cj#810> What Happens When Market Forces Get Out of Control


Richard Moore

Dear cj,

I can't quite tell who is commenting on whom, as the following piece rolls
along, but it's good to see some common sense thinking about economics, and
propaganda-economics.  (Is there a difference?)

At the end, Ed asks:
  >How many more years will the world have to put up with this academic
  >ignorance of the obvious and well proven?

If we wait for academia to wise up, we'll fall off the edge of the Earth
before things change...  if we decide to _do something about it, well
that's a different matter altogether!

all the best,

To: •••@••.•••
From: Ed Deak <•••@••.•••>
Subject: Re: What Happens When Market Forces Get Out of Control ???
Date: Sun, 2 Aug 1998

--<fwd message follows>---
Date: Sat, 01 Aug 1998
To: MichaelP <•••@••.•••>
From: Ed Deak <•••@••.•••>
Subject: Re: What Happens When Market Forces Get Out of Control ???
Cc: •••@••.•••

At 05:48 PM 27/07/98 -0700, Michael P. forwarded:

Paris July 14, 1998

What Happens When Market Forces Get Out of Control

By William Pfaff, Los Angeles Times Syndicate

PARIS - The Asian financial crisis is now a year old. Its origin in the
globalization of the Asian economies, opening fragile societies to
powerful, intrusive and exploitative foreign forces, has yet to be
addressed in the public debate.

Today's dominant economic and trade doctrines rule out an interpretation
of the crisis that puts part of the blame on the effects of the ideology
of globalized markets.

However, the intellectual challenge to these doctrines dictating Western
policies on trade and development is becoming more formidable and includes
two important books published in recent weeks. These are Robert U. Ayres's
''Turning Point: The End of the Growth Paradigm'' and John Gray's ''False
Dawn: The Delusions of Global Capitalism.''

Mr. Ayres is an American professor of economics and holder of the Sandoz
chair in management and environment at the European Business School,
INSEAD, at Fontainebleau in France; formerly he was a colleague of mine at
the Hudson Institute in the United States, where he was engaged in
technological forecasting. Mr. Gray is a professor of politics at Oxford
University and fellow of Jesus College.

Mr. Ayres's book is particularly interesting because it is the result of a
conversion. A scientist by temperament as well as training, he was once a
formidable critic of the neo-Malthusianism of the Club of Rome, and of
some of the other ephemerally fashionable ''futurist'' notions of the
1960s. In recent years he has come increasingly to question the prevailing
opinion on growth and trade because of what he calls mounting evidence
that growth ''as currently defined and measured'' is benefiting only a
relatively small number of those alive today, while producing increasing
social as well as environmental costs, even in the richest countries.
 From Ed: This is true, but with the best of intentions, Ayres contradicts
 it with his own later statements on "economies of scale...........etc.
He considers trade a constructive force between nations at roughly the
same level of development, although he remarks that today's conventional
trade policy is ''at one level ... the victory of an academic theory over
common sense.''

As for trade between developed and underdeveloped countries, he notes that
''unskilled labor is no longer a significant advantage'' for the latter,
''at least in manufacturing and information-based service industries that
produce exportable products.

''With economies of scale on their side, not to mention technology,
advanced countries now have an overwhelming competitive advantage against
producers in poor countries with undeveloped domestic markets, unstable
governments and primitive infrastructure.''
From Ed: Ayres has the drift, realizes that something is wrong, but doesn't
seem to be able to shed his neoclassical dogmas. His earlier statements
cancel out any benefits from this claim of "economies of scale...etc." and
vice versa.

Competitive advantage doesn't exist. It is an erroneous, or fraudulent
temporary state. Something like drug induced euphoria with the inevitable

There's no math, or science that could support the nonsense of neoclassical
economics, the supremacy of the market, globalization, monetary competition,
etc. These are all phoney concepts based on distorted figures and stats.
E.g. they always count alleged benefits, without accounting for the
liabilities. What these 2 books are finally beginning to do is to start
questioning this fraud, albeit still with reserved rationalizations.

If the victory of the so called "fittest" would be a desirable state of
affairs, we should let our gardens grow over with weeds and out bodies with
cancers. There's virtually nothing good, creative, or worthwhile that can
come out of a competitive economy.

In short: The theories supporting competitive economies are suicide notes.

All evolutionary systems seek balance and develop automatic mechanisms to
regain balance under any circumstances, eliminating the elements, or sectors
that caused the imbalance. This means the natural, automatic elimination of
competition and/or limitless growth.

Competitive systems, either in ecology or economy are not the result of
natural evolution, but of artificially induced energy inputs to create
imbalance for the purpose of the temporary self gratification of certain

Inequilibrium is neither a sustainable, or a logical state, as it always
fails. Anybody who believes in economic systems based on "competitive
advantage", or the stupidest buzz of them all, "competitive equilibrium" is
sadly mistaken. There are no excuses, logic or proven facts for the teaching
of these childish superstitions, yet virtually all economics departments are
hooked on it, or are forced to teach it.

In ecological systems the search for balance and energy efficiency has been
mistaken, misunderstood and mistaught as the "survival of the fittest",
which in economics means the largest and fastest growing. But, in reality
who are the fittest and who decides the paradigms? Weeds and cancers,
because they grow fast?

What economists often mistake for the "suvival of the fittest" is the
temporary existence/dominance of certain species. It is not the so called
"fittest" who survive for the long haul, but the energy efficient. This is
why ecological systems always destroy the competitive, destructive elements
to conserve energy.

In a fight between systems the "fittest, or rather the strongest" may
destroy the "energy efficient" system through excess energy inputs, but then
they destroy themselves when they run out of the potential to feed their own
constantly growing energy demands. This leaves nothing on either side.

This is going on now in the industrialized countries to gain "competitive
advantage" to benefit a few, while the inevitable reactions destroy the
system itself. The worthwhile is destroyed by the worthless and nothing is
left except destitution and misery. This has been repeated, proven and
experiences thousands of times throughout history. It is not history that is
cyclical, but human stupidity that repeats the same errors, cloaking new,
brainded theories under the guise of faith.

Imports and exports of certain resources are necessary at the lowest
possible levels of equal energy amounts given and received.
Export/import/profit based economies are overcapitalized, over energized
death traps that must and always will destroy efficient economies both at
home and abroad.

"Economics of scale" is a nonsensical concept without the definition of the
efficient size of the scale, which could be anything, big or small. Again,
going back to ecological examples, all species have their own pre-defined
sizes and numbers. We can't have elephant sized mice, or 747 sized
hummingbirds, or humans as tall as the Eiffel Tower.

We can see what has happened when the falsely used, money/profit based
"economics of scale" increased the sizes of fishing boats, the mining and
logging equipment, whole sectors of formally efficient and productive
industries, now nothing more than the wasters of resources to produce
garbage, not to mention the nuclear arsenals of the competitive powers.

Trade has nothing to do with money, competition or profits, because the
minute profits enter the picture they create an inflationary spiral.

What our clever professors are not able to come to grips with is the simple
fact that: Poverty and environmental degradation are caused by transferred,
inflated, monetary costs. Poverty and environmental damage are the results
of unaccounted, unreported inflation, where the "licence to control energy",
which may be the divine rights of aristocracies, or mighty armies, or in our
case fiduciary capital, deprive sectors of the means of survival and
transfer the resources to other sectors. Again, this is a long established
historical fact, except that it is not recognized as inflation.

Profits can not be created. Somebody, or something must pay for them,
resulting in extreme, permanently growing and incurable gaps in resource
control, which means waste at the top levels, destitution for most.

Money is the licence for the temporary control of energy. When the scope of
the licence is unilaterally expanded (inflated), those who control the rate
of the expansion in the form of monetary profits are the sole beneficiaries.
Everybody else suffers, because they have to pay the costs of the expansion.

Neoclassical capitalism is just another form of feudalism and colonialism.

Mr.Ayres is correct in his statement that no real competitive advantage
exists between industrialized and non-industrialized economies, but fails to
carry the ball into it's natural/logical goal by admitting that this also
eliminates any need, or benefit from monetary competition, globalization and
export orientation.

His view of the future for the poor countries is thus sober. The kind of
international market-led development now occurring is, he argues, neither
profitable for them nor economically or ecologically sustainable.
From Ed: Quite correct, but this also wipes out the theory of "economies of
size", as the above shows that it only transfers costs on others.

While the Ayres book is academic in tone, dealing systematically with
issues of trade, environment and growth, Mr. Gray's ''False Dawn'' is a
brilliant polemic against what he calls the ''utopian'' effort to create a
global free market. This utopia, he says, can never be realized, and its
pursuit already has produced ''social dislocation and economic and
political instability on a large scale.''

The globalized market, he argues, is the latest and probably the final
utopian project inspired by the 18th century Enlightenment vision of
rationally directed historical progress. It is driven ''by the world's
last great Enlightenment regime,'' the United States. It is yet another
attempt to remake human society, of a kind that earlier in this century
inflicted on mankind the false utopia of a Communist ''universal

Market and Marxist utopias have in common ''their cult of reason and
efficiency, their ignorance of history and their contempt for the ways of
life they consign to poverty or extinction.'' They ''embody the same
rationalist hubris and cultural imperialism that have marked the central
traditionsof Enlightenment thinking throughout its history.''

The globalist project is, he argues, ultimately incompatible with
democracy, and tends to destroy the values and institutions of
middle-class civilization that were responsible for the development of
modern democracy in Europe and North America. He thinks that the project
eventually will fracture and fail, but in doing so will promote
international anarchy.

The ultimate effects of ''the emancipation of market forces from social
and political control,'' he says, will ensure ''that the age of
globalization will be remembered as another turn in the history of

The rather dramatic quotations I have taken from these two books do not do
justice to the subtlety and originality of them both. They are works of
much intelligence, the first essentially scientific in its argument, the
second a work of impassioned intellectual history and political and moral

They contribute to the refutation of an ideology that is as dangerous to
civilized society as the Marxism which was its predecessor and was, in a
perverse way, an intellectual begetter of the market utopianism of our
From Ed: I agree all the way and this also backs up my own statements above.
The long and short of it is that: Costs can not be cut, only transferred.
The purpose of economic theories throughout the ages has always been to
rationalize over the desirability and legality of energy theft by special
interest sectors from others. E.g. Seigneurs' rights, hidalgo, divine
rights, now speculative investments.

How many more years will the world have to put up with this academic
ignorance of the obvious and well proven?

All the very best, Ed  (Ed Deak, Big Lake, BC, Canada)

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