labour commodity, on labour which is trafficked, bought and sold” an utter distortion. As Proudhon put it:

“Either competition, — that is, monopoly and what follows; or exploitation by the State, — that is, dearness of labour and continuous impoverishment; or else, in short, a solution based upon equality, — in other words, the organisation of labour, which involves the negation of political economy and the end of property.”

And talking of exploitation by the state, someone forwarded me these couple of good (related) pieces by Simon Pirani on the Bolshevik regime and labour protest against it. The first is a reply to a review in the SWP’s “theoretical” journal and the second is a pdf of further information referenced in the reply. Both are well worth reading. Pirani  was a Trotskyist (maybe still is? Maybe still a Marxist?) but when the soviet block collapsed he wanted to rethink what had happened, went right back to the post-civil war period and found some interesting material. His book The Russian Revolution in Retreat is good – I read it a few years back and I referenced it in AFAQ in its discussion of working class protest under Lenin.

A big flaw is that it concentrates on the period 1921 onwards because, to be honest, the repression (as Pirani does notes in the ISJ) did start long before – within a month of the start of the civil war the regime was a de facto one-party state, although the writing on the wall was clear months before that. But what he does uncover in the early-NEP period is important. He is good in that the Bolsheviks did have a choice – they could have been more inclusive in 1921 but party orthodoxy (party dictatorship as essential aspect of any successful revolution) played it part and, of course, any collective resistance put the party's rule in question. Thus the party helped create the atomisation which its latter-day fan-boys use to justify its rule.

As such, his work supplements works like Maurice Brinton’s The Bolsheviks and Workers’ Control. Brinton’s account is excellent and essential reading. It is in the AK Press anthology For Workers’ Power – and excellent anthology which I reviewed ages ago (and, I think, the first article I submitted to Anarcho-Syndicalist Review). I would urge anyone who has not read either book to do so. Brinton’s work is amongst the very best libertarian (socialist) writings around.

In terms of The Bolsheviks and Workers’ Control, it is very good on the ideas and debates of the times, showing that the rise of state capitalism in Russia started under Lenin and flowed from Bolshevik ideology rather than being somehow alien to it (as latter day Leninists assert). However, it is somewhat “up in the air” (so to speak) – while it mentions key historical events, it does not link the Bolshevik policies to working class struggles under the Bolsheviks nor the state of the economy. Both need to be taken into account, particularly as the former explodes the standard Leninist “working class was atomised” excuse.

I’ve tried link Bolshevik ideology to both “the objective conditions” and labour unrest facing the regime in section H.6 of AFAQ, discussing how the ideological and structural prejudices of the Bolsheviks impacted on the revolution – and helping to contribute to the very problems later-day Leninists use to rationalise and justify Bolshevik authoritarianism. However, I’m well aware that this is just skimming the surface – a whole book would be needed! And any such book would have to use works like those by Jonathan Aves which presents an excellent account of workers’ resistance to the Bolsheviks, although it concentrates on 1920 onwards by and The Bolsheviks in Power which covers the first year of the Bolshevik regime in Petrograd (and as reviewed in Black Flag).

So Brinton’s work needs to be supplemented by sources like this. Now, that would be a project worth doing! The AFAQ section is just a start, with enough academic references to get someone working on such a task going. Other useful projects for the budding anarchist historian would be, I think, a libertarian account and analysis of the 1848 revolution in France. It seems crazy that the first revolution in the age of anarchy (that is, after anarchism became a named socio-economic theory) has not been analysed. Particularly as Proudhon was an active participant in it. Still, much of the Russian revolution still requires investigation – while revolts of the Paris Commune as are still subject to regurgitating convenient (usually Marxist) myths than serious analysis.

Still, as important is such historical research is we need to use it to inform current struggles and debates. Brinton’s work is a good example, using the historical experience of Bolshevism in power to refute Leninist claims in the 1960s that their ideology supported the then popular call for workers’ control/management. Any research conducted into historical events should have a message or lesson for today’s struggles and activists. Theory and practice must be linked, otherwise the former is nothing more than interesting and the latter little more than fun. Combining both and we can learn from the past in order to transform the future!

Until I blog again… be seeing you!

Comments

Hi Iain (Anarcho) Good

Hi Iain (Anarcho)

Good article as usual - it is refreshing to read work on economics/politics that cuts right through the crap. Cutting wages is order to increase employment is neoclassical nonsense. Doing so will only result in decreasing consumption and thus increase unemployment in the long-run. Steve Keen's Debunking Economics has a good chapter on this, debunking the idea that competitive markets result in a worker's income equating to their marginal productivity. In fact, Keen is currently writing up a 2nd edition to this book, as well as currently writing a book on financial markets called Finance and Economic Breakdown.

I find that even if that idea was true - that incomes are commensurate with marginal productivity - it is total hypocrisy. With the static equilibrium neoclassical framework, we are to believe that state intervention on behalf of workers, such as social welfare, minimum wages, labor rights, unions, etc. modifies the incomes of workers above the market equilibrium wage, which is true. On the other hand, we are to believe that state intervention for the rich: corporate charters with their ludicrous rights of limited liability, immortality and near sovereignty, patents, copyrights, trade secrets, trademarks, monopolistic/duopolistic/oligopolistic market structures, bailouts, subsidies, preferential tax breaks, R&D credits, illicit drugs, military spending, below-market rate loans, too big to fail doctrine, central banking, etc. have no effect whatsoever on the wages of the rich. Simply put, neoclassical economists expect us to believe that the incomes of the rich are completely determined by the free market. Thus Bill Gates, who operates a firm (Microsoft) which has a monopolistic market structure and is protected by hyper-monopolistic copyrights, apparently "earns" the free-market equilibrium income! Complete nonsense.

As we know, the rich "earn" their wealth not through working but through the rentier economy: government intervention, intellectual property, asset inflation and deflation, speculation, and inheritance. Yet this does not stop the rich and their ideologues from claiming that the working class does not work for their incomes and thus social welfare must be eliminated! The US economist Michael Hudson has written a great deal of work on this topic and is well worth reading (Youtube has plenty of good videos of his presentations).

Apparently, neoclassical economics and the marginal revolution was, in part, a response to Henry George's idea about taxing away land rents, detailed in The Corruption of Economics by Mason Gaffney.

You may be interested in these two articles I wrote for the Guardian:

http://www.guardian.co.uk/politics/2010/jul/16/conservative-nanny-state-...
http://www.guardian.co.uk/commentisfree/2010/mar/23/pharmaceutical-indus...

I noticed that the AFAQ mentions Dean Baker's work on the Conservative Nanny State, an excellent book that exposes the "conservatives'" love of government intervention, as long as it redistributes wealth to the rich. I find their idea of laissez-faire to be a total joke - mainly because capitalists have never want a limited government and have always demanded an overwhelming powerful, interventionist and violent state, whether it was to create capitalistic property rights & wage labor, and/or to keep the dangerous classes in their place (working and poor people). As you note, "conservatives" have no problem with a powerful state to tell people what to do in their own homes and who they can marry. The criminalization of drugs is a good example, considering it violates all the principles that these "conservatives" apparently believe in: free markets, free trade, civil liberties, limited government, free choice, etc. In fact, the greatest ally of the drug cartels are conservatives. Unfortunately, many liberal governments are no better in this regard.

Australia's history provides a good case example of the supposed freedom and liberty that capitalism creates. The world's most powerful capitalist state at the time, Britain, invaded Australia, wiped out the indigenous population through genocide, enacted near slavery in the form of prison labor, created enclosures of the commons and carried out violent repression of the working class, all of which is necessary to convert the commons into public and private property. One could claim that this is a mere aeration but unfortunately, the same thing has occurred again and again, whether it be in Europe, the US, or the Third World. So much for freedom.

Putting aside that capitalism is a system of exploitation, it can be easily shown that capitalists exploit workers on market exchanges from a narrow point of view. Richard Lipsey and Kelvin Lancaster's Theory of the Second Best provides a good example of this. Apparently this paper is was what radicalized Steve Keen away from neoclassical economics towards reality-based economics.

Government intervention for the rich is very obvious yet this does not stop mainstream commentators, economists, and the business class from claiming that we have free markets and free trade! Of course the utility of this is to claim that because the rich operate by the discipline of the free market, so should those pampered Western workers living luxurious lifestyles.

One thing I am curious about: the AFAQ stipulates that labor is the only source of surplus value, not capital. Yet as you well know, Keen's honours thesis and Debunking Economics provides a good explanation why the LTV is invalid and that both labor and capital creates surplus value. The AFAQ and your blogs do mention Keen's anti-neoclassical work but not his work on the LTV. Why is this?

Otherwise, good work and keep it up.

Philip

Good article as usual - it is

Good article as usual - it is refreshing to read work on economics/politics that cuts right through the crap.

Sadly, there seems to be an unending amount of crap to cut through!

Cutting wages is order to increase employment is neoclassical nonsense. Doing so will only result in decreasing consumption and thus increase unemployment in the long-run.

Even in the short-run. I'm aways surprised that people argue for cutting wages/benefits/etc. -- it is almost if they think that the worse possible thing for companies in a recession is for people to buy their products! Still, that is what von Hayek suggested when a puzzled economist asked whether him going out and buying a coat would make the great depression worse... von Hayek said yes, but it would take a lot of mathematics to prove why! And "Austrians" wonder why they lost the debates of the 1930s -- when they mention the outcome at all...

Steve Keen's Debunking Economics has a good chapter on this, debunking the idea that competitive markets result in a worker's income equating to their marginal productivity.

Yes, that is a excellent book (have you seen my review?). I use it quite a bit in section C of AFAQ.

In fact, Keen is currently writing up a 2nd edition to this book, as well as currently writing a book on financial markets called Finance and Economic Breakdown.

I'm looking forward to both.

Simply put, neoclassical economists expect us to believe that the incomes of the rich are completely determined by the free market.

Yes, but then again most of then don't recognise pro-rich intervention for what it is -- they take it for granted as a neutral fact of the world...

Apparently, neoclassical economics and the marginal revolution was, in part, a response to Henry George's idea about taxing away land rents, detailed in The Corruption of Economics by Mason Gaffney.

Yes, I've read that claim and that specific book. I'm sure that George planned his part but the move to neo-classical economics was well on its way by then. As I note, while none of the neo-classical founders mentioned Marx, Walras wrote a book specifically against Proudhon and all of them would have been aware of the Ricardian socialists.

You may be interested in these two articles I wrote for the Guardian:

Good articles -- all these things which are taken for granted must be questioned.

I find their idea of laissez-faire to be a total joke - mainly because capitalists have never want a limited government and have always demanded an overwhelming powerful, interventionist and violent state, whether it was to create capitalistic property rights & wage labor, and/or to keep the dangerous classes in their place (working and poor people).

Yes, indeed. I can think of no better ideology than one which states "Well, okay, yes, we've used the state in the past and now we have all the wealth. Doing that was wrong as coercion is bad. Now, any attempt to change this situation is coercion and so bad. Leave is alone to enjoy our wealth -- and get back to work or you're fired." Even better, if the get everyone to accept continuing state intervention (like breaking unions, defending corporate privileges, patents, etc.) as not state intervention!

Putting aside that capitalism is a system of exploitation, it can be easily shown that capitalists exploit workers on market exchanges from a narrow point of view. Richard Lipsey and Kelvin Lancaster's Theory of the Second Best provides a good example of this. Apparently this paper is was what radicalized Steve Keen away from neoclassical economics towards reality-based economics.

Yes, I reference that paper in AFAQ. It is an important point -- as you note in one of your articles:

"Smashing labour unions while not atomising capital is another protectionist policy that favours the business class – economic theory requires that both sides be atomised."

AFAQ makes the same point. And we have seen the net effect of this since 1980 -- as productivity has grown, wages have stagnated and the different has flowed up to the top 5% of the population. And still neo-classical economics will proclaim that wages reflect productivity!

One thing I am curious about: the AFAQ stipulates that labor is the only source of surplus value, not capital. Yet as you well know, Keen's honours thesis and Debunking Economics provides a good explanation why the LTV is invalid and that both labor and capital creates surplus value. The AFAQ and your blogs do mention Keen's anti-neoclassical work but not his work on the LTV. Why is this?

Well, there are a few reasons. First, the neo-classical critique is far more important. Second, even if capital creates surplus value it still requires workers to set it in motion. Without workers, capital would produce nothing. As such, any surplus created by capital is mixed up with that produced by workers. As long as capital is owned by the few, all surplus will be appropriated by those who own rather than those who labour. Three, Keen links Marx's unwillingness to apply his methology consistently because of his need to "scientifically" prove that capitalism is doomed to evolve into socialism (due to the tendency of profit to fall). I have no such believe so it does not bother me is capital produces a surplus -- precisely because it still needs workers to make it work.

The analysis that labour produces a surplus which is appropriated by capitalists is an insight which predates Marx (Proudhon raised it, for example). "Capital" can and does make labour more productive, even create a surplus, but labour is what starts the process and without it capital would rust. When workers own their own means of production, the surplus they create belongs to them -- so the final source of parts of that surplus becomes meaningless. There is no exploitation. And, ultimately, machines cannot be exploited, only people can.

And in terms of the Labour Theory of Value, I think it has two great benefits. First, it focuses attention to production, to what happens when we create the products. That puts time, change, labaour-capital relations, etc., at the fore of the analysis (as discussed in this unfinished appendix on the LTV). Second, it remains us that capital/money does not work, people work. People can be oppressed and exploited, machines cannot. It reminds us that labour creates all (with the aid of nature, of course).

hope that helps!

Iain

Thanks Iain, The effect of

Thanks Iain,

The effect of corporate propaganda is so corrosive that people accept state intervention for the rich as the workings of the free market, as you pointed out. One facet of this is the way that neoclassical textbooks handle labor rights: there is always a section that "proves" that labor rights interferes with the working of the labor market, creating distortions. Yet try to find the section where rights for capital (limited liability, immortality and near sovereignty) create distortions in the market - it doesn't exist! Even by neoclassical standards it is hypocrisy.

Currently I'm doing my Masters/future PhD on examining alternatives to pharmaceutical patents - it really is a horrendous system of public subsidy, private profit. IP is one area that has been missed by "conservatives" who claim to be in favor of free markets. As long as the state intervenes to redistribute wealth to the corporate elite, there appears to be no problem. Fortunately, constructing alternatives to the IP system to stimulate R&D is actually quite easy. Having read through the vast majority of the literature, the only comparison between the IP system and alternatives has been performed by Dean Baker, there is literally nothing else out there.

This makes me think of the return to neo-feudalism advocated by Austrians - how on earth is a pure market system going to be able to spend anything on a pure public good such as R&D? Even by fairly conventional standards, a pure market system is going to be very inefficient. In fact, it is likely that a centrally-planned command economy would be more efficient than a pure market system because a centrally planned economy can at least attempt to produce private goods but a market system won't even make the attempt at producing public goods because actors can't appropriate the returns due to free-riding.

That episode of concerning Hayek and Hicks? is a good example of the triumph of ideology over science, as Stiglitz would put it.

Whatever you may think of Parecon, the inventors Michael Albert and Robin Hahnel have written extensively on externalities, and is well worth reading their book on welfare economics "A Quiet Revolution in Welfare Economics". Externalities is another area that is glossed over by conventional economics. In fact, the only economists who have honestly written on the subject are Albert, Hahnel and an obscure economist called E.K. Hunt who used to teach at the University of Utah. His work is very much worth reading. Albert and Hahnel go so far as to claim that markets, uncorrected for external effects, have led to the greatest mis-allocation of resources in post-feudal history.

Another area worth investigating is a new branch of economics called econophysics, which Keen holds as probably the school of thought that is going to save economics. They are extremely mathematical but are actually empirical whereas neoclassical economics is mathematized ideology. One of the leading econophysists is Joseph McCauley, and has written an excellent book called Dynamics of Markets: Econophysics and Finance. In it, he trashes equilibrium theory, utility maximization and the other totems of neoclassical economics. Their work consists of applying the empirical models and testing from physics to economics, where, predictably, they come to the opposite conclusion of conventional economists. It is too bad that they are too small to be well known at this time.

Philip

This makes me think of the

This makes me think of the return to neo-feudalism advocated by Austrians - how on earth is a pure market system going to be able to spend anything on a pure public good such as R&D?

Well, that is a key issue -- the basic position is that "Public Goods" do not exist, how can it, if there is no "Public" as such -- just individuals? In terms of R&D, I've lost count of the number of "Austrians" I've seen pointing to the internet as an example of the "free market"! But, then, I've seen the likes of Milton Friedman point to South Korea as an example of the power of "free markets" too. I even saw one propertarian point to putting men on the moon as an example of the power of the market...

Even by fairly conventional standards, a pure market system is going to be very inefficient.

If you think about the incentive and information issues with the hierarchical firm, it is no surprise that co-operatives are more efficient than capitalist firms... shame capitalism blocks their growth, so selecting against more efficient modes of production.

In fact, it is likely that a centrally-planned command economy would be more efficient than a pure market system because a centrally planned economy can at least attempt to produce private goods but a market system won't even make the attempt at producing public goods because actors can't appropriate the returns due to free-riding.

Also, such a system can allocate resources (however badly) to areas were the market simply is not interested in, namely where the pressing need does not translate into effective demand. Yes, in terms of making profits it may not be efficient (so it is "efficient" to export food from famine areas) but it does make people's lives better.

That applies to R&D, which benefits more people over the time than any single company.

Whatever you may think of Parecon, the inventors Michael Albert and Robin Hahnel have written extensively on externalities, and is well worth reading their book on welfare economics "A Quiet Revolution in Welfare Economics".

As I've said, elements of Parecon are correct and make sense -- analysis of externalities is one of them. The problem is not many of its elements, it is the over all package and the utter lack of awareness of how difficult gathering, processing and presenting the knowledge and information required for plans on a large scale would be.

Can economics be saved? I doubt it -- it's role as ideological defence of capitalism makes a realistic economics, grounded in the reality of class society, unlikely as long as the current system continues. Individual economists, and indeed some schools (e.g., post-Keynesian), will contribute to creating an economics like that. But I fear a realistic economics will come about after the revolution, when it gets back to looking at how resources can be used efficiently.

It's fascinating to see how

It's fascinating to see how stunted the Austrian approach to public goods is. Even the neoclassicals and New Keynesians, who are hardly radical, developed the public good arguments during the 1950s (Samuelson, Bator, etc.) and were well aware of the need for extensive government involvement to produce and allocate public goods.

The Internet was originally a military communications systems developed by the U.S. government through its system of public subsidy, private profit. It was only through even more public subsidy was it made ready for businesses to profit from it, beginning in the 1990s. South Korea is not an example of a country that was developed through free markets - it is a testament to how a strong mixed-mode economy with extensive government planning can rapidly develop a country. The South Korean economist, Ha-Joon Chang, relates in his book Bad Samaritans, that economists of the time thought that their military dictator of the time was a lunatic for thinking he could develop Korea as rapidly as he thought. In fact, he eventually surpassed even their projections. South Korea undertook the economic policies that was necessary for development, as did every other country that developed: US, UK, Scandinavia, Western Europe, Australia, New Zealand, Canada, Japan, etc. South Korea is falsely sited as an example of a country that developed through free markets, as is Singapore, which is rather strange given that the government as per usual takes a big role within the economy.

I wonder what the Austrian/neoclassical fascination with South Korea, Singapore and Chile is. Perhaps because these countries have been run by right-wing dictators during their development.

The moon landing is a joke if someone thinks that the marketplace was responsible for it - it was only through one of the most heavily-funded government programs of the century (NASA) was space flight even conceivable. There are many who point to the wonders of capitalistic markets but if they do produce something technologically advanced, it is actually due to market defect, much the same way that IBM and Microsoft has operated for decades (corporate charters, intellectual property, monopolistic market structure, subsidies, R&D credits, preferential tax breaks, etc.). Hardly an example of the workings of the free market. So much of a state capitalist economy is based upon bribery of capitalists by the state (corporate charters, IP, etc.).

The major problem with Parecon is that while it sounds good in theory, it has not been empirical tested. As David Schweikert has pointed out, the only firm which utilizes Parecon is their small South End Press business - hardly an example that can be used to promote Parecon for an entire economy. Furthermore, their book on the political economy of Parecon, I suspect, uses neoclassical equilibrium theory to "prove" that Parecon will be efficient... Overall, I like Schweikert's model than Parecon because it is easier to understand and possibly implement.

Keen once quoted a post-Keynesian economist (who has since died) that capitalism is likely to pass away before we are even able to understand it, and if things continue as it is, then it is quite likly that this will be the outcome.

A few more comments on

A few more comments on Austrian and Parecon...

It's fascinating to see how stunted the Austrian approach to public goods is.

They don't really have a choice -- methodological individualism kind of excludes groups, community, the public, etc. by definition.

The South Korean economist, Ha-Joon Chang, relates in his book Bad Samaritans

He is a very interesting writer, have you seen his new book 23 Things They Don't Tell You About Capitalism? It is full of interesting facts. Of course, he is a  social democratic Keynesian but he is well aware of the limitations of laissez-faire capitalism as well as having a good grasp of economic theory and history.

South Korea undertook the economic policies that was necessary for development, as did every other country that developed: US, UK, Scandinavia, Western Europe, Australia, New Zealand, Canada, Japan, etc.

Yes, I know. It is amazing -- every capitalist nation has violated "market principles" in order to industrialise yet the "Austrians" proclaim it is all down the "the market". Apparently pure theory wins out on mere historical fact everytime...

The major problem with Parecon is that while it sounds good in theory, it has not been empirical tested.

I don't think it even sounds that good in theory. The amount of information gathering, processing and presenting just seems crazy. Not to mention having to swap jobs all the time -- I'm all for empowering work but some tasks do need experience and training to do well. I'm not sure that you can expect people to chop and change like that -- assuming it were practical to even work out balanced job complexes in the first place.

It seems to much like Fourier's regulated communities...

As David Schweikert has pointed out, the only firm which utilizes Parecon is their small South End Press business - hardly an example that can be used to promote Parecon for an entire economy.

I'm sure elements could work on a small scale, like one workplace or community. But South End Press does not try to plan the activities of millions of people (not to mention the many more goods they use/produce).

Furthermore, their book on the political economy of Parecon, I suspect, uses neoclassical equilibrium theory to "prove" that Parecon will be efficient...

Oh, it does. It compares their model with the neo-classical model and proclaims it feasible! As if the neo-classical model had any bearing to reality. They make the same mistake that Lange did in the 1930s.

Overall, I like Schweikert's model than Parecon because it is easier to understand and possibly implement.

I emailed Schweickart asking him about his thoughts on Proudhon, given how close his ideas are to mutualism. Sadly, he never replied. Market socialism has its flaws, but at least it could work -- unlike Parecon!

Looks like I'll have to get

Looks like I'll have to get Chang's latest book as well. He appears to be in the Stiglitz-Krugman New Keynesian camp, but while he makes very good logical and historical arguments for a mixed-mode economy, I find that he fails to translate this over to the extent that Keen has with his work, especially Debunking Economics. For a while I did wonder why on one hand, history shows that countries developed through protectionism while neoclassical models say that countries developed through the use of markets - both can't be right but know I know that the latter is wrong because the theory is hopelessly mangled and retarded. Capitalistic markets do have their place in development but they are the junior partner as history shows. The only type of countries that don't develop are the "laissez-faire" types, such as the ones in Latin America and Africa and elsewhere.

What I don't get about Austrians and neoclassicals is they continuously harp on about the informational processing problems faced by central planners - they correctly assert that orthodox Marxists are wrong when they say that central planners can cope with the informational processing requirements to ensure correct allocations of resources and goods in a centrally-planned economy. But as Keen has showed, economic agents face exactly the same problem within markets, which is why economists have to assume perfect knowledge e.g. "rational agents". In fact, in one of Keen's PowerPoint presentations, he develops the concept of the "curse of dimensionality": the more commodities added to a selection increases the need for processing exponentially. For example, a commodity space of 1000 with 3 choices of each requires a person to make something like 30 trillion trillion calculations at time = 0 in order to maximize their utility. Yet in order for markets to function correctly, people need to "plan" all transactions into the infinite future at time = 0. Thus, conventional economics is as corrupt as orthodox Marxism: both assume that central planners and consumers/investors are able to process real-time information to make their respective systems function efficiently, the kind of processing that futuristic supercomputers would struggle with!

Probably the worst part of Parecon is the balanced job complexes - it doesn't make sense to force people to perform parts of other jobs. For the types of jobs that may be considered undesirable, such as mining, cleaning, etc., it simply follows that people should be paid well enough to compensate them for such work. Not every person wants to be a professional or bother with studies at university. I think that Schweickart picks up on their use of equilibrium economics to "prove" that Parecon will be efficient, and comments that any economic system can be made to look as such with the right assumptions factored in.

Michael Albert was recently complaining on ZNet that Parecon has been completely ignored. I think a lot of the blame lies with him and Hahnel - they have created a system that is rather alien even to the radical left. The liberal/moderate left is not even going to bother with it. If as much resources and energy had been placed into promoting Schweickart's market socialism, it would likely be far more popular because everyone is more familiar with the concept, along with the theoretical and practical problems that could at least be worked out.

Schweickart seems to break the mold of the typical Marxist - he strongly advocates markets (socialistic of course) and doesn't just present an end-point model, he actually has done the hard work to figure out how to proceed to it - the journey in other words. While orthodox Marxists are wasting their breath with outdated concepts of the LTV, falling rate of profit, central planning, etc. Schweickart is moving ahead of the pack to produce something useful. If anything, he appears to be a libertarian Marxist.

What Dean Baker's work on the concept of the Conservative Nanny State has shown is that state capitalism is actually a form of market socialism: state intervention for the rich, and freer market discipline for the rest. This is not just an aberration because it occurs in every capitalist economy. From this viewpoint, market socialism is not difficult to advocate. After all, if the government can spend trillions bailing out the rich, it can be forced by the public to purchase business all over the place for cents on the dollar and then convert them into democratically-run worker owned and controlled firms. Even those on the right-wing would not be willing to openly denounce modes of democracy in the workplace. The reason why they never bring this topic up is because they simply have no defense against it - authoritarianism in the workplace has no justification in a supposedly democratic society. Its too bad that the left in general has let this issue slide - it should be at the forefront of the labor movement.

Unfortunately, David Ellerman's work doesn't seem to be overly accessible - from the sounds of it he has produced some excellent work on workplace democracy, as has Gar Alperovitz.

Has a word count been performed on the AFAQ?

Philip

Looks like I'll have to get

Looks like I'll have to get Chang's latest book as well. He appears to be in the Stiglitz-Krugman New Keynesian camp,

From the new book he seems to be well aware of the British Cambridge school -- people like Robinson, Kaldor and so on. I would probably class him as a post-Keynesian, of sorts. Not sure how he would class himself.

but while he makes very good logical and historical arguments for a mixed-mode economy, I find that he fails to translate this over to the extent that Keen has with his work, especially Debunking Economics.

I think that is because he is writing popular works rather than Debunking Economics which is, at times, quite hard going as it goes into neo-classical economists in depth. Both are needed.

What I don't get about Austrians and neoclassicals is they continuously harp on about the informational processing problems faced by central planners

I think it is partly because, in the 1930s, the economics profession proclaimed the neo-classical socialists had won. They had to question why that was the case and so came to realise a few of the limitations in neo-classical economics. But I would say, as you note, that they are right to stress that the gathering and processing of information is the great flaw in central planning -- anarchists had suggested the same before them -- but they fail to recognise that this applies just as much to the hierarchies of the (centrally planned!) capitalist firm!

But as Keen has showed, economic agents face exactly the same problem within markets, which is why economists have to assume perfect knowledge e.g. "rational agents".

I would say that this shows the flaws in neo-classical economics. But what the "Austrians" ignore is how the market increases uncertainty which makes information gathering and processing harder, not to mention issues to do with prices not reflecting need -- most obviously when an economic crisis sees workplaces close while there is a pressing need for their products. I discuss this in AFAQ and I think it is an important point.

Thus, conventional economics is as corrupt as orthodox Marxism: both assume that central planners and consumers/investors are able to process real-time information to make their respective systems function efficiently, the kind of processing that futuristic supercomputers would struggle with!

Which explains why the mainstream proclaimed Lange the winner back in the 1930s! In fact, I would say that it is a big mistake (as some do) to call his system "market socialism" -- it is neo-classical socialism. Leave market socialism to the likes of Proudhon and Schweickart.

Probably the worst part of Parecon is the balanced job complexes - it doesn't make sense to force people to perform parts of other jobs . . . Not every person wants to be a professional or bother with studies at university.

Very true! I'm not sure whether I could become a part time doctor, lecturer in archeology, and whatever else. In such circumstances, I want someone who has experience and knows what they are doing... as for this being the worse part, well, hard to say -- quite a few things to choose from.

I think that Schweickart picks up on their use of equilibrium economics to "prove" that Parecon will be efficient, and comments that any economic system can be made to look as such with the right assumptions factored in.

Michael Albert's debate with Schweickart was strange -- he simply did not seem to comprehend the critique at all.

Michael Albert was recently complaining on ZNet that Parecon has been completely ignored.

I wish! Too many anarchists and libertarians give it the time of day...

I think a lot of the blame lies with him and Hahnel - they have created a system that is rather alien even to the radical left.

It is utopianism, system building on an epic scale -- all you can end up doing is agreeing with it, or rejecting it. Plus it is totally divorced from practice and developments in the real world. Proudhon critiqued such visions in the 1840s -- why are radicals still doing it now? We need to get a balance from "we'll see what happens" and Albert-like utopian systems. Hopefully, section I of AFAQ gets the balance right.

Schweickart seems to break the mold of the typical Marxist... While orthodox Marxists are wasting their breath with outdated concepts... Schweickart is moving ahead of the pack to produce something useful. If anything, he appears to be a libertarian Marxist.

I found his Against Capitalism extremely interesting and useful. His work does remind me of Proudhon (as his orthodox Marxist opponents are quick to state). In terms of market socialism, it has the advantage against Parecon of being practical -- whether that is the best we can achieve, well, I guess we will see! As an anarcho-communist, I hope not.

What Dean Baker's work on the concept of the Conservative Nanny State has shown is that state capitalism is actually a form of market socialism: state intervention for the rich, and freer market discipline for the rest.

Very true, but calling it "socialism" falls into the right-wing trap of equating socialism with the state. As you note, capitalism has always been marked by state intervention and so its hardly socialistic.

Even those on the right-wing would not be willing to openly denounce modes of democracy in the workplace.

I think you will find that this is simply not the case -- the "Austrians" do so, starting with von Mises and right through to Rothbard and beyond. But, yes, for those on the right who wrap themselves around the American flag then it becomes a problem. I think Michael Moore did this on Fox News against Hannity very effectively, if I remember correctly.

Its too bad that the left in general has let this issue slide - it should be at the forefront of the labor movement.

Agreed -- up until the rise of Leninism, the left was very focused on this issue. At least, the non-Social Democratic left -- syndicalists, anarchists, guild socialism and so on. It does annoy me when Leninists proclaim they support, and always have supported, "workers' control" -- as Maurice Brinton proved decades ago, this is just not true!

Unfortunately, David Ellerman's work doesn't seem to be overly accessible - from the sounds of it he has produced some excellent work on workplace democracy, as has Gar Alperovitz.

Some of his books and articles are on his webpage. He has written some important works, so it's a shame he is not better known.

Has a word count been performed on the AFAQ?

Yes, volume 1 is over 580,000 words -- volume 2 will be longer. Not to mention the appendices... but, remember, it has been worked on for over 15 years! So words per day it must be quite low...

What has occurred to me after

What has occurred to me after reading the works of Baker's Conservative Nanny State and Keen's excellent work on exposing neoclassical trash is that if we had a private sector that resembled anything like free markets, it would actually be a small part of the overall economy.

Without the extensive state protections of corporate charters (with their ludicrous rights of limited liability, immortality, soverignty), IP (patents, copyrights, trademarks, trade secrets), monopolistic, duopolistic, oligopolistic market structures, subsidies, etc. the following industries could not exist: pharmaceuticals, biotech, medical device, software, hardware, telecommunications, semiconductors, microelectronics, aeronautical, mining, transport (trains, trams), large financial institutions, seaports, airports, and so on. In fact, any industry which has high fixed costs to low variable costs, and with any goods/services which is not completely private in nature.

The reason is because of two issues: (1) no rational capitalist is going to want to invest in a large, long-term project because of the extreme uncertainty that exists in a truly free market, which thus requires corporate charters to subsidize risk and cost, and (2) as Keen has shown, the model of perfect competition is nonsense because for the aforementioned industries to exist, they must price their goods and services above marginal cost. Pharmaceutical firms, for instance, can't price their drugs at marginal cost because they won't be able to recover their enormous R&D expenditures.

Given that no society wants to live in 2nd or 3rd world conditions, the state would then have to run each of these industries given that capitalists would not invest to run them. The ironic thing is that the true believers in free markets would be forced to accept that the private sector would be rather small and the state sector enormous (unless they are all like Rothbard who assumes away public goods and ignores that empirical evidence that Keen uses which has been available since the 1940s). The other irony is that if one wants a return to social democratic capitalism, then simply advocate free markets!

Enacting free markets would probably result in the entire corporate sector going bankrupt by tomorrow, with many non-corporate firms collapsing as well. Back during the social democratic era (1950s - 1970s), the state/private sector balance was about 66/33 to 50/50. In Australia, it is now 25/75. This shows just how over-extended markets have become, thanks to the enormous corporate welfare state that helps capitalists to privatize management and profit but socialize risk and cost.

I find it interesting that the bank bailouts are denounced as socialism but this is just one more form of government intervention in a long line. Look at the intervention that exists in the banking/financial industry: corporate charters, oligopolistic market structure, IP on their "innovative" financial instruments, the central bank that acts as a lender of last resort - this one is interesting as the Fed has been lending banks loans at an interest rate of 0.25%! There is also another less obvious form of subsidy for the banks: as Baker has mentioned, the most important and effective tool the central bank has is its loudspeaker. When the governor speaks, everyone listens. If Greenspan/Bernanke says that the economy will implode without a bank bailout, then everyone at least listens, though many may not agree. After all, leading economists from Princeton, Harvard, Yale, etc. can't possibly be wrong!

So-called free trade is based upon the same principles as mentioned above. During the social democratic era, traditional forms of protectionism were put in place, such as quotas and tariffs, which had the effect to stimulating middle and working class manufacturing jobs. Now we have a move in the opposite direction: middle and working class jobs are now outsourced to low wage labor camps (India, China) while huge forms of protectionism are put in place to defend the rich. So far, I've discovered four of them in relation to trade: (1) ever-strengthened IP, (2) criminalization of drugs, (3) lack of the free movement in highly-paid professional services, and (4) increasing rights for capital and corporations. It is of course no surprise that inequality has blown out in the Western nations with these forms of policies which protect the rich and expose the middle and working class to freer market discipline.

I liked the quote of Rothbard's in the AFAQ somewhere where he comments that state capitalism is an abomination but free market capitalism is the nirvana we must move to implement. Then the AFAQ notices that the only place where free market capitalism exists is in his head! Or as other have pointed out, the 3rd world as well.

If you haven't watched it yet, I would recommend the documentary called Inside Job (sounds like one of those wacky 9/11 Truth movement films, I though it was when I first read the title). I really liked the way they exposed the highly-paid economists who wrote how "liberalizing" economies would produce large benefits for the economy. It was funny to see these economists from Harvard, Columbia, the Fed, etc. stammer their way through those questions revealing their utter incompetence. Iceland was a good test case, as the narrator (Matt Damon) pointed out that it was probably one of the purest experiments of implementing "free markets". It "worked" great since 2000, and then collapsed in 2008, becoming a backwater. It is little surprise that this documentary managed to win an Oscar.

Fortunately, state planners over the decades have not been as indoctrinated as conventional economists in leaving everything to the marketplace, otherwise we would all be in the 2nd-3rd world. Only since the unraveling of social democracy since the 1970s have things become a lot worse. The US (and also the UK) is a good example of this: about 1/6 of the population or 45-50 million are dependent on food stamps.

This is all really quite tragic, which is why I support empirically-based economics (post-Keynesianism and econophysics) and market socialism (at least a good first step and possibly the most difficult).

Philip

If you haven't watched it

If you haven't watched it yet, I would recommend the documentary called Inside Job . . . 

I've heard good things about it -- I'm looking forward to getting the DVD.

Iceland was a good test case, as the narrator (Matt Damon) pointed out that it was probably one of the purest experiments of implementing "free markets". It "worked" great since 2000, and then collapsed in 2008, becoming a backwater.

The same sorry thing happened with Chile, with Milton Friedman proclaiming it "an economic miracle" shortly before it imploded... My rule of thumb is that as soon as some notable right-wing economist proclaims something a "miracle" then its going to collapse soon...

Nice

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