Guest post: This Ricardian Hell

Originally a comment by Bernard Hurley on Your disease is their cash cow.

This is not industrial capitalism in the sense which Smith, Marx or Ricardo would have understood it, rather it is what Ricardo called “rent seeking.” The point is that the prices do not reflect the value of the product on a competitive free market but rather the “economic rent” you can levy in virtue of “owning” property, in this case so-called intellectual property. Ricardo warned that we may end up in a sort of neo-feudal society run by a few rentiers who own all the property, be it real estate, intellectual property or so-called financial assets. Just as the serf could only exist if he/she paid whatever tithe to the feudal lord demanded, so the ordinary person will only be able to exist by paying whatever rents the rentiers demand.

One of the problems for the left is that Marx argued that this “Ricardian Hell” as one 19th century commentator put it, is impossible because the financial sector could never become more powerful than the industrial sector. This leads to some orthodox Marxists denying that this is happening and actually supporting many neo-liberal policies, after all, if the “iron laws of history” tell you that society cannot revert to some sort of feudalism then it obviously cannot be happening.

Plus a comment on the Facebook post of Your disease is their cash cow.

Ayn Rand did not advocate a free market as it would be understood by the Classical economists Smith, Ricardo or Marx nor as understood by the neo classical economists sudh as Hayeck, Friedman or Bernanke; she just advocated naked greed whether through the market or through rent-seeking or probably through anything else. Neo-liberal theory says you should try to prevent rent-seeing in order to protect the free market. This is the rationale for ant-trust laws and for breaking up monopolies.

The problems the Western economies have are much greater than those that would be posed by a neo-liberal government that consistently followed neo-classical economic principles. The greater problem is that the FIRE (Finance, Insurance and Real Estate) sector has become so powerful that it can, if politicians let it – and not many seem to want to stand up to it, control the economy. Meanwhile “free market” has just become an expression of approval/disapproval and is banded about by economic ignoramuses in the media. When something is baptised as being in accordance whith the “free market” it shuts down rational discussion of the issues.

Consider this: in the nineteenth century the USA refused to recognise European patentents because “free market.” Now it is attempting to impose, through international trade deals, its own patents on the rest of the world. Again because “free market.”

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