PHA-Exchange> Re: Food for a faceless and cozy thought

[George Kent]

On May 1, 2006, at 10:14 PM, Claudio wrote:

>  the World Development Report 2006 (WB, 2006) makes a remarkable  
> statement. It says that economic inequality results from unfair  
> power structures and political influence and an absence of  
> corrective measures of market failures.


This is remarkable not only because the World Bank fails to propose  
remedies, but, more fundamentally, it is remarkable  because it fails  
to recognize the way in which free markets necessarily and  
inescapably produce economic inequality. Permit me to quote from p.  
19 of my book, Children in the International Political Economy:

"The ordinary, normal working of the market system creates wealth,  
but it also leads to poverty, and thus to concentration and to  
steadily widening gaps. The way in which the market system  
concentrates wealth and power in the hands of some and impoverishes  
others is very straightforward. The elementary transaction of the  
market system is the bargain, the negotiated exchange. One's  
bargaining strength depends on the quality of one's alternatives.  
Some people (or companies, or nations) are stronger than others  
because they have better options.

Those who have greater bargaining strength tend to gain more out of  
each transaction than those who have lesser bargaining strength.  
Thus, over repeated transactions, stronger parties systematically  
enlarge their advantages over weaker parties. Bargainers do not move  
to an equilibrium at which the benefits are equally distributed, but  
instead move apart, with the gap between them steadily widening.  
Asymmetrical exchange feeds on itself, making the situaiton more and  
more asymmetrical."

No wonder it is the rich who are the strongest advocates of "free"  
markets.

Aloha, George

+++++++++++++++++++++++++++++++++++++++++++++++++++
Professor George Kent
Department of Political Science
University of Hawai'i
Honolulu, Hawai'i 96822
USA

Phone:    1 808 396-9422
Cell:         1 808 389-9422
Fax:          1 808 956-6877
Email:       kent at hawaii.edu
Website:   http://www2.hawaii.edu/~kent
Skype ID: geokent

New book: Freedom from Want: The Human Right to Adequate Food
http://press.georgetown.edu/detail.html?id=1589010566


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