Re: Re: Markets and Diversity
On 2002.06.03 05:40 AM, [EMAIL PROTECTED] [EMAIL PROTECTED] wrote: Michael wrote, In his presidential address to the American Economic Association, Sherwin Rosen claimed that one of the benefits of the market is its ability to provide diversity. Do you suppose Rosen thinks this result (markets provide diversity) is derived from the neoclassical model or is it just part of the pre-analytic vision? I'm not sure what in the neoclassical model would lead to the diversity claim unless it was based on product differentiation. But conclusions about product differentiation is about the number of different versions of the product and not about the range of products provided. That is, if the theoretical products range from 1 to 10, product differentiation might appear as a models 4.1, 4.2, 4.3, and 4.4. But it might not lead to any 3s or 5s. Rosen might be thinking that a large number of different models means that a large range of products exists. But I don't think that the former implies the latter ERic / Usual economic textbook begin with Market. In other word, Market is assumed to analyze firstly. But Market itself began in 16C in Europe. Before this alternative product exchange means must be existed. I ,as Marxist, begin with analysis of commodity. Because it is essential element of social product. In current credit capitalism, Alternative exchange started. Such as LET, or In Argentine bank crisis People exchange product by barter trade widely. In other words, Banks are unneeded for people survival. For Fetishism of Sachen( commodity, capital and money) people believe in these categories, but it is an illusion. MIYACHI TATSUO Psychiatric Department Komaki municipal hosipital 1-20.JOHBUHSHI KOMAKI CITY AICHI PREF. 486-0044 TEL:0568-76-4131 FAX 0568-76-4145 [EMAIL PROTECTED]
Re: Markets and Diversity
Michael Perelman wrote: In his presidential address to the American Economic Association, Sherwin Rosen claimed that one of the benefits of the market is its ability to provide diversity. Yet in a number of areas, diversity is shrinking. Publishers resist printing books that cannot sell at Barnes Noble. Radio stations are becoming less diverse -- unless you include Web broadcasting. Cable does allow for more diversity in some respects, but not insofar as politics is concerned. Broadcasting Chomsky for three minutes on CNN was a big deal. Bourdieu argues in his book On Television http://www.leftbusinessobserver.com/Why_TV_sucks.html that competition produces sameness, not diversity. Doug
Re: Darwinian doctrine
Despite our other differences, I appreciate Hinrich Kuhls drawing attention to this letter. At 01/06/02 23:56 +0200, Hinrich Kuhls quoted: Engels to P. L. Lavrov in London, Nov. 12-17, 1875 Very valuable and profound letter, unmistakably dialectical and materialist. The interaction of bodies in nature - inanimate as well as animate - includes both harmony and collision, struggle and cooperation. This goes for social bodies too: states, rulers and ruled, classes, superstructure and base. Everyone of us is influenced more or less by the intellectual environment in which he mostly moves. Including Marx and Engels. Further on in the letter Engels writes I should regard the social instinct as one of the most essential factors in the evolution of humans from apes. Although this might imply that social factors are not important for apes, it is perhaps one of those passages Engels wrote in haste. What is important is the main idea, which is consistent with the importance he gives to work and to language in human evolution: that we are a social species, temporarily under the fragmenting sway of capitalist relations of production. Chris Burford
Re: Re: Markets and Diversity
Bourdieu argues in his book On Television http://www.leftbusinessobserver.com/Why_TV_sucks.html that competition produces sameness, not diversity. Doug Competition is the opposite of what? Monopoly? Neither of these terms seem very useful in addressing the underlying rottenness of mass communications in the USA. Clearly monopoly is a big, big problem in radio. 35 years ago there was tremendous variety on the NYC FM dial, with stations catering to a sophisticated classical music audience, free form radio (other than Pacifica), etc. Now that 3 megacorporations control the air waves, you can hardly find anything worth listening to. By the same token, Bourdieu has a point. When ABC, NBC and CBS chase after the same demographic slice of the market, they will cater to the lowest common denominator. This explains the explosion of reality shows, which not only embody a frat house sensibility, but are cheap to produce. (No actors with high salaries.) In any case, the real dichotomy is not between competition and monopoly. It is between profit and the public interest. PBS was meant as an alternative to the commercial networks and did produce some lively television in the 1970s before Mobil Oil and other corporate interests subverted the network. For example, Frontline used to produce some sensational documentaries on Central America during the 1980s. Nowadays, all it does is churn out exposes on terrorism that are designed to facilitate US ambitions in Central Asia. Part of the landscape of late capitalism is this cultural detritus. The power of big capital to deaden our senses and make us stupid is nearly unlimited. Last night I watched about 10 minutes of The Hamptons, an ABC documentary in two parts that was produced and directed by Barbara Kopple of Harlan County, U.S.A. and American Dream fame. From these documentaries on miners and meatpackers' struggles, she evolved into the producer-director of Wild Man Blues, an insipid portrait of Woody Allen. From there she has descended into the pits of hell. Her portrait of the Hamptons does not work as social commentary, nor is it interesting in a kind of trashy cable network fashion that you see on the E Network which features Howard Stern. Louis Proyect Marxism mailing list: http://www.marxmail.org
markets diversity
Title: markets diversity Michael Perelman wrote: it's interesting (to me, at least), that the ideal market of neoclassical economics -- the perfectly competitive market -- does not allow diversity; diversity undermines perfection. On the other hand, the more realistic story of atomistic markets that neoclassical economics typically plays down -- the monopolistically competitive market -- is the one that assumes diversity, at least in terms of the product being sold. Actually, all I'm doing is testing to see if my e-mail system will send. It ain't receiving. And I see pen-l as an all-important antidote to jury duty. I'm on a ten day trial. I have two words about that: personal injury. JD In his presidential address to the American Economic Association, Sherwin Rosen claimed that one of the benefits of the market is its ability to provide diversity. Yet in a number of areas, diversity is shrinking. Publishers resist printing books that cannot sell at Barnes Noble. Radio stations are becoming less diverse -- unless you include Web broadcasting. Cable does allow for more diversity in some respects, but not insofar as politics is concerned. Broadcasting Chomsky for three minutes on CNN was a big deal. Bourdieu argues in his book On Television http://www.leftbusinessobserver.com/Why_TV_sucks.html that competition produces sameness, not diversity. Doug
testing: competition diversity
Title: testing: competition diversity contrary to what it says below, Michael did not write the two paragraphs. I did. It's good to see that pen-l is receiving my missives even I am not receiving yours... JD Michael Perelman wrote: it's interesting (to me, at least), that the ideal market of neoclassical economics -- the perfectly competitive market -- does not allow diversity; diversity undermines perfection. On the other hand, the more realistic story of atomistic markets that neoclassical economics typically plays down -- the monopolistically competitive market -- is the one that assumes diversity, at least in terms of the product being sold. Actually, all I'm doing is testing to see if my e-mail system will send. It ain't receiving. And I see pen-l as an all-important antidote to jury duty. I'm on a ten day trial. I have two words about that: personal injury. JD
: Markets and Diversity
Bourdieu argues in his book On Television http://www.leftbusinessobserver.com/Why_TV_sucks.html that competition produces sameness, not diversity. Doug What's his reasoning? Or is it just an observation? I would expect it to depend on the circumstances. jks _ MSN Photos is the easiest way to share and print your photos: http://photos.msn.com/support/worldwide.aspx
Re: markets diversity
Title: Re: [PEN-L:26525] markets diversity On 2002.06.03 10:52 PM, Devine, James [EMAIL PROTECTED] wrote: Michael Perelman wrote: it's interesting (to me, at least), that the ideal market of neoclassical economics -- the perfectly competitive market -- does not allow diversity; diversity undermines perfection. On the other hand, the more realistic story of atomistic markets that neoclassical economics typically plays down -- the monopolistically competitive market -- is the one that assumes diversity, at least in terms of the product being sold. Actually, all I'm doing is testing to see if my e-mail system will send. It ain't receiving. And I see pen-l as an all-important antidote to jury duty. I'm on a ten day trial. I have two words about that: personal injury. JD In his presidential address to the American Economic Association, Sherwin Rosen claimed that one of the benefits of the market is its ability to provide diversity. Yet in a number of areas, diversity is shrinking. Publishers resist printing books that cannot sell at Barnes Noble. Radio stations are becoming less diverse -- unless you include Web broadcasting. Cable does allow for more diversity in some respects, but not insofar as politics is concerned. Broadcasting Chomsky for three minutes on CNN was a big deal. Bourdieu argues in his book On Television http://www.leftbusinessobserver.com/Why_TV_sucks.html that competition produces sameness, not diversity. Below is On The Jewish Question of marx MIYACHI TATSUO Psychiatric Department Komaki municipal hosipital 1-20.JOHBUHSHI KOMAKI CITY AICHI PREF. 486-0044 TEL:0568-76-4131 FAX 0568-76-4145 [EMAIL PROTECTED] For market problem, to consider Communism is needed Included among them is freedom of conscience, the right to practice any religion one chooses. The privilege of faith is expressly recognized either as a right of man or as the consequence of a right of man, that of liberty. Declaration of the Rights of Man and of the Citizen, 1791, Article 10: No one is to be subjected to annoyance because of his opinions, even religious opinions. The freedom of every man to practice the religion of which he is an adherent. Declaration of the Rights of Man, etc., 1793, includes among the rights of man, Article 7: The free exercise of religion. Indeed, in regard to man's right to express his thoughts and opinions, to hold meetings, and to exercise his religion, it is even stated: The necessity of proclaiming these rights presupposes either the existence or the recent memory of despotism. Compare the Constitution of 1795, Section XIV, Article 354. Constitution of Pennsylvania, Article 9, S 3: All men have received from nature the imprescriptible right to worship the Almighty according to the dictates of their conscience, and no one can be legally compelled to follow, establish, or support against his will any religion or religious ministry. No human authority can, in any circumstances, intervene in a matter of conscience or control the forces of the soul. Constitution of New Hampshire, Article 5 and 6: Among these natural rights some are by nature inalienable since nothing can replace them. The rights of conscience are among them. (Beaumont, op. cit., pp.213,214) Incompatibility between religion and the rights of man is to such a degree absent from the concept of the rights of man that, on the contrary, a man's right to be religious, is expressly included among the rights of man. The privilege of faith is a universal right of man. The droits de l'homme, the rights of man, are, as such, distinct from the droits du citoyen, the rights of the citizen. Who is homme as distinct from citoyen? None other than the member of civil society. Why is the member of civil society called man, simply man; why are his rights called the rights of man? How is this fact to be explained? From the relationship between the political state and civil society, from the nature of political emancipation. Above all, we note the fact that the so-called rights of man, the droits de l'homme as distinct from the droits du citoyen, are nothing but the rights of a member of civil society -- i.e., the rights of egoistic man, of man separated from other men and from the community. Let us hear what the most radical Constitution, the Constitution of 1793, has to say: Declaration of the Rights of Man and of the Citizen. Article 2. These rights, etc., (the natural and imprescriptible rights) are: equality, liberty, security, property. What constitutes liberty? Article 6. Liberty is the power which man has to do everything that does not harm the rights of others, or, according to the Declaration of the Rights of Man of 1791: Liberty consists in being able to do everything which does not harm others. Liberty, therefore, is the right to do everything that harms no one else. The limits within which anyone can act without harming someone else are defined by law, just as the boundary between two fields is
re: Wood vs. Brenner
Title: re: Wood vs. Brenner I haven't read the Ellen Wood article that Alavi criticizes below, but it fits with other things that I'd read by her (including in MONTHLY REVIEW when she was an editor there). Some people conflate her views with those of Robert Brenner, but if Alavi is right, her theoretical bent differs significantly from his. On the one hand, Brenner follows Marx to think of capitalism in terms of This separation of labour from the conditions of labour is the precondition of capitalist production. (Alavi's quote from Marx.) That is, Brenner sees capitalism in terms of proletarianization (the double freedom, freedom from the bonds of serfdom or slavery and freedom from the ownership of the means of production and subsistence). On the other hand, Wood tends to see capitalism in terms of the imperative of the market. Ironically, this is similar to so-called third worldists such as Andre Gunder Frank and Immanuel Wallerstein. Wood and Brenner do share a tendency to downplay third worldist considerations. But that doesn't mean that we should reject their research out of hand. Rather, it means that their research should be complemented, filled out, by other authors. (I like Samir Amin, for example.) No single author should ever been seen as the font of all truth, anyway. (One problem with Marxism is that some Marxists -- a very small number these days -- treat Marx and Engels in this way.) Jim Devine -- Louis Proyect posted: Colonialism and the Rise of Capitalism Hamza Alavi It is quite extra-ordinary to see how, over 45 years ago, leading Â'WesternÂ' Marxists managed to get through an entire debate on Â'The Transition From Feudalism to CapitalismÂ' (Hilton, 1976) without once mentioning the colonial context of the rise of British industrial capitalism. As we shall try to demonstrate, the imperial nexus played a crucial role in it. Capitalism was a global phenomenon from the outset, not only by way of trade but also by way of extraction of resources from the colonies that underpinned capital accumulation in the metropolis. So it continues today. That blind spot in Marxist historiography, which fails to locate the colonial relationship at the centre of capitalist development in the metropolis is also responsible for a missing dimension in Marxist political practice. The fate of the working class in the advanced capitalist countries is, more than ever, linked inextricably with that of the working people of the so-called Third World. But Western labour movements have done little to integrate their struggles with those of the workers of the Third World. Colin BarkerÂ's review article in the inaugural issue of Historical Materialism (1997), despite its brilliance and comprehensiveness, is not free from that general oversight. Barker writes with clarity and what he has to say stands very well on its own ground regardless of the merits or otherwise of Ellen WoodÂ's books that he has reviewed. One would endorse most of what Barker has to say, subject to this one caveat about the absence of the colonial dimension in his comprehensive statement. WoodÂ's own contribution to the inaugural issue of Historical Materialism is, by contrast, very disappointing. I will take her article, however, as a useful point of departure for a discussion of issues that need to be raised. Much of the problem with WoodÂ's article, it must be said, stems from her methodological decision to take the concept of Â'the marketÂ' as the organising focus of her discussion, even when she criticises others for the way in which they have used it. As against them, she argues that Â'the capitalist market (does not) represent an opportunity (but rather) an imperativeÂ'. But nowhere does she explain what she means by the Â'imperative of the marketÂ'. The market is, of course, an essential component of the mechanism of capitalism. But, except in pseudo-Marxist works, such as those of Immanuel Wallerstein (1974), the market does not define the structure of capitalism. What is specific and central to the capitalist mode of production (in agricultural capitalism as well as industrial) is the separation of the producer from the means of production. As Marx himself put it, Â'This separation of labour from the conditions of labour is the precondition of capitalist production.Â' (Marx, 1969:78) Wood is led away from that key definition in MarxÂ's thinking. Instead she mistakenly posits the existence of Â'two different narrativesÂ' in Marx. The first of these she attributes to the German Ideology and The Communist Manifesto. In that Â'conventional modelÂ', (as she puts it), history is a succession of stages in the division of labour, with a transhistorical (sic) process of technological progress and the leading role assigned to burgher classes who seem to bring about capitalism just by being liberated from feudal chainsÂ'. This rendering of MarxÂ's ideas
Re: : Markets and Diversity
On Monday, June 3, 2002 at 14:39:44 (+) Justin Schwartz writes: [Doug Henwood writes:] Bourdieu argues in his book On Television http://www.leftbusinessobserver.com/Why_TV_sucks.html that competition produces sameness, not diversity. Doug What's his reasoning? Or is it just an observation? I would expect it to depend on the circumstances. jks It is also highly dependent upon what definition of competition one uses, n'est-ce pas? If by competition, Bourdieu means modern Western state-supported large- (very) and small- firm market mechanisms, that's one thing. If he means classic individualistic competition which drives prices to approach marginal costs, that's entirely another thing. With the latter, we would have zero diversity, since we'd all still be living in caves. With the former we would have a high degree of phylogenic differentiation, but a large degree of sympatry (been reading Gould's book, in his honor, you see:-). Didn't Thomas Frank also remark somewhere that the United States is a very dynamic society going nowhere? Bill
Re: : Markets and Diversity
Justin Schwartz wrote: Bourdieu argues in his book On Television http://www.leftbusinessobserver.com/Why_TV_sucks.html that competition produces sameness, not diversity. Doug What's his reasoning? Or is it just an observation? I would expect it to depend on the circumstances. jks I quote some of it in my review, but basically his point is that the disciplines imposed by competition for audience and profit maximization force broadcasters to dumb down content, make it superficially sensational but ultimately conventional, and avoid anything that might turn away listeners or viewers. He emphasized this rather than concentration of ownership, an analysis he regarded as superficial. Speaking of superficial analyses, I recommend a listen to Mark Crispin Miller's dreadful demo tape, Queen of the Forest http://www.leftbusinessobserver.com/MCMillerQueen.mp3. Say goodbye to your animal friends... If this is the kind of media Miller wants, I think I prefer Rupert Murdoch. Doug
Re: Re: : Markets and Diversity
Thanks for all of your responses. My intuition is that goods with very small marginal production costs, such as books and television, tend to aim for mass markets, while other types of goods try to be able to capture expensive niches, often with the adjective designer attached to the product. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
RE: Re: Re: : Markets and Diversity
Michael wrote, Thanks for all of your responses. My intuition is that goods with very small marginal production costs, such as books and television, tend to aim for mass markets, while other types of goods try to be able to capture expensive niches, often with the adjective designer attached to the product. Two points: (1)do you really think supply side/technical factors lay behind diversity/nondiversity? (2) is there a chicken/egg problem: the attempt to go mass production/(nondiversity) might lead to large scale production which might lead to low marginal costs (due to the large fixed costs). Eric .
Markets and Diversity
I think Steiner discovered in 1951 that when a second TV station went to air in a market, it invariably felt obliged to emulate the schedule of the first - sorta ensuring a shot at half the going market. He then discovered a third station did precisely the same thing - better to chase 33% of a proven market than actually be worthwhile. It was around entrant number four that a few schedule disparities would first become evident. On that reading, a monopolist with four licences would proffer more variety than four competitors with a channel each. Makes sense to me. And not particularly dangerous for news and current affairs either, as it'd be hard finding a more harmonised quartet than the big US networks, no? I hear MSNBC is the last word in daring TV leftism over there ... Heh heh, Rob. Bill Lear wrote: On Monday, June 3, 2002 at 14:39:44 (+) Justin Schwartz writes: [Doug Henwood writes:] Bourdieu argues in his book On Television http://www.leftbusinessobserver.com/Why_TV_sucks.html that competition produces sameness, not diversity. Doug What's his reasoning? Or is it just an observation? I would expect it to depend on the circumstances. jks It is also highly dependent upon what definition of competition one uses, n'est-ce pas? If by competition, Bourdieu means modern Western state-supported large- (very) and small- firm market mechanisms, that's one thing. If he means classic individualistic competition which drives prices to approach marginal costs, that's entirely another thing. With the latter, we would have zero diversity, since we'd all still be living in caves. With the former we would have a high degree of phylogenic differentiation, but a large degree of sympatry (been reading Gould's book, in his honor, you see:-). Didn't Thomas Frank also remark somewhere that the United States is a very dynamic society going nowhere? Bill
Re: Re: : Markets and Diversity
--- Doug Henwood [EMAIL PROTECTED] wrote: Speaking of superficial analyses, I recommend a listen to Mark Crispin Miller's dreadful demo tape, Queen of the Forest This is truly horrible. Alas, it's typical of what passes for an environmental movement in the US. tim = Check out the Chico Examiner listserves at: http://groups.yahoo.com/group/DisorderlyConduct http://groups.yahoo.com/group/ChicoLeft Subscribe to the Chico Examiner for only $40 annually or $25 for six months. Mail cash or check payabe to Tim Bousquet to POBox 4627, Chico CA 95927 __ Do You Yahoo!? Yahoo! - Official partner of 2002 FIFA World Cup http://fifaworldcup.yahoo.com
Re: Markets and Diversity
Once, a colleague enticed me to work on a textbook project. Little Brown was interested, flew into Boston, shuttled came through a group of editors and executives, until he hit the highest level, where the honcho told him that the book would be unacceptable because the table of contents was not similar to that of McConnell's book. McConnell was the best seller at the time. On Tue, Jun 04, 2002 at 02:36:18AM +1000, Rob Schaap wrote: I think Steiner discovered in 1951 that when a second TV station went to air in a market, it invariably felt obliged to emulate the schedule of the first - sorta ensuring a shot at half the going market. He then discovered a third station did precisely the same thing - better to chase 33% of a proven market than actually be worthwhile. It was around entrant number four that a few schedule disparities would first become evident. On that reading, a monopolist with four licences would proffer more variety than four competitors with a channel each. Makes sense to me. And not particularly dangerous for news and current affairs either, as it'd be hard finding a more harmonised quartet than the big US networks, no? I hear MSNBC is the last word in daring TV leftism over there ... Heh heh, Rob. Bill Lear wrote: On Monday, June 3, 2002 at 14:39:44 (+) Justin Schwartz writes: [Doug Henwood writes:] Bourdieu argues in his book On Television http://www.leftbusinessobserver.com/Why_TV_sucks.html that competition produces sameness, not diversity. Doug What's his reasoning? Or is it just an observation? I would expect it to depend on the circumstances. jks It is also highly dependent upon what definition of competition one uses, n'est-ce pas? If by competition, Bourdieu means modern Western state-supported large- (very) and small- firm market mechanisms, that's one thing. If he means classic individualistic competition which drives prices to approach marginal costs, that's entirely another thing. With the latter, we would have zero diversity, since we'd all still be living in caves. With the former we would have a high degree of phylogenic differentiation, but a large degree of sympatry (been reading Gould's book, in his honor, you see:-). Didn't Thomas Frank also remark somewhere that the United States is a very dynamic society going nowhere? Bill -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
RE: Re: Markets and Diversity
Michael wrote, . . .the honcho told him that the book would be unacceptable because the table of contents was not similar to that of McConnell's book. Which is why my intro micro text will be self-published (for free!) on the web. Eric .
Re: Markets and Diversity
Michael wrote: The market provides fancy cars for rich people and jalopies for the poor -- thus markets create diversity. Could it be possible that Michael has some psychic powers? Apparently, he knew that Doron Levin was going to write this article. By the way, what is described below is taught at the Business Schools under the title of branding strategies or some such thing. Sabri + Automobiles for the (Very Rich) Few Commentary. Doron Levin is a columnist for Bloomberg News. His opinions are his own. By Doron Levin Southfield, Michigan, June 3 (Bloomberg) -- German cars long ago overtook Cadillac and Lincoln as the top luxury brands, thanks to superb design and engineering. Now German automakers are trying to market cars that appeal to the seriously rich. Stuttgart-based DaimlerChrysler AG this year will sell its first Maybach luxury sedans in Europe. The price of the 550- horsepower cars starts at $267,000 and may run to more than $350,000. The Maybach, among other amenities, will have fully reclining rear seats, like those in a first-class airplane cabin. DaimlerChrysler isn't linking its top-of-the-line Maybach with the Mercedes-Benz name, which it has affixed lately to models costing as little as $25,000. Similarly, Bayerische Motoren Werke AG's most expensive model in 2003 won't be a BMW but a Rolls-Royce. BMW of late has rolled out some relatively inexpensive entry-level models. Volkswagen AG, creator of the lowly Beetle, now also builds the Bentley -- which carries a minimum price tag of $214,000. Until four years ago, VW's most expensive model was an Audi. Volkswagen's Strategy ``The general feeling is that we want to make VW brands cover as broad a group as possible, from Seat and Skoda on the low end all the way up to Bentley,'' said Michael Erne, U.S. product manager for the brand. VW sells only about 3,000 Bentleys annually, said Erne. By 2005, however, it plans to add another Bentley model and triple the volume. ``The market isn't big but has tremendous potential, with lots more people who have the potential to buy but don't because they're not inspired,'' he said. General Motors Corp., rumored to be developing a 16-cylinder engine, has invested in Cunningham Motor Co., a start-up in Livonia, Michigan, that hopes to sell a $250,000 ``American grand touring car.'' Bob Lutz, GM's product honcho, has sunk $1 million of his own money into the project. Through April, BMW is the No. 1 luxury car brand in the U.S., with sales of 61,958, up 14 percent from 2001. Mercedes was second and Toyota Motor Corp.'s Lexus was third. Both are up 11 percent. Bentley vs Rolls-Royce DaimlerChrysler expanded Mercedes-Benz sales through lower- priced models and sport-utility vehicles. That may have planted doubts whether the brand still conjures an image of exclusivity -- something the Maybach must now create by setting a new and higher standard, a risky strategy. ``I'm a little troubled by the idea that people who have been buying what they thought was the best sedan in the world find out that you can get a better car,'' said David E. Davis, editorial director of Primedia Inc.'s Motor Trend magazine. Buyers of $200,000-and-up vehicles have an average net worth of about $15 million, according to Volkswagen. Most pay cash. You can also lease a Bentley for three years at $5,000 a month, Erne said, though that too will amount to almost $200,000. Volkswagen won the assets of the famed U.K. maker of Bentley and Rolls-Royce autos in a bitter 1998 auction against BMW. VW paid Vickers Plc the equivalent of $780 million -- only to discover that the deal didn't include rights to the Rolls-Royce name, which BMW later bought separately. Who's Best? BMW, which is designing the V-12 Rolls in Germany, is now completing a new Rolls-Royce factory in Goodwood, England. Only about 1,000 of the hand-built sedans and coupes will be made each year, ensuring their cachet for at least a while. Creating a more exclusive, costlier standard of luxury puts the German automakers in a pleasant place that rivals must envy. Mercedes-Benz and BMW have managed to command higher prices by extending premium branding to more models. The Cadillac CTS, for example, starts at $29,350; BMWs that compare closely with the CTS, in terms of size and power, start at $33,990. The Mercedes-Benz M Class sport-utility vehicle starts at $36,300, 19 percent more than the comparable Ford Explorer at $30,500. Whether German vehicles actually are better than the competition -- or just perceived to be -- is a matter of endless industry debate. In the end the question is decided by the willingness of consumers to pay higher prices. Though hardly the last word, Consumer Reports didn't cite a single Detroit model among its top ten picks for 2002. The BMW 530i was rated the best luxury sedan, followed by the Mercedes- Benz E320 and Audi's A6. Vehicles by Honda Motor Co. and Toyota also made the list. When Maybach reaches the market,
Re: Re: : Markets and Diversity
Bill Lear wrote: On Monday, June 3, 2002 at 14:39:44 (+) Justin Schwartz writes: [Doug Henwood writes:] Bourdieu argues in his book On Television http://www.leftbusinessobserver.com/Why_TV_sucks.html that competition produces sameness, not diversity. Doug What's his reasoning? Or is it just an observation? I would expect it to depend on the circumstances. jks It is also highly dependent upon what definition of competition one uses, n'est-ce pas? If by competition, Bourdieu means modern Western state-supported large- (very) and small- firm market mechanisms, that's one thing. If he means classic individualistic competition which drives prices to approach marginal costs, that's entirely another thing. He was talking about the modern media system, with many outlets competing for eardrums and eyeballs. Doug
Free entertainment threatens the bottom line
New York Magazine, June 10, 2002 Rock stars and music-industry execs once ruled the earth, but now -- in terms of size and profit margins -- the music industry is becoming the book business (minus the literacy). BY MICHAEL WOLFF Radio and rock and roll have had the most remarkable symbiotic relationship in media -- the synergy that everybody has tried to re-create in media conglomerates. Radio got free content; music labels got free promotion. Radio's almost effortless cash flow, and mom-and-pop organization (there were once 5,133 owners of U.S. radio stations), made it ripe for consolidation, which began in the mid-eighties and was mostly completed as soon as Congress removed virtually all ownership limits in 1996. A handful of companies now control nearly the entirety of U.S. radio, with Clear Channel and its more than 1,200 stations being the undisputed Death Star. (Clear Channel is also one of the nation's major live promoters, and uses its airtime leverage to force performers to use its concert services, as Britney Spears and others have charged.) Radio, heretofore ad hoc and eccentric and local, underwent a transformation in which it became formatted, rational, and centralized. Its single imperative was to keep people from moving the dial -- seamlessness became the science of radio. The music business suddenly had to start producing music according to very stringent (if unwritten) commercial guidelines (it could have objected or rebelled -- but it rolled over instead; what's more, in a complicated middleman strategy of music brokers and independent promoters, labels have, in effect, been forced to pay to have their boring music aired). Format became law. Everything had to sound the way it was supposed to sound. Fungibility was king. Familiarity was the greatest virtue. Once Sheryl Crow was an established hit, the music business was compelled to offer up an endless number of Sheryl Crow imitators. Then when the Sheryl Crow imitators became a reliable radio genre, Sheryl Crow was compelled to imitate them. (Entertainment Weekly, without irony, recently praised the new Moby album for sounding like his last.) [In other words, *competition* and *monopoly* are two sides of the same coin. When you have a handful of corporations ruling the radio dial, there is a much more intense need to produce a favorable bottom line.] But then, just as radio playlists become closely regulated, the Internet appears. Suddenly there was another distribution avenue offering far greater product range, notes my friend Bob Thiele, who's been producing, writing, performing, and doing AR work in L.A. for twenty years (and whose father was Buddy Holly's producer), and who, in my memory, never before talked about avenues of distribution. And then, before anyone was quite aware of what was happening, file-sharing replaced radio as the engine of music culture. It wasn't just that it was free music -- radio offered free music. But whatever you wanted was free (whenever you wanted it). The Internet is music consumerism run amok, resulting not only in billions of dollars of lost sales but in an endless bifurcation of taste. The universe fragmented into sub-universes, and then sub-sub-universes. The music industry, which depends on large numbers of people with similar interests for its profit margins, now had to deal with an ever-growing numbers of fans with increasingly diverse and eccentric interests. It is hard to think of a more profound business crisis. You've lost control of the means of distribution, promotion, and manufacturing. You've lost quality control -- in some sense, there's been a quality-control coup. You've lost your basic business model -- what you sell has become as free as oxygen. full: http://www.nymag.com/page.cfm?page_id=6099 Louis Proyect Marxism mailing list: http://www.marxmail.org
Re: Re: Re: : Markets and Diversity
Michael Perelman wrote: Thanks for all of your responses. My intuition is that goods with very small marginal production costs, such as books and television, tend to aim for mass markets, while other types of goods try to be able to capture expensive niches, often with the adjective designer attached to the product. And it's a cliche of marketing these days that it's all about the low end and the high end - Wal-Mart Tiffany's. The middle is where no one wants to be. Doug
Re: Re: : Markets and Diversity
On Monday, June 3, 2002 at 14:22:17 (-0400) Doug Henwood writes: Bill Lear wrote: ... If by competition, Bourdieu means ... He was talking about the modern media system, with many outlets competing for eardrums and eyeballs. Which we might take to have been ushered in during the late 1920s, when radio was effectively handed over to private interests, greatly diminishing the diversity from that point forward. Bill
Dividends make a difference
Dont Wait Up For the Party Its tempting to hope that spectacular market gains will return. Dont hold your breath. And get ready for a new normal By Allan Sloan NEWSWEEK While people wait for normalcywhich they define as rising stock pricesto reappear, the 27-month bear market has wiped out many of the outsize gains investors racked up in the late 90s. The SP has returned less than 1 percent a year for the past four years, according to Aronson+Partnersless than money-market funds. For the past 2-, 4-, 5- and 10-year periods, the stodgy old Dow has outperformed the Nasdaq. And heres a stunner. Richard Bernstein, chief U.S. strategist for Merrill Lynch, calculates that if you invested a dollar in the sexy Nasdaq composite when it started in 1971 and also invested a dollar in the yawn-inducing SP Utilities Index, your utility investment would be worth more. The explanation? The utilities tortoise has beaten the Nasdaq hare because it has paid higher dividends. Over 30 years, dividends really make a difference. In a 20-percent-a-year world, dividends dont matter much. In a 6 or 8 or 10 percent world, they matter a lot. Get used to it. Investors survived and prospered, gradually, for 56 years averaging less than 9 percent. So can you. Put away the party hats and noisemakers. Welcome to reality. full: http://www.msnbc.com/news/760636.asp Louis Proyect Marxism mailing list: http://www.marxmail.org
Turkey: on the brink of chaos
Also see http://www.dailystar.com.lb/opinion/01_06_02_c.htm for an alternative analysis. I thank John Enyang for bringing the above article to my attention. Sabri +++ Turkish Daily News June 3, 2002 All roads lead to early elections Dervis is signalling his intention to enter active politics... One after the other new parties are being established... Members of the three-way coalition government are accusing each other... The military is suggestion resolution to the death penalty and education and broadcasting in Kurdish issues... TUSIAD is intervening in politics by placing ads in papers... The president is gathering a summit of party leaders The political crisis has deepened enough to reach the 'deep state.' For the first time since its creation four decades ago, a National Security Council meeting was not attended by the prime minister, deputy prime minister and the interior minister... Because of his aggravated illness, contrary to claims of recuperation, Ecevit is likely to stay indoors and won't be able to attend the June 7 summit of the party leaders at the Cankaya Presidential Palace The conditions for EU membership, that is lifting of the death penalty, education and broadcasting in Kurdish and lifting of the emergency rule will be resolved, though with pains. The real crisis, however, will be over Cyprus. Neither the deep state, nor the Anatolian people will accept total Turkish withdrawal from Cyprus. 'We may pay a high price over Cyprus' warning of Foreign Minister Ismail Cem months ago had stemmed from this reality Headed by the pro-EU ANAP, the 'Euro-Club' circles are unaware how the pressures on Cyprus and the pro-Kurdish impositions on Ankara are fuelling 'racist-nationalist' tendencies amongst the Anatolian people. It will be too late when those who have not tolerated Le Pen and Haider, realize the sentimental reaction of the silent Anatolian masses. The government is aware that after political criteria time we will come to Cyprus. As it will be unable to resist pressures this year end, it is very likely that it will have to take an early poll decision this fall A development that might alter all calculations and designs, on the other hand, can be lived with the deterioration of the health situation of Prime Minister Bulent Ecevit. As Turkish politics has been no post-Ecevit contingency plan, incapacitation of the prime minister may land the country into political chaos, derail Turkish economy and easily place Turkish democracy on a path of no-return. Irrespective whether they want it, parties may find soon an early election as the sole way out from a catastrophic situation. By Kemal Balci The most critical week for a way out from the crisis that has engulfed Turkish politics has started. The health of Prime Minister Bulent Ecevit, the outcome of the summit of political leaders at the Cankaya Presidential Palace, the unending and uncompromising political contradiction between ruling coalition's senior partner the Nationalist Movement Party (MHP) and the junior partner the Motherland Party (ANAP) will all be clarified this week. The political crisis that's being gradually deepening appears making an early general elections this fall unavoidable, but there is also the risk of Turkey undergoing at any moment an extraordinary development. There are many signs that indicate that the country is being pulled to an early election. It was the Turkish Daily News (TDN) which had reported first that Turkey has entered into an election atmosphere. It was the analysis published in the TDN two months ago that first underlined that an early election was brewing. Two months after a large segment of those interested in Turkish politics conceded that there were many developments that press for an early election this fall. Most lately, the hints of State Minister Kemal Dervis during his trip to London that he was preparing to enter active politics, were indicators that all other options to come out from this political crisis but an early election have all exhausted. Dervis, who had started his revelations with a statement that disclosing an early election date would relieve the Turkish economy as it would end the atmosphere of uncertainty, is still talking on the issue despite a call for silence from Prime Minister Ecevit. Dervis did not stop at stating that a poll would relieve the economy, he furthermore stated that being afraid of an election would mean some other problems existed in a democracy. Apart from Dervis, the Turkish political elite outside Parliament who has also seen an approaching early election, has intensified efforts to establish political parties. Thus, one after the other new political parties are emerging on the political spectrum. The Democratic Turkey Party (DTP), which is known with its close links with former President Suleyman Demirel, has replaced its aged leader Ismet Sezgin with Mehmet Ali Bayar and intensified its
Re: Free entertainment threatens the bottom line
Book publishing follows the same trajectory -- only without free Internet access. Remember when Murdoch cancelled contracts with many of the mid-level writers at Harpers. Those books are migrating to the acadmeic presses, which are becoming more commercial. Regarding Lou's piece on the Internet and music: Mandel, Michael J. 2002. Superstars Sing the Online Blues Business Week (27 May): p. 30. Bhattacharjee, S., Gopal, R. D., and Sanders, G. L., Digital Music And Online Sharing: Software Piracy 2.0? conditionally accepted for publication in Communications of the ACM. The authors counted the number of different artists who made it onto Billboard's Top 200 list, which comes out weekly. They found that number jumped from 498 in 1991 to 655 in 2000, showing that sales were being spread around among many more performers. The authors argue that a key cause was the jump in the number of Internet users, from 3 million to 120 million in the U.S. By allowing buyers to hear a broader selection of artists before they shop, the Net reduces the benefit of a superstar reputation when it comes to record sales. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
RE: Re: Re: Markets and Diversity
Title: RE: [PEN-L:26520] Re: Re: Markets and Diversity BTW, Rosen is of the Chicago school (though not one of the most extreme of that school). That school seems to aim to end diversity of economic thought, by winning the game of competition with other schools. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine -Original Message- From: Michael Perelman [mailto:[EMAIL PROTECTED]] Sent: Sunday, June 02, 2002 8:45 PM To: [EMAIL PROTECTED] Subject: [PEN-L:26520] Re: Re: Markets and Diversity The market provides fancy cars for rich people and jalopies for the poor -- thus markets create diversity. On Sun, Jun 02, 2002 at 08:40:43PM +, [EMAIL PROTECTED] wrote: Michael wrote, In his presidential address to the American Economic Association, Sherwin Rosen claimed that one of the benefits of the market is its ability to provide diversity. Do you suppose Rosen thinks this result (markets provide diversity) is derived from the neoclassical model or is it just part of the pre-analytic vision? I'm not sure what in the neoclassical model would lead to the diversity claim unless it was based on product differentiation. But conclusions about product differentiation is about the number of different versions of the product and not about the range of products provided. That is, if the theoretical products range from 1 to 10, product differentiation might appear as a models 4.1, 4.2, 4.3, and 4.4. But it might not lead to any 3s or 5s. Rosen might be thinking that a large number of different models means that a large range of products exists. But I don't think that the former implies the latter ERic / -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: RE: Re: Re: Markets and Diversity
Actually, he is dead. On Mon, Jun 03, 2002 at 05:16:53PM -0700, Devine, James wrote: BTW, Rosen is of the Chicago school (though not one of the most extreme of that school). That school seems to aim to end diversity of economic thought, by winning the game of competition with other schools. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Munich gets China entry
The Economic Times Saturday, June 01, 2002 Munich gets China entry REUTERS BEIJING: China's insurance industry regulator said on Friday it has given Munich Re, the world's biggest reinsurer, approval to set up a branch. China is opening up its insurance market, now dominated by state giants China Life Insurance Co, People's Insurance Co of China and China Re-Insurance Co, to fulfil its commitments on joining WTO. We have given approval to Munich Re to make preparations for setting up a branch in China, said a spokesman for the China Insurance Regulatory Commission (CIRC). Copyright © 2002 Times Internet Limited. All rights reserved.
Darwinian doctrine
Darwinian doctrine
by Hinrich Kuhls
01 June 2002 22:06
http://csf.colorado.edu/pen-l/2002II/msg01976.html
Anti-Dühring by Frederick Engels 1877
Part I: Philosophy
VII.Philosophy of Nature.
The Organic World
A single and uniform ladder of intermediate steps leads from the mechanics of
pressure and impact to the linking together of sensations and ideas {D. Ph. 104}.
With this assurance Herr Dühring saves himself the trouble of saying anything further
about the origin of life, although it might reasonably have been expected that a
thinker who had traced the evolution of the world back to its self-equal state, and is
so much at home on other celestial bodies, would have known exactly what's what also
on this point. For the rest, however, the assurance he gives us is only half right
unless it is completed by the Hegelian nodal line of measure relations which has
already been mentioned. In spite of all gradualness, the transition from one form of
motion to another always remains a leap, a decisive change. This is true of the
transition from the mechanics of celestial bodies to that of smaller masses on a
particular celestial body; it is equally true of the transition from the mechanics of
masses to the mechanics of molecules * including the forms of motion investigated in
physics proper: heat, light, electricity, magnetism. In the same way,!
the transition from the physics of molecules to the physics of atoms * chemistry * in
turn involves a decided leap; and this is even more clearly the case in the transition
from ordinary chemical action to the chemism of albumen which we call life. [39] Then
within the sphere of life the leaps become ever more infrequent and imperceptible. *
Once again, therefore, it is Hegel who has to correct Herr Dühring.
The concept of purpose provides Herr Dühring with a conceptual transition to the
organic world. Once again, this is borrowed from Hegel, who in his Logic * the
Doctrine of the Notion * makes the transition from chemism to life by means of
teleology, or the science of purpose. Wherever we look in Herr Dühring we run into a
Hegelian crudity, which he quite unblushingly dishes out to us as his own
deep-rooted science. It would take us too far afield to investigate here the extent to
which it is legitimate and appropriate to apply the ideas of means and end to the
organic world. In any case, even the application of the Hegelian inner purpose *
i.e., a purpose which is not imported into nature by some third party acting
purposively, such as the wisdom of providence, but lies in the necessity of the thing
itself * constantly leads people who are not well versed in philosophy to
thoughtlessly ascribing to nature conscious and purposive activity. That same Herr
Dühring who is fi!
lled with boundless moral indignation at the slightest spiritistic tendency in other
people assures us
with certainty that the instinctive sensations were primarily created for the sake of
the satisfaction involved in their activity {D. Ph. 158}.
He tells us that poor nature
is obliged incessantly to maintain order in the world of objects {159} and in doing
so she has to settle more than one business which requires more subtlety on the part
of nature than is usually credited to her {165}. But nature not only knows why she
does one thing or another; she has not only to perform the duties of a housemaid, she
not only possesses subtlety, in itself a pretty good accomplishment in subjective
conscious thought; she has also a will. For what the instincts do in addition,
incidentally fulfilling real natural functions such as nutrition propagation, etc.,
we should not regard as directly but only indirectly willed {169}.
So we have arrived at a consciously thinking and acting nature, and are thus already
standing on the bridge * not indeed from the static to the dynamic, but from
pantheism to deism. Or is Herr Dühring perhaps just for once indulging a little in
natural-philosophical semi-poetry?
Impossible! All that our philosopher of reality can tell us of organic nature is
restricted to the fight against this natural-philosophical semi-poetry, against
charlatanism with its frivolous superficialities and pseudo-scientific
mystifications, against the poetising features {109} of Darwinism.
The main reproach levelled against Darwin is that he transferred the Malthusian
population theory from political economy to natural science, that he was held captive
by the ideas of an animal breeder, that in his theory of the struggle for existence he
pursued unscientific semi-poetry, and that the whole of Darwinism, after deducting
what had been borrowed from Lamarck, is a piece of brutality directed against humanity.
Darwin brought back from his scientific travels the view that plant and animal species
are not constant but subject to variation. In order to follow up this idea after his
return home there was no better field available than that of the breeding
Darwinian doctrine
Darwinian doctrine by Chris Burford 03 June 2002 13:41 UTC Further on in the letter Engels writes I should regard the social instinct as one of the most essential factors in the evolution of humans from apes. Although this might imply that social factors are not important for apes, it is perhaps one of those passages Engels wrote in haste. Charles: Or Engels might not be saying that social factors are not important for apes, but that social factors are even greater with humans than apes, and that they are the essence of the transition for apes to humans. What is important is the main idea, which is consistent with the importance he gives to work and to language in human evolution: that we are a social species, temporarily under the fragmenting sway of capitalist relations of production. Chris Burford
Re: Re: RE: Re: Re: Markets and Diversity
So is the Chicago school. Michael Perelman wrote: Actually, he is dead. On Mon, Jun 03, 2002 at 05:16:53PM -0700, Devine, James wrote: BTW, Rosen is of the Chicago school (though not one of the most extreme of that school). That school seems to aim to end diversity of economic thought, by winning the game of competition with other schools. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
The future's so bright
You thought I was joking, right? Sabri ++ The future's so bright ... You may not need shades just yet, but the economy is starting to look sunny. June 3, 2002: 5:27 PM EDT By Kathleen Hays, CNN/Money Contributing Columnist Manufacturing rebound continues! Residential construction hits record high in April! Commercial building rises for the first time since January! Home prices jumped 6 percent in the first quarter, from a year earlier. Why all the exclamation points? Because if you're just watching the stock market, you might think the economy was still looking pretty dismal. Let's make it clear: The economy is in recovery. That's the message from Monday's reports, and more good news probably lies ahead. Today we again see that one of the four indicators used to date the business cycle -- the turn from growth to recession, back to growth again -- is flashing a major green light, and that's the manufacturing sector. The National Bureau of Economic Research has four indicators -- employment, industrial production, personal income and business sales. Manufacturing makes up about 87 percent of industrial output. The Institute of Supply Management's monthly survey of manufacturers is one of the most important numbers we get each month. With May's rise, the group's index has shown growth in manufacturing for four months in a row, bringing it to its highest level since February 2000. And new orders are up even more than the overall business activity index, so all this points to more gains ahead for manufacturing and the overall economy. Also very positive: Inventories are too low according to 22 percent of those surveyed, and economists say that means a lot of companies will have to start rebuilding them, and that means more orders, output, and maybe even more jobs. According to John Ryding of Bear Stearns, most of the strength in the latest report continues to come from sectors related to the consumer like autos and housing. Technology is still putting in a mixed performance. There's still little sign that capital spending is picking up and he says -- like virtually every other economist on Wall Street -- that's what MUST pick up for the economy to really start firing on all cylinders. But Ryding is convinced that pickup is just around the corner. Worth noting the rise in the Prices Paid component of the ISM survey to 63 in May from 60 in April. Remember: Any number above 50 means growth, so this signals more companies receiving higher prices for their output. Once upon a time, we would have worried about inflation and the Federal Reserve raising interest rates, but not now. Even Fed Chairman Alan Greenspan thinks companies need to raise their profits if the economy is to grow again. And getting some pricing power back for manufacturers is one way of doing that. Greenspan has also noted that inflation is low and expectations for rising inflation low, which gives the Fed time before it raises rates. Interpretation by many Wall Street economists: The Fed is willing to tolerate a little more inflation to make sure the recovery takes hold. Why this shift from a couple of years ago? As Greenspan has noted, whatever rise in inflation develops is coming off a very low base, AND worker productivity appears to be strong enough to keep unit labor costs low. Maybe even more important is a perception that if the economy were to falter from here, de-flation could be just around the corner. When more prices are rising than falling, profits tend to get crushed, and company layoffs really go through the roof. Not a pretty picture. Not a likely scenario in the United States, according to most economists, but a reality in Japan. That makes it more than a theoretical abstraction for the Fed. Speaking of prices going up, the official numbers on single family homes are in from the Office of Federal Housing Enterprise Oversight, an independent entity of HUD which watches over the nation's mortgage lending giants, Fannie Mae and Freddie Mac. Prices rose 6.05 percent in the first quarter of this year, but that is actually a less rapid pace than last year. Take a look. Prices rose 7.4 percent in the fourth quarter, 8.9 percent in the third quarter, 9.0 percent in the second quarter and 9.3 percent in the first quarter -- all on a year-over-year basis. It's more good news for homeowners because it increases their wealth. And that's good for the economy if it helps keep spending going at a time when stocks are going nowhere in the aggregate. When we get to the end of the week, you might not feel the news is so good because the May employment report is expected to show only another small gain in new jobs and a small rise in the unemployment rate. But as long as that helps keep the Fed on the sidelines, with fingers crossed and hoping for a sustained recovery, then maybe that's the kind of not-so-good news that isn't so bad. Kathleen Hays co-anchors Money Markets, airing Monday to Friday on CNNfn, and
Krugman's IQ drop..
[Jim Devine, did PK ever take an ethics class? Or a political theory class? Has he ever *worked* in a Fortune 500 firm?] June 4, 2002 Greed Is Bad By PAUL KRUGMAN The point is, ladies and gentlemen, greed is good. Greed works, greed is right. . . . and greed, mark my words, will save not only Teldar Paper but the other malfunctioning corporation called the U.S.A. Gordon Gekko, the corporate raider who gave that speech in the 1987 movie Wall Street, got his comeuppance; but in real life his philosophy came to dominate corporate practice. And that is the backstory of the wave of scandal now engulfing American business. Let me be clear: I'm not talking about morality, I'm talking about management theory. As people, corporate leaders are no worse (and no better) than they've always been. What changed were the incentives. Twenty-five years ago, American corporations bore little resemblance to today's hard-nosed institutions. Indeed, by modern standards they were Socialist republics. C.E.O. salaries were tiny compared with today's lavish packages. Executives didn't focus single-mindedly on maximizing stock prices; they thought of themselves as serving multiple constituencies, including their employees. The quintessential pre-Gekko corporation was known internally as Generous Motors. These days we are so steeped in greed-is-good ideology that it's hard to imagine that such a system ever worked. In fact, during the generation that followed World War II the nation's standard of living doubled. But then, growth faltered - and the corporate raiders arrived. The raiders claimed - usually correctly - that they could increase profits, and hence stock prices, by inducing companies to get leaner and meaner. By replacing much of a company's stock with debt, they forced management to shape up or go bankrupt. At the same time, by giving executives a large personal stake in the company's stock price, they induced them to do whatever it took to drive that price higher. All of this made sense to professors of corporate finance. Gekko's speech was practically a textbook exposition of principal-agent theory, which says that managers' pay should depend strongly on stock prices: Today management has no stake in the company. Together the men sitting here [the top executives] own less than 3 percent of the company. And in the 1990's corporations put that theory into practice. The predators faded from the scene, because they were no longer needed; corporate America embraced its inner Gekko. Or as Steven Kaplan of the University of Chicago's business school put it - approvingly - in 1998: We are all Henry Kravis now. The new tough-mindedness was enforced, above all, with executive pay packages that offered princely rewards if stock prices rose. And until just a few months ago we thought it was working. Now, as each day seems to bring a new business scandal, we can see the theory's fatal flaw: a system that lavishly rewards executives for success tempts those executives, who control much of the information available to outsiders, to fabricate the appearance of success. Aggressive accounting, fictitious transactions that inflate sales, whatever it takes. It's true that in the long run reality catches up with you. But a few years of illusory achievement can leave an executive immensely wealthy. Ken Lay, Gary Winnick, Chuck Watson, Dennis Kozlowski - all will be consoled in their early retirement by nine-figure nest eggs. Unless you go to jail - and does anyone think any of our modern malefactors of great wealth will actually do time? - dishonesty is, hands down, the best policy. And no, we're not talking about a few bad apples. Statistics for the last five years show a dramatic divergence between the profits companies reported to investors and other measures of profit growth; this is clear evidence that many, perhaps most, large companies were fudging their numbers. Now, distrust of corporations threatens our still-tentative economic recovery; it turns out greed is bad, after all. But what will reform our system? Washington seems determined to validate the judgment of the quite apolitical Web site of Corporate Governance (corpgov.net), which matter-of-factly remarks, Given the power of corporate lobbyists, government control often equates to de facto corporate control anyway. Perhaps corporations will reform themselves, but so far they show no signs of changing their ways. And you have to wonder: Who will save that malfunctioning corporation called the U.S.A.?
