So it turns out the top brass at Lehman Brothers were deliberately lying about their indebtedness to the tune of $billions. Shades of Enron! So what’s new? Speculative markets are based on lies. In the old days financial institutions such as pension funds and insurance companies, served some social purposes. Today, hedge funds, sovereign funds and the like, serve no social purpose. They exist only to make money for their investors and themselves, both being in a position to take risks with ‘loadsamoney’. They have no moral compass beyond ‘making as much money as possible’ to quote the famous economic mountebank, Milton Friedman. So, of course, they are liars. The accounting profession are culpable, deliberately falsifying balance sheets so they appear less risky than they are. And firms of auditors are liars, declaring the accounts to be “true and fair” when they know perfectly well they are nothing of the kind. But very few of these parasitic liars end up behind bars.
All posts by Gordon Pearson
The Case for Monopoly
Keynes said he could see no reason why a government should become involved in owning a railway. However, the result of privatizing British Rail and trying to open it to competition, suggests Keynes may have been short-sighted. Monopoly might be a bad thing when exploited by some profit maximising economist, but the case against is by no means shown to be universally true.
Was Friedman right?
Milton Friedman is given a rather severe critique in The Rise and Fall of Management, especially over his malign influence on industrial management, how it is taught and how it is done. The Friedmanism which best captures his contribution to that endeavour is the one which tells the world that ‘corporate officials’ have no ‘social responsibility other than to make as much money for their stockholders as possible’.
The Conservatives' Commitment to Mutualism and Co-operatives
This space is not habitually given to expressing party political views, but occasionally it is unavoidable. Political parties inevitably, from time to time, address head on, topics which are of prime concern here. And sometimes their approach is either so right, or so wrong, that comment is necessary if these postings are not to appear totally disconnected from the real world. Today is such an occasion.
Continue reading The Conservatives' Commitment to Mutualism and Co-operatives
Freedom or Competition: make your choice
The seemingly ever increasing numbers of innocent followers of Mises, Hayek and Friedman, in their devoted pursuit of the free market ideal, have overlooked the fact that markets, which typically start out as competitive, naturally tend to become monopolistic.
Rape and Pillage or Co-operation
The announcement that Gordon Brown is to put mutualism and co-operatives, such as John Lewis Partnership, at the heart of Labour’s election manifesto is surely welcome after twelve years of the rape and pillage resulting from New Labour’s unquestioning support for free market deregulation and the maximising of shareholder wealth. But what does it mean? Is it just the sentimental swan-song of the Labour government? Or does it have substance as the foundation for real action?
The Destruction of Accumulated Surpluses
The disposal of Cadbury is some kind of a marker. It was still a successful company and could have continued independently with no problem. It had a proud history which doesn’t need to be repeated here, but it also had a price. And that price was agreed by its board of directors who gained prodigiously from the sale. Cadbury’s loss of autonomy is surely the precursor of many cost reducing decisions taken at its new American headquarters without regard to the old Cadbury stakeholders, notably including its employees. Doubtless, in the end, Cadbury’s Bournville heritage will be preserved merely as yet another industrial museum, the dead remains of the once thriving industrial community. Such relics are strewn across the British landscape, commemorating our once pioneering roles in wool, cotton and silk textiles, machine tools, iron and steel, cycles, motor cycles, motor cars, trucks and buses, china and pottery and hundreds of other sectors where Britain was successful and achieved a strong position but then sold it off for the financial gain of the few and the bitter disadvantage of the many.
Cadbury Directors Acting Illegally
The Cadbury board have the legal duty, according to the Companies Act of 2006, “to promote the success of the company for the benefit of all its members and in doing so have regard (amongst other matters) to a) the likely consequences of any decision in the long term, b) the interests of the company’s employees” as well as the interests of other stakeholders. The board appear to have ignored these legal duties in accepting the bid on the apparent grounds that the share price offered is probably higher then the company would be likely to achieve in the next two or three years if it continued its independent existence.
The Trouble with Markets
Every day the media reports movements that have occurred in the stock markets and pundits and commentators explain to the people the reasons for those changes. And every day, millions of viewers, listeners and readers think to themselves “If you’re so smart, why didn’t you tell me before it happened?”
Alternatives to Free Market Fundamentalism
The juxtaposition of two editorials in a mainstream broadsheet makes interesting reading. The one argues that Gordon Brown’s advocacy of a tax on global financial transactions, the so called Tobin tax, suggests that the British government has, at long last, given up its slavish adherence to ‘the ideology that believes in deregulated, untaxed, ever-expanding global capital markets as an end in themselves’. The other argues that ‘China must be held to account for its political repression’. The connection between these two lies deep within the aforementioned ideology.
Fighting for Fairness by Remaking the Real Economy 