March 19, 2023
I am a staunch believer in Capitalism (as well as a good Union person), but I have come to the conclusion over the years that much of what I learned in my youth is a steaming pile of horse effluvia. Two examples:
The Wisdom of The Markets
It is said that if there is a free and fair flow of information, all stocks, bonds and assets are fairly priced because the joint wisdom of the masses is accurate. I remember my professor having a hard time not laughing when he taught us this at MIT. My mother, on the other hand, sagely noted that the masses are asses. For sure, the “market” is short term, eco-unfriendly, hostile to organized labor and suffers from multiple other biases which cloud its judgment.
Capture the Value of your Labor
One decade into my two decades at CMP, I left to join my friend, the late Richard Dalton, in a consultancy called Keep/Track Corp. I had been raised on the idea that in capitalism, corporate capital captures the value-added of your labor. “I’ll capture it myself,” I thought. Turns out the added value of my labor in a large technical media company was high; the value of said labor in a two-person consultancy was nil.
How anyone with a lick of sense, let alone supposed economist giants like Paul Samuelson and Alan Greenspan, could possibly swallow and promulgate the absurd myth of market efficiency is beyond bewildering. My only conclusion is that they wanted to decline to study mob psychology, a discipline in which they had no training. After all, who does? Yet recent events demonstrate that the actual worth of institutions has little to do with how they fare in the real world when the Invisible Hand does its prestidigitation.
Posted by: CLARK R SMITH | March 20, 2023 at 05:39 PM