Re: [OPE] Why Markets Fail

From: <>
Date: Tue Nov 11 2008 - 21:26:55 EST

Hi Anders and all,

> If one is giving a speech these days one have to stress:
> a) Markets are unstable and cannot be left alone. Without
> *democratic* regulation, i.e. social, political, normative - markets
> create negative social consequences and are obviously inferior to a
> "reasonable" way of doing things.

I understand what you mean, but what you say implies that regulation can
prevent markets from creating negative social consequences. What has to be
said imo is that markets are in themselves socially negative, because they
are based on the exploitation of the workers' labor and so on. For the
same reason there is no *democratic regulation* of the markets possible,
unless one maintains that *less* exploitation of one part of the *demo" by
the other part of it can be *demo*cratic. And more: one has to say that no
regulation will ever prevent industrial and financial crises from
Although it may look radical, what one must say is that only the abolition
of the market and of private property, i.e., socialism, can solve the
social problems, the problems of the people and of the workers. If
Marxists don't say it, who will say it? And how will people know?
Finally, only the crises, economic and political, make visible the
contradictions of the society and thus open the eyes of the common people,
in particular of the workers, to the need for a radical change. The
transition to socialism will only be possible after a crisis so deep of
the capitalist economy and society, that an institutional revolution will
look inevitable. Thus, it doesn't seem reasonable to contribute to the
prevention or to the mitigation of the crises, because this only
contributes to the maintenance of the political passivity of the workers
and consequently to the maintenance of the power of the market. For two
thirds of the world population, including a part of the population of the
advanced capitalist countries, there is hardly any difference between a
regulated and an unregulated market.

> d) Strong unions is one of the best ways of keeping business
> "decent". That is the "Darwinian" hand that weeds out obscene
> bonuses, fraud, cheating on product quality etc. etc. Strong unions
> in keeping pressure on a social democratic party in power is the best
> variety of capitalism, and only varieties of capitalism are on the
> real political agenda - regrettably.

I think one must say that there is no good variety of capitalism. Strong
unions that don't fight for socialism are not good unions, they contribute
to maintain the exploitation of the workers, even if a *smaller*
exploitation. I believe that there are only varieties of capitalism on the
agenda because, among other reasons, there are few socialists left. But
this will not last forever. The ones that are still there have to keep
speaking for socialism, that is the only reason for them to exist. If not,
what is the reason to be a socialist?
What is a social democratic party that sustains capitalism? It is a party
of the capitalist class. A party of the working class would not sustain
capitalism, but fight for socialism. A social democratic party aims at
hiding the class contradictions, preventing them from being seen,
maintaining the political passivity of the working class, sustaining the
*democratic* exploitation of the workers and repressing the *leftist

Claus Germer.

> e) International regulation of capital is necessary, tax exchanges on
> the stock markets (London has a small tax - increase it tenfold!)
> Only one trading day on the stock exchange per month! Continuos
> trading has nothing to do with changes in underlying long-term
> productive realities! No tax heavens - send the marines to topple the
> "financial" terrorist regimes.
> f) Market failure is a ridiculous concept! One can talk about systems
> failure, the dire consequences of *not* properly regulating
> fundamentally *unstable* markets etc. but not market failure!
> ... and so on ;-)
> Shooting from the hip...
> Anders
> At 18:43 11.11.2008, you wrote:
>>Markets fail for many reasons. With all the attention to the current
>>financial crisis, the time has come to look at another part of
>>market failure -- the reluctance to invest in long-lived plant and
>>equipment. I'm not merely thinking about the deindustrialization of
>>the US economy, but a more general reluctance.
>>The commitment of funds for fixed capital entails taking a risk. In
>>the words of John Hicks, one of the earliest economists to win a
>>so-called Nobel Prize, pointed to the obvious problem: "an
>>entrepreneur by investing in fixed capital gives hostages to the
>>future" (Hicks 1932, p. 183). Unfortunately, neither Hicks nor
>>virtually any other economist has explored this fear of investment.
>>The most popular response to this reluctance to invest came from a
>>very conservative Austrian economist, who once served as a socialist
>>minister of finance, before landing at Harvard. Joseph Schumpeter
>>was indeed one of the giants of 20th century economics. Here his
>>reputation to his personal brilliance, as well as a willingness to
>>learn from Karl Marx.
>>I have attached the rest of the piece as a pdf at
>>It was written to help me focus my thoughts for my talk in San
>>Francisco tomorrow. Any comments will be appreciated.
>>Michael Perelman
>>Economics Department
>>California State University
>>michael at
>>Chico, CA 95929
>>fax 530-898-5901
>>ope mailing list
> _______________________________________________
> ope mailing list

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Received on Tue Nov 11 21:45:23 2008

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