Reforming state

Economics Economics Questions
1

This is a question I got from a Keynesian professor: Can the power of capital be matched by the power of a reforming state?

This is the explanation of the question from the Professor:
-I am meaning to give capital a general meaning: capital broadly speaking, or when it acts collectively to bring about political pressure of one kind or another. The question taps into the age-old question concerning the capacity of a government to bring about change-assuming that it wanted to do so.
-When I framed the question, I was taking it as given that the students more attracted to the question would be thinking of egalitarian policy regimes. I suppose you could go the other way, but that will make the topic and question lose its edge, as the whole point of the question is whether an egalitarian-focused government would be allowed by capital to ‘get away with it’.

I’m pretty confused at the moment, so any help from an Austrian/libertarian perspective would be great. Also, some useful readings would be awesome!!

2

I am not sure whether you ran that through a translator service, but I can’t understand what he’s asking.

3

I don’t understand the question. What is the power of capital? If you mean productive power then what is a “reforming state” and what does it demand for its egalitarian policies?

4

That’s exactly what I thought when I got the question…Do you think I should just write the essay on the superiority of the private sector over the public sector in generating economic growth etc. ??

5

How can capital act?? I think you need to establish a specific definition of what the question means by ‘capital’ before you can answer it.

If you don’t mind me asking, where are you studying?

6

Is he talking about the Capital?

…or can the power of capital, or the power of the market, be matched by the power of the state, or by the state to reform itself?

Would an egalitarian-focused government be allowed by the market to “get away with it” (whatever “it” is, policy I assume) to do whatever it does?

Not until I know the usage of capital you can’t really answer the question.

7

I take it he’s using “Capital” in the way someone like Marx talks about Capital, ie an organized capitalist class. I’m kinda shocked your economics professor is phrasing it that way, but whatever. I recommend capitalizing the c. Can the power of Capital be matched by the power of a reforming state?

I’m not sure how this can be answered, or rather, how an answer could be anything but meaningless rhetoric. Is this seriously an economics question, or is this for some other class? But taking the question as generously as possible… I still don’t see how to answer. It seems either contradictory or question begging. He assumes that the state is committed to reform, yet asks how Capital can respond. Well… wouldn’t Capital respond by influencing politics? Is he suggesting instead that, faced with the strong arm of the law, capitalists would hire guns to fight back? Would they flee? Is Capital barred by the conditions of the scenario from involving itself in politics (thereby begging the question that the state succeeds, at least legislatively), or is it allowed to do so (thereby contradicting the initial condition and the whole point of the question)?

There’s also a possible contradiction in that, if the state succeeds in its egalitarian program, wouldn’t everyone necessarily be part of Capital? Presumably, capital (stock) itself would be redistributed to all.

8

I think he is deliberately trying to be vague…I am going to use this essay by http://mises.org/rothbard/public.asp (The Fallacy of the Public Sector) to attack the question. I’m thinking he might mean: the power of private entrepreneurs versus the “progressive” state to achieve certain economic objectives e.g. higher economic growth–What does everyone else think? Here are the other question we had to choose from which were just as confusing:

  1. If there are alternative ways of knowing the same thing it is right to choose
    the objective way — measuring is better than guessing. But that is different
    from making objectivity a principle of selection…‛ (Stretton, 1999, p.26). What
    is the role of objective social science in political economy?
  2. The mark of modern-day economic orthodoxy is its extraordinary
    indifference to the concern that earlier economists had with the connection
    between theory and reality‛. Is this an accurate characterisation of the present
    situation?
  3. It is to the politics of heterodox schools of political economic thought that we
    must turn if we are to understand why their ideas were never accepted into
    economic orthodoxy. Discuss with reference to one, or perhaps two (but no
    more than two), heterodox schools of political economy

I study @ UNE. Here are a list of his publications (obiously he is an unabashed social-democrat):

Publications_Authored Books_

Battin, T., Abandoning Keynes: Australia’s Capital Mistake [with a foreword by G.C. Harcourt] (Basingstoke: Macmillan, 1997), 300 pp.

Battin, T., Full Employment: Towards a Just Society, published by the Australian Catholic Social Justice Council, 1997, 48 pp.

Co-edited Book

Battin, T. and G. Maddox (eds), Socialism in Contemporary Australia (Melbourne: Addison Wesley Longman, 1996).

Contributions to Books

Battin, T., ‘The A.L.P. and Social Change: The Vain Hope of Chasing the Middle Ground’ in Whitlam, E.G. et. al. A Century of Social Change: The Centenary Conference of Labor Historians, (Sydney: Pluto Press, 1992), pp. 158-73.

Maddox, G., and T. Battin, ‘Introduction’ in Battin and Maddox (eds), Socialism in Contemporary Australia (1996).

Battin, T., ‘A Political Analysis of Australian Economic Debate: The Role of Socialist Thought’, in Battin and Maddox (eds), Socialism in Contemporary Australia (1996).

Battin, T., ‘The Extremism of the Middle Ground: The Australian Democrats and Social Justice’, in John Warhurst (ed.), Keeping the Bastards Honest: The Australian Democrats’ First Twenty Years (Sydney: Allen and Unwin, 1997).

Battin, T., ‘Unmaking the Australian Keynesian Way’, in Paul Smyth and Bettina Cass (eds), Contesting the Australian Way: States, Markets and Civil Society (Cambridge University Press, 1998).

Battin, T., ‘The ALP, the Public Sector, and the Market’ in Andrew Parkin and John Warhurst (eds), The Machine: Labor Confronts the Future (Sydney: Allen and Unwin, 2000).

Battin, T., ‘“Laborism” and the Australian Labor Party’ in Paul Boreham, Geoffrey Stokes, and Richard Hall (eds),The Politics of Australian Society: Political Issues for the New Century (Melbourne: Addison Wesley Longman, 2000).

Battin, T., ‘Laborism, the Australian Labor Party and the Third Way’, in Paul Boreham, Geoffrey Stokes, and Richard Hall (eds), The Politics of Australian Society: Political Issues for the New Century Second Edition (Melbourne: Addison Wesley Longman 2000).

Battin, T., ‘The Whitlam Government, Labor Tradition, and the Present Paralysis’ in Battin (ed.), A Passion for Politics: Essays in Honour of Graham Maddox, Pearson Education Australia, Melbourne.

Refereed Articles

Maddox, G. and T. Battin, ‘Australian Labor and the Socialist Tradition’, Australian Journal of Political Science, Vol. 26, No.2, 181-196, July 1991. [Reprinted in D. Lovell, I. McAllister, W. Maley, C. Kukathas (eds), The Australian Political System (Melbourne: Longman, 1995), pp.376-86.]

Battin, T., ‘What is This Thing Called Economic Rationalism?’ Australian Journal of Social Issues, Vol. 26, No.4, November 1991, pp. 294-307.

Battin, T., ‘Economic Rationalism and Ideology’, Journal of Australian Studies, No.33, June 1992, pp.12-18.

Battin, T., 'A Break from the Past: The Labor Party and the Political Economy of Keynesian Social Democracy,Australian Journal of Political Science, Vol.28 No.2, July 1993, pp.221-242.

Battin, T. and G. Maddox, ‘A Reply to Johnson’, Australian Journal of Political Science, Vol.26, No.3, November 1991, pp. 550-552.

Battin, T., ‘A Case of Mistaken Identity: A Reply to Dollery’, Australian Journal of Social Issues, Vol 27, No.3, 1992, pp.213-14.

Maddox, G. and T. Battin, ‘Australian Labor and the Socialist Tradition’, Republished in D. Lovell, I. McAllister, W. Maley, C. Kukathas (eds), The Australian Political System (Melbourne: Longman, 1995), pp.376-86; republished again in second edition of D. Lovell, I. McAllister, W. Maley, C. Kukathas (eds), The Australian Political System(Addison Wesley Longman, 1998), pp.294-304. [Originally published in the *Australian Journal of Political Science,*Vol. 26, No.2, 181-196, July 1991.]

Battin, T., ‘Keynesianism, Socialism, and Labourism, and the Role of Ideas in Labor Ideology’, Labour History, N. 66, May 1994, pp. 33-44.

Battin, T., ‘Employment Blues: What Can be Done?’, Current Affairs Bulletin, Vol.74 (3), October/November, 1997, pp.4-11.

Battin, T., ‘Dissent Gathers Steam’, Just Policy, Number 13, 1998, pp.46-54.

Battin, T., ‘The Australian Labor Party and the Notion of Economic Management’ Journal of Economic and Social Policy, Vol.6 (2), Winter 2002, pp.1-15.

Work in Progress/Forthcoming

Battin, T., ‘The Whitlam Government, Labor Tradition, and the Present Paralysis’, in T. Battin (ed.), A Passion for Politics: Essays in Honour of Graham Maddox (Pearson Education Australia).

Battin, T. (ed.), A Passion for Politics: Essays in Honour of Graham Maddox (Pearson Education Australia).

Book Reviews

The Deficit and the Public Interest: The Search for Responsible Budgeting in the 1980s, by Joseph White and Aaron Wildavsky, Australian Journal of Politics and History, Vol.37, No.1, 1991. pp.162-63.

Foundations of Arbitration: The Origins and Effects of State Compulsory Arbitration 1890-1914, edited by Stuart Macintyre and Richard Mitchell, Australian Journal of Politics and History, Vol.37 N.3 1991, pp.519-20.

A History of the Labor Party in New South Wales, by Jim Hagan and Ken Turner, Australian Journal of Politics and History, Vol 39, No.1 1993, p.100.

9

The third question is screaming out to you to be answered. Focusing on the Austrians, you should firstly note that there is no necessary connection between the economic theory of the Austrians and the policy recommendations of any one Austrian - this is because economics shows the results of action but does not tell you which results are desirable, i.e. it is value-free. Then you should note that the century-old fallacies revived and repeated by Keynes had always been beloved by those who wished to justify their political power, and that the Austrians were marginalised since they could see these fallacies for what they were. The marginalisation of the Austrians therefore had nothing to do with their politics, since as Austrian economists they had no political stand whatsoever. Their marginalisation was due to the political hijacking of the Keynesians who disliked the fact that the Austrians demonstrated that their policies would not achieve what they claimed. As Mises said, Keynes merely emotionally rejected Say’s Law, rather than actually refuting it.

As a start you should see:

Mises, Lord Keynes and Say’s Law

Mises, Stones into Bread The Keynesian Miracle

Mises, The Ultimate Foundation of Economic Science

Rothbard, Ludwig von Mises and the paradigm of our age

EDIT: Also, it’s good to see there are other Austrians about in Australia. Do you know if there is anyone at your uni that teaches the Austrians?

10

Thanks heaps for the last post…I really appreciate it. There are no Austrians that I am aware of, although the economics faculty had a number of individuals sympathetic to the Chicago school some years ago. Australia is in dire straits at the moment, with the Labor/Green alliance on the verge of signing a new carbon tax into law. Although the Labor government will be handily defeated at the next election, the Greens will still retain control of Senate. This is there party manifesto:

http://greens.org.au/sites/greens.org.au/files/Consolidated+policies+March+2010.pdf

If you read it, you will understand why we are in such dire straits. It is a truly scary document, which will reduce Australia from one of the economic engine’s of the world to mere subsistence.

11

No problem. If you want to ask me something or for some more sources, feel free to PM.

Seeing as I’m a Melbournian, I’m quite familiar with the ALP and the Greens (the Greens MP holds the seat of Melbourne after all)!! Let’s just hope that the election comes soon, and that the Coalition really does repeal the Carbon [sic] Tax before the latter becomes the status quo.

I should really try to find out where all the Austrian (and fellow travelling) academics are teaching/researching around Australia. I know that where I am there is a graduate class which teaches Mises, Hayek and I believe Rothbard (I’m not in the Economics department, however). I don’t know whether or not it runs every year.

Also, did you know that there is an Austrian economics seminar being held in Sydney at the end of November? Hans-Hermann Hoppe is going to be there.