Thursday, June 20, 2013

David Ruccio — Who framed inequality?

More on economics and power.

OCCASIONAL LINKS & COMMENTARY on economics, culture and society

Who framed inequality?
David Ruccio | Professor of Economics, University of Notre Dame

In the neoliberal "market state," who has market power and why?


Magpie said...

I think Prof. Ruccio makes a very good point: people (like Paul Krugman or Jacob Hacker) go around proposing ways to ameliorate the symptoms of the disease.

Don't get me wrong. This is okay, with me.

But whether one is speaking of predistribution or of redistribution, these are not cures to the disease.

It seems the problem of inequality is framed around ways of keeping things as they are in the essence, just not so ugly.

Tom Hickey said...

It seems the problem of inequality is framed around ways of keeping things as they are in the essence, just not so ugly.

That's my major objection to MMT also, and every other fix that leaves the foundation of the the existing system in place. It's not capitalism, It's not socialism, and it's not a mixed economy either. It's a neo-feudal system that is based not only on privilege and extraction but also deeply infected with corruption and cronyism. There is only one fix for that and it's changing the structure of the system. That will require popular democracy and distributive justice.

Even if it is posited for the sake of argument that a laissez-faire capitalism in which markets were perfectly competitive, information symmetrical, and no imperfections, frictions or externalities woud result in Pareto optimal distribution, there are several issues with that. First, while such a state might be attainable, it would not be permanently attainable due to power relationships arising, for instance, that would result in imperfections. Secondly, Pareto optimality is not necessarily iaw distributive justice without defining justice in terms of meritocracy, which is the basis of neo-feudalism.

Those on the left would argue that a fix has to take into account more than theoretical economics since it is social and political as well as economics and this implies normative in addition to positive. In a government of the people, for the people and by the people, the system needs to reflect the will of the people wrt to the norms of the society. In a genuine democracy, this is the frame that would arise out of the political debate.

Instead, we are having a debate over affordability rather than the political power that determines the frame, who has the power, and what this implies for society.

The present frame is based on unlimited growth at all cost, since a rising tide lifts all boats, aka trickle down. That framing needs to be questioned and changed if it is the popular will. For that to happen, we need a transition from oligarchy and plutonomy to eqalitarian democracy.