December 12th 2009

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Articles from this issue:

EDITORIAL: The challenges facing Tony Abbott

CANBERRA OBSERVED: Abbott's victory took media by surprise

NATIONAL AFFAIRS: Senate committee recommends against same-sex marriage

SOUTH AUSTRALIA: Euthanasia bill defeated in SA

ENVIRONMENT: UK's climate research centre discredited

ECONOMICS: Birdsville Amendment stops fuel predatory pricing

ENERGY: Time for a new Coalition emissions policy

THE MANHATTAN DECLARATION: U.S. Christian leaders draw a line in the sand

REPRODUCTIVE HEALTH: Women's health risk ignored by Rudd Government

UNITED STATES: Health care reforms unleash passionate debate

RUSSIA: Medvedev's desperate drive to modernise Russia

EDUCATION: Whatever happened to adult authority?

SCHOOLS: Are independent schools enemies of social cohesion?

Westmore has not read my report: Fr Frank Brennan

Morally handicapped politicians

Market economics misunderstood

Surafend massacre


CINEMA: Dickens' Christmas tale brought to life A Christmas Carol (rated PG)

BOOK REVIEW: FIRES OF FAITH: Catholic England under Mary Tudor, by Eamon Duffy

BOOK REVIEW: THE REVOLT OF THE PENDULUM: Essays 2005-2008, by Clive James

Books promotion page

Market economics misunderstood

by John Ballantyne

News Weekly, December 12, 2009

Dr Garrick Small's review of John M├ędaille's book, The Vocation of Business: Social Justice in the Marketplace. (News Weekly, November 28) is good in parts and rightly highlights the need for more ethical behaviour in the marketplace.

However, Dr Small's review contains a couple of serious errors.

He alleges that the 18th-century father of modern economics, Adam Smith, "succeeded in turning greed into the key virtue driving economics".

Smith did not. In fact, he said quite the opposite. In his neglected classic, The Wealth of Nations (1776), he denounced what he called "the mean rapacity, the monopolising spirit of merchants and manufacturers who neither are, nor ought to be, the rulers of mankind".

A second error is where Dr Small asserts: "Market economics assumes perfect market competition".

Perhaps some unbalanced libertarian ideologues might think this way. However, the standard undergraduate textbook's treatment of market economics is to examine four models of market behaviour, of which the simplified model of perfect market competition is but one.

The other three are monopoly (market domination by a single seller), oligopoly (market domination by a very few sellers, such as Australia's "big two" supermarkets, Coles and Woolworths), and monopolistic competition.

John Ballantyne,
Balwyn, Vic.

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