I think that it is probably safe to say that we all agree that the
neoclassical concept of competition is bankrupt in the sence of
implying any concept of maximization or dynamic of investment.
What is curious is that concept seems to have almost a mystical
power within the othordoxy despite the criticism first by
Schumpeter and second, by John K. Galbraith. All of the
'competitive' sectors are stagnant and depressed. It is the
monopoly sectors that are dynamic and agressive.
I spent ten or so years as a member of, or chairman of, the milk
control board of Manitoba. We were to control the price of the raw
milk coming from the farmers and the final price to the consumers.
The rationale was that the processor/retail price was controlled by
monopoly/oligopoly elements, while the farm gate price was
controlled by the 'market' (which gave the oligopoly processors a
market advantage.) We priced milk at the farm gate at the
'competitive' level -- i.e. cost of production pricing using engineering
concepts of adequate facilities, opportunity cost of farm labour,
managerial labour, feed, etc. etc. but we did not have any concept
of 'normal profits.' Normal profits, in our model, included the
average rate of return to capital ( the interest rate) on farm
investment.
Interestingly enough, the return to dairy farmers was higher than
than due to other farmers, which indicates that farmers as a group
recieve less than adequate returns (i.e. they exploit themselves or
their families.) [Just as an aside, our system of dairy pricing is
part of our supply control system that the US has denounced and
is in the process of destroying throungh the WTO, one of the most
evil institutions of the post-war period.}
Lest anyone think that we were protecting farmers against having
to respond to changing technology and increase their productivity,
we raised the productivity every year according to industry trends
before we figured out costs.
The depressing thing is that the farmers, embued with
neoclassical market nonsense, objected to our price controls.
Each thought that they, individually, could beat the market average,
or could undercut their neighbour and corner the market. Not all
the farmers -- those with a collective or socialist consciousness
were strong supporters of our board.
In the larger context of the imbalance of economic power, I have
argued that the monopoly/oligopoly power of the grain trade and the
transportation system has served to transfer surplus from the
primary purchaser to commercial/financial capital ("Staples,
Surplus, and Exchange: The Commercial-Industrial Question in the
National Policy Period" in *Explorations in Canadian Economic
History: Essays in Honour of Irene Spry*, ed by Duncan Cameron,
1985. [I should note that Irene Spry, one of the greatest political
economists and socialist of Canada, died within the last year. She
was one of the original drafters of the Regina Manifesto, the
intellectural foundation of the CCF and the whole social democratic
movement in Canada, and an enthusiastic socialist academic and
researcher to the end. Interesteringly, we had been working on an
article on economic power and economic rent over the last couple
of years but had never got around to actually writing it.]
I have argued that intellectual property rights has been a major
factor in the (mal)distribution of income -- I think reflecting the
thought of Michael -- on a spatial basis. (See my "Inellectural
Property Rights and Regional Disparity" in Intellectual Property
Rights, ed. by KRC Nairn and Ashov Kumar, New Delhi, 1994.)
In short, I would argue that there are no proftits in the economy
except those by monopoly which have one of four sources:
a: a natural monopoly on source (e.g. oil)
b: a legal monopoly on product/technology (i.e. copywrite/patent)
c. a trade secret monopoly on process and/or product
charactaristics (coke)
d. capital entry barriers (automobiles)
But this suggests the question, what should the socialist policy
be? If competition is a dead end, what should we be advocating?
Paul Phillips,
Economics,
University of Manitoba.
[EMAIL PROTECTED]
