Monday, January 25, 2010


above: Respected Australian economist John Quiggin





















Readers of John Quiggin may be interested in the following essay on 'The Democratic Mixed Economy' by Dr Tristan Ewins as well ;  Discussion Welcome

see here:


  1. If your main argument is that infrastructure projects are better built and owned by the government, I agree with you.
    The big issue though is whether the government should be running businesses. I believe they are very bad at it, for many reasons and that the wrong things were privatised.
    Better that public transport should be owned by the government and managed by companies.
    Qantas was a good privatisation, Telstra was a bad one unless you believe the government was smart to offload a high risk and declining business to the public.

  2. We already have a mixed enough economy. Marxism died a long time ago and neo-Marxism has no political home in Australia in the new-Labor or Liberal parties. I am not saying the public sector should die or should be such a small size to be ineffective. I am simply stating that the size and scope of government in Australia has been well established ever since the Hawke-Keating rationalised government on a federal level.

  3. As Rationalist said, we've never had a purely private economy, so I don't get the argument.

    On one point though you're clearly wrong: student loans. Although it is not a completely free market for tertiary education and its financing in the US, it is a lot freer than Australia. People all the time decide how much to borrow for a given course of study (and educational institutions decide how much to invest in programs) based on their expected future return.

    Public ownership has been such a thoroughgoing failure in almost every instance, the burden of proof rightly remains on those who advocate it. Bureaucrats are hopeless at running businesses. That's why they are bureaucrats - they're capable of little else.

  4. I wonder would we hold up the American model as a pargon of success?

    While many will rationalise away the GFC and all the other problems of unrestrained capitalism, these failures and other fundamental problems as many different groups converging on the mixed economy or similar viewpoint.

    There are the stable state/zero growth economics groups, the ethical and environmental economics groups, and the Mixed-Solidarity, Social economy and PARECON groups.

    I imagine throw in Peak Oil and Climate Change and a general powering down of global economies and will come even more the to fore.

  5. "Public ownership has been such a thoroughgoing failure in almost every instance" !?

    Oh dear. Is that a mantra, a manifesto, or just blind faith? It can't be an empirical determination. There are numerous cases where service has worsened and/or cost has increased after privatisation. However, if you define public ownership as failure...


    There are some misunderstandings here, or perhaps a different use of language:-

    - That was no "system of globalised laissez-faire" then, nor is the more recent, resurgent stuff.

    - There is no separation or conflict between "the property rights of capital owners" and "the democratic presumption that people should have a say in the major decisions that affect their lives", not under genuine laissez-faire and free markets, because then the two groups are the same (granted, the rigged system we have now sustains different interest groups, but see the earlier point). Think of Chesterton's saying, "Too much capitalism does not mean too many capitalists, but too few capitalists" - The Uses of Diversity, 1921.

    - The other side of the coin, the state admixture, doesn't offer a "more democratic mode of organization" anyway. It's something that goes through various layers of bureaucracy and indirect, representative democracy (which in principle is no democracy), and at the end of the day is far less democratic in practice than even a slightly damaged laissez-faire. Granted, it is more damaged than that now, but the cure does not consist in substituting something that even at its best is materially harmful and does not deliver on what it purports to.


    Actually, although that is how the argument is often couched, once people focus on that they have already been caught by misdirection; they are asking "how much" and not "whether", and so on. Even if that aggregate measure improved, it would no more justify the transfers involved than, say, it would have for the Enclosure movement. Among other things, the "who/whom" question isn't being asked, and it is quite realistic for more than 100% of gains to go to some groups. Don't let this formulation tie you up.

    "The global financial crisis has shown that private financial markets are far from efficient".

    No, because (a.) it only tells you what they did, not what they are (different tenses and verbs), and (b.) even what they did doesn't show that they were not efficient, in that it may well have been a perfectly logical response to a flawed, biassed and distorted situation. A lame animal doesn't prove that muscles, sinews and skeletal structure don't work, just that they are out of joint.

    All that is direct criticism of what is here. For constructive ideas, readers would do well to consult the thinking of Distributists, Mutualists, and "left" Anarchists broadly understood (i.e., allowing in stuff from other kinds of Anarchist too, where it fits).

    P.S. "Respected Australian economist John Quiggin"? But there's still no beard! Beard = respect.

    P.P.S. There's some problem with copying and pasting. This form wouldn't let me do it on the first input, but only after the preview.

  7. re: copying and pasting - I've had that problem sometimes with Blogger blogs too - but it usually 'comes right' with perseverence. :)) Still no idea what's causing it.

  8. As I see it, the big problem with the mixed economy is there is no natural force to balance the average public bureaucrat’s propensity to build unproductive empires. This happens in the private sector as well, but the discipline of a competitive market penalises the firms that indulge in this practice. Even natural private monopolies are still required to exist in a competitive capital market which will replace managements that indulge in unproductive activities. (For example, the replacement of Telstra’s self indulgent executive team in 2008.)

    The privatisations of the past few years are the only way to rein in a public sector which will have us living with Zimbabwe style hyper inflation if they are given half the chance. Are there any alternative methods that provide a balancing force against the empire builders?

  9. Peter - re: bureaucratic 'empire building' - I think the key is electoral pressure coming from voters - building up through the public sphere... The key is that voters/citizens etc distinguish between valid criticisms in this regard - as against populist point-scoring.

  10. Tristan - I know Amartya Sen's hypothesis is that democracy is a counter force to the worst excesses of rampant capitalism. But I can’t see it will work against waste in public institution. In fact, the popular thesis is that the last state election was won by the Labor party here in Queensland because of fear in the state’s bloated public sector that the opposition would privatise a lot of empires if they won government.

    Mind you, budget pressure is causing the Qld government to undertake a privatisation program. Unfortunately, they are privatising the wrong empires. I believe they should be privatising bloated empires like the Public Works department which is hampering the development of a competitive environment in things like IT services. Instead they are privatising things like ports and rail where a natural monopoly exists and they can a price for the monopoly rents.

  11. Peter Moy says..


    And we dont think the private sector has not built a few unproductive empires lately (How abot Lehman, Goldman Sachs and Morgan Stanley?).

    This single minded selective blindness about the private sector's tendency to empire build when they are just as guilty and wasteful and speculative (more) and extravagant (more) than the a tad annoying.

    There exist many industries now where competition does not step in to stop private sector empire building (keep em in check).

    Private sector empire building has risen above competition in many industries and those firms now have a firm grip on control of their own price (as opposed to the consumer).The sort of industry concentrations we face nowadays makes a mockery of the quaint old fashioned concept of "competition" for that is all it is (quaint and old fashioned).

    A mixed economy is needed to stop rampant darwinism and survival of the fittest of corporate firms destroying whatever competition there ever was in the private sector industry (and leaving the entire supply of eg an essential good or service in the hands of the private sector - ultimately extremely foolish).

    Thhe mixed economy acts as a restraint, something wghich competition might have done a century or more ago, but no longer. How can competition restrain firms...when they face very little of it?

    Time to face facts. By $ value of turnover ..Oligopoly is likely the dominant firm structure (not comeptition). That means we simply cannot rely on competition assumptions.

  12. As as been previously pointed out, there haven't been too many state sized free-market economies. They've almost always been mixed by default as there tends to be large collectivist groups in every society. I'm don't understand what's radical with a mixed economy like what you're proposing, and a lot of the voluntary communitarian stuff comes from the free market side anyway; it's not really new. I can only conclude what you're really asking for is a larger role for the state.

    But anyhoo, the real test of whatever it is you're proposing is how much is compulsory, and how much is voluntary. How much are people able to engage with it and detach from it according to their own needs and wants.

  13. Firstly: This website is for both 'traditional social democratic' (eg: relatively moderate/mainstream) - AND relatively radical perspectives. The aim is to foster debate on the theme of the "democratic mixed economy" - to challenge the neo-liberal hegemony from various directions. (but with some common principles, values, ideas, themes)

    Secondly: My own interpretation - with regard to mutualism, collectivism etc - would suppose tax breaks, cheap credit, state-provided support/counseling. These forms of activity will not spread significantly if we just leave it to 'the free market'. But with government intervention we can potentially have a more democratic market in this sense.

    Further: The aim of an expansive social wage/welfare state, supported by a strongly progressive tax system - while not considered radical by many - does go against the 'common sense' (neo-liberal ideology) which is dominant over much of the world. Some, therefore, would describe these ideas as radical - but we want to bring back back into the 'mainstream'.

    Finally: The are many different positions on the 'democratic mixed economy' - and we could accomodate in this forum a variety of ideas on the composition and size of the public sector.

    For my own reasons, I don't believe industries like mining should be 'out of the question' - especially in the context of an internationally competitive market. But even on the Left here in Australia - many would feel such a position goes 'too far'. I hope one day to put a more comprehensive case.

    In conclusion: 'radical' and 'moderate' are relative terms. But across a variety of perspectives I believe we have a common interest in challenging neo-liberalism.

    And I hope can host a variety of perspectives across the range specified by our 'mission statement'.

  14. What if we returned to the idea that capitalism isn't the end of history.... Or did history end while I wasn't looking?

  15. Pr Q said:


    A mixed economy complements, rather than substitutes, free market capitalism. A better name for the "mixed economy" is perhaps "complementary capitalism".

  16. Jonathan: I agree that it's foolish to suppose 'the end of history' - and I remember Peter Beilharz making to same point - something to the effect of capitalism not being eternal: approaching the issue with "the historian's objectivity"... Here's hoping, though, that if this is true - that capitalism is replaced by something better - and not the barbarism some socialists fear...



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  19. A brilliant economist who worked for the UN in underdeveloped countries for many years said, "I don't care whether a country is socialist or capitalist. I care whether the government is honest or corrupt, that is what makes all of the difference." I think that is a crucial factor in thinking about mixed economies. Unfortunately, the majority of countries are quite corrupt. The least corrupt are European countries, Australia, Canada, etc.

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