employment cartel
Dec. 28th, 2005 04:50 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
sophiaserpentiaA cartel is a group of legally independent producers whose goal it is to fix prices, to limit supply and to limit competition.
In Economics 101, you're taught that the cornerstone of capitalism is the free market. The theory goes, if you don't like what is being offered by one seller, you can go to another.
The problem with this theory is that the market is not as free as walking across the aisle to another stall. Exercising your consumer freedom involves an expenditure of time, energy, and perhaps money (if you have to pay to go to the next vendor). You have to spend time researching different products and vendors in order to get the best deal, and you have to have access to good information. These "free market costs" add up to leverage that can be used to the vendor's advantage -- but this kind of leverage is small compared to the leverage the vendor has if you are dependent on the product they are selling.
This leverage makes it possible for cartels to form. In a truly free market, a cartel would not be viable because a single vendor could undermine it by lowering his prices or increasing his supply. But the leverage which vendors possess makes it possible for vendors to band together and undercut the mechanism of competition by setting their own prices. Once a cartel forms, the consumer has nowhere to go to get this product without submitting to the cartel's terms -- and if the consumer is dependent on the product, the consumer cannot simply opt out of buying it.
Theoretically, when cartels are identified, the government forcibly breaks them up in the name of "preserving market competition." Another reason to break up cartels is that they often involve coersion and can lead to violence from efforts to keep the vendors or consumers in line.
The leverage which haves have over have-nots is the root of the "iron law of oligarchy," which states that "all forms of organization, regardless of how democratic or autocratic they may be at the start, will eventually and inevitably develop oligarchic tendencies."
The fact that we have authorties charged with trust-busting means that those cartels which are allowed to continue existing are given tacit legitimacy.
Is it still a cartel if it spans the entire economy? The difference between an oligarchy and a cartel is like the difference between a religion and a cult: the only real difference is size and social acceptance, the veneer of "legitimacy." If the cartel's influence is lingering and ubiquitous, we arrive at a state where we cannot imagine life without it; it becomes standard reality, common sense.
So if i were to suggest that our labor market is ruled by an enduring and powerful employment cartel, i might be dismissed as a loon, but think about it for a moment. Your employer has a strong degree of power over you. The "free market cost" of seeking another employment vendor is often high -- and is probably kept that way -- thus putting pressure on people to keep or seek jobs, no matter how cruddy or humiliating or dehumanizing they are. Dependency is high; people without their own property do not have the freedom to visualize themselves in a world of their own design, and they are kept that way because oligarchy is more profitable for the landed class than democracy.
Economists have described the "natural unemployment rate" as an inevitable aspect of a capitalist economy. But those without jobs are held up as an example for those who have jobs, to keep our enthusiasm high for whatever drudgery that we do to pay our rent. The "natural unemployment rate" is a mechanism of coersion.
In Economics 101, you're taught that the cornerstone of capitalism is the free market. The theory goes, if you don't like what is being offered by one seller, you can go to another.
The problem with this theory is that the market is not as free as walking across the aisle to another stall. Exercising your consumer freedom involves an expenditure of time, energy, and perhaps money (if you have to pay to go to the next vendor). You have to spend time researching different products and vendors in order to get the best deal, and you have to have access to good information. These "free market costs" add up to leverage that can be used to the vendor's advantage -- but this kind of leverage is small compared to the leverage the vendor has if you are dependent on the product they are selling.
This leverage makes it possible for cartels to form. In a truly free market, a cartel would not be viable because a single vendor could undermine it by lowering his prices or increasing his supply. But the leverage which vendors possess makes it possible for vendors to band together and undercut the mechanism of competition by setting their own prices. Once a cartel forms, the consumer has nowhere to go to get this product without submitting to the cartel's terms -- and if the consumer is dependent on the product, the consumer cannot simply opt out of buying it.
Theoretically, when cartels are identified, the government forcibly breaks them up in the name of "preserving market competition." Another reason to break up cartels is that they often involve coersion and can lead to violence from efforts to keep the vendors or consumers in line.
The leverage which haves have over have-nots is the root of the "iron law of oligarchy," which states that "all forms of organization, regardless of how democratic or autocratic they may be at the start, will eventually and inevitably develop oligarchic tendencies."
The fact that we have authorties charged with trust-busting means that those cartels which are allowed to continue existing are given tacit legitimacy.
Is it still a cartel if it spans the entire economy? The difference between an oligarchy and a cartel is like the difference between a religion and a cult: the only real difference is size and social acceptance, the veneer of "legitimacy." If the cartel's influence is lingering and ubiquitous, we arrive at a state where we cannot imagine life without it; it becomes standard reality, common sense.
So if i were to suggest that our labor market is ruled by an enduring and powerful employment cartel, i might be dismissed as a loon, but think about it for a moment. Your employer has a strong degree of power over you. The "free market cost" of seeking another employment vendor is often high -- and is probably kept that way -- thus putting pressure on people to keep or seek jobs, no matter how cruddy or humiliating or dehumanizing they are. Dependency is high; people without their own property do not have the freedom to visualize themselves in a world of their own design, and they are kept that way because oligarchy is more profitable for the landed class than democracy.
Economists have described the "natural unemployment rate" as an inevitable aspect of a capitalist economy. But those without jobs are held up as an example for those who have jobs, to keep our enthusiasm high for whatever drudgery that we do to pay our rent. The "natural unemployment rate" is a mechanism of coersion.
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no subject
Date: 2005-12-28 10:01 pm (UTC)(no subject)
From:(no subject)
From:no subject
Date: 2005-12-28 10:21 pm (UTC)I don't think that can happen without legal barriers to entry or a pre-existing cartel in capital <- this needs a post of its own, because I think it's the primary point of disagreement between us.
I do happen to think it happens all the time, precisely because of those barriers and the pre-existing cartel in capital, along with the "selection filter" factor, which I probably should also post about.
Most of the time the government forms cartels, rather than breaking them up. When it does, I would suspect that the cartel is an unexpected result. When it doesn't, as you said, it is giving tacit acceptance of that cartel, and I would suspect it formed it intentionally.
"So if i were to suggest that our labor market is ruled by an enduring and powerful employment cartel, i might be dismissed as a loon, but think about it for a moment. "
I agree! In fact, this is the source of almost all the suffering in the modern western world.
Basically our entire economy is about 80% (or more) cartelized. There ain't no free enterprise in the western world, except maybe the black market, but even those markets are broken.
(no subject)
From:(no subject)
From:no subject
Date: 2005-12-28 10:28 pm (UTC)*nods*
I love that you approach economics the same way as I do. Using the principles of the neoclassical model and then comparing it how they are not present.
no subject
Date: 2005-12-29 12:35 am (UTC)