This comment was posted on the blog late yesterday by someone called Ed Seedhouse, who I do not know, but it seemed too good not to share:
We seem to need gods. As the old ones lose their credibility it seems we must substitute new ones to replace them — and if you are an economist the name of that god is often “free market”.
I am a fan of markets. I think they are a great invention, of the order of alphabets or wheels.
But markets are not gods. And when you make them into gods disaster is pretty well sure to follow. As we have seen.
As for “free” markets, there is no freedom except within limitations. If we want to play a game the first thing we must do is invent some rules we agree to follow. Otherwise we can't play a game we will all enjoy. If I play chess I am free to chose whatever move I like, so long as I make a move that is allowed by the rules of chess. If I make a rule that isn't allowed in those rules we're not playing chess anymore. It is the rules of chess that make me free to play it.
So “free” markets aren't actually markets any more. Without an agreed set of rules for the game “market” there is no market. And the set of rules we use for markets is called “regulations”.
So, if someone is for lifting the “burden” of regulations on markets I ask, “well, would you support the deregulation of football”? Let the players do what they want, let the “free marked” rule the game of football. After all, if “free” markets are self regulating, then so should games such as football be self regulating, surely. So, let's deregulate football. Let the players do whatever they want. And what could possibly go wrong with that?
Nothing at all, obviously.......
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If you want a good sporting analogy in support of market regulation then I would offer Rugby as the example.
Rugby has its own problems like every sport but the Ref is the boss. He has huge responsibilities for safety and fair play in this rough and tumble game. He is called ‘Sir’ and even he is only 4 feet tall, the game has no problem with him putting a nearly seven foot tall, 4 foot wide second row bang to rights when the rules have been flouted. And the second row does as he is told because that is what is expected.
One of my dreams is that Nigel Qwens becomes the regulator for the City one day and puts that lot bang to rights.
And I do look forward to the day when players also call the ref ‘Miss’.
Thank you Mr Seedhouse for making the telling link to complexity made between “regulation” and a functioning “market”. Think of transport or communications with no regulations; for example, for the safety of the airways used by airlines and planemakers; or access to landing rights at airports; the standards required ‘across-the-board’ (from safety to emissions) in the construction of a motor car; or international agreements required for satellite launches; or the network allocations of spectrum in telecommunications even to produce a “market” in cell-phones.
A “free market” is merely a piece of political theology, with no referent. The questions we need to ask are less, how “free” is the market; but what are the (inevitable) regulations for? Who do they serve? Why are they there? These are the real questions because, as was said yesterday on another thread: reality is a “regulated market economy” of one kind or another.
If I may say, Mr Seedhouse’s comment was also an elegant and thoughtful demonstration of the un-ideological ‘use’ of philosophy in economics, with a quiet nod towards (late) Wittgenstein.
Agree with all that
I like the questions in your second para
I recall in Lord Clarke’s “Civilisation” years ago, he quoted Spinoza saying most people worship the gods of the tribe and gods of the market place.
I thought about the Americans (especially the politically active) at present who are up in arms over the NFL kneeling protest while the national anthem is played yet they ignore the reason for the protests. Also the way that Republicans who flaunt their Christianity at election time, vote to take away health insurance form millions of the poorest. Do they ever read the parable of the Samaritan or Matthew 25?
The real God gets lost so easily.
Ian if you like a good parable try this one as apposite to current economic conditions.
Matthew 18:23-34
Particularly poignant I find when my best offer of a loan is at 49.9% (and they aren’t justifiably charging for ‘risk’ because they also insist on a guarantor)
Risk which exists only on paper because, as the banks themselves reliably inform us, they never had the money they’re lending in the first place. So, then, no opportunity cost and no actual risk. Why any interest at all, then, and not simply a flat creation fee to cover overheads?
Andy It is very good. Cause an economic crisis, no one goes to jail, then insist that the loans made necessary by the fall in business activity are all paid even if it means taking resources from the poor to pay for it.
We hope for an afterlife with justice, but…
It’s not that I don’t trust God to deliver, it’s more that I would like to see Him not have to bother. I want justice here in this world.
The sport analogy is completely the wrong way round. The games all existed long before rules were codified and constantly evolve anyway.
And if I want to organise a game of football with rush-back goalies or no goalies or free-kicks instead of throw-ins then I am free to do so among people who agree to the changed rules.
You seem obsessed with the idea that nothing can happen without rules being imposed on it first. Rules which you would like to create.
Luckily for the rest of us you are completely wrong.
Ursula
I must agree with you. The games dd exist, in many and very different forms, before the rules were codified. But they weren’t the same game as a result.
And it’s true markets did exist before there were rules. And to be candid, that’s why they were not much use and feudal society had relatively little use for them, for example. The reason was obvious: outside ytour own village you had no idea who you could trust and what the rules were.
So it’s true we can all agree our own rules and play by our games. But the condition is markets cease to function in any way that we now know because no one will have a clue about what they’re buying, and if it’s safe. So the risk premium will be so big no one will buy. Or in other words, the game will be fundamentally different.
But, I stress, you”re right. You can make your own rules. But not if you want the world to work in a way where markets have any significant role at all. Because in that world everyone has to know the rules without asking all the time because we just don’t have the time or energy to do that. Nor the resources. But in your fantasy that’s what we’d be doing.
And just as in sport there’d be nothing left to watch we could all agree upon was a game we recognised between teams we knew the same would be true of markets.
Is this mayhem what you really want? Let me know. Because I am agreeing, you could have it as long as you accept the consequences to the economy, which would be staggering in their scale.
Ursula,
If you would like to see your scenario of free markets in sport played out in real time you could witness it over the Easter weekend in Workington, West Cumbria as the traditional ‘Uppies and Downies’ ball game is played out over three(?) evenings.
Rules: A ball. (Specially made according to ancient traditional recipe) . Two teams. A goal at each end of the town, a mile or so apart. End of. No pitch definition, no team colours, no other rules. A maverick third team could, in theory pinch the ball, and take it elsewhere, but I’m not aware of this ever having happened. (One of the parachute regiments might get away with it, but a standby helicopter back-up would be advisable and research as to what might be an appropriate team size)
It is emphatically not a safe player or spectator environment.
You might find a traditional ‘game’ of similar nature closer to home. There are a few extant.
But the point is that this a neo-feudal game and so would be economy based on it be of this form
I think you’ll find there’s a hidden rule these locals have to carry on living with each other after the game!
“The sport analogy is completely the wrong way round. The games all existed long before rules were codified and constantly evolve anyway.”
Actually, I think you have the argument the wrong way round. “Codification” is a word that you introduced. The argument did not depend on codification (this is not a case of “Post hoc, ergo propter hoc”). It is true that in most large economic examples the rules are ‘codified’, but that rather misses the point (certainly Wittgenstein’s point).
In order to have a game, there must be a set of rules (whether they may change or evolve or be on a public scale requiring codification, is beside the point); there must be some set of understood rules at least by everyone playing, or there is no game. Wittgenstein wrote about ‘games’ (what made a game?) in the ‘Philosophical Investigations’ to inform an argment about the nature of language itself; it was the very fluidity of the nature of games, within a set of rules, that gave Wittgenstein his insight into the nature of language; language did not follow the strict logical atomism of contemporary philosophy, but was a dynamic rule-dependent process that used fluid ‘family resemblances’ in order for language to work; the “complicated network of similarities overlapping and criss-crossing: sometimes overall similarities, sometimes similarities of detail” (Philosophical Investigations, I, p.33).
John,
if you can make of sense of brother Ludwig I take my hat off to you.
Very interesting man though. Have you read ‘The Jew of LInz’?
My theory is that he made his philosophical works deliberately abstruse in order that no-one could remove him from his post because his ideas were unchallengeable (He would be safe from me anyway) so he could carry on with his ‘real’ mission.
Just because a rule is not “codified” doesn’t mean it doesn’t exist. As a kid I played “cowboys and indians” a game with no codified rules, but still with many of them. And since they weren’t codified much of the game time was spent arguing about what the rules were. “You’re dead” “No, you’re dead!” and so on and on.
Of course once the rules are codified we still argue about them, try to find ways around them, look for loopholes in the rules – which are always there. Thus the need for referees and arbiters.
But unless the players agree what the rules of the game are, there is no game. If I have one set of rules and you have another and we try to play a game it will fail because, actually, we are playing separate games.
Whether they are officially codified in writing or not, rules there are and there is no game without them. At the base there are the “laws” of physics which are the same for everyone. Thus the the game “universe”, as a whole, runs pretty smoothly.
I refer you to the art of Barbra Kruger – unfortunately I cannot post as a graphic…
http://www.barbarakruger.com/art/allegience.jpg
One of my Elizabethan ancestors was an aleconder, so years ago I spent many happy hours researching the regulations relating to the production and sale of beer, grain, bread and herrings (!). Even 500 years ago, there was no such thing as a completely “free” market – and I suspect there hadn’t been for decades or centuries before that. All the stakeholders wanted to protect their own livelihoods.
There never was a purely “free” market in the sense of one that has no rules. For the universe itself imposes rules upon us, the laws of physics and chemistry to cite only a set of “rules” that we understand pretty well.
When these people drone on about ‘free markets’, it’s done to keep this vague notion at the forefront of political and economic discourse. This is to further their permanent revolution of marketisation, from which there can be no turning back. Everything to be bought and sold and political power to be deployed to allow the rentiers and the monopolists to hoover up public funds.
Libertarianism must be the most dishonest political philosophy that has ever existed since…well…Burkean conservatism!
The problem with “free-marketeers” or Neo-Liberals is their self-interest over-rides their ability to see that Individualism always has to operate within a context of Mutualism. This is Nature’s way which is not a Hobbesian, Social Darwinist or a Selfish-Genes one:-
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3471369/
Well thank you Richard. I wish I had made fewer spelling errors.
I am “just this guy, you know?”. A layman, no degrees, retired from a public library where I tried to convince the computer system that *I* was running *it*, dammit! That is, I talked myself into a job doing I.T. support.
Upon retirement I found a website or three that talked about “Modern Monetary Theory”, which had some ideas that fit in with my earlier ones so I started reading and thinking about it. I guess if I am anything I am a “homespun philosopher” at best. I did spend most of my adult life reading a lot of books, thus my happiness to work in a Library. As well as reading lots of books I also spent a fair amount of my time thinking about them.
That does for me!
And I might add that I am chuffed and honoured to have my comment elevated to a post. Can fame and fortune be far behind?
But then it’s a burden, too. If I am to run the risk of having my comments so elevated I’m gonna’ have to clean up my spelling and grammar, ain’t I?
Yeh
But seriously, thanks
I am reminded of the suggestion (I can’t remember who said it) that there is no such thing as “de-regulation”. It is actually re-regulation. A changing of regulations to suit one particular group or set of interest groups.
If you don’t believe that just go and have a look at some of the so-called “de-regulation” legislation and how many thousands of pages of new regulations it has in it. “Free market” and “de-regulation” are just dishonest euphemisms that are intended to create a semantic illusion of greater choice.
Similarly there is no such thing as “free trade”. “Free Trade Agreements” also have thousands of pages of restrictive regulations and should be known by their former and correct title: Preferential Trade Agreement.
Like Ed, I play chess. A few weeks ago I was facing defeat, again, and mused on the outcome of the game if my queen could move like a knight as well as a bishop and rook. At a stroke I could have turned the tables on my opponent, but only if he was barred from using the same extended rule. Of course, he wouldn’t. At least he wouldn’t unless the additional queen functionality was dependent on having more pieces on the board than one’s opponent.
It seems to me, that the free market is free, but only if you have the power to move said market. In my youth I dabbled in the commodities market, and achieved a small return over an extended period that required me to keep my eyes glued to a computer screen for endless hours each day. Apparently, only a few percent of traders make a positive return, and in a moment of clarity I realised that it was the 95% of traders who did not win that funded the wins of the other 5%.
The rules of chess have evolved, but in order for the game to be playable, there is a generally accepted consensus on the rules of play by all chess players. The issue with the free market, is the bigger players can manipulate the rules (because they can) whilst the rest of us are singing from less advantaged hymn sheets. In fact, surely that’s how they make their money?
We have a long way to go before our political leaders are seen to be dealing with this imbalance, but I am cheered by the slogan of the present opposition party that chants “For the many not the few”.
It’s worth reading Ivan Horrocks on Progressive Pulse around these power themes Bob
I’ve listened to May’s speech again and I’m more baffled than ever. Apart from the fact that we don’t have free markets (and haven’t for centuries) and I’m not aware of evidence that complete free markets would benefit the majority, I don’t even know what she was saying (not for the first time). I did listen very carefully, but May didn’t say what kind of free markets she meant. Does she expect UK exporters to hawk their wares to the highest bidder? Does she envisage a kind of Wild West marketplace with no price or quality regulations? Correct me if I’m wrong, but I thought the US is the UK’s biggest single export market and Trump has declared more protectionism. Many of those who voted Brexit objected to their jobs being “stolen” and markets being flooded with cheap imports, both of which are a result of free trade. Does this speech have anything to do with the launch of the Institute of Free Trade? The Sun claims that the IFT will aim to cut prices and boost growth. Hmmm! It all sounds like a plan to soften us up. Could somebody explain how free trade (even in theory) would cut prices and boost growth? I know the abolition of the Corn Laws in the nineteenth century cut prices (for some) and boosted growth (for some), but the rural poor became even poorer and cheap imports weren’t by any means the only factor in late nineteenth century growth – for a start, the UK had an Empire. So what does May have in mind?
I wish I knew
I am sure she does not on this occassion
Well that’s not surprising .
She doesn’t write her own scripts – she just performs them like an actor delivering lines.
If she understood what she was saying it would sound less like garbage and more like nonsense.
If you see what I mean.
‘That that is is.’ Can make sense or not depending how you say it.