Archive for September 1st, 2011

I do not believe in the myth of the Magic Market. I don’t believe that if everyone pursued their selfish ends in an unregulated marketplace that it would, in the end, be good for everyone, that somehow single-minded pursuit of profit will usher in a just social order.  I do not believe that there is an “invisible hand” miraculously guiding economic affairs.

Oh, I believe there is an invisible hand, all right. It’s just that I see it firmly clenching the throats of the poor and of workers.

In light of the disastrous effects of that misguided ideology, it is hard to see how anyone can still hold to it, but a great many do. Just as hardcore Marxists insist that the horrors that resulted in nations adopting that creed were not the result of the creed, but only came about because it was not implemented in its pure form, so hardcore free marketeers insist that the economic crisis brought about by their efforts to deregulate banks and industry really came about because of whatever government regulation remains.

Such cobbling and rearranging facts to fit one’s worldview is a testimony to the power of ideology.

On the other hand, there is a market force which is so obvious that it is undeniable. That is the one that arises from the decision-making of the buyer: if you make a product that meets a need well, that lasts a reasonable amount of time before breaking, and is affordable, it is likely that the buyer will become a loyal customer. On the other hand, if you make shoddy goods you will never see that customer doing business with you again.

This is the market force that rewards quality and punishes mediocrity, and when allowed to function eliminates the manufacturers of crap.

For example, early in my career as a letter carrier I bought a pair of Rocky boots. These are expensive boots, ones I never would have been able to afford without the uniform allowance that is part of my compensation. They did not have to be broken in, but were comfortable from the moment I put them on. They lasted a full year of walking 10 to 15 miles a day, until my annual allowance was again available. Only once did I buy another brand, and they gave me blisters for a week- no fun if you walk that far- and wore out in 6 months. I went through 2 pair of boots before  I could again use my allowance. So guess which brand of boots I buy now?

On the other hand, there is our 2001 Dodge Caravan. We got a good deal on it, and saw that it was popular, and it seemed like a good idea at the time.

Alas, it was not so. It ran fine for a while, but then began breaking down with regularity. And the suspension was shoddy; we would fix it and in a matter of months it would begin knocking again. The mechanic said that this was endemic with Caravans, that Chrysler had used a nylon bushing in some part or other that wore out quickly. I am no mechanic, nor an engineer, but I know that nylon is a lot weaker than steel.

The thing has 85,000 miles on it and feels like it. My 1999 Saturn has 210,000 miles and rides better. And the Caravan is rusting badly. I have friends who own Dodge vans of the same vintage, and they have all had similar experiences. Unanimously, we agree that we will never purchase another Chrysler. What short term profit the company made on the ubiquitous Caravan is cancelled by the fact that no one who owned one will ever purchase another.

Or take our refrigerator. Please. Only three years ago or so we bought a new Frigidaire. We payed good money for what we thought was a good product by a reputable company. But shortly after the warranty expired the shelves began breaking, one by one. I looked into it, and found that replacements were prohibitively expensive, so I rigged up my own. Then it began to leak badly from somewhere in its bowels. A refrigerator should last 20 years; this one will not make it to 5. And when it finally gives up the ghost, guess which brand I will not even consider?

You would think that capitalists would realize this lesson, that short term profits will result in bankruptcy if not coupled with quality. That is the lesson that the buyers’ end of the market should teach. But why should these corporations, that make such stupid decisions, learn this simple lesson when the government will bail them out when they go broke?

While the corporate end of the market, the one that has resulted in greater and greater economic disparity and the erosion of the middle class, has become increasingly deregulated, the buyer’s end of the market, the ability to make purchasing decisions, has been countered by government bailouts of inept corporations. So stupid capitalists do not learn their lessons. Or rather they learn the lesson that when the State and the corporation are in cahoots they don’t have to face the long term consequences of choosing quick profit over quality. When the ruling classes unite to look out for one another’s interests it is the People who lose.

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