“The primary purpose that the military serves for big business is to use up their surplus they couldn’t otherwise dispose of,” he told Press TV’s U.S. Desk on Wednesday.
Reports say U.S. arms sales could surge by nearly one-third to $50 billion in 2011. Over the past decade, U.S. arms sales have grown from $8 billion, and they are likely to continue growing in [the] coming years.
Commentary: Sadly, his comments on saving a depression with defense spending since WWII and a “surplus” needed to be spent on a war economy are utterly misguided.
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Kevin has a great radio voice.
Just another affirmation of Kevin Carson’s distorted view on economics, if Studies in Mutualist Political Economy wasn’t enough.
From what I understand Carson maintains that barriers to entry in the field of cybernetics, electronics, heavy industry, mass transportation, etc. such as patents, tariffs, contracts, and heavy government subsidies create large amounts of surplus products that no one on the free market would have any use for.
If this product were released on the market prices would fall drastically and there would be a serious recession. The only alternative is for the state/military to buy these products back and keep the whole economy afloat.
That is my bare bones understanding.
Yeah and it’s a stupid argument.
He’s engaging in a bonehead mistake: he is treating capital goods as homogenous instead of heterogeneous items. There is no “surplus” of things produced when the government intervenes. The intervention causes DIFFERENT STUFF to be made.
Honestly, what use does the private economy have for the various boondoggle systems used in a Raptor aircraft, or in a nuclear submarine for example?
Mmm,
Maybe we have a disagreement over terms. Maybe it is more accurate to say that resources are allocated to produce “different” goods rather than “surplus” goods, but we both agree that there is no private sector demand for them.
This lack of private sector demand is met by state purchases. Carson maintains that a large section of the US economy, since the end of the second world war, has functioned this way, and that a serious depression (correction) would take place were state subsidies to end.
Again, my bare bones understanding.
I think our main disagreement is over terms. Call it “surplus” or “different” the point is that the government, through establishing barriers to entry in industry, allows those industries to sell their products at a higher price than they otherwise would be able to.
The problem is that there is no real private demand for this surplus production at that price so the state must buy it. Carson argues that most of the US economy is shaped in this fashion and there would be a depression (correction) if US government aid were to cease.
There is no such thing as surplus production. The State creates demand for products that would not have been produced in a free market, but there is no surplus. If the State had not demanded these goods even though they had already been produced, these goods would still be demanded only at a lower price. This has nothing to do with barriers to entry. Barriers of entry do not lead to production of goods that must then be sold at a loss, if not for the government stepping in to save the day. This is pure nonsense.
I’m sorry, maybe I’m missing something; but wouldn’t a “barrier to entry” prevent anything from being produced in those areas in the first place? Or more simply, if you can’t even get into a market, how can you produce a surplus?
I think the point is barriers to entry allow existing producers to charge more for their products than they otherwise would be. To maintain existing economies of scale it is impossible, in the short term, to reduce production, so there remains an unsold surplus.
Joseph Stromberg wrote about this in the JLS.
http://mises.org/journals/jls/15_3/15_3_3.pdf
Barriers of entry allow inefficient producers to stay in business at the expense of the more efficient producers. That is all! They charge more because they produce less per unit of cost.
To paraphrase, the barriers to entry allow the producers to charge a higher price than they other wise would be able to. They can either raise prices or reduce production. Reducing production means laying off workers, leaving previously constructed factories unrunning, etc. That may have undesirable political results and leaders of business may not be in favour of it. The other alternative is to produce at full capacity and have the tax payers purchase the surplus product.
Producers can’t charge more then what consumers are willing to pay for. Barrier of entry allows no such magic.
who are you paraphrasing? Yourself? Your entire explanation lacks any coherency.
“Producers can’t charge more then what consumers are willing to pay for. Barrier of entry allows no such magic.”
To my understanding (state established) barriers of entry lower supply, which does raise the price.
“There is no such thing as surplus production. The State creates demand for products that would not have been produced in a free market, but there is no surplus. If the State had not demanded these goods even though they had already been produced, these goods would still be demanded only at a lower price.”
I think this is what is meant when Carson says the US economy is largely dependent on war and war derivatives. If the US government ceases subsidizing these industries the market price of their products will fall so drastically that they will stop being productive.
I am drawing mostly from the Joseph Stromberg essay, “The Role of State Monopoly Capitalism in the Rise of the American Empire”, you can search it in the JLS.
“To my understanding (state established) barriers of entry lower supply, which does raise the price.”
If the price is lower on account of the lower supply, there is still no need for the State to buy the products.
Mstob, I read the article by Stromberg, it is very very good but has some minor errors. His analysis is too heavily based on Schumpeter’s works but Schumpeter despite his brilliance was not an Austrian ( Hell, he was an Austrian, literally, he-he. ) So they used such terms as “surplus of capital”and “overproduction”, things loved by Marxists but alien to Austrians.
Kevin Carson is an economic ignoramus that does nothing but promote syndicalism and socialism in the guise of libertarianism. How many times is he going to be outed for this?
None, of course, since he is none of those things and does none of those things:-
- In his economics, he draws on the Austrian tradition, among others. Around here, that is considered sound. Right or wrong, he definitely does no the material – and so he is no economic ignoramus.
- He does not advocate syndicalism (rule by trade unions, or at least mediated by them). He does advocate mutualism, which involves having any joint activities that turn out to be desirable carried out by voluntary groupings – very anarchist.
- He does not advocate socialism, at least not of the sort that that term conveys these days (from everybody according to his means, to everybody according to his needs). He does admire the sort of thing that early anarchists, mutualists and proto-libertarians covered under that term, when they fell outside state or other compulsion.
However, Kevin Carson will no doubt continue to be falsely accused of such things, by those who simply lump him in whichever category he reminds them of, from among the limited range of things they know about, rather than paying attention to what he is actually on about.
Drat! Finger trouble. He does know the material.
I don’t understand the headline. How is Carson outed as Walter Block? Please, someone explain to me what that means.
The photo shown during the interview is Walter Block, not Mr Carson. (There are no known photos of Mr Carson)
Wow, that (no photo of Carson) is interesting. Mystique always sells…
BTW, maybe this is the reason Walter Block’s picture was shown:
http://en.wikipedia.org/wiki/Kevin_Carson#Criticism
the video has been changed, it now has a photo that may or may not be Mr Carson and a charming shot of what is allegedly Auburn, AL.
I was going to say that doesn’t look like Block at all.
I’m not so sure it’s a disagreement of terms as a correct versus incorrect view of what’s going on.
When a captive market is available — as in the sale of arms, military-related electronics, etc. to governments which pay for the goods using stolen tax money and which are vulnerable to lobbying and political pressure to keep buying and buying and buying — the people benefiting from that market will do everything in their power to keep that market going and growing rather than free it and take the risks involved in re-orienting themselves to serve genuine, undistorted economic demand.
The US economy has been “structured by war” since World War Two for precisely that reason. The political pressure comes not just from the owners of businesses engaged in military/government contracting (who want the gravy train kept rolling), but from the workers in those businesses (who are well-paid and would much rather keep turning bolts on JDAM kits than try to find new jobs), those workers’ families (who don’t want Dad unemployed), local governments and members of local communities (who see a running arms factory and are afraid that if it closes, its owners and workers won’t find other ways to make the money that they pay in taxes, spend in shops, etc.).
Once the Third Reich and Dai Nippon were defeated, there were definite political incentives to make the Russians out to be scarier than they really were. And when the Soviet Union collapsed, then there had to be new bad guys, because if there’s not at least a “cold” war and preferably several “hot” ones going on, then yes, there IS a “surplus” of assault rifles, fighter aircraft, etc. being produced versus anything like real demand … and those companies would rather keep producing that “surplus” than either lay off the workforce or hope that they can be the ones who figure out what widget to produce that an unforced market will buy … and they know politicians will respond to the aforementioned pressures that can be brought to bear.
I don’t think it’s going too far to say that a sudden upsetting of this apple cart would produce immediate corrective effects that looked like recession or depression between the stoppage of the whole thing and the time that
a) Stolen tax revenue stopped flowing to government and started being noticed back in taxpayers’ pockets, where it could express as economic demand for MORE non-war stuff or NEW non-war stuff;
b) The owners of businesses found new ways to employ their capital/industrial plant to respond to real economic demand rather than politically created, tax-financed government “demand;” and
c) The former workers in those businesses found real employment to replace politically created, tax-financed jobs they had been working.
That’s the view I consider correct. I think it’s the view Carson was expressing. The mistake I’m seeing here is in attempting to apply free market predictions to non-free-market phenomena.
“The mistake I’m seeing here is in attempting to apply free market predictions to non-free-market phenomena.”
What Tom said.
There’s surplus productive capacity because the state’s artificial property rights, artificial scarcity rents, and monopolies increase the income of classes with a higher propensity to invest and decrease that of classes with a higher propensity to consume. There’s nothing impossible or logically inconsistent with the state shifting income from aggregate consumption to aggregate investment, and creating an economic imbalance thereby.
Investment necessitates a demand for capital goods, so I fail to see your point. In other words, investment is demand.
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