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June 17, 2011


Dick Pountain

A very acute analysis Will. The propensity to assume that all the surplus value belongs to you was Veblen's definition of predation.

Richard Holloway

Keep blathering away. No-one's listening.
If someone wants to pay £18,000 for a degree, let them. If a university wants to make a profit, who the hell are you to complain?
The 'all beneficent state' has succeeded in dumbing down education in this country so that we are falling in educational league tables in almost every subject.
The 'state' universities are producing graduates who haven't the basic skills for the current job market.
I think Grayling should be knighted for daring to stand up to such closed and snobbish minds as yours.

Will Davies

Richard - I suspect you've only skim-read my blog-post (that's right, you better read it soon, or I'll send you to the Gulag!) because I specifically argue that the price of the degree is not the main problem, nor is the fact that it is independent of the state. My argument (or 'complaint' if you prefer) is that the problem lies in its 'for profit' status. Surely if Conservatives want to avoid bad caricatures of the private sector, to match your bad caricature of the state, it's time to recognise that there are multiple ways of devolving power, beyond this form of hackneyed, greed-driven privatisation?

Richard Holloway

Oh I read it.
What blinkers you is this notion that profit is always greed driven.
Is the John Lewis Partnership greedy for wanting to give its Partners a bonus?
Is the creator of a new medical technique greedy for wanting to be rewarded for its diligence and time?
If a university wants to make a profit to reinvest as well as reward shareholders, why does that make them greedy?


Try again, Richard. The John Lewis Partnership does not *maximise* profit - for example, what incentive does the firm have to lower the wages of its employees (through outsourcing, offshoring, etc.) to increase the surplus when that surplus goes to the partners?

The point is that rewarding shareholders can act as a deadweight on productive and creative activities because their return is not capped - their liability is limited through incorporation, but not their share of the surplus.

Will Davies

Richard - on your specific examples...

It would (as the comment above) indicates be difficult to describe JLP as a 'for profit' entity, in that it has no external shareholders. Its equity is held in a trust which exists to defend the interests of its 'members', i.e. employees. If and when surpluses exist, these get distributed as dividends. But those surpluses are a side effect of a company that is well run and attractive to consumers; if they dried up, it wouldn't imperil the company or management in any way, as would occur for Tescos.

Re medical innovations, it is widely recognised, even by fairly radical free-marketeers, that 'up-stream' R&D will not be delivered to an optimal level by markets and profit-maximisation. This is why (Republican-supporting) thinkers such as Michael Porter worked hard to persuade the Bush administration that neglecting public spending on research and universities would imperil the long-term competitiveness of the US economy. If you want to be more neo-con about this, think of what the Pentagon and NASA did for US technological and economic supremacy during the Cold War and years following.

A 'reinvested profit' is called 'retained earnings' not 'profit', so I don't understand the final point.

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