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Salient. Victoria University Student Newspaper. Volume 36, Number 21. 5th September 1973

Economics in the Land of Zog

page 7

Economics in the Land of Zog

Over the last few months there have been various murmurings of discontent coming from the Economics Department. Students at more advanced stage have been complaining about the amount of work that is sandwiched into limited credit courses, There have also been complaints about the excessively high failure rate for Econ 201.

At a meeting on Tuesday of last week of staff and students, and an earlier discussion at the end of last term between a delegation of students and the chair man of the department. Professor Sloan, these problems were raised, and a fair degree of change was achieved. A new exam has been arranged for those who failed Econ 201, and a reduction of workloads and extension of deadlines has been arranged for Econ 301, the compulsory 300-series paper.

But this is far from all of what students in the department want. There is a feeling that terms requirements are useless under the system of continuous assessment which is currently operated. Students suspect that staff have been mechanically prescribing textbooks, regardless of the cost — although the department may now try to remedy this Moreover, there seems to be no certainty that the situation will not be allowed to worsen once again; and to this end, students are pressing for some permanent channels of liaison between themselves and the staff.

Another source of disagreement, perhaps among a smaller proportion of students is over the gradual indoctrination of students in capitalist thinking. Some staff members pretend to have academic objectivity, yet they can consistently support capitalist ideology. When students begin to study Economics, they start with Samuelson, e.g. "A parable on the rationing role of efficient pricing. There were in Flanders two kingdoms. In Zig, good King Jean commandeered the food brought to the city in time of famine, paying the peasants a just (but generous fee) and rationing supplies in fair shares for all. As the famine persisted, the dying citizens blessed the dying King.

In nearby Zog, at a time of plenty each of a dozen merchants stealthily built (and stocked with cheap grain) a warehouse of food. When famine came, they sold the food at double the usual price, stripping people even of their watches and jewels. Some ( but by no means all) of the jewels they then gave to less-hard-hit peasants to coax out still more food; and as the news spread, peasants came with food from as far away as Zig. The longer the famine, the higher the price Zogites paid for food, until finally the market rationed them to a minimal diet. By the time the famine ended the whole city was in debt to the merchants but alive; and each merchant was resentful that competition from his colleagues had kept him from increasing his fortune twentyfold, rather than only fourfold."

This one quotation from Samuelson's "Economics: An Introductory Analysis" demonstrates the basis of the Economics I course at this university. It also has implications for the whole of the teaching of Economics. The whole line of approach constitutes an apology for the capitalist free enterprise system. As is stated elsewhere in this famous book: "All economic life is a blend of competitive and monopoly elements. Imperfect competition is the prevailing mode, not perfect competition. This is a fact, not a moral condemnation."

Cartoon about starvation and capitalism

The issue in economics is how much power to give to monopoly capitalism.

In the manner in which students are generally encouraged to study economics, monopoly capitalism is one of the things which is taken as given. Monopoly is an imperfection — but are students asked to defeat the injustices and inequalitites that it imposes upon them? Of course not. What orthodox economics advocates is a return to a state of perfect competition. Therefore we must reduce tariffs and have freer international trade. The impossibility and unworkability of perfect competition is irrelevant, as is the fact that any free enterprise economic system automatically tends to concentration, or monopoly. But Samuelson views socialism as some neo-fascist "totalitarian dictatorship of production" — anyone who goes along with this view should read some of the recent Salient articles on China.

This attitude is exemplified in an essay topic that was set for the Microeconomics part of Economics II last year. There was a quotation from Schumpeler, a writer known for his admiration for the role of capitalism in economic development, and particularly the role of monopoly. Students were asked to comment on it, and to assist them, they were referred to a series of readings glorifying capitalism. The quotation from Schumpeter referred to his distaste for perfect competition, and students were expected to denigrate perfect competition and to worship monopoly capitalism instead, to admire the role of monopoly in forcing lower wages for workers, in charging higher prices for products, and other abuses. The association between the concentration of economic power and the concentration of political power was to be ignored. Socialism, as the alternative to both the mythical perfect competition, and the very real monopoly capitalism, is not considered.

Fat Freddy's Cat comic

Some economics teachers, hower, are not always fond of considering reality. If the practical examples of what they are teaching might tend to tarnish the image of capitalism, the practical examples are not given. A case in point is the discussion of "price discrimination" as a facet of monopoly power, which is again, a topic in the Microeconomics course at Economic II. Perhaps in example is given of the foreign dumping of surplus production — the EEC butter, for example But is monopolistic price discrimination ever considered in the context of the factor market? Of course not. And why? Precisely because the ability to definitely, irreversably separate: the working class by the colour of its skin is the basis of institutional racism in Southern Africa. How could it be acknowledged that monopoly capitalism was the basis of that deservedly loathed doctrine of apartheid?

This is part of the role that capitalist economics has taken of glossing over all the evils of capitalism. One of the worse examples of this is in the role that is generally, accorded to advertising. Orthodox economics views advertising (a facet of imperfect competition) as a minor cost which is outweighed by the advantages there by afforded the consumer who is enabled to choose between one brand of soap and another. Naturally the increased price that must be paid to cover the costs of all the advertising and useless packaging is ignored. The role of packaging in environmental despoliation is conveniently forgotten.

Economics like many other social sciences is also used to defend the structure of capitalist society against outside attacks. Some illuminating insights into this practice can be gained by looking at the orthodox views of Marxian economics. Take as an example the attitude adopted to Marx's prediction of the increasing misery of the proletariat. In Econ 322, when Marxian Economics is discussed students are told that when statistical data are examined, this prediction is found to have been proved false in reality. But Econ 326 students were taught that there is a widening gap between the rich and the poor — the inference is that it is all right to tell the truth unless the truth is shown to blacken capitalism.

Despite Samuelson's claim that the price system can resolve everything quite obviously it cannot resolve the problems of economic fluctuations. Bourgeois economists are forced to accept that alternating slumps and rising prices are inevitable. They refuse to admit that the cause of economic fluctuations might be the price system and the anarchy of capitalist production. The economists once again have to leave problems unresolved because the cannot risk damaging their sacred ship of capitalism.

That, then is a brief outline of some of the faults that may be observed with respect to what is taught as economics at this university. But economics students should not give the subject up. Given a different perspective (that is, if the student is prepared to attack capitalism), the subject can be quite instructive. Just be prepared to remind your lecturers when they are bullshitting.

By Simon Langton