Links. (Super-)markets. And Project Syndicate really needs a better fact checker.
I love (most) companies. I love (most) markets. And like Ricardo Hausmann I totally think that investments and increases in scale led to unimaginable increases in productivity, though we have to remember that the largest absolute increase in productivity in spinning took place when the distaff was replaced by the spinningwheel – according to a woman I once talked with at a local fair, who had mastered the distaff as well as the spinning wheel, the wheel is two to three times as productive. I.e. – it cut the time needed to spin a certain amount in half. Such improvements in productivity also enabled increases in prosperity – including shorter working weeks, though we should not forger that people spinning in putting out systems using the spinning wheel or the many single women in pre industrial revolution urban centers were, ahem, not always the most prosperous members of society – though they took part in a well defined market system. Unlike Hausmann, however, I do think that government production (most roads, most education, large parts of healthcare and insurance) is an important part of our present prosperity, too. Hausmann does not even mention this – just like the neoclassical macro models, which almost always assume that government production has zero value by nature. Hausmann also forgets about rent extraction, for instance by multinationals who want to drill for oil and natural gas in Peru and are not taxed enough. And Hausmann is wrong about Peru, too. That’s not a dirt poor country and poverty is (according to world bank data) falling fast, while economic growth is, compared with the South American average, high and stable. Again: why doesn’t Project Syndicate (the site which published the Hausmann blog) have a better fact checker! Markets can, sometimes, contribute to prosperity or to the ability of people to survive. And Hausmann is right that larger, wage labour based companies often do a better job at this than cozy small scale companies of the self-employed, which have to few resources to invest. Though Dutch family farmers did an outstanding job at this – aided however by government-funded research and development and education, which took place within a non-market framework with a very high involvement of these family farmers and suppliers. the point: ‘the market’ does not exist. All markets are by necessity historically contingent while there is a continuous redefinition of the production border between companies and, for instance, households (solar panels, for an example). And we
might need strong unions, as a counterfailing power to large companies like Walmart, which employs 2,2 million people.
During an outdoor trip (I’m a guide, see below) I happened to run into a Lidl (a Germany based food discounter which is upgrading) manager who is responsible for part of the organization of the ‘country weeks’ (French food, Italian food, Spanish food, Greek food etc.). One of the problems with the Greek food week is that many Greek food companies are simply too small to deliver the 2.300 European Lidl supermarkets. But this is of courtse a ‘golden sorrow’ for the Greek. I mean – think about why there isn’t a Dutch food week. Food companies are large enough!
While shopping at the Aldi (a Germany based food discounter which for decades has resisted the lure of upgrading) I ran into a ‘corporate responsibility’ folder of the Aldi. Aldi is a very rules based, efficiency boosting tough negotiator. Which however, unlike the upscale Albert Heijn supermarkets in the Netherlands, does not employ as much very cheap sixteen and seventeen year olds as possible but which keeps the same people for years – and offers them career possibilities. Remarkably, they seem to take the rules based approach into the realm of ‘corporate responsibility’ – just another set of demands imposed upon the suppliers (global supply chains in macro economic parlance, ’empire’ as its called in heterodox circles). They state that they sell ‘responsible’ fish and coffee and chocolate while they have Greenpeace and the WWF as advisors. I’ll phone Greenpeace about it.
4) The outdoor season is in full swing!