one nonsensical claim per paragraph, more or less.

here’s a scary thought – a party acquiring power, populated by “courageous” politicians willing and able to do what RM would have them do.

That reminds me, here’s a wonderful novel about economics and central planning – highly enjoyable and informative

http://www.amazon.co.uk/Red-Plenty-Francis-Spufford/dp/0571225233

A bit harsh Luis ? [1]

This is not a call for a soviet style system, rather a state commitment to health, education and reasonable stock of social housing – for a better or worse this is what we have had for some time – I share the authors concern about handing public assets over to the investment bankers, or the other fat cats who will put ability to pay at the heart of subsequent services.

a&e

if you think RM’s views correspond to moderate left-wing ideas (of the sort I myself hold) such as “state commitment to health, education and reasonable stock of social housing” I think have not exposed yourself to the full power of his lunacy.

oh dear – I didn’t literally mean RM is a Soviet style central planner, although evidently I think his thinking bears enough resemblance that I was reminded to recommend a book I have been meaning to recommend here for a long time.

It is the new welfare state. Welfare for richpeople and elites. These people are the greedy ,selfish and they want to control every aspect of our lives. Never mind cradle to grave socialism this now cradle to grave corporatism.

They have bought the politcal class on both sides of the Atlantic. The politicians arbe just puppets. The tories have always been the puppets of the elites but labour and lib Dem have all now bought into the new elite greed. In the Us Obama has been a huge fake. He puts ex bankers in charge of his financial policies. The very same bankers who ten years ago demanded the deregulation that has lead to the meltdown. In addition he is about to destroy the social security system,in exhange for possible tax reform down the line that will never happen.

The so called free market which does not exist,and has been shown to not exist by the bail out of failure is the new religion. The rich will get rich when the fake market turns a profit,and will be bailed out when they fail. The idiotic Adam Smith institute can wail about trade unions all it likes. The real closed shops and restricted practices are the game of thee rich elites.

Pitch forks and guillotines are the only way change will come now. Which is why the puppet politicians have been creating a militarized police force for the last 30years. Fascism has triumphed and we all will be slaves.

What is quite joyous is that this edit leaves out most of the truly silly things that Richard says in the fuller version of it.

Well edited, whoever it was. Although this:

“So not only are these services now more costly because a profit margin has been or is being added into their cost structure”

really is a very strange thing for an accountant to say. Even an accountant who skipped their economics lectures at uni should grasp that the incentive to make profits can (and sometimes does) increase productivity so that goods and services provided by profit seekers are not necessairly more expensive than those provided by non for profits. Only in a static economy would a profit margin lead inexorably to higher prices.

The state exists solely to benefits elites via PFI?

edited out all the truly silly things, you say?

he seems to be complaining that privately run “free schools” are free only because they are taxpayer funded. Think about that. You support a tax payer funded education system which is free at the point of use of course schools are free because they are tax payer funded you buffoon.

2 paragraphs down.

@7, I agree, that’s a good one, especially given Richard’s insistence that public choice economics is a load of tosh. I would have said that one belief of his proves it myself.

A couple of bits edited out from the original:

“I am aware that the terms neoliberal and neoclassical are technically the same in economic theory ”

“Neoliberal economics assumes that there is nothing markets do not know, and therefore nothing they have not already built into the prices that they charge.”

“David Cameron and George Osborne led the way in the UK when, without an electoral mandate, they secured power”

As I say, some of the true howlers have been edited out.

This article is based upon a false premise because the state in the UK is growing, not shrinking. The long term trends in terms of the percentage of people employed by the public sector and the percentage of income taxed and spent by government are clear.

There are arguments to be had about the looting of state assets by private contractors (such as the big management consulting firms that get paid through the nose for performing simple tasks formerly carried out by civil servants) and about the cowardice of elected politicians who duck tough decisions, instead subcontracting them to unaccountable quangocrats, judges and transnational bodies such as the EU. However this is a result of a decadent state not a shrinking one.

@ 8 Luis

“he seems to be complaining that privately run “free schools” are free only because they are taxpayer funded. ”

Does he? I read it as him complaining that the money paid to free schools goes into private sector hands: “It is a state that wants to privatise its education system through ‘free schools’ – free only because yet more tax goes to the private sector in the process.”

RM: “we now have weak governments led by weak politicians”

They are not weak, they are complicit.

Why do I always get the impression from Mr Murphy that he would like a nice strong State with a big strong man in charge, doing what he wants it to do, eh?

How can a state be cowardly when it’s doing what it wants?

Not cowardly, not weak – just hopelessly corrupt and dishonest. And, in Cameron’s endless pursuit of, and hatred for, the chronically sick and disabled, aided and abetted by Osborne, not even sane.

I’m not sure how Mr Murphy ever gets any space for his witterings. I suppose online, space is infinite. What he fails to ever acknowledge is that every “strong state” solution he proposes has been attempted before and has been undermined by human beings’ innate desire to be free. Failure is in the DNA of his”solutions”. But then he is not renowned for logic…

I see central planning didnt work for Chinese or Germans.Lets be like the US with its superb public education system or its wonderful healthcare

@15 – And which party endorses beating and charging peaceful protesters? Oh right, your Tories.

Richard is right, we do have a cowardly state.

It is a cowardly bully of a state that appropriates, at the point of a gun, the resources for which its citizens have worked and provides compulsory, sub-standard services in return. It is irrelevant whether these, inevitably rationed, services are provided directly by an inefficient and self-serving public sector bureaucracy or by corrupt, private sector, corporations who take a slice of the money as monopoly profits. The fault is in not ensuring that its citizens receive value for the money that has been taken from them and the solution is to allow them to spend it for themselves.

It is a cowardly bully that manipulates the political agenda via a corrupt and craven media and continually legislates, in panic, to assuage the worst instincts and fears of the populace, in the process curtailing and controlling the freedoms of those who would seek to resist its will.

It is a cowardly state that does not allow its citizens to express views of which it disapproves and censors our language to prevent them from doing so.

It is a cowardly state that sends young men to die in foreign wars, ostensibly in the name of freedom, but, in reality, out of self interest- to secure continuity of energy supply and continued wealth and influence through ideological imperialism.

So yes, Richard, we have a cowardly bully of a state, but the solution is not for the state to become more assertive.

The solution is for it to stop the bullying.

The state is cowardly because it won’t tell the truth. It pretends it is doing what it does for the people. It is not. This is govt for the elites, paid for by the elites. And all 3 parties are complicit. The Lib Dems being the latest liars.

a state that wants to privatise its education system through ‘free schools’ – free only because yet more tax goes to the private sector in the process.

More tax goes to private sector how?

Free schools are run like any other academy, so no more tax necessarily goes to private contractors than is the case with academies or maintained schools.

Chaise,

You mean he’s complaining that when the state purchase services from the private sector that involves the state purchasing services for the private sector?

Can you really see anything substantive in that paragraph?

The bloody M25 is only free because the state funnelled yet more tax into dastardly private sector construction companies

@20 – You missed private schools becoming “free” schools then.

” Meanwhile, in the financial markets speculation has replaced real investment. This is logical because investing in new technologies in manufacturing or services is a much less safe bet for individual businesses than just getting on one of two gravy trains, the first being public sector outsourcing and the second financial derivatives. ”

Brad DeLong had a good post the other day about this type of thinking.

” And in its scarier moments some of the trains of thought emanating from this deep point of view slide over to: “good German engineers (and workers); bad Jewish financiers” (and “good Russian Stakhanovites, bad Jewish Trotskyite intellectuals”). ” http://delong.typepad.com/sdj/2011/11/another-note-on-von-misess-and-ron-pauls-monetary-mental-disorder.html

Once you start down the route of this train of thought, it is not far to go to see the unapproved ones in finance as all Untermenschen.

As mere untermenschen is how Mr Murphy views those who do and believe things that he does approve of. No dissent can ever be tolerated because no other views can ever have any validity.

Mr Murphy and his Courageous State will lead the left to nowhere but a statist dead end. Behind the warm words and good intentions ultimately lurks a monster. He is Adam Smith’s Man of System.
http://knowledgeproblem.com/2005/08/08/adam_smith_and/

And truly represents Nietzsche’s: the last man.
http://en.wikipedia.org/wiki/Last_man

You see collapsing into rubble and dust in this video was the vision of monsters just like Mr Murphy.
http://www.youtube.com/watch?v=HaE2tYo2z0s

The buildings in that video were the apex of the courageous state that created a dystopia reflecting its own image. The brutalist architecture was not a mistake, it was an expression of the true nature of the men of systems nomenclatura who would state plan the future and determine how people would live. The architecture of the period looked just like them. We will build streets in the sky. People should live communally because that is more socialist. Every house should be the same . All the stairwells will look just like all the other stairwells. The state will attend to all their needs It was a vicious vision that stripped people of any identity and humanity. Stripped of humanity, individuality and identity it was little surprise that some people in those areas turned into antisocial brutes. Mr Murphy’s courageous state made them in its own post WW2 image.

“The state is cowardly because it won’t tell the truth. It pretends it is doing what it does for the people. It is not. This is govt for the elites, paid for by the elites. And all 3 parties are complicit. The Lib Dems being the latest liars.”

Yet, correct me if im wrong, you support the EU???

Oh dear oh dear Ritchie, where is your ‘delete and block’ button now? You do know that people are allowed to express their opinions on this website don’t you?

Luis at this rate I’ll have to start banning you from commenting on RM’s articles. You lose your marbles.

Look, I’m getting extremely tired of the ‘lets all blame thatcher’ tone. Lets get our facts straight. The wanton destruction of the UK actually started in 1997.

Sunny,

You are quite right. The fact this clown gets any air time at all drives me round the bend.

Don’t forget folks, “This is a state that now exists solely to facilitate the looting of its power to tax for the benefit of an elite who want to own its assets through the PFI scheme”

Now there’s a man with a full complement of marbles

I actually believe in economic planning, and genuinely think that the market system leads to unforgivable economic and social failings that cannot simply be corrected by government intervention. Even well functioning efficient markets regularly lead to morally abhorrent outcomes, and as a result surely a more humane society would wish to replace the inefficient market mechanism with a better system.

However, I don’t think Richard Murphy makes a particularly good case for an alternative to markets. I’ve read many of his blogposts and he resorts to extremely simplified arguments, overuses the word “neoliberal” and just comes across as a populist who’s not thought his ideas through. This article is full of hot air, without any direction or purpose.

The best “left” writers at the moment are the bloggers from “stumblingandmumbling” and “leninology” IMO.

[29] “the market system leads to unforgivable economic and social failings that cannot simply be corrected by government intervention” – listen to this trader, not economic failing exactly, rather an opportunity to exploit the new market conditions,the new ‘reality’ if you like – depends how you look at it I suppose?
http://www.youtube.com/watch?v=lqN3amj6AcE&feature=related

And saying that neoliberal and neoclassical economics is the same is not true at all. Neoliberalism is a particular philosophy that is based on the methodology of neoclassical economics and it’s fundamental assumptions (i.e. perfect competition, perfect information, rational utility maximising agents etc) Based on these assumptions, neoliberals will argue, for example, that minimum wages will increase unemployment , because an MW is like a price floor, creating a surplus of labour and therefore unemployment. However, most neoclassical economists know that when looking at policy, you absolutely cannot use the extreme benchmark case of perfect competition etc, and must analyse markets with frictions, information asymmetries, market power, externalities, etc, which neoliberals ignore.

In terms of macroeconomics, neoliberals tend to subscribe to the “New Classical” school of Macroeconomic thought, which tends to look at supply side reasons for the fluctuations of the business cycle (rather than the demand side, like Keynesian theory) So neoliberals claim that to get out of a recession, you need to focus on supply side policies like cutting the top rate of tax, deregulating, privatising etc to return to growth.

However, there are social and political aspects to the doctrine of neoliberalism, and neoliberalism itself can be seen the development of the “New Right” movement that started in the 80s.

This is why it’s untrue to conflate neoclassical economics and neoliberalism. Neoclassicism is a particular methodology based on certain principles, such as maximising behaviour and a philosophy based on methodological individualism. The post war Keynesian consensus was actually technically known as the “neoclassical synthesis”, and it was Paul Samuelson who attempted to reconcile the neoclassical methodology with the Keynesian theory of business cycles.

In fact, there are still Analytical Marxists who work within the neoclassical methodology (although they were more prominent in the 80s)

I’m not an economist so I may have got some things wrong in this answer, but this is what a friend (who is an economist) told me when we discuss these things.

This is scary if true. Don’t know why it could be offensive it’s about finance.

http://www.stansberryresearch.com/pro/1011PSISBBVD/PPSIM853/PR

Don’t be worried. Just do a quick G search on Stansberry Research. That might tell you something.

@ 30. the a&e charge nurse –

That is not a trader – every trader watching was instantly aware of this and after the media frenzy, within 24 hours, so were the gullible..

http://www.dailymail.co.uk/news/article-2042717/Alessio-Rastani-How-did-BBC-mistake-day-trader-Master-Universe.html

He runs a company “teaching” people how to trade – its what wanabe traders who can neither trade or teach do.

“Far from being a City hotshot, Alessio Rastani has admitted to being an ‘attention seeker’ who lives in a £200,000 semi-detached house owned by his girlfriend.”

Be careful who you form your perceptions from…you could end up a bit looney like the author of this article.

32

Classic socialisation of costs, privatisation of profits. (the elites favourite policy) The banks and their puppet politicians have transferred eye watering amounts of private debt, onto the taxpayer. No one knows how much all these commitments are worth. Could be trillions and trillions of $.

Marshal law in the US within 25 years? Could be within 10 years.

SR819

You should read Red Plenty. I mean, really.

Oh, and perfect competition and information are not what neoclassical economics consists of. Afaik imperfect comp, asymmetric info etc. all still neoclassical

@6 Tim Worstall

“So not only are these services now more costly because a profit margin has been or is being added into their cost structure”

really is a very strange thing for an accountant to say. Even an accountant who skipped their economics lectures at uni should grasp that the incentive to make profits can (and sometimes does) increase productivity so that goods and services provided by profit seekers are not necessairly more expensive than those provided by non for profits. Only in a static economy would a profit margin lead inexorably to higher prices.

Funny, that doesn’t seem to have worked in the railways which are now four times more expensive to run than when they were nationalised. Or on the privatised busses, who’s fares have risen well above inflation. Does it lead to an incentive to improve productivity etc, or does it just give an incentive to cut staff and services as far as possible while milking as much public subsidy as can be got away with?

Notwithstanding the above trolls. I think this raises an important point about how our political establishment has been wholly captured by big corporate and financial interests. And is now acting more or less exclusively in their interests. Which is probably THE major political issue of our day, and one that is frequently blacked out in discussions bu the mainstream media. And frothing at the mouth rightwingers like those above..

[34] thanks – but does this make the fundamental sentiments wrong? (amorality of certain kinds of money making).

Other observers have picked up on similar themes – a film made well before the financial crises in Europe
http://www.youtube.com/watch?v=JeROnVUADj0

If we can’t rely on strong (rather than authoritarian) political representatives then I guess we are all doomed?

@33

Thankyou.
Maybe the editor of this site can remove the link?

@30

Thanks, maybe the link should be removed now?

37. Graham

Funny, that doesn’t seem to have worked in the railways which are now four times more expensive to run than when they were nationalised.

Sorry but would you care to provide a source for that claim?

Or on the privatised busses, who’s fares have risen well above inflation.

Some fares. Some fares are not just cheaper but much cheaper. When you can go from Edinburgh to London for a fiver I think we can agree some prices are much cheaper.

Does it lead to an incentive to improve productivity etc, or does it just give an incentive to cut staff and services as far as possible while milking as much public subsidy as can be got away with?

Well let’s look at telephones shall we? Improved productivity, innovation, falling prices. Yep, that seems to work. As it has in utilities. Minicabs. In fact almost everywhere the state has removed its presence.

I think this raises an important point about how our political establishment has been wholly captured by big corporate and financial interests. And is now acting more or less exclusively in their interests. Which is probably THE major political issue of our day, and one that is frequently blacked out in discussions bu the mainstream media. And frothing at the mouth rightwingers like those above..

Sorry but by what delusional standard can the 33% of the British economy (or there abouts) that is spent on welfare be said to be spent in the interests of big corporate and financial interests? What financial interests by the way when much of the banking industry is owned by the government?

“thanks – but does this make the fundamental sentiments wrong? ”

The opportunity to exploit the new market conditions? How about the need to adjust to what ever market conditions are in order to survive? Bank of America to cut 30000 jobs, 150,000 jobs gone in the credit crunch

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/3251952/Top-10-bank-job-cuts.html

etc – There are fat cats – billionaires who will use any situation to the most of there ability ( hence they are billionaires ) and in bad times if they play it right the pay off is big, but your average “exploiter” of the market is just the same as the rest of us, trying to get by doing there job and facing grim possibility, just like every body else.

I am slightly worried by the definition of the “Courageous State” in the full version of this article on Tax Research’s website.

Quote number 1:

“A Courageous State is populated by politicians who believe in government. They believe in the power of the office they hold. They believe that office exists for the sake of the public good. They know what that public good is.”

Quote no. 2, six paragraphs later:

“A Courageous politician knows that there is a great deal that he or she does not know, and knows that despite that they will have to act.”

Conceivably that might mean they don’t actually know what the public good is, but they will act for the sake of it anyway. Or is the idea that politicians MUST know what the public good is, even if they know nothing at all about anything else?

I can’t help feeling that logical inconsistencies like this should have been ironed out in the proof-reading process. Or doesn’t RM believe in such niceties?

I am also a little concerned by the quasi-religious language. Beliefs abound, but on what are they based? Not much, it seems, except RM’s definitions. What exactly qualifies him to define what politicians should believe?

@42 – And what percentage of those were executive level, or traders?

“your average “exploiter” of the market is just the same as the rest of us”

Nope, most of us don’t destroy £7 of value for every £1 we make.

@41 – I’m paying more for my phone now then I did 18 years ago. Without the free weekend calls I had then. And I’ve helped five businesses in disputes with BT in the last year…their service is terrible and they’ve been caught lying on seventeen occasions across those five cases.

pitchforks and guillotines it is then.

I wish there was a country where Richard Murphy and his like minded followers could go and run their experiment, to see if his ideas actually work in the real world, or much more likely how long things last before they collapse.

We could call it “Scotland”.

Any takers?

“We could call it “Scotland”.

Any takers?”

About half the scottish population if opinion polling is accurate.

@ 21 Luis Enrique

“You mean he’s complaining that when the state purchase services from the private sector that involves the state purchasing services for the private sector?

Can you really see anything substantive in that paragraph?

The bloody M25 is only free because the state funnelled yet more tax into dastardly private sector construction companies”

Yes – but there’s a difference between using tax money to set up state schools (which will obviously involve private sector input) and using tax money to subsidise private schools, which can apparently teach whatever the hell they please and don’t actually belong to the country.

Sometimes you do need to outsource to the private sector, I’m not claiming it’s a bad idea (though Free Schools are ridiculous). But you appear to be putting words into the OP’s mouth to make it easier for you to jeer at him.

48 chaise,

Well, I hope I’m not putting words Into his mouth; I’m accusing him of writing something vacuous. I dont think that para has any more content than the sentence: the government has started using private outfits to provide schools under the free to use tax payer funded system. Like they do in The Netherlands, for instance. This is simply a neutral statement of fact. He is trying to use it as an example of the state doing a bad thing, but what he has to say about it is true by definition: of course such schools are free because tax revenues are paid to private outfits.

I admit, it’s probably the least bad dumb RM utterance I have ever picked him up on. It’s not wrong, it’s just bad substance free writing.

Luis at this rate I’ll have to start banning you from commenting on RM’s articles.

That’s just the liberal in you talking Sunny.

@ 49 Luis

Fair enough, I thought you were making a different point.

“And saying that neoliberal and neoclassical economics is the same is not true at all. Neoliberalism is a particular philosophy that is based on the methodology of neoclassical economics and it’s fundamental assumptions”

That’s pretty good actually. I shall have to use that differentiation.

Eseentially, neo-classical is a toolbox, a series of techniques to look at things with. Neo-liberal is, as you say, rather more a political/economic philosophy.

Luis Enrique @ 49

the government has started using private outfits to provide schools under the free to use tax payer funded system.

Actually, this isn’t true.

Free schools are all ‘not-for-profit’ academy trusts. The Secretary of State maintains reserve powers to sack the trustees and appoint his own in their place if the school doesn’t perform.

Essentially this means they are no more ‘private’ than any NHS Trust or other quango type organization. They may have greater autonomy in action but are no more ‘private sector’ than the BBC or similar publicly funded/independently operated outfits.

Dear me there is some tru;y risible trolling here.

Usual vacuous pedantry from one source and other supposedly critical commentary is not worth the bandwith which it uses up.

@54 BenM

It’s really hard to comment constructively on something as vague as this. At least the howlers in the original have mostly been edited out, but what is left has about as much substance as a bowl of jelly.

Vacuous pedantry? Maybe, although if you are referring to my comment I happen to think that the prospect of politicians who know almost nothing about anything acting “anyway” over matters affecting my family’s future too horrible to contemplate. Far more problems are caused by people acting in ignorance than by malicious intent.

55 Frances Coppola

Not only your comment.

Besides, if you’re so worried about arguments attacking the kind of hare-brained consensus and status quo which led to the catastrophe in 2008, and which this coalition government is so keen on trying to reflate, then I wonder what it will take to convince you that carrying on as anglo-saxon economies have done in the past 40 years is not an option.

Would anyone on here go out for a pint with RM? I’m sorry to sound personal, but whenever you read something by him you just get the feeling of a completely insufferable, pompous man totally impervious to any kind of constructive criticism and wholly unwilling to engage in debate.

That capitalism in its current form has failed is beyond doubt – but I don’t want the alternatives (which aren’t expressed here particularly well) to be espoused by RM. If I could pin it down it is that he has a grossly over exaggerated view of his own intelligence and resorts to crude simplifications.

When part of the first page of the book (not reproduced in this extract) talks about the “overthrow of the democratically elected Allende government in 1973”, that may be true, but it doesn’t give you much hope for the rest of the book if he’s just going to regurgitate favourite old cliches of the Left.

@56 BenM

You obviously didn’t read my posts about banking on this site earlier this year, then. Me, wanting to maintain the status quo? Hardly. But I don’t think RM’s ideas – which I have been following for months now – are an improvement. In fact they are so harebrained (to borrow your term) that they are possibly even more dangerous than the status quo.

I would REALLY like someone to come up with a workable alternative to our present system. I’ve even had a stab or two at it myself. But it isn’t that simple. I wish it were.

@57 Sam Bridges

that about sums it up imo

, if you’re so worried about arguments attacking the kind of hare-brained consensus and status quo

imho this explains the success of RM. “Because he is saying things I think are bad are bad, if you disagree with him you must be defending badness.” Because he is attacking capitalism, bankers, mainstream economics etc., he sounds radical, he loudly trumpets his membership of team good guys, he gets cheered on. Nobody cares that he regularly makes basic errors, has incoherent ideas etc. That’s just pedantry, what matters is the big picture, not detail.

He’s a litmus test – if you are attracted to superficial righteousness, and don’t care about substance, RM is your man. I am very dispirited by how large sections of what passes for the left-wing in this country – or at least its representatives in the media – fail this test.

I’m absolutely furious. Murphy doesn’t have the decency to respond to my remarks on this blog. Instead he writes his response on his own blog where he controls the comments. He deletes any comments I put on his blog. So (yet again) he has left me in a position where I have to accept his muddle-headed and inaccurate response to my remarks because he has made it impossible for me to defend my argument.

Except that (with Sunny’s permission) maybe some people on this thread will comment on my behalf. Many people here will know that my views on economics are very far from “neoliberal”. Here’s the link to the Tax Research post where he takes apart the comments I made at 43 above.

http://www.taxresearch.org.uk/Blog/2011/11/17/i-believe-in-belief/