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Chapter 10 | Clarence S. Bayne (continued) The classical market or exchange economy assumes that there are no problems related to the asymmetry of information; there can be no exercise of monopoly power since the scale of organizations and firms are too small to influence the market, and consumers are indifferent as to which of the many suppliers meet their needs. On one hand, consumers are believed to be sovereign and independent in their choices and are motivated by the desire to maximize their satisfaction. On the other hand, the private sector firm’s actions are based on profit maximizing principles that form the rationale for their commitment to the provision of goods and services. Many critics see this profit motive and the rabid individualism (implied by the model) that drive consumer choices as anti-civil society forces. They see both behaviours as leading to excessive selfishness, the loss of the value of social action/community, greed and the diminishing of loyalty to community, the elimination of caring communities and democratic values. Not withstanding this, the perfectly competitive model places the failure of the market system to provide the socially desirable demand for goods and services, required to satisfy our utilitarian as well as hedonic and symbolic needs, at the feet of those in society that exercise monopoly power. That is, those that have inherited large endowments of resources, or own specialized resources, have exclusive access to information, and use their market position to control entry to or engineer exits from the market. Those who by virtue of the power represented by their ownership of a disproportionate share of capital resources can and do restrict the participation of entire classes of persons in the economy and society. The classical competitive model considers this type of exercise of power as an externality that causes the market to fail. Government intervention in the market to fund the arts and culture is properly prompted by the partly public nature of many aspects of the arts and the disadvantage arts institutions suffer by not being benefactors of productivity improvement due to technology progress to the same degree as the manufacturing and other sectors (Baumol and Bowen, 1966). But governments have created cultural monopolies which largely encourage acculturation on the Anglo and Franco conformity dimensions (Bayne, 1997). The Walrasian general equilibrium illustrated in the theoretical construct of an Edgewood box allows us to examine the welfare properties of equlibria in an exchange economy. In particular, it allows us to examine social cohesion from the perspective of the ideal of Pareto optimality. That is to say an economic outcome (a set of social, cultural, economic, environmental conditions) for which there is no alternative feasible outcome and for which every individual in the economy is at least as well off and some individual is strictly better off. The internal logic of the model allows us to show that, provided certain characteristics of consumer behaviour exist, a desired level of social cohesion and Pareto optimality can be achieved by a transfer of wealth. However, the model does not address the effectiveness of certain methods for effecting transfers, like volunteerism and philanthropy, or the likelihood of successfully implementing government transfers in the face of resistance from powerful monopolists and neo-liberalists. It is this limitation that fuels the arguments of many among the civil society movement The spokespersons for this movement continuously point to the fact that Corporations pay less and less of their fair share of the tax burden. That the middle classes of Western democracies finance the welfare transfers. They argue that the emergence of global markets replaces trade by inter-company transfers and has created a complex international system of business that facilitates tax avoidance and reduce corporate accountability to any given state (Chomsky, 1997, 1999; Eberly, 2000). 3. international monopoly power and communities Globalization focuses our attention on the relationship between society and national and multinational corporations. It draws attention to the role large corporations play in advancing civil society or frustrating its development. One of the major issues is the effect of globalization on small states, non-European economies, and subcultures and regional economies within larger communities and economies. It is believed that huge American corporations are dominating world trade and are through trade homogenizing the cultures of other societies and cultures. Moreover, they are exploiting the weak bargaining power of workers in third world countries and paying subsistence wages, or slightly better, in the interest of making large economic rents/profits. Large Corporations seek almost blindly the maximization of profits or the wealth of their shareholders. They transfer investments from high waged areas relocating their operations in third world countries where in the interest of reducing costs they disregard safety, the protection of the environment, the health of the local populations. In general they seek to avoid paying the social costs of doing business that they would be required to pay in the more industrially advanced economies. That is to say they transfer these costs to third world governments and their societies. In many of these arrangements, women and children are by circumstance forced to carry the burden of this feudal economic development supported by local governments. It is also argued that the transfer of capital to these societies results in a major dismantling of industries in the industrially developed societies with the result of major reduction of employment among minority populations and the working classes created by capitalist forms of production. The impact of this is felt and born mainly by minorities that held these jobs. NAFTA is now know to have been not advantageous to either Canadian or American minorities and to white working classes. It is also known that it was put in place by a concerted collusion between the Canadian government, the American government, with the support of the large corporations, and the professional classes. The WTO international free trade initiatives are now being opposed by civil society groups that seek practical alternatives to globalization advanced by what is now popularly described as a neo-liberalism philosophy. |
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