Will any reader defend the retention of David Blunkett within the Cabinet?  Drop me a line

For enthusiasts for “markets” (and I confess I am one…) the Argos/Littlewoods price-fixing fine poses an acute question.   

• [ Why am I a market enthusiast, as a signed-up socialist?  Because trading systems have the potential for self-sustaining operation, without the need for direct State management. And "the State" can command relatively few resources, in this day and age. With the State facing growing organisational challenges in society, socialists will have to cultivate self-sustaining trading systems as a means of freeing-up time and space for serious public service management, as and when it is absolutely necessary. ]

In the Argos case, it is not just the size of the fine, which at £22,600,000 will make everybody sit up and take notice.  It is the question-mark which this entire form of Government intervention puts against the market system itself.   Ever since the mid-1930s, Western governments have been trying to make markets work better by forcing businesses to take their own market theories seriously – cartels have been broken up, dominant market positions dissolved, pricing-rings penalised, parallel-pricing rigorously disrupted..  All very virtuous, all very proper, very high-principled.

But what if markets do not, after all, operate like that?  What if "market theory" is misleading?  What if the promotion of a quiet life, and the avoidance of market conflict, is the norm?  What if the fine intellectual principles of Adam Smith represent yet another middle-class misinterpretation of real working life?  What if so-called “markets” only work as stable trading systems if there is a degree of “fixing” – limitation of entry, turf wars, the avoidance of confrontation, punches pulled, the quiet phone-call followed by the quiet withdrawal, the consensual restriction of tender-lists?  What if the fine market theories of the business sector are only intended for PR purposes, to run in parallel with a darker world of market fixers, to whom open competition is anathema?

Having operated in the market place myself for many years, I confess I have been impressed generally by the competitiveness of markets, and the honesty of the competition perceptible at my level.  The natural aggression and competitiveness of mankind tends to keep markets alive, and functioning.  Yes – I have been propositioned to accept bribes, and to withdraw from tender-lists, to stand aside and let another win – but those experiences have been very limited – and the corrupt options easily rejected. 

But my suspicions remain.   At higher management levels, on the golf-club and over brandy-and-cigar, I suspect that Board-level market-rigging is much more common. And I am sure that among smaller and weaker traders, market-rigging comes with the territory, it comes naturally.  While strong competition occasionally breaks out within every trading system, I suspect that many markets are rigged by powerful Directors who lower their eyes at the discreet, decisive moment. 

If I am right, it means that Governments who present themselves as the steely-eyed proponents of commercial virtue could be riding for a fall.  Their efforts could generate more unstable trading systems, with weaker competitors, weaker trading reserves, less able to command venture capital, and therefore limited to slower rates of growth.   Now that would indeed be a nasty surprise, for theorists all round...