Peter Hume

I agree with a lot of your points.

I agree that market failure doesn’t mean that people don’t choose to buy and sell things.

I agree that market failure doesn’t necessitate government intervention. Sometimes, the problem is too small, or intractable, or the cost of government failure exceed the risk of market failure.

Like you, I’m no fan of subsidies and business welfare or politically driven market interventions.

I disagree that the definitions of “market failure” and “public good” are subjective, probably because I approach these issues as an economist. Economics has quite clear ideas about what causes market failures – natural monopoly, externalities, information imbalances etc. It also has a fairly clear definition of a “public good” – non-excludable and non-rivalrous (e.g. free to air TV) – though in practice excludability in particular tends to be a matter of degree not absolute.

I agree, though, that there is no clear or common definition of “collective need”. That’s negotiated through the political process, and we have to argue it out.

The evidence for support of the mixed economy is that this is what the overwhelming majority of Australians vote for at elections, while the Marxists, libertarians etc tend to attract a small proportion of votes. Plus, almost all mainstream political discourse seems to me to sit between the extremes.

Your argument from indoctrination seems to contradict your position elsewhere that supports individuals’ right to choose their own paths.

A few footnotes on the article, which I enjoyed:

Because something is a public good does not mean that it must be supplied by government, or that it will not be supplied by the private sector. Free-to-air TV makes a profit not by selling programs to viewers, but by selling audiences to advertisers. However, a public good may not be supplied at an efficient level by the market alone. We might get private roads, lighthouses, police forces and charities, but the misalignment of costs and benefits means that there is a much greater likelihood of the market under-supplying such services compared to conventional goods like bread and televisions.

Peter the Profit tells us many things. He enjoys word-games too! And he seems to be rather hot for capitalism.

Of course, most people are. After all, they've been indoctrinated from birth to think that more is better, that one's life can be measured in dollars. I suppose that makes Rupert Murdoch an outstanding human being, Kerry Packer too!

It's funny how we value human beings. But it's not funny how corporations value human beings (their value is based upon how much money each human can make for the corporations and the shareholders).

Are humans simply economic units on two legs? Or do we actually have other potentials, other creative talents?

http://www.dangerouscreation.com

*But it's not funny how corporations value human beings (their value is based upon how much money each human can make for the corporations and the shareholders).*

David G, I think you misunderstand the role of corporations, so
let me ask you a question. If your bank took some money out
of your account and gave it away for what they thought was a good
cause, what would be your reaction?

Most people would protest loudly and demand their money back
from the bank.

Yet for some reason you seem to think that this is what corporations
should do, if a shareholder entrusts their hard earned savings
with a company.

David f
> Socialism implies neither government ownership nor a command economy.

Agreed.

> It means ownership in common.

Agreed.

The crucial distinction is between coercive or voluntary socialism. Examples of voluntary socialism would be monasteries, communes, kibbutzim and voluntary co-operatives. I have no problems with voluntary socialism if people want to do it and don’t impose it on others.

There is nothing stopping producers from forming co-operatives voluntarily. If the public prefer their products, a co-operative will thrive.

But historically, producers’ co-operatives have only rarely been able to withstand market competition. This is the same as saying that the masses prefer the products, prices and ultimately the internal policies of the competition. If it were true that co-operatives work very well, then there would be no need for government to prop them up against their competition. The fact that coercion is necessary to override the choices that the people would make in the absence of the coercion, demonstrates that the people do not in fact prefer such co-operatives.

Consumers don’t need to own a business to determine its policies. As a group, the consumers as a class – almost all of whom are the workers - exercise sovereign direction over production through their behaviour in buying or abstaining from buying. Businesses which do not satisfy their consumers’ demands suffer losses and go out backwards. Their assets are transferred by the market into the hands of entrepreneurs who are able and willing to provide satisfaction of their demands. Businesses which makes profits demonstrate thereby that the consumers place a higher value on the finished product than they place on the alternative uses to which the factors of production could have been put.

All government economic interventions amount to diverting the factors of production to uses which the masses, in their capacity as consumers, consider to be of lower value. Wealth comes not only from increasing income; it’s also from reducing expenses. This means that the masses, in their capacity as producers, gain less from co-operatives than they lose in their capacity as consumers.

Pelican
Economics does occur naturally, because nature imposes certain limitations on human action - for example our time is limited and resources are scarce. And these limitations have logical consequences which
a) can be known, and
b) cannot be evaded.

We can’t just make up whatever economic reality we like, no matter how many people vote for it.

That’s why not even the communists claim that communism has ever really existed; and it’s why private property has arisen in every human society. Sarcasm, telling me what I want or think, accusing me of bad faith, or calling me ‘recalcitrant’ – these are all personal and irrelevant.

The basic economic problem is that human life and society take place in conditions of scarcity. There is a need to make choices so as to devote resources to the uses that will satisfy the most urgent or important wants. This problem underlies all economic activity by anyone. It is not a matter of “ideology”, and the problem can’t be made to go away by vesting ownership of resources in the public.

Marx actually claimed that socialism would make society more physically productive as well as fairer but nowadays not even the socialists claim that socialism will make society more physically productive, since both theory and practice have proved the claim to be laughable.

The idea that private property is “exploitative” comes from Marx’s theory, according to which, the value of everything is just an embodiment of all the labour that has gone into it. According to this theory, if you take two hours to produce something, and I take one hour to produce the same thing, your product is worth twice as much as mine. And if the theory was true, the value of a Van Gogh painting would remain as it was when the artist completed his work on it.
No business would ever suffer a loss. If you kicked up a one-kilogram gold nugget while going for a walk, the value of the gold would be the value of the labour that went into finding it: - nothing.

(cont.)

The labour theory of value is simply wrong. And that theory is the basis of the socialist belief that capitalism is exploitative.

In fact, the worker gets paid now for a product that may not actually bring in any income for years. And the worker doesn’t undertake the risk: - if the product fails to sell, he doesn’t pay his wages back. The entrepreneur, by contrast, undertakes the risk of failure, and has to wait for payment during the period of production. If I offer you $1000 now or $1000 in 5 years, which do you choose? Present goods are universally worth more than same future goods. That is why the worker gets less earlier in time than the total value of the final product later in time. The capitalist gets something a) for risk, b) for delayed grat, and c) for correctly predicting the future state of the market - *if indeed he gets anything at all!*.

Marx was wrong. Employment, being mutually beneficial, is not exploitative.

Mikk
There are three major problems with that:
1. You have not ventured to define which private property is to be permitted, and which not; and no wonder
2. Public property would entail the same exclusivity and therefore would be no improvement on the original problem
3. If we apply the same standard consistently to both public and private property, then no-one would have the right of exclusive usage of resources and the result would the immediate death by starvation of literally thousands of millions of people.

David G
Passionate indignation and personal argumentatin does not make communism ethical or practical.

Rhian
Since perfection is not an option in any case, it is unfair to hold against private ownership that it is not “efficient” by reference to an abstract standard involving perfection. Public ownership is no better position to satisfy the same standard, or rationalise the same scarcity when all costs are considered.

All
No-one has shown how common ownership or control is going to be any improvement on any of the problems discussed.