Corrupt Australia presents an alternative to the politically correct channels of debate to reveal and scrutinize the skewed structure/design of modern Australian society. We also seek to encourage autonomous Australian culture which is free from the standardizing and overly materialistic clutches of globalisation and which encourages citizens to go further than simply contributing to a quantity over quality mindset and the banal and unsustainable conditions under which we may increase our love for and attainment of material mass.

Economics of the whole?


"By pursuing his own interests he frequently promotes that of a society more effectually than when he really intends to promote it" - Adam Smith, The Wealth of Nations, 1766.

The above quote from the father of modern liberal economics, Adam Smith, basically states that free economic markets, driven fundamentally by the self-orientated preferences of market participants, most efficiently allocate resources for the greater good of society when market participants are in fact not aiming to better anyone but themselves. For 'free' economic markets are virtual arenas in which buyers and sellers interact and in which the price for goods sold on that particular occasion is set and the amount of goods sold on that particular occasion is determined. As such, markets are the meeting places of parties that carry with them their own self interests and nothing more: buyers and sellers who demand the goods and who produce/supply the goods, respectively.

A basic principle in economics is that the total net benefits are attained for all market participants (all buyers and all sellers in the market of a certain good), and apparently also the whole of society too (echoed by Smith's quote), when the number of items buyers are willing to purchase of each good (demand) is equal to the number of items suppliers/producers are willing to sell of each good (supply). Add to this the tendency for free markets to reach this 'equilibrium' position naturally, and you get the conclusion that free markets naturally allocate resources for the good of the whole - in spite of the original partisan and selfish intentions of market participants. But do they really do this? First we need to examine how markets naturally reach this point of 'equilibrium' (where quantity demanded equals quantity supplied, or, Q*) before we can assess the claim that this equilibrium, and thus free markets, driven by nothing more than selfishness, ensure the best total outcome for society as a whole.

The downward sloping demand curve in a common economic model like the one below reflects the willingness of people to purchase more of a good at a lower price, and the upward sloping supply curve reflects the tendency of suppliers/producers to supply more of a good if the price they will get for it is higher.

Imagine if the price for a common good like paper, in the market occupied by both producers of paper (pulp mills etc) and buyers of paper (retail stores etc), were different from the equilibrium price P*. With a market price of less than P*, (i.e. lower on the vertical axis than P*), the quantity demanded at that price would exceed the quantity supplied at that price, resulting immediately in unsatisfied demand. This unsatisfied demand would naturally create upward pressure on prices, providing suppliers with an incentive to supply more to the market, until the excess demand was met - back at the equilibrium price.


Now, in any market the amount of a good on offer from suppliers or producers, as well as depending on the demand for those goods, ALSO depends on the costs of producing and supplying the good, including costs associated with labour, materials and other expenses. The more it costs to produce and supply a certain amount of a good, the higher the price the supplier will charge (and this will be reflected in an economic model by a new supply curve which will in turn reflect a lower equilibrium quantity ultimately agreed upon by buyers and sellers). However, the only supply side costs currently factored in to economic considerations are the PRIVATE costs born by the individual producer. If the WIDER social costs of producing and supplying goods, like for instance paper, were factored in to an economic model, as opposed to the aforementioned labour and material costs born merely by the individual producers, then the equilibrium market position, i.e. the quantity which buyers and sellers unintentionally 'agree' upon and thus the quantity produced which most benefits society, would be much different.

Say we factor into the supply concerns regarding the production of paper the ADDITIONAL costs - not simply to the producer but to the environment, to all of us (including the producer), from deforestation - we immediate get a new supply line for our economic models which indicates that a lower quantity of paper than before must be produced to attain market equilibrium and thus to maximise the total benefits to society from hosting a market for paper. A lower equilibrium quantity will be indicated when environmental costs are considered because the increased price the producer will charge - when it recognises that as a part of society it bares additional, in the form of, environmental costs - will cause demand to drop off somewhat, until a new and lower equilibrium quantity is reached.


Ultimately, it seems that the social costs of producing and selling goods that are environmentally, morally, or otherwise harmful to society in the long run are not as tangible as the private and producer-specific costs of labour and materials, thus they are ignored by our highly materialistic society. Like many of human kind's inventions and discoveries, the conceptual systems of economic can either be used appropriately and realistically as a feedback mechanism, or it can be used parasitically. Liberal economic systems, in which we as Australians conduct our affairs with nothing in mind but our own selfish interests, must be accepted as un-sustainable. Economics can only be truly informative if economists, buyers and sellers are truly realistic about the wider implications of their own interests and if they factor these implications into their decision making. But it is difficult to picture market participants freely representing the wider and extra-individual costs of their activities into their decision making. In that case, and for economics to be of any use in efficiently allocating resources, they must be made to.

By David


Think of it all - of the life that is! Study your friends and foes!
Study the past! And answer this: "Are these times better than those?" The life-long quarrel, the paltry spite, the sting of your poisoned pride! No matter who fell it were better to fight as they did when the world was wide.

Boast as you will of your mateship now - crippled and mean and sly - The lines of suspicion on friendship's brow were traced since the days gone by.
There was room in the long, free lines of the van to fight for it side by side -
There was beating-room for the heart of a man in the days when the world was wide.

With its dull, brown days of a-shilling-an-hour the dreary year drags round: Is this the result of Old England's power? - the bourne of the Outward Bound?
Is this the sequel of Westward Ho! - of the days of Whate'er Betide? The heart of the rebel makes answer "No! We'll fight till the world grows wide!"

The world shall yet be a wider world - for the tokens are manifest; East and North shall the wrongs be hurled that followed us South and West. The march of Freedom is North by the Dawn! Follow, whate'er betide! Sons of the Exiles, march! March on! March till the world grows wide!

- Henry Lawson

(c)2008 Corrupt AU