Money and Power Lecture 5

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Money and PowerLecture 5

• Who wins and who loses in a market system

2
Money and Power Lecture 5Who wins, who loses in a
market system
Outline

• Types of allocation system
• Income distribution
• Social and economic exclusion
• Externalities, cost transference versus cost
  reduction
• Moral hazard
• Monopoly
• Oligopoly and cartels
• Transition to a market system
• Short run losses, long run gains
• Historical tendency to monopoly
• Globalisation

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Money and Power Lecture 5Who wins, who loses in
a market system
Alternative Allocation Systems
Family
Peasant agriculture
Government activities

• Socialism

English peasants, 19th century
Mexican family C1900
Firm
Rochdale Co-op Laundry Girls 1924
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Money and Power Lecture 5Who wins, who loses in
a market system
Economic Exclusion
Initial endowment what do you own to sell?
Discrimination will others let you buy/sell?

• Adverse selection will the market push you out?

Appalachian poor 1930s visualhistory.freewebpages.
org/ ..
Priced out of the housing market
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Money and Power Lecture 4Who wins, who loses in
a market system
Monopolies, cartels and competition
The fewer the competitors the higher the price
original excess supply
Price high
Price medium
Monopoly. No bidding price stays high
2 Competitors. Very limited bidding
Price quite low
5 Competitors. Some bidding
Many competitors. Much bidding. Optimum
Price as low as possible
Buyers and sellers want same quantity
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Money and Power Lecture 4Who wins, who loses in
a market system
Monopolies, cartels and competition
The fewer the competitors the higher the price
Monopolists hold prices highest
Price high
Conspiratorial cartels are created with if few
competitors exist
Price medium
Price quite low
Oligopolists create rigid bureaucracies, stifle
initiative and new ideas
Price as low as possible
Oligopolists exert political power
Buyers and sellers want same quantity
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Money and Power Lecture 4Who wins, who loses in
a market system
Monopolisation and globalisation
Increasing monopolisation?
Monopolies, cartels and globalisation
Globalisation and financial power
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Money and Power Lecture 4Who wins, who loses in
a market system
Transition to a market system Winners and losers
England in the sixteenth century
The beggar and the gentleman in Elizabethan
England
Introduction of cash crop farming in ex-colonies
Commercial farm, farming whats left

• Privatisation in UK

MRSA super bug germs http//news.bbc.co.uk
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Money and Power Lecture 4Who wins, who loses in
a market system
Short term losers, long term winners?

• Initial losses recouped through long term wages
  rises due to productivity gains
• Would changes have occurred anyway?
• Can gains be made without apparently anti/extra
  market actions
• Do Markets create the rich and the poor?