Philosophical Conversations Public Opinion Junk for code
parliament house.gif
Think Tanks
Oz Blogs
Economic Blogs
Foreign Policy Blogs
International Blogs
Media Blogs
South Australian Weblogs
Economic Resources
Environment Links
Political Resources
South Australian Links
"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

Boxing Day consumption « Previous | |Next »
December 27, 2011

Apparently Xmas sales have been sluggishthis year. There has has been none of the mad frenzy of crowds of eager shoppers elbowing one another to grab a bargain. Retail is doing it tough but the sector remains optimistic that the consumers will dig deep.

Why bother to rush into the sales when 'the sales' are the new normal; when everything is discounted all year round to counter the low consumer confidence:


This is the biggest shopping weekend of the year and it will be make or break time for many retailers. The challenge for the store chains is to turn browsers into buyers at a time when the bricks and mortar retailers are in economic trouble.

It's worse in Europe, of course, with the increase in unemployment, a squeeze on family budgets and government spending cuts as the euro crisis deepens. There its economies and institutions that are crumbling.

No doubt the neo-classical economists will continue to posit that market economies efficiently work towards equilibrium and harmony at a time in Europe when where no such harmony exists ie., the "Market" looks to be inherently destabilising. So the market, contrary to neoliberal belief in the superior power of The Market to efficiently fix any problem, may actually be incapable of fixing every problem. The reason? Capitalism is inherently unstable and lacking in equilibrium.

If you recall, the economic profession's response to the great financial crisis in 2008 was that it was a rabid outbreak of ‘irrational exuberance’. What happened to the economic assumption of rationality (maximization of a utility function) of ‘rational’ economic agents? Apparently they were caught up in their 'animal spirits', meaning that people get a little irrational from time to time. The inference in that irrational decision-making helped cause the housing bubble in the US not market failures in financial markets, externalities or disinformation to consumers.

As Philip Mirowski points out:

The problems with the financial system in 2007 had nothing to do with participants lacking correct incentives to purchase enough ‘information’ which would have revealed the dodgy nature of the collateralized debt obligations (CDOs) and other baroque assets which clogged the balance sheets of the financial sector. Rather, the reams of information that they did purchase, from ratings agency evaluations to accounting audits to investment advice, was all deeply corrupted by being consciously skewed to mislead hapless clients and evade the letter of the law.

What resulted was financial system collapse and so any economic analysis based on equilibrium and harmony is inherently flawed.

| Posted by Gary Sauer-Thompson at 9:28 PM | | Comments (1)


I haven't bothered with the Boxing sales this year.I'm not interested in spot prizes for bargain shoppers, such as gift vouchers and bonus points for customer loyalty cards.