The Campaign for Real Ale: Capitalist or Not?

 Who do CAMRA belong to? What does the existence of this Campaign imply for capitalism and society?

Rick argues that the brewing industry’s failure to anticipate CAMRA and forestall its demands represent a failure of capitalism. Because…

according to the classical economic theory that is still fetishized in some parts of the blogosphere, an organisation like CAMRA should be unnecessary. Markets react to supply and demand. If there is enough demand for traditional beer, so the story goes, new firms will enter the market to satisfy that demand. However, when you look at what firms actually do, rather than what the theory says they do, the reality of markets is different. In many sectors, firms adopt industry standards which enable them to promote their collective interests at the expense of customers.

Tim disagrees, and argues that the voluntary pressure group is a natural part of capitalism. He characteristically caustically launches a broadside in defence of textbook economics with his “The stupid, it hurts!” Personally, I think Rick has called this wrong, but he has done so in an interesting way. I also think Tim is a big fat meanie, and he is too quick to use others’ interesting mistakes to cement his biases, rather than using them to test them.

Most academic economists and economic textbooks have very little on firms, invention, innovation, and entrepreneurship. Despite this year’s Nobel Prize winners interest in search costs, that too is still under-researched. It doesn’t have to be this way, Schumpeter knew the importance of innovation, but many others have forgotten, or never learned. A lot of vulgar libertarians fall into one of these two groups.

Some insist that the market will deliver so long as the state gets out the way, however they usually offer precious little detail on how the market will in fact operate (often using the excuse that predicting things is hard as an excuse not to bother, rather than giving it their best shot, as an actual entrepreneur would).

Others insist entrepreneurs will fill any void worth filling, but these have the opposite problem of offering precious little detail on the macro consequences of this. Entrepreneurs may well delivery, but when and what happens in the meantime are usually left out of these analyses.

Rick was railing against an all too common misconception that markets are automatic and that good things happen when government gets out the way. That is expressly not the case. There is no market, merely endless experiments, many failures and a few successes. Libertarians very often exaggerate the speed with which markets achieve equilibrium and the costs and difficulties of them doing so, and it is right that this be made clear.

However, CAMRA are not so much anti-capitalist as a subsidy for capitalists. They are a completely free market research council which the drinks industry has used to reduce the costs of finding out what market to (re)enter. If CAMRA had flopped we would still all be drinking “Australian” Fosters brewed in Wales, but as they have gained members they have revealed the existence of a profitable market which brewers once thought it best to leave.

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15 thoughts on “The Campaign for Real Ale: Capitalist or Not?

  1. Well ‘called it wrong’ and ‘interesting mistake’ is an improvement on ‘stupid’. ;-)

    Thanks, first of all, for the link.

    I wasn’t actually saying that CAMRA was anti-capitalist though. It’s a bunch of people who, partly through trail and error, dicovered how to work within capitalism to get what they wanted. I doubt that this was their original plan but that is effectively what they ended up doing.

    1. Provocative titles get comments rolling!

      The experimentation side to economics in life and in economics is often underemphasised. Its too often about “markets” and “aggregate” demand or supply. So I see why you could characterise CAMRA as doing something outside the market, but that is because I think you’ve conceptualised the market incorrectly.

      The market is often shown as a bunch of production functions and consumption functions, but really it is more complicated than that.

      “It’s a bunch of people who, partly through trail and error, dicovered how to work within capitalism to get what they wanted. I doubt that this was their original plan but that is effectively what they ended up doing.”

      Basically that is a MASSIVE part of capitalism, at least the useful part of capitalism, brouching subjects here, trialing new products there, opening new premises here, seeing if building a car on a rolling production line is more efficient.

      CAMRA did that for the breweries and certainly did it better than the breweries could have done because they were decentralised (and centralised organisations are generally inefficient) and flexible.

      The right’s crusade against the state is 90% nonsense, most of the functions which the state performs are not amenable to the experimentation which sees improvement in other sectors of the economy, but 10% of the time they have a point. Productivity improvement is hard and difficult to predict, so maximising useful experimentation (which very often means the market), is the way to go.

      1. I didn’t say that CAMRA did something outside the market, just that it didn’t sit around and wait for market equilibrium to sort the problem out. I don’t understand your point about conceptualising the market incorrectly.

        Overall, though, I agree with most of what you say here, especially your point about innovation.

        1. Okay, perhaps I’ve misread you a little.

          My point is that you cannot “sit around and wait for market equilibrium to sort the problem out.” Markets are only equilibrated by people doing something.

          Existing capitalist firms are occasionally?/usually? sometimes not the best at doing this, and I think Tim fails to address the oligopolistic nature of the beer market which would have seriously increased the time a real ale revival would have taken, which was your point.

          1. My other objection to the ‘CAMRA simply helped the breweries rediscover the demand in the market’ is that it lets the big brewers off the hook.

            They didn’t just make a mistake and not realise people wanted real ale. They deliberately set out to destroy it because it wasn’t as profitable.

          2. Not helped, they forced brewers to see they had made a mistake.

            Large companies are normally crushing, soulless, uninnovative bureaucracies, but they exist and we need to interact with them. I don’t want to let them off the hook, I’m just trying to explain the process.

      2. Out of curiousity, why do you say that 90% of what the state does is not amenable to experimentation?
        My understanding of policing is that it does involve experimentation, of how best to solve crimes, negotiate hostage situations, etc, and they’ve learnt things about this over the last 100 years. Eg I understand that part of the reason that things are relatively more peaceful in Northern Ireland is that the authorities got better at infiltrating terrorist groups.

        Health care – Western healthcare only really started improving once people got serious about experimenting.

        Roads – how about those guys who are experimenting with doing away road signs?

        Democracy, presumably I’m not the only one who has occasionally changed my mind about the wisdom of whom I voted for, on seeing how they performed once in office, and one of the points of democracy is that a few years later you get to try a different opinion, if you want.

        Defence – I’m told that “no plan survives first contact with the enemy”.

        So what’s this 90% where experimentation isn’t useful?

        1. The fundamental thing I realised looking at where economic growth and productivity improvements came from was that improvement is sporadic and concentrated in a few notable industries/firms, like mushrooms sprouting up over night. Even if overtime improvement spreads out like yeast filling rising bread.

          Now in the long term this offers a strong argument in favour of opening the state up to the market and more competition.

          However, in the short run, any argument which claims that “competition” – as in competition between capita and serco for porkpacked contracts – will improve the way the state operates is massively misunderstanding how improvements often occur.

          90% is nonsense long term, most of the state can be improved by robot nurses or air-to-ground-laser-guided-pothole-fillings, but in the short term there would be very little improvement in what the state does because 1) it does a lot of labour intensive service work and 2) productivity improvement is hard.

          1. Ah, you were saying something quite different to what I thought you were saying.

            I don’t understand the distinction between long-term and short-term here. Isn’t the long-term changes typically the result of lots of short-term innovations accumulating? Eg I understand that Watt didn’t invent the steam engine out of nothing, instead he improved already existing designs, which kept on being improved after that too.

            Your explanation also raises a further question: Why do you think that labour-intensive service work is not open to improvement by experimentation? I’ve had a fair number of basic service jobs, and in each one of them there were more and less effective ways of doing them.

            I agree with you that productivity improvement is hard.

  2. Last time I looked Manchester wasn’t in Wales, Fosters is produced at the Royal Brewery, in Moss Side.

  3. “There is no market, merely endless experiments, many failures and a few successes.”

    Isn’t that actually a description of how the process of innovation works in a market economy?

  4. You’re being a little kind to him, I think. He posted this below Tim’s post:

    “Markets don’t adjust on their own. Somethimes you need to get together and put pressure on them to adjust.”

    Gaaaaaah!

    I can’t work out whether he genuinely still doesn’t get it or is staging a not particularly dignified retreat of the kind you should never really attempt on the internet. Shame because I hang on his every word in the areas he knows.

  5. Though commendably kind, I should say. I’m not sure Worstallsnark is really the way forward for the classical liberalism movement.

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