Date: Tue, 17 Jan 1995 01:43:41 +0500 (EST) From: Mike Goldman <damon-AT-telerama.lm.com> Subject: Re: Absolutes/ efficiency On Mon, 16 Jan 1995, Ron Press wrote: > However could the efficiency of the market be assessed ( at a > particular time, in a rough sort of way, relative and randomly varying > but between limits), by a consensus of the majority. I suppose this is as good a time to make an introduction to this list as ever. Hi. Some of you may know me from my occasional postings on LEFT-L. I am not a Marxist, but I am interested in Marxism and related economic philosophies, and how the perceptions of practitioners of such may view issues which I consider important. For a start, this message brought to mind many of my objections to Neoclassical Economics (NCE) and its tremendous emphasis upon "efficient" markets. NCE attempts to be a "value-free" economics, it tries to analyze the consequences of economic policies and decisions in terms of their effectiveness in achieving the desired goals with a minimum amount of undesired consequences. But economics, like any study of human action, cannot be a value-free discipline. Any discussion of "efficiency" which does not consider the perspective of all market participants is a false efficiency, it is more properly expediency. NCE then is the economics of expediency, and its originators and practitioners have never been above expediency in defining their premises in order to achieve their desired conclusions. And this may even be more fundamental. For any scientist knows that if you know what you want your results to be, and structure the experiment so as to achieve them, the value of the whole exercise is absent. Let me demonstrate how NCE *could* have been used had it been originated just a century before, before proceeding to apply it in its own context. Southern plantations require large amounts of labor to pick cotton, for this they employ slaves. Interference with the slave trade, then, would create market inefficiencies which would in turn raise the costs of cotton production, and consequently all products based on cotton, and in turn rebounding in increased costs and inefficiency throughout the market. The fallacy inherent in this argument, but hidden from perspective, is the treatment of the slave as a commodity, as a capital, possessing no value but what he can produce for his master. Inefficiency of the marketplace herein is only an inconvenience to those who happen to be fortunate enough not to be enslaved, those on the other end of the whip would have an entirely different view. But NCE did not treat slavery, as it was not created until after this practice had been abolished from civilized nations like the United States and Great Britain, from which its promoters came. Rather, the central concern of their day was the land question, particularly in Ireland and many cities on the other side of the pond. Land reformers came in various stripes, proposing various remedies. I have made it quite clear in my postings that I hold most closely with the American economist of that day, Henry George, though I refrain from calling myself a Georgist (as there remain some significant differences upon which I need not dwell here.) George was particularly influential in this issue, his book "Progress and Poverty" being the most widely read economic text of the time, and his adherents were a strong political force. Against these, then, were the proponents of NCE arrayed. Just as in my above analogy, where slaves were treated as a capital commodity, as though this were a value-less judgment without consequence, the NCEists in the early part of this century defined land as a capital commodity. The argument went something like this: Because productive effort created wealth, and because that wealth was *invested in* land, land became consequently a store of capital wealth. This transubstantiation of capital could have been applied as readily to the purchase of slaves, but such a *reductio ad absurdam* would have invalidated their standing with the public, and so it was never discussed. By treating land as a form of capital, then, and applying the doctrine of efficiency, private, unfettered ownership of land was promoted as the solution which would maximize benefits to the public. But of course, this conclusion could only apply to the landowning public, and at that, only those who possessed the largest amounts of land, just as the largest slaveowners were the greatest beneficiaries of slavery. I am interested, however, not merely in "knocking down" others, my objective is not simply to invalidate NCE, but to promote economic dialogue which is genuinely productive. In that spirit, I would like to suggest that the best results can be obtained by a scientific method, by adopting only those premises which are real and meaningful, with no reification of concepts like "capital", except as a conclusion to be established by strict adherence to logical reasoning from earlier fundamental premises. Premises must be checked, and checked again, from every possible perspective, to reveal unintended bias. And our conclusions should follow only as the premises permit, there should be no fitting of facts to agree with a predetermined outcome. If such a conversation would be unwelcome on this conference, or if a more appropriate forum might be suggested, I am quite willing to remove it. But I have a particular interest in hearing these things discussed from a perspective different from my own background, which, as I have previously said on LEFT-L and elsewhere, was originally Right-libertarian. I have come to the Left by choice and by conviction, because I could not reconcile my conclusions with the ideology of those who favor liberty without questioning institutional factors, just as I cannot accept the notion of efficiency which disregards those same factors. In conclusion, I believe that efficiency and liberty are each good things, but they are not unmitigatedly so. If all institutional factors were eliminated, if all our premises were in harmony with nature rather than privilege, then we should ask for liberty, and efficiency, as much as we can have. But let us not demand either exclusive of demanding the abolition of privilege. -- Mike Goldman <damon-AT-telerama.lm.com> and <A HREF="http://www.lm.com/~damon/"> "Nor will it invalidate his right [to land], to say every body else has an equal title to it; and therefore he cannot appropriate, he cannot inclose, without the consent of all his fellow-commoners, all mankind." -- John Locke, Second Treatise of Government ------------------
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