Just Use It!

As the recession deepens, businesses will fold. They will no longer be needing the resources over which they have exerted control in an era when money determined what happened in the economy. We need to shift towards an economy that responds more to energy - and the energy of local people rather than fossil fuel energy.

The recession will offer many opportunities. As car-sales operations fold, forecourts and salesrooms will be unused; the failure of shops will make lots of premises available on the streets of our towns and cities; paddock-owners will have no use for their fields without the profits earned by businesspeople being spent on children's riding lessons. There are opportunities here for using these resources to rebuild the local economy. But how will we deal with the money issue?

Money is the one resources that will be less plentiful - but that offers no problem once you step outside the capitalist economic paradigm. Within a capitalist economy you can't do anything unless you have money; in a sustainable economy money is merely a means to facilitate transactions. Other resources should be not left idle and useful economic activity should not be prevented just because of a historical anomaly.

Several years ago, when I still lived in Aberystwyth, a jaunty anarchist named Bob Maycock led a group that 'liberated' a local defunct night-club and turned it into the People's Palace. For six months we did as we pleased there - and did not need to pay anybody for the privilege. After that, the long arm of the law ensured that, as before the people's arrival, the premises were boarded up and left useless once more.

This clearly identified the law as on the side of the owners and of property. If not, it would permit the use of unused resources by those with genuine need - whether for homes or premises to reskill themselves and provide their own food and clothing. This was not always the case: under Roman Law if land had been left idle for a certain number of years, landless peasants were permitted to make use of it. A similar law applies in Brazil today. In Europe we pay farmers to leave their land idle.

During Argentina's disastrous economic collapse in 2001, empty factories were 'reclaimed' by their workers. They could not tolerate the illogicality of productive resources sitting around, while people were unemployed, and others wanted to buy the goods the factories had produced. This setting right the inefficiencies caused by an economy where money dominated has been documented by Avi Lewis and Naomi Klein. It should provide inspiration for the next steps we will take to use our own recession to the advantage of local communities. Tweet

The Assumptions of Perfect Competition: Lesson 4

Assumption 4: All firms produce an identical product

This assumption is necessary to achieve the required situation where we make our purchases solely on the basis of price; it is often referred to as the homogeneity of the product, while consumers are defined as being indifferent between the different products on offer. We are indifferent between the products of different suppliers, since we ‘regard all units of the industry’s product as identical’. For this to be true, we would have to be sure that our teenage children would be equally happy with a Primark tracksuit for Christmas as one emblazoned with the latest trendy sports brand. Or that a pair of trainers with Wayne Rooney’s face appliquéd to the side would offer no more delight than another pair without this childish respository of England’s hopes.

One textbook deals with this point about consumers’ lack of indifference by explaining that this assumption is unlikely to be met in practice, citing the example of the car industry where, even if there were many firms, perfect competition would not be possible because the Ford Mondeo and the Vauxhall Vectra cannot be considered homogeneous goods; consumers have individual preferences for one or the other. The assumption can then slightly qualified so that, if a producer decides to produce a slightly different product then this does not invalidate the assumption, but rather a new market is created. This may hold water if we think of the market for shoes being divided into the market for shoes and the market for trainers. But we can hardly make sense of a theory that would require a different market for trainers with each different sportstar’s face, or for each different team’s football shirt. Yet it is clear that young people are far from indifferent between these goods.

Again the proof of the irrelevance of this assumption is found in the actions of the market actors themselves. If indifference between similar items were part of their understanding of the market, why would the expend so much energy shoring up the uniqueness of their brand, which is the main focus of energy of the global corporations, as shown by Naomi Klein. The purpose of the brand is directly to undermine the homogeneity of products, to achieve a situation where indistinguishable brown liquids become of hugely different value because they are marked with the label ‘Somerfield Cola’ or ‘Virgin Cola’. The advertising industry is explicitly dedicated to undermining this assumption by establishing consumer preference for one brand or another.

The brand is now the key means for corporations to establish value. It is a means of inflating the value of a product to the customer compared with the actual value of the item in terms of what it can do. In Marxist terminology, the exchange value is extended way beyond the use value of the product. This means a bonanza for the corporation, which has to only pay the poverty wages to make the items but can extract a profit equal to almost all the value on the market. But if you are stupid enough to buy a worthless brand rather than a useful product I suppose you have only yourself to blame!

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