Download ideologies and perspectives

Godard Chapter 1 IDEOLOGIES AND PERSPECTIVES (1)
Neoconservative/neoclassical perspective
18th Century philosopher, George Berkeley, challenged the philosophy of
materialism by maintaining that so called “real” things are only ideas of those
perceiving them. While the weight of philosophical opinion was and remains
contrary to Berkeley’s ideas, his work highlights the importance of human ideas
and action in shaping the world in which we live.
*For more on Berkeley, see http://plato.stanford.edu/entries/berkeley/*
The relevance of this to labour relations and the role of trade unions in
contemporary Canadian society is that ideas and belief of reality play a crucial part
in influencing human action. The lenses through which human beings perceive the
“real” world affect greatly, if not exclusively, the nature and evolution of human
action.
In Chapter 1, Godard identifies various paradigms of belief systems. Their
importance is that people’s ideologies and beliefs affect their values and actions.
The paradigms considered by Godard are:
Neoconservative/neoclassical;
Managerialist;
Pluralist;
Liberal Reformist;
Radical.
The neoclassical perspective is now considered below. Other perspectives will be
considered and posted later.
Neoconservative/neoclassical
Classical economic theory emerged in the late 18th Century. It criticized the system
of patronage in which the government created business and trading monopolies
which shared part of their profits with the government.
Economist Adam Smith in 1776 produce his work The Wealth of Nations where he
argued that economic efficiency is best maximized for the public good by
competition among small producers and service providers. No actor in the
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economic system should have the ability to control prices and quantities produced.
Nor should there be collusion among economic actors to control prices and
quantities produced.
In pursuing their own self-interest producers etc. would also contribute to the
public interest by competing to provide products and services at prices and of
quality most attractive to consumers. The most competitive producers would be
most successful. Producers charging too much or failing to deliver good quality
would fail in the market.
If firms made high profits new producers would enter the market and sell at lower
prices. This would prevent exploitation of consumers. Monopoly profits would be
competed away by an “invisible hand” that is by the sum total of individual
decisions made by countless consumers and producers. Smith’s model was
democratic as it placed in the hands of consumers the power to decide what would
be bought and sold. See the concept of “consumer sovereignty”. There was no need
for government manipulation of the system. Indeed, that would be harmful. Smith
saw the main danger to his system to be the presence of large producers who could
dominate price fixing and volume of output to avoid competition.
Neoclassical economics emerged in the mid to late 19th Century as capitalism
emerged as a significant economic force. It remains a force today. The main
concern of its proponents is efficiency of production and minimization of costs of
production in order to beat competitors.
The focus is on labour markets – higher wages are viewed as meaning higher
prices and therefore a threat to efficiency and competition. It is seen as necessary
to keep government out of the market because of the anti-competitive practices of
patronage, subsidies, restrictions of trade etc. Deregulation and the removal of
governments from the market are goals of today’s big business.
Trade agreements between and among countries (e.g. NAFTA) typically reduce the
role of governments and courts in regulating action by large corporations. This
raises the question of the appropriate balance of power between corporations and
elected governments.
In the neoclassical tradition, power is seen as operating through the market. If one
cannot compete on price and quality etc. one has the power to either improve
competitiveness or exit the market. This theory applies also to labour. If a worker
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considers she is paid inadequately for her work, she can seek to negotiate better
terms or exit her employment and seek work elsewhere.
Conflict is seen as minimal if market forces are allowed to operate freely.
Unions are seen as having negative economic and social consequences.
The prescription of neoclassicals is to reduce govt. and union interference with the
competitive market. It also favours privatization of public services, in keeping with
the norm that governments should not .
Positives of the neoclassical perspective are that it highlights the importance of
markets. It seeks to avoid the command economy with controlled markets such as
occurred in the old Soviet Union. This perspective promotes incentives to produce;
it can contribute to the power of consumers in the market; it may facilitate the
potential for competition and the avoidance of state patronage and highly
centralized decision making by the state.
The negatives are that the neoclassical perspective ignores the imperfections in the
market. Today there are many monopolies, oligopolies, cartels etc. Many
undermine the fundamentals of classical perfect competition theory through price
collusion, and buying out competitors. Also the free market does not allocate
resources well in essential services such as health care education, affordable
housing, childcare, seniors care. Success in the market is measured by profit
margins. Accordingly, wealthy people and their families will fare well in buying
quality health care, education etc. However, those who cannot afford prices
dictated by the market lose access to healthcare, education etc. to their own, and
society’s benefit.
While elements of consumer sovereignty remain plausible, contemporary
marketing can lead to perverse outcomes. For example, the pharmaceutical
industry advertises drugs for consumption for both sick and well people. Arguably
this does not respond to consumer needs, as neoclassical theory requires, but
creates unnecessary wants and needs, and fulfill only the profit goals of the
industry. It is true that trickle-down theory predicts that profits and income reaped
by the wealthy will trickle down to all levels of society to the general benefit of
society. While there may be some trickle-down effect, Statistics Canada evidence
indicates that wealth and income are increasingly concentrated within the already
wealthy.
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While the neoclassical/neoconservative perspective rightly identifies the danger of
state control and patronage, the things it promises have not emerged in practice.
The economic depression of the late 1920s and the early/mid-1930s was a disaster
for both rich and poor. The laissez-faire approach of government restraint failed
and societies were rescued by Keynesian economics and government initiatives.
Contrary to neoclassical theory, the system was not self-correcting.
More perspectives to be discussed later.
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