Human Actions and the Evolution of the Social Organism

I have been meaning to talk about this aspect of Neo-Hobbesian social theory for a while, but have been slowly developing the best way to convey it.  Central to all the behavioral sciences is looking at the actions of humans.  The human super-organism is of course comprised of individuals who make it up.  These individuals are all contributing to it in some way.  This essay looks into this more deeply. It is a great question as to how humanity became a civilized urban species.  For millions of years our ancestors were not urban, colony dwelling animals but rather nomadic sparsely populated pack animals.  Somewhere along the way humanity decided to take the leap into civilized living, thus creating an entity greater than itself: society.  And society functions in its aggregate as its own independent super-organism.

The genetic hardware which enabled humans to become an urban species is probably from our history as a group animal.  Being a pack animal, humans evolved living in groups (usually no more than about 30 people) where they were all interdependent on each other and on the group.  The psychology of all pack animals is to put the group ahead of themselves, and the personal goals of the individual members (like wanting to become pack leader) were all fed back into strengthening the pack.  For example, an individual may want to become pack leader for purely selfish reasons of wanting more power, but if he is an effective leader, then the group as a whole benefits from having a strong and capable leader.  If of course he is a bad leader, another power seeking individual may displace him with the support of the group.

It is through mechanisms like this that human DNA equipped us to be able to live among each other, and more importantly, to cooperate with each other and share the risks and rewards that the group has.  It is this pooling of risk and rewards among the members of the group which creates a social organism that functions as a single unit.  We know that we are all in this together and therefore we must work together.  In effect the individuals become merely cells in a greater super-organism- the pack.  This pack can outlive the individual members of the group and becomes an entity in and of itself.  This in essence is where the tribe emerges, and perhaps it was tribalism where civilization emerged.  Different groups of humans acknowledging a common heritage and creating a de facto alliance at least in the sense of a shared culture and tradition.

Over time this evolved and expanded beyond tribes to become cities, and then nations.  The “pack” in which we lived expanded from small groups of about 30 to large cities of thousands and eventually even millions of people.  Ironically as our groups grew larger we in fact became less communally oriented, while the small group of 30 may have a system of sharing everything, larger civilizations eventually adopted private property.  We gained more independence and isolation while we were simultaneously becoming more connected.  The adoption of private property versus pure communal sharing was most likely a result of simple logistical impracticality, when in a group of thousands of humans, it becomes much harder to delineate the sharing of things.  While a small tribe may have a communal store of spears from which people may grab and put back from time to time, in a large community there is much less incentive to let people borrow your goods as there is a much greater likelihood that you will not get it back.  Furthermore, there is also the fact that we humans are not evolved to be able to know thousands and millions of people on an intimate level.  Our genetic hardware is still geared towards us knowing, living and working with a smaller group of people. In the small tribe of 30 everyone knows each other very well, but in the city of 1 million this would be an impossibility. As such we have kept a greater distance from each other, and instead of interacting and distributing resources on a discretionary and communal basis.  In the small tribe of 30, I know everyone’s unique personal characteristic, I know what they like and what they don’t like.  If they approach me I have a good idea of what they may ask since I know them extremely well.  Of course in the city of 1 million I couldn’t possibly know what the intentions of others are, so to compensate we have adopted a rules based approach taking the form of a social contract.  I may not know all my fellow countrymen personally, but I do know that they are subject to the same codes I am, and thus I have at least some expectation of how they may act and what they can do to me.

These momentous changes are in fact an adaptation humans made in response to a new change in circumstance.  And indeed the evolution of humanity from a nomadic pack animal to a bustling, metropolitan hive-like super-organism came from adaptations, piece by piece, happening over millennia in response to the pressures of reality.

The human super-organism has survived because of its ability to adapt and to adopt when new changes occur.  The process which has occurred has been a natural selection of sorts, the same mechanism by which biological evolution occurred.  In biological evolution, random mutations of genes are accumulated over time by their effectiveness in the natural world in which the organism lives.  Although the mutations may be random, and many of them are in fact useless or even harmful, those ones which do provide adaptive benefit will survive and be passed down.

For the human society this occurs through the actions and behaviors of the individuals and institutions which make up society.  It is true that there is some genetic evolution as well, however the transition which humans made from pack animal to urban colonist has been far too rapid to have been triggered by genetic change alone.  The group animal background of humanity certainly provided it with the hardware to live and function in a group setting, but the overall evolution of society has come from its own natural selection of actions and behaviors being adopted.

The Environment

The environment is a central part of natural selection.  It is in fact what decides whether an adaptation succeeds (and thus survives) or fails.  For purposes of analyzing society, the environment is in essence, the universe.  This of course includes the conventional understanding of the environment as the natural world (weather, climate, geography, etc).  However it also includes the human world as well as the natural world.  Many if not most social theorists including and especially economists make the mistake of viewing man as someone unique in this world.  The natural world is outside of man, and it is man who enters it and homesteads it and turns it into something useful for him.  Man in essence is conquering the environment, and everything which he creates is not a part of it, but rather only a part of him.

This view is entirely incorrect.  Man is both subject to the environment yet a part of it at the same time.  Natural selection at the end of the day only allows the strong to survive.  What is out there testing to see what is strong or not is the environment.  Humanity is capable of creating actions which then enter into the environment, and bounce back to effect it.  This of course is not something that is unique to man.  A great example of this in biological evolution is that of sexual selection.  Sexual selection refers to those traits which are passed down and selected purely out of their utility in attracting a mate.  A sexually selected trait provides no survival benefit outside of it fitting into the “mating culture” if the animal itself.  Peacocks evolved their enormous displays from this mechanism.  The peacock’s display serves no strategic advantage outside of mating.  The peacock females started to prefer the males with larger displays, and over time this reflected in the sexual traits being passed down.  This action of females preferring males with large displays had in effect made them a part of the environment which was shaping their natural selection.  Peacocks could be both subject to the environment and yet a part of that environment which they were subject to.

And humanity too is the same way.  Outside of sexual selection of genes, we also create the environments which shape our behaviors.  The growing of the population and the larger groups which we found ourselves living in changed the environment which we were living in and thus changed our behaviors regarding things like possessions.  Our technology also changes our environment which then changes us.  We create economies and markets which take on a life of their own.  The stock market, though driven by humans making decisions, becomes an alien force to the very humans who create it.  The Dow jumps up and down like a wild bull in a barnyard, and nobody knows where it is going next.

Thus our own actions are in fact interactions with the environment, however at the same time when we interact with our environment we are adding to it, and creating new forces which we must deal with.  This makes a feedback loop which allows the human organism to adapt and change, and it is continually changing.

The Actors

This next part will focus on human actions and how they affect society as a whole.  The early marginalist economists devised that all economic activity came in fact from the actions of individuals.  Each individual is out to increase his utility or pleasure by undertaking whatever tasks he desires, the sum of all these humans interacting is what we call the economy.  However, at the base of it, is just the small minute actions of individuals, buying a candy bar, looking at homes, calculating the cost benefit of buying a car.  It is from these micro-calculations that the economy emerges.

While neoclassical economics obviously shares many of the traits of a Neo-Hobbesian approach, I still reject many of their primary conclusions.  The most glaring flaw in methodological individualism that I see is that it simply deduces all economic activity down to the actions of individuals.  The rationale they say is that since all economies are just comprised of individuals, those are the things we should be looking at, keeping it firmly grounded in micro-economics.

However this is not true, humans create institutions and groups which create actions of their own.  Although it is true that the subjective preferences of individuals lead them to form things like corporations, a corporation also exists as its own entity separate from the motives of the individual members.  As noted earlier, as pack animals, humans have evolved to interact with each other so that when they do form associations and groups with each other, the group takes on a life of its own which is separate from that of the individuals.  Just as the tribe comes before the person, the corporation comes before the worker.  Sociological and psychological research has shown that people will put their own desires aside for the cohesion of the group.  As the health and cohesion of a corporation may be vital for the economic security of a worker, he is more willing to put his own personal preferences aside to allow the corporation to achieve greater cohesion and stability.  It is this subordination which allows a group to take on a life of its own, it no longer just a vehicle for its members to achieve their desires, but rather an entity into itself which functions as an “artificial man” which seeks to secure its survival and success.

A corporation is fully capable of making its own independent calculations of cost/benefit, and it can in every way function as the capitalist consumer of marginalism.  This of course occurs at all levels of society, households do this, as do schools, churches and government.  To only focus on the individual is to miss that our groups are capable of functioning as individuals and that they too are having input into the economy and society.

It is this reason that I believe that neoclassical economics has had a major blind spot in understanding human society.  The normative recommendations of neoclassical and Austrian economics for complete laissez faire have not been reflected in the real world.  If this were in fact the true and natural economic model for man, why has reality looked so different?  This glaring inaccuracy has led many to libertarianism, which is ultimately a conspiracy theory of sorts, which tries to explain away the apparent disparity between neoclassical predictions and real condition as the result of a power hungry government which seeks to use coercion to interfere with the “natural” way of things.

They are at least partially right in that government may have something to do with it, however they are still missing the main picture.  By erroneously concluding that the economy is driven merely by individuals and not individuals plus the groups and institutions they create, the neoclassical and libertarians are not seeing the true nature of how humanity operates.  In reality it is much more complex than what they make it out to be.  Society is in fact individuals and groups acting in response to the environment they live in, and those actions in the real world become a part of the environment around them, which then alters the environment in a way that creates a new action in response.  This self-repeating cycle creates an economy which is in fact dynamic and evolving.

And we should in fact expect humans to create firms, groups and governments, it is in our nature to band together to form a unit which is greater than ourselves.  And in its totality, what we see is a society which in and of itself is functioning as one giant organism.  The individuals who make it up are the cells, the institutions are its organs.  Like a simple neuron cell, the individual human may not know that she is a part of a greater organism, nor is it her intention, like a cell in the human body she simply seeks her sustenance and meets her own needs, however since her own needs are dependent on the group she should be subtly seeking to reinforce and strengthen the greater body.  And just like how a worker is subordinate to his corporation for the good of the corporation, humans too will act in subordination for the greater good of our society.

This of course is blasphemy to many in the English speaking world.  We have been trained to see things from a Lockean perspective which elevates the individual to the highest level.  Neoclassical economics with its methodological individualism is really just a part of this cultural bias which distrusts any notion of a collective body.  And there is of course the rhetorical aspect as well, nobody in America wants to be told that they are in fact subordinate, and should be subordinate to the greater good.  But nevertheless, an objective look at society clearly indicates that this is the case all over the world.  Even in our capitalist system, workers in a firm are still subordinate to the greater body of the firm.  Capitalism is no more individualist than socialism is.

But the individualist may still be in denial, and he may say “we do not need coercion to make it work because humans willingly work together.” This too is a Lockean idea that humans willingly work together, and it is true that to some degree this occurs.  Yet this still is fallacious in that it assumes that individuals working alone are able to create the social cohesion necessary for society to exist.  Once again the individualist is missing the part where our groups and institutions come in, for they in fact have helped to create this cohesion and reinforce it.  Our governments were created by human action in response to environmental pressures which needed stability, their existence does create stability, for the same reason described earlier of how social codes allow the man in the city of 1 million to be able to trust and feel safe around the fellow citizen who he has never met.  The stability created by governments has in fact mended with the environment, so as to create an environment where individuals do have more stability.  Thus it is a fallacy to look at the market place and say “the merchants, buyers and traders here are all private entities, the government is not doing this, therefore we do not need a government to have commerce.”  This fallacious interpretation ignores the fact that commerce emerged in the environment which government helped to create through its very existence.

The individualist who still sees man as the homesteader conquering his environment is looking at it the wrong way.  Humanity is an organism whose actions, individuals, and institutions are part of the environment as well as reacting to it.  If one fails to see this dynamic and complex interplay it would make sense that fallacious theories about human society could emerge.

 

This crudely made picture was created to at least give the reader a mental image of how I envision this process. The actions of human, however minute or random, become part of the environment around us which then help to further shape us. It is in this way that the human super-organism has allowed itself to evolve and refine itself.

Actions and Natural Selection

This next part will focus on natural selection as how it has helped to shape human society to enable our complex civilization to emerge from a group of nomadic pack animals.  The natural selection of human society works in this way:  the environmental pressures cause humans and their institutions to act, which then in turn changes the environment, creating new pressures which lead to new actions.  The actions of the human super-organism are the aggregate of the actions of individuals and groups.

Let’s go back to earlier where I mentioned that the individual is to society what the individual cell is to the human body.  Though focused on his own selfish desires, he is contributing to the whole.  But what if he decides to do something that is harmful to society as a whole?  Surely there is no magical force which could stop him.  And indeed, individuals as well as institution are capable of acting in ways which hurt society as a whole.  If it spins out of control, the “bad” actor can in fact become like a cancerous cell, continually diminishing the health of society as a whole.  All of us have been “bad eggs” from time to time, yet most us still manage to be “good” most of the time.  The individualist would say that this is evidence that Locke was right, that humans are intrinsically group oriented and good.  Of course the Hobbesian realizes that this is not true, if humanity was naturally a capitalist civilization dweller, why was it a nomad for millions of years?  If we truly evolved to have this as our natural state, why was the transition from hunter-gatherer to civilized in a matter of only a few thousand years?  Far too soon for the slow pace of genetics to catch up.  The Hobbesian understands that it was a change in environmental pressures which caused this change in behavior, and indeed it is the environment which makes the average civilization dweller a “good” citizen now.

Of course there are people who will decide to take advantage of the vulnerabilities of others, violate the social contract, steal, rape, rob, terrorize.  And they will continue to do so until they are stopped.  This capacity for being a rogue does exist in all of us to a certain extent, it is the environment we live in which can bring it out.  Long ago societies realized the vulnerabilities of living in a large group.  In the city of 1 million it is much harder to regulate harmful behavior than in the group of 30.  The action of rogues put a strain on society, which eventually would create an environment which was quite hostile to the wellbeing of society.  This environmental strain begged a response from the humans subject to it, and thus citizens used collective power to create groups whose sole jobs were to maintain security and prevent wrongdoing.  This of course is the police power of government which emerged.  Government and police power made it so that the criminal was made aware that the environment had changed, though he may still try to terrorize other individuals, eventually he would be hunted down by this authority and punished.  Just like how white blood cells help to destroy the harmful entities in the human body (including cancer cells), the government and police power do this in society.  And through their action they have actually created a new environment, which sends its signals to the criminal that a force exists which will hunt them down if they disobey by the rules.

Because the government police power has changed the environment, it can achieve effects without even having to lift its fingers.  Simply because it exists, all men are put on notice that they could be subject to its punishment should they do something which harms society.  Now it is true that the police power could be used for abusive purposes, and this has happened multiple times in the past.  However, through natural selection, a bad police power is in fact bad for society, creating an ill environment much like the criminal.  Eventually these actions do in fact necessitate a response, whereby the actions of others respond to create a newer and better environment.  And the instances of which a police power becomes rogue are rare.  As the government is a social institution which works for the people, it is less likely to be corrupted by the selfish desires of its members than an individual would.  Those instances of government brutality are often whenever the members have attained too much individual power.  A police force can still have power and be egalitarian as long as the power of its individual members is controlled.

Over time as new challenges present themselves, new laws and entities emerge to respond to them, and these new entities only further change our environment, which creates new changes and new responses.  This evolutionary cycle causes us to adapt new behaviors, and to be adaptable, and over time, as our actions multiply, we slowly change from a simple, nomadic and isolated species, to one which is fully urban and fully connected.  And in total, it becomes something which is completely different from what it was before.

Our society is subject to evolution, and hopefully I have illuminated some of the mechanisms by which our society evolves and changes and adapts.  However what is perhaps most remarkable of all is that all of these things have still maintained a strong society.  Humanity remains a super-organism, one in which we all play a role.  We could have disbanded centuries ago, but yet we remain in-tact.  Though humans are naturally group animals we are by no means evolved create large colonies like ants do, but yet that is exactly what we do.  Although the foundation of society is individuals acting in their preferences, society as a whole has taken on a life of its own, a super-organism which ensures its own survival.

The Whole comes first

As I mentioned earlier, the original impetus for the creation of a police force is the complaints and desires of like-minded people to create an environment which is better for them.  There is no doubt that selfish, subjective and personal goals underlie the bulk of human action and the institutions which it has created.  However the survival of these institutions is not from their ability to satisfy the needs of individuals (as the individualist may tell you).  For the purely selfish actions will eventually come into conflict with the goals of the collective.  An action which only meets selfish needs may survive for a short period of time, but eventually it could become useless or even harmful to the super-organism as a whole.  Human society has survived because it has allowed for natural selection to reinforce those activities which benefit the super-organism as a whole.

This of course is where the higher collective intelligence of humanity emerges.  By living in a society we are all dependent on the success of that society for the wellbeing of our lives.  We all have a stake in its outcome and so we all naturally want to see it work, and oppose those behaviors which hurt it.  However, at the same time, as individuals, we have our own selfish desires as well.  And these selfish desires will inevitably come into conflict with society as a whole.  Human beings are still ultimately selfish creatures, and while we value society we value ourselves more, and if we can do something that we enjoy, we will do it.  Now very few humans actually want to do an act which will fatally wound society, however many of us do “small” acts which alone will not kill it, but in its aggregate could.

Speeding on the highway is one crime which nearly everyone commits from time to time.  One person speeding will probably hurt no one, however, if everyone disobeyed traffic laws it would make travel unworkable.  This same goes with things like shoplifting, drug abuse, discharging weapons in a populated place.  One time won’t hurt, but if everyone did it, society could die by death by 1000 paper cuts.  And of course since we humans are selfish we naturally give ourselves license to break these rules, even if they are rules that we generally agree with.  If we can get away with it we will try it.  And by doing this we are creating actions which can alter our environment.

The human super-organism would cease to exist if it could not curb selfish behavior, and of course it uses things like the power of culture and the force of law to help curb these bad behaviors.  However over time a new pattern emerges.  The human society, through natural selection, eventually learns to target those behaviors which are a threat to it, while encouraging those which are beneficial to it.  Human morality and culture and sociology is slowly refined over time more and more to fit within this model.  We are trained to like the things which are good for society, and not like the things which are bad for it.  Of course at this point in time it is not perfect, like I said our genetics have not caught up to our present situation, so for now we still rely on police to stop drunk drivers and kids throwing bottles at cars.  But eventually we may reach a point where our behavioral genetics make us fully equipped to live in a way which benefits the human super-organism as a whole.

And even today of course we are trending that way, our behaviors are unbeknownst to us shaped to benefit the whole.  The super-organism has managed to create an environment whereby out actions serve to increase it.  We are not simply individuals helping individuals, but rather individuals who are serving a greater collective.  By helping other individuals we are in fact helping the collective.  By engaging in capitalist behavior to increase our money hoards we are in fact engaging in production and distribution of resources which are strengthening society.  By engaging in socialist behaviors and charity and welfare we are also doing this.  Those behaviors which do not better the super-organism are wiped out by natural selection, and the ones which remain only remain because they benefit the super-organism.  Even those activities which appear to be private and self-interested are in fact not, the fact that you get individual pleasure from it is but a mere pleasant coincidence.  We really all work for the collective, and just like the individual brain cell that is pumping out signals and breaking down proteins, most of us are completely unaware of this.

The police in fact do not work for us, they work for the super-organism.  The citizens are not the consumers of government services, rather it is society which is the consumer.  The consumer of the capitalist production is not the actual benefactor of the capitalist’s production, rather, the capitalist is merely providing the necessary resources to the cells so that they have the energy and resources to continue to serve the whole.  The whole comes first, it always has and it always will.  Our actions are merely a part of its direction, we are but cogs in the wheel, the super-organism is the star of the show.

Now I realize that what I have just told you may be radically different from the rhetorical upbringing many of you had, and in fact some of you will be shocked and offended and convinced I am wrong.  If  you feel you can prove me wrong I would gladly appreciate that you give me feedback.  And even if you don’t want to give me feedback, I urge you to think about this theory and see for yourself the evidence which exists for it.  For centuries the west has taken the erroneous individualist perspective on things, however the individualist perspective is the wrong one.  Humanity, along with its societies and economies is a collective endeavor, and should be viewed as such.

The Great Pendulum of the Psychological Economy

Back when I was in undergrad, on the first day of the first econ class I took (intro to political economy), the first thing the professor asked was “what is the goal we are looking for in economics, what is it that we are trying to achieve?” I was the first one to raise my hand, and the first thing I said was “well, I can tell you what we don’t want to see, and that is for everyone to lose trust of others and of the economy, and to become complete self-interested to the point that we no longer participate or cooperate in society and go into complete survival mode.”

I didn’t fully realize it at the time, but I was hinting at the two great forces in economics and in society at large.  The animal spirits within us can push us into different directions.  At the one end, is complete individualism, when we lose our faith in society and in each other, and we revert to our hunter gatherer roots.  At the other, is complete reliance on each other, working for others and getting all your vital needs from others.  One of the great themes in human history is the shifts back and forth between these 2 mindsets.  It is impossible to understand the societal and economic trends which have shaped civilizations without understanding this cycle.  If there is one thing that you ever need to know about political economy and human society, it should be this.

The formation

Why do humans choose to live in a society?  For millions of years we lived in small bands of hunter gatherers, looking out only for our closest of kin, providing for ourselves, only really caring about our own short term needs.  Then, somewhere along the way, something changed.  We started living in larger groups, we farmed our food instead of hunting and gathering it, we built temples, we traded and worked with each other.  Our villages turned into cities, our cities turned into nations, our nations turned into empires.  Humanity changed from a pack animal to a hive animal, the human super-organism was born.

Society of course is made up of individuals.  Humans most likely formed our societal arrangements purely out of subjective preferences: it made our lives better, and it was better than the alternative.  We choose to live in society because it gives us a materially better life than if we lived in the wilderness in solitude and were completely self-reliant.  Implicit in the societal arrangement is a social contract, we are all in this together, and we all need each other to make it work.  However there are times when it works well, and times when it doesn’t work as well.  Civilizations rise, flourish and fall.  Economies can boom, economies can stagnate.  What ultimately drives break downs and build ups? 

The Great Cycle

As society is made up of individuals, it is dependent on those individuals.  Our psychology is central to this.  Societal success is dependent on our expectations, when those expectations are good, society tends to do well, when they are bad, it tends to do worse.  At the end of the day all humans are ultimately concerned with the quality of their own lives, we usually make decisions that we think will make our lives better and avoid the ones we think will make it worse.  For example, if you are dating someone and you find them to be compatible with you in every way and they make you happy, you may have the expectation that they will make a good life partner, and thus you will be likely to stay with them.  If you are dating someone and you find there are wide differences, incompatibilities and they make you unhappy, your expectation of the future with them may be too bright, in which case you may be better off ending that relationship.  Because ultimately we are trying to use what we have to make a better life for ourselves.

When dealing with society and economies, these expectations are central as well, our expectations of the future will determine how we behave in the present.  When society is doing well and you are making money and continue to make money, you will have greater trust and reliance on society and the economy as a whole.  Instead of fixing the leaky pipe in your house you hire a plumber to do it, because you are making enough money at your job that it is actually cheaper to outsource this labor because the time spent on fixing it yourself is better spent making money somewhere else. 

When we expect that our future will be bleak, uncertain and austere, we tend to lose trust of society and rely on ourselves.  When we take a pay cut or lose our job, we are more likely to fix the leaky pipe ourselves, because it is now cheaper for you to save the cash and fix it yourself.  And of course when this happens across an economy many plumbers may lose a job, when we have less money we spend less money, when others are spending less money we are making less money.  The cycle can become vicious at times.

This cycle happens on both large and small scales.  And economies are often going in one direction or another.  At each end is a kind of economy, the market economy on one, the household economy on the other.  One could say that a true total market economy or total household economy do not actually exist, however they are simply directions which we tend to pull towards.  Some have referred to these

The Total Household Economy

In the total household economy one is completely self-reliant and does not economically interact with anyone outside of the small group he lives in.  All food is grown or caught by you and your family, also known as subsistence living.  All labor is done by you.  You are your own plumber, your own doctor, your own priest, your own farmer.  You hoard your excess goods rather than trade them.  You are distrustful of outsiders.  Your world is very small.

This could be described as a “Robinson Crusoe economy” of sorts.  Its important to realize that
outside of a few marooned sailors and isolated tribes very few humans have intentionally gone to this extreme.  Even in the hunter gatherer days there was some trading amongst groups of humans.  However there have certainly been times in history when society has been more household than market.  The best example is the Dark Ages.  The Roman Empire Collapsed, along with its vast trade networks.  The people of Europe moved out of the cities into the country and lived on a manor.  There they farmed their own food, made their own clothes and had their own closed in world.  There was much less trade, much less travel, society had become garrisoned in a series of manors that functioned as their own communes or sorts.  Culture suffered, education and literacy plunged, barbarians roamed the peripheries.  Society had become unreliable, as a result, people began to rely on the manor or the household, rather than on society as a whole. 

And of course this effect happens on a much smaller scale with economic booms and busts.  Events like the great depression were a miniature version of this contraction and inward focus.  And certainly the world as it is today is going through a contraction phase.  Is this just a temporary contraction or are we entering a secular trend like Rome did in its latter days?  Only time can tell, but hopefully this is just temporary.

The Total Market Economy

In the total Market economy you are completely engaged with and inter-connected with everyone else.  All your labor is outsourced, you buy all your food from the store, when you need medical help or a leaky pipe to be fixed, you seek a doctor or plumber to do it.  Professionalization does most work, and you too are a professional, tinkering away at your specialty which you do for others in exchange for money, you then use that money to obtain all the goods and services you need to survive.  There’s no need for grandma to fatten a goose in your backyard for Christmas dinner, it’s cheaper and easier to just buy one at the store ready to go. 

This should sound very familiar, though our civilization is not a total market yet (there are still many chores we do ourselves) we are certainly closer to this end of the spectrum than we are to the household economy described above.  One could say that the theoretical total market economy is a hyper-capitalist one, however it could also very easily be described as a post-market communist-esque society like Marx theorized.  All tasks are performed for others, from child rearing to food growing to taking the dog for a walk, we hardly need to do anything ourselves in this world, there is always someone there who is willing to do it for us.  The boundaries between families become blurred, we are all interconnected.  Perhaps the focus on this end is not that it is a monetized market society, but that it is a society where we are all reliant on each other and have complete faith in each other to meet each other’s needs.

The Real World

Of course, in reality the extreme ends of both spectrums do not exist, we are merely pulled in one direction or another.  But it is important to realize that these pulls exist.  The initial cause of a breakdown in society like what happened with Rome may not have been purely economic, it could be political, like an invading army, or climatic, like a cooling period that kills off crops.  However, once the expectations of the individuals who make up society change, it can quickly turn into a self-reinforcing cycle.  People spend less, become more isolated, do their own work.  This causes the market to retract, if people aren’t hiring you to work for them you too have less money to spend and you too will become more inward focused.  The cycle reinforces itself and can, in some circumstances, perpetuate itself for decades or even centuries. 

We are at a cross roads in this era.  We have great uncertainty in this world, our greenhouse gas emissions are warming the planet, yet our leaders are failing to take any meaningful action.  Each day that goes by without a solution makes our expectations bleaker.  Our society is becoming more divided, the gap between rich and poor is widening, the political gap between each other is widening as well.  On the one end are the anarchists you wish to destroy our governments, they do not want action on global warming, they do not want action on anything.  They wish to see society go backwards to a household economy, and in fact they glorify the pioneers and settlers and people of olden times who lived a more inward life.  To them the household economy is rugged individualism, and they despise all forms of collectivism. 

However, on the other side are those who see this desire as dangerous and fallacious.  They wish to see action taken on global warming, and know that only collective action can solve it, they know that attacking the sovereignty on governments is really an attack on the social contract and the bonds that keep us, as individuals living in a group, together.  They glorify the inner urge to do things for others, to act outside of our own self-interest. 

I of course am in the latter camp.  Our world faces great problems, problems which were collectively created, and can only be solved collectively.  To tackle an issue like climate change will take the greatest act of cooperative and collective action our species has ever endeavored.  To retreat back into the household is not a viable option, if we want a decent world for ourselves and our grandchildren we must be able to trust each other and work together.  This is a momentous time, and I can’t guarantee that we won’t retract like Rome did.  We shall either rebound from these latest contractions or we will divide ourselves and slowly and quietly go into the night.  However, if we succeed in coming together and meeting these problems, the human species will be stronger than ever.  The choice is ours, either we retreat to a more primitive reality, or we advance into a great future.  We cannot force people to change their expectations, but we can change the world on which those expectations are based. 

 

 

Julian Simon and the Welfare State: Are Libertarians Social Malthusians?

The Libertarian/right are a fickle bunch, on the one hand they tell us that we need not worry about unlimited growth, that the Malthusian theories are incorrect and that we should all read Julian Simon to see why.  However, when it comes to social resources, they become distinctly Malthusian, things like universal healthcare they say, will lead to incredible scarcity, complete with terrifying tales of people dying while waiting in line, absurdly unequal doctor to patient ratios, a worse life for all of us.

But yet, when the countries that have implanted such systems are looked at, it becomes apparent that their tales of doom are not as accurate as they claim.  Perhaps my Libertarian friends need to re-read Julian Simon to see why.

When I first read Simon, I was admittedly quite skeptical, as are most people who do.  For those of you who are unfamiliar with his work, Julian Simon was a Chicago School economist best known for his book “The Ultimate Resource”.  Simon’s fascinating vision is bold, he believes that the Malthusian theories of ever-depleting resources and ever worsening material reality for humanity are wrong.  We will not run out of resources, even as the population increases he says, in fact the long term outlook for commodities should be bearish, that is, the price of things like oil and metals, finite resources, will be lower in the future than it is now.

Crazy, right?  That’s what I thought too, but as I explored his theory more, I realized that Simon may have a point.  The theory goes that as demand increases for a commodity, so will the price, however, rather than fizzle into oblivion, it will reach a point where the cost becomes so high that markets will seek innovations which lead to greater efficiency, or substitutes for the good.  As a result these innovations will decrease the scarcity of the good, and in fact the price will go down eventually.  Essentially the price outlook for all commodities should be one of a giant bell curve, the price rises, reaches a peak, and then innovation and substitution will kick in and the price decreases.  For example, over 100 years ago whales were the primary source of heating oil, they were famously hunted to the point that they were on the verge of extinction, anyone living 150 years ago could reasonably assume that whales would be gone from the earth eventually.  However, there came a point that the price of heating oil was high enough that demand increased for substitution, and eventually a man named Edwin Drake figured out a way to drill for a new kind of heating oil, called “rock oil”.  This proved to be a success, and soon kerosene replaced whale oil as the main source.  Furthermore, the drilling techniques were perfected and kerosene proved to be even cheaper than whale oil.  Soon the hunting of whales for oil ceased to be a viable industry, and today we have more whales than we did 100 years ago. 

Another example is in wood, for centuries wood was the dominant fuel source.  It was used for both household heating and cooking as well as industry like iron smelting.  Nearly all of the forests in North America were chopped down at some point in time, very few virgin forests remain in the northeast.  The amount of wood decreased, erosion caused damage, and it was becoming harder and harder to find cheap wood for fuel.  But in places like the hills of Pennsylvania and West Virginia a new fuel was being discovered: coal.  At first the mining of coal was ineffective as it was cheaper to find wood, but as forests became increasingly scarce, the opportunity cost changed.  Soon mining of coal became more widespread, innovations made it cheaper than wood, and processes such as coking proved it to be superior for industry, this helped to spur the steel industry.  Today we again find more forests than we did 150 years ago. 

The more you understand Simon’s theories the more convincing they become, at the center of it is a deep faith in the ingenuity of humanity.  If the human mind, which Simon called the “ultimate resource” was properly utilized, innovation and responses to increased demand can deal with threats of scarcity, and in fact our society will enjoy further and further abundance and prosperity. 

Libertarians often tout Simon when responding to criticisms of environmental strain and resource scarcity.  And to be fair, the criticisms have some validity, we should still seek to curb harmful activities and not go overboard.  But I agree with many of the Simon fans that a focus should be on innovation and proper use of human resource, rather than austerity.   However the economic liberals become staunch Malthusians when it comes to things like the welfare state or green technology.  In their mind something like universal healthcare will invariably lead to a Malthusian spiral in which we all die.  This kind of Jekyll and Hyde hypocrisy is common among the laissez faire crowd, on the one hand they will tell you that things like the bank bailouts aren’t needed because the market is strong enough to bounce back, yet at the same time they seem to attach an apocalyptic outlook for the slightest of things like Environmental regulations and Social Security.  Very strange indeed.

Libertarians need to stop being so Malthusian and listen to Julian Simon.  Something like Universal Healthcare, if done correctly would not lead to an epic collapse.  If everyone in the country could afford healthcare it would indeed spike demand, however, would it be the end of times?  Of course not, the increase in demand would cause a corresponding incentive for innovation, the obvious job opportunities would lead more people to med school, greater use of creative innovations like use of LPNs and better preventative and screening technologies would occur.  In other words, the healthcare market would expand so the supply meets the demand, and if human ingenuity is used correctly, we may even expect that these innovations would be cheaper than their predecessors, thus healthcare in the long run may actually become progressively cheaper.  This is classic Simonian analysis here.  And of course this is why universal healthcare has not caused doomsday scenarios in the countries that have it.  As long as we do not stomp on opportunity and the freedom for medical providers to innovate and expand, we shouldn’t expect it be bad in the long run at all. 

Once you reach this understanding the world opens up and becomes an exciting place.  Could we create an economy that combines the best of both capitalist and socialist features?  Could the demand boosting aspects of socialized programs be complimented by a capitalist supply side?  I cannot say for sure, but with each day I grow more and more convinced that if the “ultimate resource” of humanity is properly utilized, we should expect to see a better world.  The ingenuity of humanity should never be underestimated.

And a cheaper and universal healthcare system would be utilizing the ultimate resource, the decrease in medical fees would free up capital to be invested in other purposes to help people achieve their goals and dreams.  Things like social security for old age and disability decrease the burden on households to cover those immediate needs. Thus the children of a disabled or elderly person, instead of having higher time preference and having to work quick paying, low skilled jobs to cover immediate expenses for their family members, could be relieved of that burden by a welfare state and instead be able to make long term investments in themselves like education and training.  This would help them utilize their full potential.  Imagine how many potential Einsteins and DaVincis, Beethovens, Cricks and Curies have wasted their lives away working in a farm field or a factory because they were forced to meet immediate expenses to pay for their elderly parents or disabled spouse, or to simply cover basic costs like food and shelter.  Imagine if they had been able to instead afford the long term investments in themselves by becoming educated or pursuing their passions.  Imagine the benefit that would have brought humanity.  Imagine if we could have a world where human capital is not being wasted.  Imagine a world where the ultimate resource is used in the most efficient manner.

I am not a Malthusian, I believe that we can achieve a better world.  Free market capitalism only gets us halfway there, it still does not properly utilize human ingenuity, socialism is also only a halfway point, it does not utilize the innovating power of the market and the incentives of privatization.  We could see a better world.  I challenge all the free marketeers and socialists out there to open their minds, allow themselves to ask “what if?”  The safety net of the government compliments markets if done correctly.  We truly could have a better world.  Open your mind and stop being so Malthusian. 

Public Security: Why the State is both Necessary and Inevitable

The voluntaryist is doomed to frustration because the world around him never seems to operate as he wants it to.  In his mind the state is optional, and harmful.  Yet governments exist in every functional society on earth.  This overwhelming statistic should cause him to ponder that perhaps his assumptions are flawed, perhaps the state is not only necessary but inevitable.  To explore why this may be we will look at the main services that the state provides and see why alternatives have not arisen.

There are many reasons why one would want to have a government as opposed to anarchism or voluntaryism, however the presence of at least one factor makes states not only necessary, but inevitable if a prosperous and free society is to survive: Public security.

What is Public security? Public security is something that exist distinct from private security.  Private security is the security of the person and private possessions.  The security of your home, family, your person, your place of business are all examples of private security.  These are things that can be defended via a protection agency such as a police force, or through the means of the private individual himself, such as buying a gun for protection.

Public security on the other hand is the security of the society as a whole and those areas which are deemed to be public.  For example, the safety of the public square from a terrorist attack, or the safety of a neighborhood from crime in general can be seen as public security.  Protection from exogenous threats such as natural disasters and invasions of foreign enemies also fall in the purview of public security.  The essential feature of public security which separates it from private security is that while private security involves protection from threats and injuries which are specific to one individual or his property, public security is protection from threats which hurt the public as a whole or a given area as a whole so as to say that the injury is on multiple people and on society as a whole as opposed to any one person.

Most of the proponents of private law enforcement only focus on private security.  People like Murray Rothbard have gone to great pains to explain how private protection agencies can bring justice if someone is robbed or assaulted, and how justice can be brought in such situations.  But what if someone places a bomb in the public square like the Boston Marathon Bombers did?  Are we so naïve as to say that only those killed or injured in the blast are hurt by such acts?  Of course not, acts of terror and disruption serve to harm multiple areas, a bomb in a marketplace can kill no one at all and damage no property yet still cause real harm.  People will not go to areas where they feel unsafe, businesses will lose customers and profits, areas with gangs in the vicinity will suffer economically as people will avoid those locations.  The marketplace thrives on certainty, and the uncertainty and fear which such public threats bring economic and psychological harm to everyone involved.

The privatized law enforcement model put forth by people such as Rothbard operates essentially as a commercialized blood feud system, in which only individuals can bring claims rather than the idea of crimes which are against society as a whole.  The blood feud system thrived for thousands of years all over the world.  In essence it worked as such: if an individual is harmed by another he and his clan can demand retribution from the offender, the power and might of the clan will help to ensure that justice is achieved.  Rothbard’s vision merely replaces the clan with a protection firm, whom you pay to carry out the same tasks that the clans in the blood feud system did.  However in looking at history it becomes apparent that there are major drawbacks to such an approach.  It is no surprise that the end of the blood feud system coincided directly with the emergence of market economies.  The marketplace needs stability, and realizes that even if a crime is committed against an individual, it can still be a public threat as well as others will be discouraged from undertaking certain activities if they feel their safety will be in danger.  Thus the notion of “the king’s peace” was born, which later evolved simply into “the peace”.  Under this model, a crime against an individual such as murder or threat is also a crime against the public as a whole, thus public authorities have the right to enforce against the perpetrator irregardless of the demands of the victims.  This system is what is in place today.

Rothbard’s idea of a system where all crimes are purely private matters between individuals is naïve and unworkable.  Crimes against individuals are part of the public peace.  If my neighbors are in an active feud and killing each other that is also a crime against my right to live in a peaceful and stable society.  Those of us who abide by the social contract and wish to live in a peaceful society have a right to extirpate those who do not respect our right to live in a peaceful society and have a public peace. 

Now of course, the voluntaryists would argue that protection of the public good could still be met by private means, for example, if all roads and bridges and public squares were privately owned, it is up to the owners of said roads and bridges to provide for their safety.  Fair enough, I suppose that would work, but it would be awfully silly.  Such scenarios would invariably become natural monopolies or oligopolies.  The protection from threats such as terror would involve coordination and cooperation among protection agencies that would become a virtual oligopoly in and of itself.  Thus the deadweight loss that detractors complain about with state owned protection agencies would still be present.  Which makes you wonder, if the costs of monopoly would still be present, what is the point of privatization?  Wouldn’t it make sense just to have these natural monopolies publicly owned and paid for by taxation?  Besides, the deadweight loss of a state run protection monopoly can be remedied by democracy and initiatives which increase efficiency.  When such an oligopoly or monopoly is privately owned, what recourse is there? None.

Furthermore, in such a voluntaryist society in order to get protection you have to “pay to play”.  In a statist society protection from force of violence is a birthright, even tax evaders still receive the same protection that all other individuals receive (though you will probably be thrown in jail eventually).  All humans, rich or poor deserve the same protection under the law, a privatized system denies this fundamental right.  A society which bases private protection on ability to pay only is an unethical and cruel one.  And a society which makes the costs of public security bore by people who participate in public life (i.e. fees for driving on a road, or going on a bridge, or entering a public square) is even more unethical, as you have essentially made it so that people must pay to be able to participate in public life or in the marketplace.  What utter cruelty it would be to enforce entry fees on public life itself.

And what of natural disasters?  If a marketplace is flooded it would greatly damage the economy.  Having plans in place and an agency to help carry them out would bring greater efficiency than the idea of a completely privatized endeavor.

But the voluntaryist position becomes even more absurd.  Essential to any advanced economy is stability over vast distances.  Shipping lanes, highways and all other routes of transportation must be secure if we expect commercial entities to use them.  If not well secured, pirates and other marauders will seek to unfairly rob others, thus hurting commerce and scaring away businesses from engaging in such activities.  Imagine how rudimentary and primitive our economies would be if we couldn’t have international trade or shipping that crossed vast distances.  Those shipping lanes would have to secured unless we want the likes of Somali pirates raiding our commercial fleets.  Security over a highway or a shipping lane is a natural monopoly, just as the public safety of a city would result in a natural oligopoly or monopoly so would the protection of highways and shipping lanes.  Of course control over the right to protect a shipping lane would be big business, the monopoly could allow for outrageous fees to be charged, and competition among protection agencies to secure the right to own that area could devolve into all out warfare.  Again, it makes the most sense to allow for a state, or coordination of states with their navies to protect shipping routes and ensure that an advanced economy can thrive.

Finally we come to the biggest reason why the state is the best, and perhaps only reasonable way to provide for such security: invasion.  Foreign armies and the threats they bring have always been a major threat.  Are we to believe that foreign governments wouldn’t exist?  And even if they didn’t, a society without a protection force would be a sitting duck, its cities and resources would be easily grabbed if someone with a lot of weapons decides it is worth it.  And human nature is such that there are sadly many people who would gladly use force to enrich themselves by gaining control over an area.

Some may say that a militia could protect us.  But this is laughable to say the least.  A voluntary militia would never be able to have the organization and firepower of a well worked army.  The societies with strong, centralized, professional and advanced militaries would easily overwhelm those with no centralized army and rag tag militias made up of weekend warriors.

Let’s also not forget the vast arsenal of nuclear weapons that exist in the world.  Who will own them?  Who will make sure they do not end up in the wrong hands?  Are we simply to trust that no psychopath would ever take advantage of such a flawed and easy to exploit situation?

Thus the idea of a voluntaryist society and private protection agencies is absurd and laughable.  Such a society could never be sustained.  The centralized state and the consolidation of these vital services into one entity is vastly superior to all other models.  This is why the state model has succeeded and why it is found all over the world for meeting public security.  This is also why the voluntaryist model has never succeeded and does not exist in any developed nation or functional society.

The costs of such protection can be paid for through taxation, which is superior to the user fee economy.  The user fee economy increases the actual cost of engaging in such activities, while a system paid for by taxation derives its funding from the overall growth and prosperity itself.  The presence of a state run system of protection provides for greater certainty and stability which will also bring greater prosperity.  Thus the real costs of such a system are less than one which is based on privatized security and user fees as there is more wealth being created overall so the time and effort spent on security as a percentage of GDP would be less than what it would be in a voluntaryist society. 

The advantages of state run protection are so great that it is inevitable that society will choose it over any kind of privatized scheme.  By providing superior protection for the public safety such a scheme is also providing superior protection for private security as well.  A society which blurs the distinction between public and private security achieve greater unity and cohesion, and it also provides more opportunity for those who are less fortunate.  The state is beneficial, the state is superior, and ultimately the state is inevitable.  The key to prosperity and peace is a strong and secure central state.   

Corporatism is Capitalism, You Morons

What makes the An-cap and Paulbot crowd so laughably pathetic is not the fact that they are economically illiterate buffoons, but the fact that they think that they are not.  Apparently reading some Rothbard and a view articles from the von Mises institute makes you a fucking economist in these circles.  They will try to lecture people on why they should throw away their money investing in gold and Bitcoin, or why Central Banks are evil, all the while displaying their ignorance in such matters.

This laughable cluelessness is no more apparent than in the common argument I hear that America is somehow “Corporatist” and not Capitalist.  I constantly hear comparisons between “true capitalism” and “corporatism” and how in a “true free market” we would not see the powerful corporations that seem to exist in our present economy.  They try to say that corporations as legal entities are the product of legislation, thus if you removed the government corporations would go away as well.  This of course is nonsense, Corporations exist for a reason, they are found in every economic model on earth from laissez faire to Stalinist Communism.  These clowns need an economics lesson to understand why corporations exist, and why they would most certainly be found in anarcho-capitalism and laissez faire.

Corporations exist for the purpose of pooling risk and pooling resources.  The first modern corporations emerged in the Netherlands in early modern era.  As the Age of Discovery unfolded, entrepreneurs saw opportunity in the vast trade networks that opened up in places like the Americas, Africa and Asia.  Demand for fur, tobacco, guns, spices and slaves created an international trade by sea.  Merchants tried tapping into markets far away from home.  However, it became apparent that there was risk involved as well.  One bad day at sea could sink a ship, and destroy the fortune of a merchant.  So, to hedge this risk, merchants got together and created joint stock corporations which allows them pool the risk and uncertainty that came from operating an enterprise that spanned across vast distances and risked stormy seas, pirates and the ups and downs of the market.  Thus a joint stock corporation could own 30 ships, if a few of them sank (the happening of which was all but inevitable) it would not bankrupt the company as they still owned many others that would be able to make up for the costs.

Let me put it a different way.  Say I want to drill for oil, it costs a few hundred grand to set up an oil well, if I strike oil I stand to make 10 times the investment I put into it.  However, there is a 70% chance that my oil well will strike nothing and all that money I invested in it will be for naught.  Say I am only worth a few hundred grand, should I risk my entire life savings on a venture that carries a 70% chance of failure?  But I have a plan, I find 9 of my friends and we decide to form a corporation, instead of one oil well we drill 10 different oil wells in 10 separate places.  As the potential return for striking oil is 10 times the capital investment, only one of the 10 wells has to strike oil for us to make a return on our investment. But statistically our chances are that at least three of the wells will strike oil, which means we will triple our investment, we may even get lucky and have 4 or 5 strike oil, in which case we get a windfall.  Thus the opportunity cost per well has decreased.  What my friends and I have created is called an economy of scale, which occurs when the cost per unit decreases as the scale of a business increases and evenly spreads the fixed costs over more units. 

By pooling our resources, we have decreased the opportunity cost of drilling for oil.  Instead of risking lots of money on a single well where my chances of failure are 70%, I have instead entered into a venture where my chances of tripling my investment, or at least doubling it are closer to 90%.  As we get bigger and drill more wells, the cost per well continues to decrease, we grow richer and the company grows larger.  Thus the opportunity cost of drilling for oil has decreased substantially; it’s cheaper and smarter for me to join my friends in a venture than to go out on my own.

Now I know it may hurt their little anarchist brains to envision such scenarios, but the fact is that envisioning scenarios like this is what economists do every day.  Real world opportunity costs such as the ones mentioned exist, incorporating lowers risk, and thus lowers the real costs of engaging in such ventures. Over time the economy of scale grows and the real costs continue to decrease, to the point where it becomes far more efficient and cheaper than a one man operation.  It makes perfect economic sense to form a corporation.  This is why corporations exist in all kinds of economic models, from communism to laissez faire.  There are many products, services and industries that simply wouldn’t exist if it hadn’t been for corporatism, the opportunity costs would make such ventures impracticable without Now it’s true that these corporations can become extremely powerful and influential, but that is to be expected when you have large economic institutions, it doesn’t mean that you can’t have some kinds of regulatory constraint to keep them from being overwhelming.

So when they say that “corporatism” won’t exist in “true capitalism”, I really have to scratch my head.  What do they possibly mean?  Would there not be things like oil drilling and overseas shipping in a “true free market”?  Would people willfully forgo the advantages of risk pooling and economies of scale and engage in high risk and inefficient activities?  Would the fundamental laws of economics somehow change? 

No, the laws of economics wouldn’t change, that is why this anti-corporatism talk is such nonsense.  If you have the means of production privatized with a market economy the incentives for incorporating would still be there.  In fact, if you were to have an anarcho-capitalist society such an economy would have an even greater reliance on corporatism.  By removing the certainty and security of government and the services it provides, you would be shifting even more risk and uncertainty onto private individuals which will create even more incentives to incorporate and pool risk.  Anarcho-capitalism may be better described as anarcho-corporatism.

Now it’s true that corporations exist as legal entities recognized by the law and endowed with certain rights created by legislation.  But this does not mean corporations are products of government regulation, in fact it’s just the opposite.  Governments realize the advantages of corporatism, and how they would exist either way in a capitalist or socialist society, and that if one were to not recognize corporations they would be seriously harming their economies and thus the welfare of the people.  Corporations existed via contracts between private individuals before governments ever made any laws about them.  Governments are simply accommodating something that already exists, because they know it would be stupid to ban or inhibit them.

So there you have it, corporations form because of the law of economics, not because of the laws of governments.  They provide advantages and allow people to engage in industries that would be too risky or costly to engage in otherwise.  They provide many benefits to us and are the engines of our economy. Even the communists were smart enough to realize that.  So if you go around saying that in a “true free market” there wouldn’t be corporations, or that capitalism and corporatism are two mutually exclusive things, you are an idiot.  Of course it could be the case that you oppose corporatism on moral grounds, perhaps you don’t think people should have the right to engage in joint enterprises or that they should be prohibited from such ventures.  That’s ok if you believe that, but if that’s truly what you believe you should rethink your political positions because you are certainly not a capitalist or a libertarian, or even a socialist for that matter.  So the next time you hear some self-proclaimed “capitalist” lecturing about how corporatism is not true capitalism, make sure to smack that idiot upside the head and say “corporatism is capitalism, you moron”.  

Addendum: It appears that I have to insert an addendum here to clear some things up. Some people are complaining that by “corporatism” they are really complaining against the influence corporations have on government and crony capitalism, rather than the idea of corporations in and of themselves. First of all, the correct term for that kind of behavior is called corporatocracy, not corporatism. But regardless, this logic is still faulty. Corporations by their nature will be powerful and influential, they will seek to influence local authorities and have laws passed which benefit them and enable them to do business. This is part of the package of having a large enterprise that has more wealth and resources than any individual could possess. The government does not create this influence, the size of the corporation and its interests do. Even if government were removed they would find alternative means to gain influence and stifle competition. Even if government chose to back off from passing any economic legislation whatsoever corporations would still be influencing local authorities and using paid security to get their way. Such behaviors are inevitable to a degree. The worst abuses of this kind can be tampered by proper laws, but we shouldn’t expect corporations to become tame little sheep just because government refuses to listen to them or government goes away. In fact having a government which acts with no regard to their effect on existing firms is probably a bad thing as it could pass loss that ruin business opportunities. Shouldn’t a business have a right to speak up if a proposed law will hurt their enterprise? And of course if you had no government at all then there really is no way to stop a powerful corporation from doing what it wants. The point of this article is to illuminate what a corporation is and why they would form in a free market and to show that this is how capitalism is intended to work. The power and influence of the corporation are a part of that. And laissez faire and anarcho-capitalism would only increase the power and influence of corporations as government, law and lobbying are not where corporations get their power from. Unsurprisingly many people are still in denial about these basic facts.

Humanity as a Super-Organism

 

The genius of the Hobbesian approach was that for the first time in history it viewed humanity in purely objective scientific terms and sought to unify man, matter and society into one vision.  Hobbes started out in physics, studying matter, however he soon developed a theory whereby he viewed humanity purely as “matter in motion”, and looked at humanity in completely secular terms.  Previous social theories attached supernatural explanations for humanity, however Hobbes was intent on looking at humanity the same way we looked at inanimate objects or plant and animal life.  Thus humanity would be looked at with the presupposition that no magical or divine intervention had shaped humanity or society.  This novel approach shook the world and is the beginning of the Western social science tradition.

Today all the social sciences start with this premise.  Economics, psychology, sociology, history and political science all start with entirely secular premises, no mythical or magical terms are inserted, humans are simply matter in motion, we watch and observe.  However even more ingenious was the conclusion Hobbes reached on humanity.  He saw humans living society forming an “Artificial man” that functioned as a single unit.  This looked at humanity as if humanity in its aggregate was one giant organism, a super organism if you will, that had its own survival strategy and behaviors designed to ensure its survival.

 A picture of London compared to a Human Brain Cell. Human Civilization operates in the same way that life forms operate

 

This view is not far-fetched, insects such and ants and bees have long been looked at in terms of the hive or colony, and indeed the way these functions do seem to behave as if it was its own organism.  Humans in groups also have this effect, sports teams try to function as a single unit on the field, musical bands try to create a single sound and thus become a single instrument, corporations act as a single economic entity, with its own goals and wellbeing which is separate from the individuals who make it up.

It is not that much of a stretch to look at human civilization and see this same trend.  The actions of the individuals which make up society seem to create something which in its aggregate allows civilization to function in a way which ensures its survival.  Economist have long noted the apparent “spontaneous order” which emerges in markets and how the seemingly self-interested actions of individuals are, perhaps inadvertently, contributing to the functioning of the market as a whole.

This input of individual actions perhaps acts a super-intelligence of its own.  Of course this does not mean that humanity the super-organism need be conscience of its survival strategy for it to occur, there are plenty of unintelligent life forms who through natural selection of traits and cellular functioning create an emergent pattern and ordered routine that displays an intelligence of its own.  Our minds are nothing but the aggregate of the individual signals sent out by neurons, our bodies are the result of billions of cells acting in concert to create something which is greater than the sum of its parts.

And human civilization too creates something that is greater than the sum of its parts.  At the heart of how this works is a natural selection or sorts involving human activities.  Although human behavior may be governed by the subjective preferences of the individual, as a whole these seek to reinforce behaviors that benefit the species and stomp out the bad ones.  We see this in price signals, which although based in subjective determinations in value by individuals, through the push and pull of the markets and input from millions of actors is able to create a valuation that is more reflective of overall scarcity.  What if the self-regulation and emergent patterns we see in markets extend outside of the market as well, into things like culture and politics?

Humanity the super-organism seeks to promote its beneficial behaviors and regulate or stomp out the ones which are harmful for the society if left unchecked.  Now this is not to suggest that everything and every law we see is somehow automatically vital simply because it exists.  However it does suggest that there is a greater dynamic at play in which the forces which hold society together may be threatened or strengthened by a given activity.  Our goal is to identify these forces which are vital to society’s survival, the “stabilizing mechanisms” that are crucial for the super-organism to stay intact.

By approaching social questions using this framework we could help shed new light on these things and provide a new perspective on many age old questions.  Political economy could be greatly helped by input from this perspective.  Economists are a frustrated bunch, I’ve never met an economist who wasn’t upset about some policy that they believed was causing harm, and indeed from the perspective of an economist many policies seem simply perspective.  However by looking at such policies from a super-organism perspective we can remove some of the blind spots that exist when only approaching it from only one point of view.  Perhaps many of the programs and activities which decrease economic efficiency and befuddle economists are in fact worth this inefficiency to society because they fulfill a vital stabilizing mechanism.

Some societal behaviors may not appear to make sense at first, but perhaps many or all of the things we do serve a greater purpose which is in furtherance of our species.  We see this in nature as well, many behaviors that wild animals do seem to have no purpose, only for scientists to discover later on that they do in fact play a vital role.  Many of the “useless” genes we called “junk DNA” are now being found to actually have important roles to play.  Many organs and organelles that seemed to have no purpose were later found to have important roles.  The whole is the sum of its parts, and every part may play a role.

The emergent patterns in society involve input from cultural, economic and political institutions, working in tandem.  Cultural trends may help to regulate economic behaviors, economic changes instill cultural reactions, etc.  The division between state and economy, public and private, ecclesiastical and political are not recognized in this framework, all these forces are seen as simple organs working within the human super-organism.  A comprehensive and holistic vision of human society emerges.  One in which there are no blind spots or gaps.

I plan on exploring this theory in greater detail and looking at politics, sociology and political economy using this framework.  By viewing human society as an “Artificial man” we can provide illumination to many questions, and look at ourselves in a new light.  And hopefully the discoveries of such an approach can help to aid us in attaining a better understanding of ourselves, and perhaps enable us to provide some good to the world in the many challenges it faces.

The Real Reason for the Eurocrisis

Europe has gotten pretty seedy these days

 

You would have to have been comatose for the past few years to not know that Europe is in a complete mess.  A financial sector crippled by the 2008 crisis, only to be hit with wave after wave of Government debt crises that never seem to stop.  The most recent sideshow was the Cyprus debacle, in which officials actually considered taking the outrageous action of stealing from people’s individual bank accounts to finance bank debts.

But where did this begin?  Some say it is the unified currency.  That view is partially correct, but overall it’s too simplistic.  Others blame wastefulness of the Southern European states.  This too, is mostly horse shit.  The real reason for the Eurozone crisis is one based in political structure.  The crisis is not a financial one, but a political one.

The Eurozone is failing because it is using a failed model: Confederacy.  Confederations have a long history of being utter failures.  Yet amazingly, much like the idiotic gold standard, even smart people still fall for its bogus promises.  America too started out as a confederation, however it soon realized that confederations were utterly inferior to a strong central government.

I will write more on the precise reasons why confederacies are unworkable in later blog posts.  But for now I will stick primarily to Europe.  The confederate structure of the Eurozone is a direct contributor to the debt crisis.  People deride the Greeks for their large welfare state and social services, and of course the merits of such policies can be debated on their own.  However, think of it this way, the economies of many of the Southern European countries like Greece and Slovenia are the size of many US states.  Like the United States there is a unified currency, a unified trade zone and free movement of peoples within the country.

The difference?  The United States has a Federal Government which undertakes certain tasks that the individual states in Europe are charged with.  Imagine if the government of a state like Georgia had to pay for the costs of its own deposit insurance, military, food stamps, medicare, disaster relief, social security, financial and environmental oversight?  How high would the taxes have to be to pay for those things? These are the kinds of costs which Eurozone countries are charged with paying for.  It is no wonder they have a government debt crises, they have to choose between: 1) a lower quality of life from less government services; or 3) taxes so high that it negates any economic benefit derived thereof; or 3) huge deficit spending leading to debt.

To be fair, Eurozone countries like Greece already had high debt levels before going on board with the Euro, but at least with the old currencies the government could inflate their way forward and keep the engine going (I will by the way address the government deficit dilemma in later posts).  Once they got on the Euro however, the weight of the common currency proved to be overwhelming given their debt levels.  One by one countries succumbed to debt crises.

And yet the German overlords still expect the Southern European states to go forward with the austerity regime.  Countries like Spain are still responsible for all of the programs I mentioned above.  If the US had this make up and forced local governments to incur these expenses we would be in the same boat.

The Federal system used in America is superior to the Confederation system used in Europe.  Through an economy of scale, America can use tax proceeds from economic powerhouses like New York to help pay for federal programs in poorer states like Kentucky.  This increases the quality of life for those people and betters the economy by reducing unemployment and burdening private markets with the sunk costs that programs like Social Security take care of.  This pooling of services and reliance on the federal economy of scale brings great benefits and is in all ways superior to the Confederation model that is currently destroying the European economy.

Germany of course is the economic powerhouse that would take up that role in such a situation.  However Germany has been hit with a bad case of euro-skepticism.  Instead they have decided to force austerity on their euro-compatriots until the system reaches a breaking point.  Even then Germany still limits any bail out or change to bare bones “just enough” assistance, giving the Southern States just enough to scrape by for a few more months while their people suffer from a mandated depression.  Unemployment among youth in these countries is higher than the great depression.  It is a crime against humanity.

In order for Europe to get out of this dilemma it must demand that Germany change the terms, they need to create a central power that has actual tax and spend powers.  The debt ridden countries should be allowed to consolidate debt via Eurobonds.  Better yet, convert the debt to equity and use that to form a new Europe wide Federal State that actually fairly distributes the costs and benefits of governance.  Tell the Germans they can have the capitol.  Besides, isn’t owning Europe what they’ve always wanted?  All kidding aside, Federalization and centralization are badly needed to fix this crises, and I’m afraid that until this does occur we shouldn’t expect the financial and political situation to improve much.

My Federalization idea may be overly optimistic, the ethnic division and cultural rivalries in Europe run deep.  But any move in that direction, even the slightest move, will be a positive step forward.  The prejudices of the confederate know-nothings do not change the fact that their bankrupt system is fundamentally flawed.  The power of a strong central state can bring great benefits to all of us.  Unfortunately there are those out there who seek to deceive us into believing that centralization is bad.  They have had great influence over the European elite.  The suffering of the European youth who will grow up with sapped opportunities is on their hands.  Hopefully the world will come to its senses and realize that unification, centralization and federalization are the best way forward, and that only through a strong central state can humanity achieve its full potential.

-The Hobbesian

The Hobbesian Salutes the Japanese!

I’m proud of the Japanese, they are breaking free from the neoliberal rhetoric and have taken control of their own destiny.  For over 20 years the economy of Japan has suffered, deflation has crushed opportunities, their business has stagnated, their future looked bleak.  But a new wind is blowing in Japan these days.  The government of Shinzo Abe has embarked on a bold expedition, dubbed “Abenomics” the Japanese government is finally doing what it should have done years ago.   The Japanese currency, long suffering from deflation has devalued substantially, from around 77 yen to a dollar in November 2012 to 99 yen per dollar (US) today.  Spending has increased as well, government bond buying is putting money into the economy, corporations are becoming more competitive( partly due to the devalued yen), the Bank of Japan has even talked about the possibility of buying corporate stock! I love it.

The Nikkei has been soaring, and the fundamentals are all improving.  But the Japanese progression has not just been a financial upswing, there is also a cultural uplift as well.  The Japanese people are reinvigorated once again, spending is up, people are investing, this is a national effort towards a better future. All of this coincides with the election of Shinzo Abe, who many call a right wing nationalist.  The Nationalism of his government is putting Japan first.

Like all economic developments, the Japanese resurgence has its naysayers.  The neoliberals and laissez faire ghouls have predicted that the Japanese bond market will disintegrate, their currency fall apart and their stock market implode.  These people were also the same ones who wrongly predicted that this would happen in America as well, and many of them are also the same ones who applauded European Austerity.

But those of us who know better see things differently.  The stagnant growth and deflation helped fuel a liquidity trap in Japan for many years.  If stocks are down, bonds virtually yield less and a currency that is constantly deflating, simply holding on to your cash could make you wealthier than actually investing it.  Simply lowering interest rates and increasing the money supply may not be enough, there are times when the state needs to take action. 

The Japanese are taking action, the government is making a concerted effort to embark on a Keynesian growth experiment, and it just might work.  A similar event occurred in the 1930s, while the world was in the throes of a global financial crisis, one country bolted ahead from the rest of the pack: Germany.  The German economic policies of the early to mid-30s were essentially Keynesian in their nature: easy monetary policy, infrastructural investment and stimulus to help private corporations and boost employment.  By 1936 Germany had the strongest economy on earth.  Although the economic policy of the Nazis were essentially Keynesian, Keynes himself was hesitant to point this out, as he didn’t want to be give any credit to the Nazi regime, but even the staunchest opponents to Nazism will tell you that their economy did improve in those years, while the austerity ridden countries remained stagnant.  This is not to suggest that Nazism is actually a good thing, the Nazis were an awful and terrible regime.  But their example does prove stimulus led economic recoveries are in fact possible.

Another interesting parallel is that both Abe and the German regime were right wing rather than left wing.  This is interesting because in America and Europe most of the advocates of an active fiscal policies are big old bleeding heart liberals like Paul Krugman.  The right wing in America and Europe has become thoroughly anti-government in their view of the economy along with their other ridiculous views on hyperinflation and central bank bubbles. So far the right in both America and Europe have been a major stumbling block for any kind of meaningful stimulus as of late.  The tea party blocks all bills in the states and Angela Merkel, well she’s just a bitch.  

Perhaps the key to a true turn around Keynesian miracle is to get the right wing on board.  It would make sense, conservatives are big blowhards when it comes to culture, and they really buy into the whole nationalism and patriotism and sense of duty to one’s country.  Liberals on the other hand are not going to get all choked up about these things.  They may care about helping the poor and middle class, but they certainly aren’t as focused on making their country “the best”.  Maybe there is a difference between simply throwing money at something for stimulus (like what Obama did) and rousing the animal spirits like Abe is doing.  The US may have had a stimulus program but Obama certainly hasn’t stoked the animal spirits here, in fact if anything our cultural fabric is becoming even more pulled apart.

The Japanese bull market is not just a regular bull market, it’s a cultural transformation.  People aren’t just altering their spending habits, they are altering their state of mind.  After all, true prosperity is not just in the numbers, its in the Gemütlichkeit. Economic progress requires not only growth in production, but an increase in confidence and motivation as well.  The Japanese know that this may be their last chance to truly break free from the economic stagnation they have been suffering over the years, so its all in at this point.  If their efforts work out it will make the case for such efforts in Europe and America stronger.  I am skeptical though, the right wing here is so entrenched in their anti-government nonsense that it may be hard to overcome. 

The only way that something like this could spread to America or Europe is if a spirit of cultural unity reawakens, and people learn that rather than simply being self-absorbed individuals, that through the government they can achieve a greater strength.  It will really only be possible if the conservatives return to their senses and abandon the anarchism that has hijacked the right wing in America. Either way, we still salute the Japanese, we are rooting for them, and hopefully the Japanese bull market will become the Japanese miracle.

Why the Establishment likes Locke

Anyone who was educated in America can probably remember the time in grade school when they were forced to write a paper on Hobbes and Locke.  As always the paper was supposed to be skewed in Locke’s favor.  Hobbes was a mean and nasty man who paved the way for Fascism while Locke believed in freedom.

To deny the bias towards Locke would be absurd, clearly Lockean social contract theory is shoved down our throats as a way to prevent Hobbesian thought from seeping in.  Hell the two almost come together in a package, if you are taught about the Leviathan it almost has to be followed up with Lockean social contract theory.  Hobbes is the bitter pill and Locke is the pleasant tasting chaser that follows.

But why exactly is that?  Why are these two men always taught in tandem?  There is really no comparison to the Locke/Hobbes symbiotic relationship in academic thought that can be found anywhere else.  I have a theory why that is.  Very rarely does posterity produce an individual who has the wherewithal and the nerve to tell it like it is.  Machiavelli was one, Socrates, and of course Hobbes.  Not surprisingly all three of these men found themselves at the mercy of the authorities for their “blasphemy”, either through imprisonment, censure or execution.  There is something about Hobbesian thought that strikes a nerve, a deep one, and we don’t like it.  Perhaps because, it’s true?

The Hobbesian view of humanity is not a feel good one, in our natural state we are thieves, liars and murderers.  We kill senselessly, we take what isn’t ours, we neglect what is ours.  Jesus was right, we are all sinners. The state is there as a saving grace, without it we would surely be at each other’s throats, and indeed even with it we still are.  Without society we are just as graceless and cruel as any other beast. 

Locke on the other hand presents a warm and fuzzy view of things, humans in their natural state are cooperative, they work together and never get into fights.  We all respect each other’s natural rights, and if injustice does occur that is the fault of an individual, and not evident of humanity as a whole.  The state exists to uphold justice, and we could always get rid of it if we felt like it.  We don’t really need social structure because humans can take care of themselves just fine.  Oh and let’s not forget property rights, the elite love their property rights.

The Lockean viewpoint is the one our establishment wants us to hear, and for a few good reasons.  The first is that it assumes that we have chosen our government, our society and our economic system out of mutual agreement.  All these things are here to make you feel better.  Certainly our economic and social systems are not ones that unfairly favor a certain group over another, because these things arose out of mutual agreement of everyone. Also it makes the individual feel special: you are the star of the show, the elites and government are just there to help ensure your life is better, and we all have a seat in the table in the social contract, we are equal.  The homeless beggar and billionaire are all social equals in the Lockean world.  Property rights and the social inequality that results when they are over-exaggerated are also natural of course.  Finally, the Lockean viewpoint is favored because it glosses over the sketchy aspects of humanity.  Humanity is and always has been a good thing, people have always had good lives.  Overall the picture is a feel good one.  It is also pure rubbish.

The truth is that we live in a Hobbesian world.  Human beings are capable of terrible things, most of human history has been a chronicle of suffering, hardship and war.  Society and the state don’t exist merely because we wanted to get along, it exists because we have no other alternative.  For thousands of years we lived off the land, but our population exploded and the burden became too much, we killed all the herds, we picked all the low hanging fruit, man the hunter was forced into living in society and relying on agriculture to survive.  Civilization is a necessity because of ecological constraint, government and law is a necessity because of social constraint.  We rely on the state because we have to, not because we want to.  Humanity can be capable of great good, but it can also be capable of great evil.  And that evil can be turned on quite quickly.

How would a Lockean explain Nazi Germany?  An entire nation embarks on a macabre adventure in which nearly everyone participates in a horror show of gross proportions.  Or better yet, what about war in general?  It only takes 6 weeks of boot camp to turn anyone into a killer.  Surely such horrors must be the government’s fault, and indeed modern day Lockeans pretty much blame the whole thing on the state. 

But there is an alternative explanation for Nazi Germany and the horrors of war: humanity has a monkey on its back, a bad one, and one that can easily be released if we are put it in the right environment.  We are still animals underneath, and history and the present are testaments to our primitive and violent nature.  We don’t want to be independent, we want to be led.

The establishment likes Locke because Locke limits the role of the government to mere perfunctory matters.  The night-watchman state.  Everything else is to be left up to the “markets”.  Our economic system, wealth distribution, ecological relationships, social trends, all of that is left up to “humanity”.  It is also helpful that Locke includes a right to property in his view of what “natural law” is.  Thus the rich are able to say to everyone else that their condition is natural, any redistribution or taxation is thus an affront to nature as their property rights are “natural” and any attempt at equality is a sin.  And indeed, these are the very beliefs held by the establishment.

The establishment doesn’t like Hobbes because Hobbes spoke the truth.  Humanity is not in control of things, we have no idea what we are doing, here we are in the 21^st century, in the wake of financial catastrophe, and potentially on the precipice of an ecological one.  War and violence is a reality for far too many of us, millions of people are rotting in cages around the world, species disappear from this planet every day, millions suffer seemingly needlessly from poverty and mental illness, economic disparity between rich and poor has never been greater in the entire history of this world.  And as always, we are the culprits.  We did not choose this world, we were simply born into it.  There is no guarantee that things will get better, and in fact they may very well get worse.  And yet we continue to go forward because there is no other alternative.  Our world, the real world, is a Hobbesian world.

What if however we could improve things?  What if humanity had more power than it is led to believe?  What if through governance and law we could do more to improve our life? Our economy? Our ecosystem?  We are taught to believe that this is somehow beyond our control, that the government is useless in these matters, that we must simply accept it for what it is.  But perhaps that isn’t true, perhaps the social contract carries with more bargaining power than we were told by the Lockean?  Locke tells us that humans are just fine on their own, Hobbes however points out that we are all in this together, and we all need each other.  Hobbes was right. 

The establishment loves Locke because Lockean theory is ultimately a wolf in sheep’s clothing.  It makes the individual feel as though this is our “natural” order.  It makes them feel as though they are truly free.  Its feel good story helps justify our actions when we “rain freedom” on other countries in the form of hellfire missiles.  It allows the elites to raid our wealth, tear down our public institutions, privatize our public goods and degrade the commonwealth.  It makes collective power out to be an enemy. Locke tries to objectify subjective preferences, and ultimately this makes our fellow men out to be enemies as violence in the name of these preferences is justified.  It tells us that our choices are limited.  Locke, not Hobbes, ultimately tells people to stay in line.   

Hobbesian thought however, tells us that our laws are not a result of nature or wisdom, but of mere authority.  This is often misused to accuse him of despotism, however the true implication of this line of thought is that it leaves it open ended.  What it really means is that humanity, through the power of our sovereignty can change these laws.  Far more power is in our hands than what the Lockean framework tells us.  Locke tells us that people don’t have to compromise anything to live in society because everyone is naturally all rosy.  Hobbes on the other hand acknowledges that part of living in a society means giving up some freedom for security, however what freedoms those are is up to us.  Plus the Hobbesian view acknowledges that without that security our lives would be far worse. 

Our world is not a Lockean one, it is a Hobbesian one.  The Lockean vision being taught in our schools is one used to anaesthetize us while the elite grab more power and wealth.  The elites use their authority to grab more power and then turn around and tell the masses that it is their “natural” right to do so.  It is high time we begin to look at the world as it really is, and that starts with some honesty.  Lockean theory is fundamentally dishonest, and thus it will always be used to maintain the status quo rather than improve it.  Hobbesian thought may make one uncomfortable, but it is ultimately the more honest of the two philosophies.  It is when we are honest that we will begin to see truth, and through truth we can bring about a better world, for all of us.  The first step in attaining true freedom is to see the world for what it really is.    

A Neo-Hobbesian perspective

I have created this page because I feel like the Hobbesian perspective is under-represented in the blogosphere.  As an educated intellectual who has a lot to say, I have grown sick of posting long comments on other people’s pages and have come to the conclusion that perhaps it would be a good thing to create a page of my own in order to fully develop and communicate my vision.  I hope to be able to bring new views to the table and inspire thoughtful and provocative discussions and to also slowly develop a worldview which hopefully can influence others.  I look forward to the coming discussions and hope to both teach and learn from everyone out there.  Stay tuned!