Market Socialism: The Impossible Socialism

The idea of combining some form of social equality with markets goes back to the very origins of socialist tradition and also underlies most of the proposals currently being presented as “alternatives” to the capitalist social order. However, taking as its axis the organic relationship between commodity circulation and capital, as revealed by Marx, it is possible to offer a critique of market socialism (choosing David Schweickart's version of Economic Democracy as a generic textual reference) to demonstrate its inconsistency as a project for social emancipation alternative to the capitalist mode of production. And this for reasons of: i) economy: due to market inefficiency in allocation, and its tendency toward social polarization; ii) politics: because markets prevent citizen self-government and block the free development of human capacities; and iii) ecology: the market is incompatible with a social metabolism that is sustainable with nature. The conclusion is that a market-based production structure is incompatible with the conscious, rational, and democratic regulation of the economy.

A New Measure of Market Inefficiency

Financial crises, such as the Great Financial Crisis of 2007–2009 and the COVID-19 Crisis of 2020–2021, lead to high volatility in financial markets and highlight the importance of the debate on the Efficient Markets Hypothesis, a corollary of which is that in an efficient market it should not be possible to systematically make excess returns. In this paper, we discuss a new empirical measure—Excess Trading Returns—that distinguishes between market and trading returns and that can be used to measure inefficiency. We define an Inefficiency Matrix that can provide a complete, empirical characterization of the inefficiencies inherent in a market. We illustrate its use in the context of empirical data from a pair of model markets, where information asymmetries can be clearly understood, and discuss the challenges of applying it to market data from commercial exchanges.

Do extreme market value ratios mean that the market is informationally inefficient? A study of the Warsaw Stock Exchange

Aim/purpose–The aim of this paper is to verify whether extremely high values of mar-ket value ratios are the symptoms of informational inefficiency of the market in a weak form. The authors intend to examine whether these phenomena co-occur with each other.Design/methodology/approach–Following Bachelier’s strict random walk model, we quantified a weak-form informational market efficiency with the use of the percentage of normality tests in stock returns run (Expanded Shapiro–Wilk, D’Agostino-Pearson and Jarque–Bera), which indicate that the analyzed distribution is normal (a null hypothesis cannot be rejected). The empirical study was based on the comparison of the market value ratios (P/E and P/BV) and the informational efficiency measure at the level of particular companies, listed on the Main Market and NewConnect of the Warsaw Stock Exchange, and grouped into eight sectors. In order to do this, we analyzed scatterplots, descriptive statistics, Pearson’s and Spearman’s rank correlation coefficients. The da-taset covered 214 companies (based on the assumptions made) in the period from 2016, December 31 to 2020, March 23.Findings–Results obtained indicated that, in most cases, the extremely high values of market value ratios did not co-occur with market inefficiency. Hence, the outstandingly high market value ratios do not have to be the symptoms of market inefficiency. Research implications/limitations–Following a common belief shared in the industry, but still not examined yet, this study examines the possible co-occurrence of extremely high market valuation and market inefficiency, but does not exploit it fully. The authors encourage other researchers, especially, to apply other market value ratios and to come up with their own ideas for market efficiency proxies. What is more, this study has been conducted on a relatively small market, thus the conclusions drawn from the study on the WSE should be tested on other, more developed markets.Originality/value/contribution–According to the authors’ knowledge, this study is one of the first trying to examine if the extremely high market value ratios are the symp-toms of the informational inefficiency of the market.Keywords: efficient market hypothesis, weak-form efficiency, market value ratios, stock markets, random walk. JEL Classification:G10, G12, G14.

RANDOM WALKS AND MARKET EFFICIENCY: GOLD, PLATINUM, SILVER VS ASIA EQUITY MARKETS

This paper aims to analyze the efficiency, in its weak form, in the markets of commodities, Platinum (London Platinum Free Market $/Troy oz), GOLD (Gold Bullion LBM $/t oz DELAY), SILVER (Silver – Zurich SW. francs/kg) and the stock markets of KOREA, CHINA, JAPAN, PHILIPPINES, IN¬DONESIA, from January 1, 2019 to October 20, 2020. To perform this analysis, different approaches were undertaken to assess whether: (i) the Gold, Platinum, Silver markets have more robust levels of efficiency when compared to Asian stock markets? The results of the variance test indicate that the random walk hypothesis is rejected in the Gold, Platinum and Silver markets, as well as in the Asian stock markets, with no differences between markets. These findings show that profitability is auto-correlated over time, with a reversal of the mean, because the values of variance ratios are lower than the unit, i.e., price fluctuations are not i.i.d. The results have significant implications for investors, as market inefficiency can affect the domestic and international flows of an economy. In conclusion, the hypothesis of market efficiency, in weak form, may be questionable, since the prediction of the movement of a given market can be improved if the out-of-the-current movements of the other markets are considered, thus enabling the occurrence of arbitrage operations. These findings also make room for regulators in these markets to take steps to ensure better information between these markets and international markets.

THREATS OF ECONOMIC CRISES

The present article examines the historical aspects of the origin and development of various economic crises existing in the world, which constantly raises an issue of finding ways out of the problem, before scientists-researchers. In this regard, the author reviews the views of the representatives of the classical school of different epochs on the elimination of crises. In addition, the author also analyzes the directions proposed by modern scientists, the most notable of which is the theory of the real economic cycle as an independent direction, which laid the foundation for the systematic study of the economic crisis. Moreover, a conclusion that the slowdown in output growth in market conditions is not due to market inefficiency, but is due to low rates of technological development, and economic cycles are caused by technological shocks is notable. Based on the above assumption, scientists presented an argument, that the market can restore equilibrium without an outside intervention. The cyclical nature of crises followed by economic stimulus is also analyzed.

Asymmetric price transmission in the distribution channels of pork: Focusing on the effect of policy regulation of Sunday sales by hypermarkets in Korea.

In this paper, we investigate whether there exists market inefficiency in the distribution channel of pork by estimating a developed partial adjustment model that captures the asymmetric price transmission from wholesale to retail prices. The estimation results show that market efficiency exists for the wholesale and two types of retail markets in the distributional channel of pork in Korea. The government's regulation on Sunday sales by hypermarkets plays a significant role in increasing market efficiency, forcing more competition among hypermarkets, and changing the structure of asymmetric price transmission from wholesale to traditional market prices. The results suggest that the policy goal has been achieved in the traditional market by leading to a more efficient price forming due to a lessened degree of asymmetric price transmission from the wholesale price. Although market inefficiency has been maintained in the distribution channel between wholesale market and hypermarket, the behavior of price setting by hypermarkets has not been influenced by the policy.

The Phenomenon of the Month of Sela in the Indonesian Capital Market

Seasonal anomalies cause market inefficiency by affecting the mean and volatility of stock returns, and allow investors to obtain abnormal returns. In Indonesia, there is the month of Sela which is believed as an unlucky month so that many people avoid this month to hold ceremonial activities. As a result, the economy declines in the month of Sela and possibly, the return will also drop in this month. Therefore, this research aims to reveal whether the month of Sela is a seasonal anomaly. This research tested two hypotheses; the effect of the mean and volatility of price index return by using the GARCH model. To examine the effect of the month of Sela on the mean and volatility of return of price index, we collected the data on Indonesian Composite Index and 10 sectoral indices from 2009 to 2019 on three Javanese months, Sawal, Selo and Besar. In total, we collected 7.095 returns data. The month of Sela was a seasonal anomaly that the average and volatility of returns during the month of Sela were lower than those during the months of Sawal and Besar. These results also indicated that during the months of Sawal and Besar, the price index was more volatile than it was during the month of Sela. This research is useful for investors in considering their investment decisions to obtain an abnormal return. This research also contributes to the literature by adding new knowledge about seasonal anomalies that exist in Indonesia.