Thursday, December 8, 2011

On Why Market-Oriented Research Institutes Are Using the Wrong Tactics

One of the tactics that seems to be popular these days is the use of "Report Cards" among "market-oriented" research institutes.  A good example of this is when they create and issue "Report Cards" based on standardized test results.  I suppose they think that the report cards are the means for them to their desired end, with the desired end being accountability of the education system.  I want to briefly point out why I think this whole approach is terribly flawed given our current global situation.

First, it makes little sense to me for why supposed market-oriented research institutes would use an empirical-positivist approach in their quest to advance their free market cause.  The empirical-positivist approach was first advanced as a tool to advance the cause of central planning.  The transition of economic science from a study of human action to a study of applied mathematics has its origins in the 1920s and 1930s.  So I am not sure that "measuring everything" is really the best approach for advancing the free market cause.  But seriously, that is only a minor criticism.

Second, a much bigger issue is that we are engaged in an ideological war.  So it makes no sense to pump out a bunch of "report card" numbers as some sort of "tracking number," when the war is over ideas not observable numbers.  If these market-oriented research institutes want to be effective then they better observe what kind of topics people chat about on Facebook.  People don't talk about "Report Card" scores on Facebook.  Most of the time they are talking about some sort of banker conspiracy to set up some sort of world government.  Given the fact that the mainstream media is now talking about total European Union collapse and how this collapse will spread to North America then it is understandable that people will be looking for causal factors.  My suspicion is that the neo-Marxists and communists will exploit this for all it is worth (think 1930s and the transition to fascist economics in America) and our current batch of market-oriented research institutes seem to be unprepared for a counterattack or at least a defense.

From all the material I have read, seen posted, discussions, etc., I would recommend that instead of making little "report cards," they better start refuting neo-Marxist imperialism theories.  Today I took maybe 1 hour just very briefly flipping through Lionel Robbins The Economic Causes of War and this book sounds like a very good place to start.  Robbins seems to be addressing a number of issues that have resurfaced today as "conspiracy theories."  They seemed to be the same conspiracy theories back in his day as well.  For example, I noticed that Robbins mentioned something about the Baghdad railroad concessions; well that is a common issue you will see raised in "New World Order" type books (I saw William Engdahl mention that in his New World Order book on the oil industry).  Given the fact that we are going into a global economic collapse, the conspiracy theories are going to make a big-time comeback.  Consequently, I recommend that market based research institutes stop wasting their time on report cards or a lot of their other secondary issues (I remember how one market-oriented research institute in Canada seemed obsessed with "accountability" on Indian reserves).  Instead, they need to address the neo-Marxist imperialist theories.  They also need to address a related issue:  the underconsumption theories.

According to Robbins, there is some serious inconsistency even among Marxian writers as to what the term "Marxian theory of imperialism" means.  Robbins wrote (23) [all emphasis is mine; all comments in square brackets are also mine]:

The Marxian theory of imperialism, I thought, rested upon a somewhat rigid form of the underconsumption theory of the trade cycle.  Because there was chronic tendency for the working classes to have too little to spend, [my guess is that this justifies the call for "more money" to be continually pumped in; people just do not have enough money to buy the goods] there developed a struggle for international markets which tended from time to time to culminate in war.  That, I thought....was the Marxian theory of imperialism.  BUT IN FACT THIS IS NOT SO.  The theory of imperialism, or the theory of NOT a matter on which there is general agreement among Marxian writers.
Robbins also noted that this is an area where even among the Marxists there is "the sharpest possible dissension."

Later on, Robbins (60) [all comments and emphasis is mine] wrote that there are serious defects in the Marxian theories:

Our researches thus far have had a negative outcome.  We have surveyed the under-consumptionist versions of the communist theory of imperialism and found that they were either logically defective or that they did not prove their main contention.
The problem, as I see it, is that when unemployment rates jump to 30% [even if we ignore the often heard cries of manipulation of rates to make them look less damaging to the incumbent politicians], and when people see escalation of conflicts toward world war (maybe Iran?) people will be much more likely to ignore cool and rational arguments and will be tempted to fall for different variations of Marxian theories of imperialism.  The danger here is that people will blame this all on "laissez-faire capitalism" even though no such thing exists or has existed for some time.  Laissez-faire capitalism was already being suppressed by the inherently conservative movement of the Progressive Era.  This was all done deliberately, as a matter of government policy.

Therefore, I think that market-oriented researcher institutes are misdirecting their efforts to tangential and minor issues such as:  report cards, more homework for students, whether we should or should not have a "harmonized" tax and so on.  These are all valid issues; I am not saying that they should not address them.  All I am saying is this:  I think these institutes are addressing minor issues.  They are addressing minor skirmishes and ignoring the mega-war that is staring them in the face.

The war is ideological.  You are going to see a resurgence of the underconsumption hypothesis and a resurgence of the idea that monopoly somehow emerges on the "free market."  We will get a lot of 1920s propaganda coming back.  It was, for example, the 1920s communists in Italy who kept pushing the Occupation Movement (granted back then it was to "occupy the factories" and not to "occupy Wall Street).  Similarly, Mussolini pretty much gave us the same false dichotomy argument that will probably come back, namely, "you can either have monopolies of private corporations or the government monopoly."  It will be extremely important to refute the argument that monopolies emerge on the free market.  In addition, the correct interpretation, namely, that monopoly emerges because of deliberate government policy, needs to be stressed.  Ron Paul wrote about this in his book The Case for Gold.  This thesis was supported by Gabriel Kolko in his book The Triumph of Conservatism, in which he noted that the competition was so stiff and the economy was so decentralized that no one could centrally control it.  This trend toward competition and away from monopoly lasted until the government intervened in order to protect certain firms from competition.  I would also emphasize that this is not laissez-faire because it was deliberately created by government interventionism.  Stressing the fact that government intervention caused the problems will be vitally necessary.

In conclusion, when I read the websites of market-oriented research institutes I think to myself "fine, these are all nice suggestions that I can accept" but you are missing the big picture.  The entire idea of free markets will be attacked vociferously in the next few months.  As unemployment skyrockets and as global wars intensify, all the old Marxist lines on imperialism that blame it all on "capitalism" will all be resurrected.  These institutes need to start positioning themselves to address this coming storm.

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