A Level Economics 25: Resource Allocation in Free Markets

The main assumptions of a free market are as follows:

1. Perfect Competition: The assumption of perfect competition implies that there are a large number of buyers and sellers in the market, with no single entity having control over prices or market conditions. All market participants are price takers, meaning they have no influence on the market price and must accept it as given.

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3. Rational Behavior: The assumption of rational behavior suggests that consumers and producers act in their self-interest and make rational decisions based on maximizing their utility or profits. They have access to complete and accurate information and aim to optimize their outcomes given the available choices.

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5. Absence of Market Imperfections: Free markets assume the absence of external factors that may distort market outcomes. There are no barriers to entry or exit, no transaction costs, and no market failures such as externalities or public goods.

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7. Property Rights and Rule of Law: The assumption of well-defined and enforceable property rights ensures that individuals have the right to own, use, and transfer property and assets. The rule of law ensures that contracts are enforced, fraud is punished, and disputes are resolved impartially.

In a free market, the allocation of resources is determined through the interaction of supply and demand. The price mechanism plays a central role in coordinating the decisions of buyers and sellers. Here's how the market allocates resources:

1. Price Signals: Prices act as signals that reflect the relative scarcity or abundance of goods and services. When demand for a particular good or service increases, its price rises, signaling that resources should be reallocated towards its production. Conversely, when demand decreases, prices fall, signaling a reduction in resources allocated to that product.

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3. Profit and Loss: In a free market, producers are motivated by profit. If a good or service is in high demand and prices are high, producers have an incentive to allocate more resources towards its production to earn higher profits. Conversely, if a good or service is in low demand and prices are low, producers may reallocate resources to more profitable areas or exit the market, leading to a reduction in supply.

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5. Consumer Preferences: Consumer demand and willingness to pay for goods and services influence resource allocation. As consumers express their preferences through purchasing decisions, producers respond by producing the goods and services that are in demand, adjusting production levels, and innovating to meet consumer needs.

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7. Efficient Allocation: The free market is assumed to allocate resources efficiently by directing them to the most valued uses. Through the price mechanism and competition, resources are allocated based on consumer preferences and production costs, maximizing societal welfare and economic efficiency.

It's important to note that while free markets can be effective in allocating resources and promoting efficiency, they may also have limitations and require appropriate regulations and interventions to address market failures, promote fairness, and protect public interest. The assumptions of a free market provide a theoretical framework, and in reality, markets may deviate from these assumptions due to various factors and imperfections.

A Level Economics 6: Production Possibility Frontier

Explain with examples the factors which may shift the PPF inwards or outwards.

The PPF (production possibility frontier) can shift inwards or outwards due to various factors that affect an economy's production possibilities. Let's explore examples of factors that can cause shifts in the PPF:

Technological Advancements: Technological progress can lead to an outward shift of the PPF. When new inventions, innovations, or improvements in production techniques occur, the economy becomes more efficient and can produce more goods or services with the same amount of resources. For instance, the development of advanced machinery and automation in manufacturing can increase productivity, resulting in an expansion of the production possibilities.

Changes in Resources: Any changes in the quantity or quality of available resources can impact the PPF. If there is an increase in resources, such as the discovery of new oil reserves or an expansion of a country's workforce through immigration, it can lead to an outward shift in the PPF, allowing for higher levels of production. Conversely, a decrease in resources, like a natural disaster damaging agricultural land or a decline in skilled labor, can cause an inward shift of the PPF, reducing production possibilities.

Changes in Trade: International trade can influence the PPF. Opening up to trade and engaging in imports and exports can expand the variety of goods available to the economy, increasing its production possibilities. Trade allows countries to specialize in producing goods they have a comparative advantage in, resulting in greater efficiency and an outward shift in the PPF. Conversely, trade restrictions or barriers can limit access to foreign markets, reducing the range of goods available and potentially causing an inward shift of the PPF.

Changes in Education and Human Capital: Investments in education and human capital development can impact the PPF. An educated and skilled workforce can enhance productivity and lead to an outward shift in the PPF. For example, if a country invests in improving its education system and provides training programs for workers, it can increase their knowledge and skills, thereby expanding the economy's production capabilities.

Changes in Institutions and Policies: Government policies, regulations, and institutions can influence the PPF. Policies that promote entrepreneurship, innovation, and competition can stimulate economic growth, leading to an outward shift in the PPF. Conversely, if policies hinder business activity, impose excessive regulations, or limit investment, it can result in an inward shift of the PPF, constraining production possibilities.

These examples highlight how factors such as technological advancements, changes in resources, trade, education, and institutional policies can cause shifts in the PPF, either expanding or reducing an economy's production possibilities.

A Level Economics 4: Production Possibility Frontier

Consider an economy that produces both cars and bicycles, and it is currently operating at point A on its PPF curve, producing 100 cars and 200 bicycles. Explain the difference between a movement along the PPF and a shift in the PPF using this scenario. Additionally, discuss the implications of these changes on the economy's production possibilities.

A movement along the PPF refers to a change in production quantity of one good relative to another caused by reallocating resources within the existing production capabilities. On the other hand, a shift in the PPF represents a change in the overall production capabilities of the economy, resulting from factors such as technological advancements, changes in resources, or improvements in productivity.

In the given scenario, let's explore the implications of both movements along the PPF and shifts in the PPF:

1. Movement along the PPF: Suppose the economy decides to produce 150 cars and reduces bicycle production to 150. This movement along the PPF curve signifies a reallocation of resources from bicycles to cars, leading to a change in the production quantities of both goods. This movement does not expand or contract the overall production possibilities of the economy but reflects a choice to produce more cars at the expense of fewer bicycles.

2. Shift in the PPF: Now, imagine that the economy experiences a technological advancement in automobile manufacturing, leading to increased efficiency and productivity. As a result, the PPF curve shifts outward, indicating an expansion in production possibilities. The new curve would allow the economy to produce more cars and bicycles than before, reflecting an increase in overall production capabilities. For instance, the economy could now produce 120 cars and 250 bicycles at point A on the new PPF curve.

The implications of these changes on the economy's production possibilities are as follows:

• Movement along the PPF: This decision involves a trade-off between cars and bicycles within the existing production capabilities. Producing more of one good means producing less of the other. It demonstrates the concept of opportunity cost, as the economy sacrifices the production of bicycles to increase car production (or vice versa).

• Shift in the PPF: A shift in the PPF curve indicates a change in the economy's ability to produce both goods. It represents economic growth and expanded production possibilities. With the outward shift, the economy can produce more cars and bicycles than before, leading to increased consumption and potential economic benefits.

In summary, a movement along the PPF reflects a reallocation of resources between goods within the existing production capabilities, while a shift in the PPF represents a change in the overall production possibilities of an economy. Both movements along and shifts in the PPF have implications for production quantities, trade-offs, opportunity costs, and the economy's capacity to produce goods and services.

Economics Essay 55: Unemployment

Explain why unemployment creates social and economic costs. 

Unemployment creates both social and economic costs due to its detrimental effects on individuals, communities, and the overall economy. Here are the reasons why unemployment has such consequences:

1. Economic Costs: a. Loss of Output: Unemployment leads to a loss of productive resources and potential output in the economy. When individuals are jobless, their skills and talents remain underutilized, resulting in a decline in overall economic productivity. This loss of output translates into a decrease in the country's gross domestic product (GDP) and potential economic growth. b. Lower Tax Revenue: Unemployment reduces tax revenue for the government. Unemployed individuals pay fewer income taxes, and businesses experience lower profits, resulting in decreased tax collections. This reduction in tax revenue limits the government's ability to fund essential public services and investments in infrastructure, education, healthcare, and social welfare programs. c. Increased Government Spending: Unemployment often leads to increased government spending on unemployment benefits, welfare programs, and social assistance. These expenditures are necessary to provide support to unemployed individuals and their families, but they place a strain on public finances and can contribute to budget deficits and national debt. d. Reduced Consumer Spending: Unemployed individuals typically have lower disposable income, leading to a decrease in consumer spending. This reduction in aggregate demand can have a negative multiplier effect, affecting businesses across various sectors and leading to further job losses.

2. Social Costs: a. Income Inequality and Poverty: Unemployment exacerbates income inequality and increases the risk of poverty. Without a steady income, individuals and families struggle to meet their basic needs, including housing, healthcare, and education. Long-term unemployment can push individuals into a cycle of poverty, making it challenging for them to escape. b. Social Exclusion and Marginalization: Unemployment can lead to social exclusion and feelings of marginalization. Individuals who are unable to find work may experience a loss of self-esteem, a sense of purpose, and a feeling of being disconnected from society. This can have detrimental effects on mental health and overall well-being. c. Strained Social Services: High unemployment rates put pressure on social services, such as healthcare and social assistance programs. Increased demand for these services coupled with limited resources can strain the capacity of social support systems, making it more difficult for individuals and families to access the assistance they need. d. Social Unrest and Crime: Prolonged unemployment can contribute to social unrest and an increase in crime rates. Frustration, desperation, and a lack of opportunities may drive some individuals to engage in illegal activities as a means of survival.

In conclusion, unemployment creates significant social and economic costs. The economic costs include a loss of output, reduced tax revenue, increased government spending, and a decrease in consumer spending. The social costs encompass income inequality, poverty, social exclusion, strained social services, and the potential for social unrest and crime. Addressing unemployment through policies and programs that promote job creation and support the unemployed is crucial to mitigate these costs and foster a more inclusive and prosperous society.

Fallacies of Capitalism 8: The Efficient Markets Hypothesis

The Efficient Markets Fallacy 

Markets are considered efficient in certain aspects because they have the potential to allocate resources efficiently, respond to changes in supply and demand, and facilitate mutually beneficial transactions between buyers and sellers. This efficiency arises from the following factors:

1. Price mechanism: Markets utilize the price mechanism, where prices are determined by the interaction of supply and demand. This mechanism helps in efficiently allocating resources as prices adjust based on changes in supply and demand conditions. For example, when the demand for a particular product increases, its price rises, signaling producers to increase production to meet the demand. This responsiveness allows resources to be directed to where they are most valued, leading to efficiency.

2. Competition: In competitive markets, multiple buyers and sellers compete with each other, leading to increased efficiency. Competition incentivizes businesses to improve their products, reduce costs, and innovate, ultimately benefiting consumers. For example, when multiple companies produce similar goods, they are motivated to offer better quality or lower prices to attract customers. This competition can drive efficiency improvements over time.

3. Profit motive: In a capitalist system, the profit motive serves as an incentive for individuals and businesses to make efficient decisions. When individuals seek to maximize their profits, they are driven to allocate resources in the most productive and efficient ways. For instance, if a business realizes that a particular product line is not generating sufficient profits, it may reallocate resources to more profitable areas, contributing to overall efficiency.

4. Flexibility and adaptability: Markets are often more flexible and adaptable compared to centralized planning systems. They can quickly respond to changes in supply, demand, and consumer preferences. This adaptability allows resources to be reallocated efficiently, ensuring that goods and services align with consumer needs. For example, if a new technology emerges, markets can swiftly adjust by reallocating resources to support its development and meet the changing demand.

However, while markets can be efficient in certain respects, it is important to recognize their limitations and the factors that can hinder their efficiency. Let's understand this concept with simple examples:

1. Market concentration: In some industries, a few large companies can dominate the market, resulting in market concentration. These companies may have significant market power, enabling them to set prices, limit competition, and control supply. For example, imagine a telecommunications industry where only a handful of companies operate. This concentration can lead to reduced choices for consumers and hinder new entrants from competing. The efficient markets fallacy does not account for the potential negative effects of market concentration on competition and consumer welfare.

2. Monopolies: A monopoly occurs when a single company has exclusive control over a particular market. This lack of competition can result in inefficiency and reduced innovation. For instance, imagine a pharmaceutical company that holds a patent for a life-saving drug without any competing alternatives. This monopoly power allows the company to set high prices, limiting access to the medication. The efficient markets fallacy does not address the potential harm caused by monopolistic behavior and the need for regulations to promote competition.

3. Inequitable distribution of resources: The efficient markets fallacy assumes that resources are distributed fairly and efficiently in a capitalist economy. However, in reality, the distribution of resources can be highly unequal. For example, wealth and income disparities can arise, with a small portion of the population holding a significant share of resources while others struggle to meet their basic needs. This inequitable distribution can lead to social unrest and hinder overall economic growth. The efficient markets fallacy does not adequately consider the need for interventions and policies to address the inequitable distribution of resources.

4. Externalities and public goods: Efficient markets do not always account for externalities, which are the costs or benefits that affect third parties not involved in market transactions. For instance, pollution from factories imposes costs on the environment and public health. Without government intervention, the market may not internalize these costs, leading to inefficient outcomes. Additionally, markets may underprovide public goods like education or healthcare, which have broader societal benefits. The efficient markets fallacy fails to address the need for government intervention to address externalities and ensure the provision of public goods.

In summary, the "efficient markets" fallacy fails to address the issues of market concentration, monopolies, inequitable distribution of resources, and the provision of public goods. Recognizing these limitations is crucial for understanding the need for regulations, competition policies, and interventions to promote fair competition, address market failures, and ensure a more equitable distribution of resources in a capitalist economy.

Fallacies of Capitalism 6: The Growth at all Costs Fallacy

What are the consequences of the "growth at all costs" fallacy, which prioritizes GDP growth without considering the ecological limits and social consequences? 

The "growth at all costs" fallacy is the belief that prioritizing GDP (Gross Domestic Product) growth should be the primary goal of an economy, regardless of the ecological limits and social consequences. This approach fails to consider the long-term sustainability of economic activities and can lead to several negative consequences. Let's explore these consequences with simple examples:

1. Environmental degradation: The "growth at all costs" mindset often leads to the exploitation of natural resources without considering their finite nature and the capacity of the environment to absorb waste. For example, imagine a country that prioritizes rapid industrialization without implementing proper environmental regulations. This may result in deforestation, water pollution, air pollution, and the depletion of natural resources. Over time, such activities can damage ecosystems, harm biodiversity, and contribute to climate change, compromising the well-being of both present and future generations.

2. Social inequality: The focus on GDP growth alone can exacerbate social inequality. Economic growth does not always benefit all members of society equally. For instance, imagine an economy that experiences significant GDP growth driven by industries that rely heavily on low-wage labor. While the overall GDP might increase, the benefits may disproportionately flow to the wealthy or corporate elites, while the working class experiences stagnant wages and reduced social protections. This can widen the gap between the rich and the poor, leading to social unrest and an erosion of social cohesion.

3. Overconsumption and materialism: The "growth at all costs" fallacy encourages a culture of overconsumption and materialism, where people are constantly encouraged to acquire more goods and services. This can contribute to resource depletion and waste generation, placing further strain on the environment. For example, a society that values GDP growth above all may prioritize the production and consumption of goods without considering their environmental impact or the true well-being of individuals.

4. Neglect of social well-being: Prioritizing GDP growth without considering social consequences can result in the neglect of essential social factors that contribute to overall well-being. For instance, a society focused solely on economic growth may overlook investments in education, healthcare, social safety nets, and other critical social infrastructure. This neglect can have detrimental effects on human development, quality of life, and social cohesion.

5. Unsustainable economic practices: The "growth at all costs" fallacy can perpetuate an economic system that relies on continuous expansion and consumption, often at the expense of long-term sustainability. By disregarding ecological limits, such as resource scarcity and pollution thresholds, this approach can lead to economic instability, environmental crises, and compromised future prospects for economic development.

In summary, the "growth at all costs" fallacy, which prioritizes GDP growth without considering ecological limits and social consequences, can result in environmental degradation, social inequality, overconsumption, neglect of social well-being, and unsustainable economic practices. Recognizing the importance of sustainable development and taking into account ecological and social considerations is crucial for ensuring a more balanced and resilient economy that benefits both current and future generations.

Why Free Market Capitalism is not as Good as they say

 

The Future of Pakistan

Quit Balochistan Movement

 

On Stupidity: How do Smart People Outsmart Themselves

Nadeem Paracha in The Dawn


What is stupidity? Ever since the mid-20th century, the idea of stupidity, especially in the context of politics, has been studied by various sociologists and psychologists. One of the pioneers in this regard was the German scholar and theologian Dietrich Bonhoeffer.

During the rise of Nazi rule in Germany, Bonhoeffer was baffled by the silence of millions of Germans when the Nazis began to publicly humiliate and brutalise Jewish people. Bonhoeffer condemned this. He asked how could a nation that had produced so many philosophers, scientists and artists, suddenly become so apathetic and even sympathetic towards state violence and oppression.

Unsurprisingly, in 1943, Bonhoeffer was arrested. Two years later, he was executed. While awaiting execution, Bonhoeffer began to put his thoughts on paper. These were posthumously published in the shape of a book, Letters and Papers from Prison. One of the chapters in the book is called, ‘On Stupidity.’ Bonhoeffer wrote: “Every strong upsurge of power in the public sphere, be it political or religious, infects a large part of humankind with stupidity. The power of the one needs the stupidity of the other.”

According to Bonhoeffer, because of the overwhelming impact of a rising power, humans are deprived of their inner independence and they give up establishing an autonomous position towards the emerging circumstances. They become mere tools in the hands of the power, and begin to willingly surrender their capacity for independent thinking. Bonhoeffer wrote that holding a rational debate with such a person is futile, because it feels that one is not dealing with a person, but with slogans and catchwords.

So, to Bonhoeffer, stupidity was not about lack of intelligence, but about a mind that had almost voluntarily closed itself to reason, especially after being impacted and/or swayed by the rise of an assertive external power.

In a 2020 essay for The New Statesman, the British philosopher Sacha Golob writes that being stupid and dumb were not the same thing. For example, intelligence (or lack thereof) can somewhat be measured through IQ tests. But even those who score high in these tests can do ‘stupid’ things or carry certain ‘stupid ideas.’

Golob gave the example of the novelist Arthur Conan Doyle, who created the famous fictional character, Sherlock Holmes. Holmes, a private detective, was an ideal product of the ‘Age of Reason’, imagined by Doyle as a man who shunned emotions and dealt only in reason, logic and the scientific method. Yet, later on in life, Doyle became the antithesis of his character, Holmes. He got into a silly argument with the celebrated illusionist Harry Houdini when the latter rubbished Doyle’s belief that one could communicate with spirits (in a seance).

The question is, how could a man who had created a super-rationalist character such as Sherlock Holmes, begin to believe in seances? In fact, Doyle also began to believe in the existence of fairies. Every time someone would successfully debunk Doyle’s beliefs, Doyle would go to great lengths to provide a counter-argument, but one which was even more absurd.

Golob writes this is what stupidity is. And it can even be found in supposedly very intelligent people too. According to the American psychologist Ray Hyman, “Conan Doyle used his smartness to outsmart himself.” This can also answer why one sometimes comes across highly educated and informed men and women unabashedly spouting conspiracy theories that have either been convincingly debunked, or cannot be proven outside the domain of wishful thinking. By continuing to insist on the validity of such theories, one is simply using his/her smartness to outsmart oneself.

What about the leaders whose rise to power, according to Bonhoeffer, triggers stupidity across a large body of people? Take the example of today’s prominent populists, whose supporters are often referred to as being stupid. But as mentioned earlier, these leaders too are explained in a similar manner.

The truth is, dumbness, if it means a substantial lack of intelligence, is not what explains prominent political leaders. Had they been dumb, they would never be at the top of the heap. But as we have already established, stupidity and dumbness are two very different things; leaders can be stupid.

In this context, Golob explains stupidity as “the lack of conceptual resources.” By this he means that some leaders lack the right conceptual tools for the job. He writes that this can lead to a ‘conceptual failure’, where a leader is unable to fully grasp the concept of (political, economic or social) reality that he/she is operating in. They may excel in what they understand, but enter the domain of stupidity when they don’t. However, it is quite clear by now that today’s populist leaders may have had the intelligence to propel themselves to power, but they really do not have the conceptual tools to remain there.

Take PM Imran Khan. As an opposition leader, he understood well the concept of fiery, emotional rhetoric that can become a venting vessel for many. However, this tool becomes impotent in the conceptual context of actually being in power. Khan lacks the conceptual tools to understand the many economic and political quagmires the country has slid into. The more he fails in this, the more he falls back on concepts that he actually understands: i.e. fiery rhetoric (but one that does not sound very convincing anymore), and issues of morality.

He understands the latter well because, when he was a dashing ‘playboy’ in his pre-political days, he was often attacked for being immoral. He understood what the concept of morality is in Pakistani society. He now uses this as a tool to distract his thinning support from his obvious lack of understanding of what is actually happening around him in terms of the country’s drastic economic meltdown.

So, politically and economically, as things crumble around him, he stubbornly continues to “address issues of social immorality” because, by now, this is the only concept he can grasp. This is another case of political stupidity and conceptual failure, or of smartness outsmarting itself.

The things that went right to get New Zealand in the World Test Championship final

 

Britain out of the EU: a treasure island for rentiers

There’s no sign that ministers will use the twin shocks of the pandemic and Brexit to fix a broken system that is failing too many people opine the editors of The Guardian

‘Culturally, Brexit plays the same sort of role as the right to buy, insulating poorer leave voters from the idea that they will suffer from the resulting policies.’ Photograph: Christopher Furlong/Getty Images
 

When the UK entered the coronavirus age in March, state resources and collective commitment were mobilised on a scale not seen since the second world war. Decades ago, Britain had revealed itself, thanks in part to being able to marshal the industrial might of the empire, to be a formidable world power. Its economy was energised with breakthroughs in radar, atomic power and medicine.

Although the story of the pandemic has not yet ended, there appears to be no such transformation in sight under Boris Johnson. Rather depressingly, familiar trends of greed, incompetence and cronyism are reasserting themselves. This is bad news for an economy where there has been a collapse of socially useful innovation. Britain’s lack of hi-tech manufacturing capabilities, notably in medical diagnostic testing, was cruelly exposed by the pandemic.

This country has become more of a procurer than a producer of technology. But it is a remarkably inefficient one – despite an extraordinarily high percentage of lawyers and accountants in the working population. Connections seem to matter more than inventions. How else to explain why, in the desperate scramble to procure personal protective equipment, ventilators and coronavirus tests, billions of pounds of contracts have gone to companies either run by friends or supporters – even neighbours – of Conservative politicians, or with no prior expertise.

History is not short of examples where political insiders were successful in extracting virtually all the surplus that the economy created. Such influential interests moulded politics to enlarge their share of the pie. Greed was limited only by the need to let the producers survive. The shock of war, revolution, famine or plague provides an opportunity to fix a broken society. But if, post-pandemic, UK politicians care less about reform than the retention of power, they will fail to restrain the grasping enrichment that undermines democracy itself.

Windfall profits

Perhaps the most penetrating X-ray of this phenomenon today is by Brett Christophers in his book Rentier Capitalism. The academic makes the case that Britain has become a treasure island for those seeking excess profits from state-sanctioned control of natural resources, property, financial assets and intellectual property. Rent, paid by renters to rentiers, is tied to the ownership or control of such assets, made scarce under conditions of limited or no competition.

Mr Christophers says that the first sign of this new order was when Britain struck black gold in the North Sea. He writes that MPs on the public accounts committee noted with incredulity in 1972 that “the first huge areas of the sea were leased to the companies as generously as though Britain were a gullible Sheikhdom”. After that, public assets were sold off cheaply. The private sector ended up controlling lightly regulated monopolies in gas, water and electric supply, and public transport and telecoms. Customers lost out, overpaying for poor service. In a rentier’s paradise, windfall profits abound. Brazenly occupying the lowest moral ground was essential, as the housebuilder Persimmon proved by earning supersized state-backed help-to-buy profits long enough to hand out a £75m bonus to its boss.

The banks, which took this country to the brink of collapse a decade ago, are at the heart of a rentier state. France, Germany, Japan, the US all have banking sectors smaller than the UK. While banks earning rents have flourished, the households paying them – either directly as financial consumers, or indirectly as taxpayers of a debtor state or customers of debtor firms – have floundered.

The anger that such spivvery engenders is diffused politically by making voters complicit in the theft. The sell-off of council homes, says Mr Christophers, was a privatisation that gave many of those perhaps most inclined to kick against Thatcherism a personal stake in the project. Culturally, Brexit plays the same sort of role as the right to buy, insulating poorer leave voters from the idea that they will suffer from the resulting policies.

The prime minister understands that Covid can change Britain, but lacks modernising policies. He extols the virtues of free competition – both for itself and because such freedom, he reasons, will somehow liberate the spirit fluttering within a pre-Brexit Britain caged by coronavirus. He is no doubt betting that the disruption of leaving the EU will be lost in the roar of an economy taking off as an inoculated population returns to offices and shops.

Weakened regulations

The gap between rich and poor in the UK is at least as high today, academics calculate, as it was just before the start of the second world war. This is largely because the British state that once mediated the struggle between labour and capital has been taken over by rentiers. Weakening regulations, reducing the importance of fiscal policy and shredding social protections has corroded liberal democracy in which an increasingly influential wealthy few have been enjoying a free run. Ultimately, rentiers want to increase what the economist Michał Kalecki called the “degree of monopoly” in an economy. This allows them to limit the ability of workers, consumers and regulators to influence the markup of selling prices over costs and to defend the share of wages in output.

The EU says its labour, environment and customer protections are a floor, not a ceiling, and that they can’t be traded away for frictionless market access. If we had stayed in the club, our ability to concentrate profits for monopolists would have been stymied in future trade deals negotiated by Brussels and open to MEPs’ scrutiny. Outside the EU, Mr Johnson can barter away such regulations – without parliamentary oversight – and scrap safeguards in new technology for higher monopoly profits. Karl Marx wrote in The Eighteenth Brumaire of Louis Bonaparte in 1852 that “the Tories in England long fancied that they were in raptures about royalty, the church and the beauties of the ancient constitution, until a time of trial tore from them the confession that they were only in raptures about rent”. His assessment of early 19th-century Tories applies with unerring accuracy to today’s Conservatives.

Mr Christophers’ insight is that the Tories under Mr Johnson are a party of – and for – rentiers, much more than the interests of productive capital. This explains why, after 2016, the Tory party embraced Brexit and shrugged off productive capital’s concerns about leaving the EU. It will be to the great detriment of this country if the pandemic permitted Mr Johnson to combine present-day fears with a yearning for hopeful change to persuade the average person to vote against their interests in the future. But history often repeats itself first as tragedy, then as farce.