[OPE-L] Marx and markets

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Tue Jan 24 2006 - 17:07:15 EST


Jerry,

Perhaps I expressed myself badly - I meant to suggest that Jenkins might be
attacking Adam Smith's (rather than Marx's) notion of the monopolists
conspiring to rig prices and block competitors - implying thereby that, in
reality, oligopolies do not necessarily stand in the way of product
innovation, so that big business can be good business, progressive, and
indeed egalitarian, to the extent that it provides new products available to
even low-income consumers. Who could have a quarrel with that?

But the dispute in economics as far as I know is not really about that, it
is more about the extent to which new innovations can be *generally applied*
under oligopolistic conditions. In his book about IPS, Michael Perelman for
example suggests that IPS can restrict the general application of
inventions, or at any rate shape the path of technological development in
ways which are hardly desirable. Thus, e.g. in computing, technologically
superior solutions and systems might not become standard, simply because
they conflict with business priorities. A technostructure might thus
develop, in which the use of some technologies is dependent on the use of
other technologies, even although from a technical or social point of view,
better choices could have been made at an earlier stage of design.

Chris Freeman and Fransisco Louca (As Time Goes By, Oxford UP, 2001)
describe in some detail the emergence of the car industry, and comment as
follows:

"Utterback (1993) has shown that the pattern of evolution displayed in the
twentieth century by the US automobile industry was characteristic of
several other industries, both before and since, such as typewriters,
bicycles, sewing machines, televisions, and semi-conductors. An early
radical product innovation leads to many new entrants and to several
competing designs. Process innovations and the scaling up of production then
lead to the emergence of a dominant robust design, the erosion of profit
margins, and a process of mergers and bankruptcies, ending with an
oligopolistic structure of a few firms. Incremental innovations then tend to
prevail in both product and process; 'lock-in' to a dominant paradigm is
regarded simply as 'common sense'." (p. 278-279).

No doubt there are great benefits deriving from e.g. Microsoft applications
being an industry standard, but presumably that is more because it provides
a standard as such, rather than its intrinsic technical superiority (which
many dispute).

To my knowledge, Marx never argued that markets were intrinsically all bad,
that is more a latter-day Marxist idea originating from the Bolshevik
revolution. Such an argument might also lead to the idea we would be better
off with "grow your own" subsistence feudalism and barter, which is
practically impossible in large areas of the world anyway, or to a Luddite
banning of markets. Nor did Marx argue that money is the root of all evil,
or that capitalism is always reactionary, and never progressive.  I take
Marx's argument to be that, in the long run, the growth of market economy
ineluctably leads to its own nemesis, calling new allocative methods into
being to correct the maldistribution of resources that result from market
functioning.

Meantime, market trade might obviously allocate resources well in some
settings, and not in others, but Marx's real critique concerns much more:
*in whose interest* do the markets function anyway? And here, it is typical
of an ideology that it portrays a sectional interest as a general interest
and vice versa, meaning that you have to look at the specifics of markets to
understand the real interests involved. Those that benefit from a market
will defend it, obviously, those that do not, will attack it. A more
balanced view of markets would acknowledge they can create both great
personal freedom and brutal exploitation, i.e. precisely that markets
provide no particular morality of their own, anymore than that they can
cancel out the sectional interests of social classes and nations. I think
this is one reason why modern moral controversy focuses obsessively on the
setting of limits for acceptable behaviour and the imperative of "social
cohesion". The genie has got out of the bottle and cannot get back in.

Jurriaan


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