[OPE] Charles Bettelheimās contribution. Is there one?

From: Jurriaan Bendien (adsl675281@tiscali.nl)
Date: Sun Jun 29 2008 - 03:01:39 EDT


I am rather iffy about the concept of "utility" insofar as there is no generally applicable, uncontested measurement possible for it - at best you can say that a certain policy observably met human needs or satisfied certain interests, or that it observably had a positive effect on a means-ends relationship, and in that sense was useful. 

To measure utility, we typically require certain proxy variables which are taken as indicators of utility. Marginal utility is really only a description or justification or interpretation of what motivates exchanges or what the exchange advantage is, but it cannot easily orient real exchange, only rationalise it. Almost nobody trades only for the purpose of increasing or maximising general utility; they have a specific useful purpose in mind for their activity which isn't easily generalizable to other activities.

Langean prices are essentially administered prices which could, or could not, respond to an observed supply-demand relationship. The central question is really how such prices can be enforced, which is to a large extent a matter of political power and public awareness. If administered prices are set at a certain level, but there is an interest group who has advantage by a higher price, or seeks a lower price, it is very easy for an (illegal) alternative trading circuit to come into being, through which trading occurs at prices which vary from the set administered price, or through some form of bartering. This happened frequently in the USSR, i.e. the so-called "grey" circuit, creating a real problem of corruption.

In turn, that means you need some way of "policing" prices and some way of responding efficiently to trading at prices which vary from the administered price. There is no great problem if the majority of people has an interest in maintaining the administered price - in that case it would be more or less self-regulating or self-policing - but if that is not the case, then either the administered price has to be maintained in spite of supply/demand relationships (other forms of trading are prevented), or it has to be adjusted accordingly. 

In general, some kind of shared perception of use-value and allocative justice is required as a basis for cooperation among producers and consumers, who feel they all have an interest in making the allocative system work to get their needs met. In part, that requires a transformation in public and human morality, and an active, aware social participation, but also a popular perception that people benefit, that it is in their interest, and that perception will obviously unlikely to exist, unless it is really in their benefit, or in their interest.

As regards reciprocation, this is an allocative mechanism which has existed since prehistory and continues to operate in human affairs because it is absolutely necessary for human life (and human love) and to operate transactions and contracts. But it involves human wills, and it can be coerced in some way, practically necessitated, or voluntary - it could be initiated unilaterally, bilaterally or multilaterally. Marx mentions the Latin juridical formula "do ut des, do ut facias, factio ut des et facio ut facias" (I give so that you may give, I give so that you may do, I do so that you may give, and I do so that you may do). As the service economy expands, reciprocation becomes an ever more important facet of human interactions since the service level will depend on how people behave, while how they behave is partly determined by reciprocation.

Reciprocation is in fact an element in most trading relationships, insofar as they assume mutual gain, but it need not presuppose the intermediation of money, or exchange equivalence (getting an equivalent in return). Because in the real world market relationships alone fail to balance out the human metabolic interactions of giving/getting, receiving/taking, obtaining/relinquishing, accepting/rejecting etc., non-market relationships such as reciprocation act to compensate for that. A lack of money or purchasing power can for instance be compensated for by non-market forms of cooperation which ensure that needs are met or goals achieved anyway.

The problem with most economic theory is that it has a very caricatured picture of markets and market functioning, as businessmen well know, insofar as they have to operate (in) those markets and engage in various cooperative strategies, in order to effect or persuade a transaction or sale. Market cooperation is usually impossible without non-market cooperation, or at least presupposes that non-market cooperation will occur. The real world of market trade rarely conforms to the theoretical idealisation of how it occurs, as shown by historical, anthropological, political, cultural and archaeological studies. This is possible, because it is unnecessary to understand much about markets in order to participate in them, and it is unnecessary to have a fully correct perception of what the self-interest or shared interest in a transaction is, or indeed to have perfect information. In fact, much market trade relies on market deception, in which self-interest masquerades as shared interest. People are also willing to trade on the basis of a false perception of trading advantage. 

Nevertheless there are also clearly articulated notions of fair trade. See, for example, Americo Beviglia Zampetti, Fairness in the World Economy: US Perspectives on International Trade Relations. Edward Elgar Publishing, 2006. 

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