To help poor people, give them money (Draft excerpt from Economics in Two Lessons)

“More difficult, but arguably more effective is to change the structure of markets and property rights to produce a less unequal distribution of market income — this is sometimes called ‘pre-distribution’. We will come back to this issue later.”

Pre-distribution is just the same as redistribution, but a different wrapper. Effective redistribution means that there is more money in poor communities and more local employment (and so they have better bargaining power in the labour market). An unconditional income support (i.e. a basic income) is the best way to stop employment exploitation – because it gives poor people the ability to say no to exploitative offers. It also means less intrusive bureaucracy (we are trusting people to make their own decisions). Some of the redundant bureaucrats could maybe do real social work instead of making poor people jump through hoops.

Housing is a completely different issue, and needs real supply side measures (demand side subsidies just push up the price of land). But basic income would help here too, by allowing people to move to where they could afford to live (rather than where they could find work) and to some extent, jobs would then follow them.

Interesting recent book on basic income in India. I discuss it briefly here:

http://www.forbes.com/sites/timworstall/2015/01/28/indias-basic-income-or-lets-abolish-food-stamps-and-make-everyone-richer/

Makes much the same points (the book that is). Giving cash is hugely better than the current Indian system of giving goods (grain, cooking oil etc).

Three bits I’d add.

In the US system at least, there’s not all that much support for general redistribution. There’s more support for redistribution so that people can eat, get medical care, get housing. That what redistribution there is is largely limited to these things (at least in my view) increases the amount of redistribution that does happen. Simply because the general populace thinks that way.

On the food aid internationally: worth noting that both the Bush and Obama admins have tried to change the system. Instead of 50% (or whatever it is) of food aid having to be American food, transported on US ships, instead send money to buy food locally to distribute. That they couldn’t get it through allows a Mancur Olson like point to be made about special interests blocking good policy.

Predistribution I worry about, possibly excessively. Depends upon exactly what one does as that redistribution. The recent UK election saw the freezing of energy prices being described as this, and also a good idea (from some quarters). Rent control also often offered as a similar idea, possibly higher min wages and so on. But price fixing has a horrible record. Too much of it (for some meaning of “too much”) leads to the Venezuela situation. There’s been an excellent analysis showing that the country could have achieved its poverty reduction goals by selling petrol domestically at a reasonable price (currently, they don’t actually charge for it. The wholesale trucks don’t invoice the gas stations as the margins needed to run the station are higher than the total price of gasoline to the consumer) and then using that cash to distribute as something like a citizen’s income.

Predistribution could also be better than redistribution, I suppose, but it would depend upon exactly what was being done.

John, who is your target audience for this book?

Giving poor people assistance in kind, such as food stamps and subsidized housing, has a lot of political appeal. Not only does it meet an apparent need, but it appears to reduce the chance that the recipients will waste their extra income..

What’s the limiting principle here? There seems to be general consensus (at least from the center-left left) that medical care and schooling should be provided, as opposed to “give people money and let them choose”. An argument as to why medical care is different from housing would be helpful.

SamChevre 06.16.15 at 1:40 pm @ 7 —
Medical care is a kind of authoritarian caste monopoly, so it does not respond readily to market pressures. The average person knows whether she or he wants to buy a kind of food or live in a kind of house, but decisions of medical care — prescriptions — are masked in layers of miracle and mystery. Given that this situation will not, perhaps cannot change, the solution often proposed is further authority, for example Single Payer or socialized medicine.

Similar observations might be made of the (formal) education industry, although its work is somewhat less arcane.

“I could be wrong but my impression is this is the ‘ecomically literate’ left-wing view (entitlements to public provision of services bad, progressive income transfers good) which has been conventional wisdom among left-liberal policy types in UK at least since 90s, a period during which the left has lost much ground politically and inequality has ballooned (whether these facts are connected I would not like to say).”

People understand helping the poor with medical care, food and shelter. For some reason giving the poor cash money FEELS different. Not sure why really.

/I actually think a combination of strong public services and a guaranteed national income would be the best system for everyone.

MPAVictoria 06.16.15 at 2:29 pm @ 11:
‘People understand helping the poor with medical care, food and shelter. For some reason giving the poor cash money FEELS different. Not sure why really.’

It gives them autonomy.

‘It gives them autonomy’

Choosing whether to fix your heating or take your kid to the doctor: freedom…

That was the question but answered it with a the normative claim: giving poor money to spend on (privatised? essential?) services ‘gives them autonomy’ compared to public provision) – I disagree. (Labelling the latter ‘authoritarian’ is also rather tendentious…)

This comes off as naive about the facts on the ground, which vary from place to place.
For instance, I know a grandfather in Sacramento, a worker for the state, whose daughter got involved in an outlaw motorcycle gang when she was 15. I’ll call him Abe and her Sara. Sara spent 20 years in the gang, getting free cocaine, meth and whatever else, and providing sex for the gang and childcare for the gang leader. Sara had two children. Both were raised by their grandfather. They have serious neurological problems. One boy has managed to stay in a section-8 housing apartment. The other cannot do that. He lives on the streets, sleeping under cars, under the freeway, etc. The boys have children by girls who are from similar circumstances that are equally incapable of functioning in society. The grandfather has arranged for adoption.

Sara, a grandmother now, has 3 teeth left. She is in the process of being institutionalized by Abe. He took her in after the biker gang kicked her out for being old. She was left alone while they went on vacation and they returned to a mess, despite watchful friends.

There are many stories like this. There are poor people who are struggling and making responsible decisions. And there are a persistent class who create their own misery and can’t be stopped. That is why the EBT and SNAP programs exist. There are far too many mothers and fathers out in society who see nothing for themselves. To them, the opportunity cost of anything that isn’t drugs that make them feel better is too high. There is a recent case here of a man who killed a 6 year old while mom was in rehab and burned her body. Those people would spend all their money on liquor, pot, meth, cocaine, etc. There are good reasons why EBT food cards don’t pay for anything but food and you can’t buy alcohol with them.

Another story is the son of a UC Davis professor. He got involved in drugs when he was young and never stopped. As often happens, he got arrested for assault and did time in prison. I met him when he worked at UCD and was on parole. He did ok then. Off parole he began stealing again and moved into a storage locker. He was seen around town for a while then disappeared. Last time I talked to him he mumbled, “I don’t even remember,” when I mentioned something about the years he worked at UCD. He was on assistance and disability. His focus was drugs, and when he was sober he saw that his life was totally screwed up. He didn’t want to be a janitor or a nobody. So he went back to drugs.

I know this is anecdote, not statistics. But I also know that data collection on this segment is fairly poor. My experience with it directly contradicts certain papers I have read. So I am wary. There are many such stories. I could go on.

Surely this just falls head first into the objection that any redistribution distorts markets and messes up relative opportunity costs?

Overall, from what I’ve seen it just feels like you’re using too much of the right’s framing. As soon as you start talking about things in terms of markets, taking them as natural and given, and arguing that social justice is just about getting the price right, you’re going to be met with all the standard rejoinders: externalities will correct themselves via Coaseian bargaining, charity will fill the gap, income distribution reflects productivity, etc. I’m not saying these are right or even that you’ve not considered them, but I would try to maintain an awareness of and engagement with them throughout the book.

In any case, I hope you will include this quote from Paul Samuelson at some point:

“This is why books entitled Economics in One Lesson must evoke from us the advice: ‘Go back for the second lesson’.”

Interestingly, he was actually referring to the Cambridge Capital Controversies.

http://robertvienneau.blogspot.co.uk/2006/08/some-of-samuelson-on-subject-of-sraffa.html
In any case,

@CJColucchi

3. Privately-provided housing, publicly subsidized, for those who can’t afford market rents
4. Publicly-provided housing for those who can’t afford market rents
5. Rent control
Not sure about 3 v. 4

#4 is usually cheaper, but won’t reflect the desires of the tenants as much as #3 in terms of housing. I tend to prefer #4 simply because it solves the issue of the poor being priced out of an area because demand is rising faster than housing stock, and because you don’t need to create a big monitoring system to ensure that private developers getting public subsidization are in compliance.

Anarcissie- I’m aware US welfare state can be highly authoritarian and bureaucratic. I said that in an argument over state versus private provision of welfare services referring to the former model ‘authoritarian’ is tendentious (and makes you sound like a right-libertarian imo).

(I’m aware it rains a lot in London but someone who insisted on referring to London as ‘the rainy city’ in argument about the competing merits of London versus Manchester wound not be encouraging enlightening discussion imho).

Anyway, to answer MPA’s question another reason is that it tends to be hugely wasteful as much of said money ends up in pockets of rich people who own the capital and land which is used to provide the services cf. Britain’s C21st housing benefit bill aka slumlords benevolent fund

“I get why middle-class people resent welfare — as least welfare as they imagine it”

Atrios has a great line about how many poor white people believe that minorities have access to the “good” welfare system.

“‘It gives them autonomy’

Choosing whether to fix your heating or take your kid to the doctor: freedom…”

Yes, very much what that book about India describes. “Agency”. Or, as we might describe it, the maximum increase in human utility for a given level of redistribution.

But then that’s me getting all free market again: because I’d ascribe the same to schools, give them the money and let them decide, etc, etc, etc.

Ideally, though, we organize society from the get go, from Day One, to benefit everyone. That means we don’t have to react to poverty. It’s not there. If we organize society around the needs of the 100%, as opposed to our current way of doing so for the greed of the 1%, then we don’t have to worry about issues after the fact. We prevent them from happening in the first place.

And why we keep insisting on a system that we know will always, forever — it’s guaranteed — forever produce ungodly amounts of inequality, waste, destruction, ecological devastation, poverty, etc. etc. . . . is truly beyond baffling. The acceptance of official, legal, structural insanity, while expending energy on trying to mitigate for that insanity, is itself insane.

Anarcissie @ 27: . . . noting that even a connotation of autonomy is repugnant to presently prevailing concepts of social welfare and how society should be organized in general.

Autonomy, of at least a limited kind, is the reward for successfully navigating and being socially useful in the System; the wages of failure, so to speak, must feature depriving people of autonomy — going to prison being the extreme. Social welfare is just a rung slightly higher on the ladder than prison.

Not arguing for the system, of course, just adding to your insightful remarks.

“Basic pay ratio laws, living wage floors, universal education, health care and upgraded transportation, plus guaranteed work would do it. Government guarantees all these things, as it should.”

Sign me up for almost all of this.

@19. Kudos. Your post confirms, to me, that a definition of poverty rooted simply in cash on hand and potential earning power is entirely inadequate for any sensible discussion of the problems of the poor.

@30. Your authoritarian demands are certain to find stiff resistance even from the poor. Legislating wage scales within corporations is an attractive option, however, and an option worth pursuing.

Plume @ 33: I’m guessing you’re not saying the argument should only be between those factions. Just that it is, right?

That’s right, sort of. I wouldn’t say, “factions” because there are no corresponding political factions. These are not interest group positions, or even partisan policy stances. They swallow up partisan competition for office and power, removing both the ideas and levers of institutional power by their framing of a common economic world view that leaves no alternative. Any deviation from this framework can be marginalized by a ready torrent of rhetoric, as you can readily confirm by consulting the massive output of a Brad Delong, Matthew Yglesias or Tyler Cowen. Mark Thoma provides dozens of links every damn day, to example high and low. I would not even say, “two” because the rhetorical symbiosis is so close, though the ability for these professionals (and they are professionals, whether economists or pundits — that’s important to note; no real person would have these opinions, left to their own devices; they are too disconnected from reality) to manufacture a massive stream of blahblahblah between their two poles of a common axis is critical to their effectiveness as propagandists in excluding any point of view grounded in reality.

I am saying that political arguments about economic policy are presented in salient media as only between those two points-of-view, with their common presumptions and construction of how the political economy “works”. It is taught that way in schools and colleges and presented that way by prominent pundits, as the proper terms of discussion for “serious” mainstream policy by “serious” people. Everytime, some pundit repeats, for example, a cliche about “the” debate being fundamentally about “the size of government”, they are repeating a frame introduced by Milton Friedman more than fifty years ago, when he was laying the foundations for this dialectic. So, yes, as you say, this has been the way it has been since before Reagan, when the Liberalism of the New Deal faded away in its last hurrah in the 1960s (and I suppose also, as militant left-authoritarian socialism lost its sense of idealism and power, after the death of Stalin).

Since we are talking about Hazlitt, I think it would be fair to say, that the seeds were planted in the 1930s and 1940s, as reactionary conservatives tried to recover from the debacles of the Great Depression and the World Wars (which dogmatic reactionary conservatives and weak-minded liberals caused, not incidentally). Hazlitt’s little pamphlet was, arguably, one of those seeds, and fitted into a propaganda dogma about what made private-enterprise capitalism superior to actually-existing communism.

On Quiggin’s previous thread on the Last Gasp of U.S. Neoliberalism (his title, not mine), I provoked a little exchange with Brad DeLong, where Professor Delong (advice: always use the proper honorific when calling someone stupid), explained his own neoliberalism, as based on the claim

. . . market mechanisms–properly-regulated market mechanisms–are more likely than not a better road to social democratic ends than command-and-control mechanisms.

paired with another claim that a measure of social democracy is necessary to preserve capitalism against the threat of socialist revolution (my heavily paraphrased interpretation of his thesis). DeLong took the view that as the threat of imminent socialist revolution faded, so did the strength of the left (neo)liberal argument in favor of what we used to call a mixed economy balanced between “market mechanisms” and social democratic, social welfare policies. A bit self-serving in the sense that proto-neoliberals ancestor to the DeLongs of our tired, sad world, made a deal where they did everything they could to knife the threat of imminent socialist revolution in the back, marginalizing every one to their left and destroying whatever institutional support the socialist viewpoints might have had. And, of course, DeLong remains absolutely committed to praising his conservative libertarian interlocutors while savagely attacking anyone to his left. (In that thread, he called JW Mason “stupid”, which surely misses the mark.)

This is getting long-winded, because I’m trying to be very precise as well as accurate. I want to draw attention to the other leg of Brad DeLong’s neoliberalism, the one expressed in the blockquote above: “market mechanisms . . .are . . . better . . . than command-and-control mechanisms”. This is the one that is acutely relevant to Quiggin’s challenge to Hazlitt’s One Lesson. Hazlitt’s One Lesson includes the supposition that the Economy is a “market” system. His analysis of “the System” is based on a theory that analyzes the general equilibrium tendencies of a theoretic market economy that coordinates by market price and opposes coordination by market price to coordination by the administrative fiat of the state, aka command-and-control. Brad DeLong accepts this dichotomy, which was a central dictum of the conservative propaganda that came to prominence in the 1940s. Hazlitt is drawing on Mises and Chicago School ideas, as well, of course on the venerable Bastiat, and his effort is closely related to that other great pamphlet of the time, Hayek’s Road to Serfdom, which made use of Hayek’s own elaborate theory of competitive market price as an informational system allegedly superior to command-and-control. Brad buys into this. And, like all the foundational dictums of propaganda, it is a Big Lie.

We used to know this about propaganda, that propaganda is founded always on the synergy of the Big Lie and the Half-Truth. Well, this is the Big Lie. As I am always having to repeat, there are, in fact, very few actual markets in our money economy, and most of the prices you encounter are formed in administrative processes: the prices you encounter are administered, which is to say, that prices are mostly tools of command-and-control. Not alternatives to, but artifacts of. Our economy, our economic system is dominated by hierarchy. More than half the U.S. labor force works for organizations with more than 100 people and the vast majority of people participate in the economy in employment or in analogous contractual relations and in a commerce of administered exchange.

So, I guess I could say, Brad DeLong is a big, fat liar, but that would be impolite and would unfairly discount his sincerity. Not to realize this, to base his most serious political commitment — indeed, his most serious professional commitment as an economist — on a sixty-plus year old propaganda dictum that he could disprove to himself in a moment if he just opened his eyes next time he was in the supermarket, well, that’s a special kind of stupidity.

Anyway, the point is not to create an opportunity to call an arrogant, but basically good-natured and honest, tenured professor either stupid or a liar. It is to point out how deeply handicapped is our collective ability to think about the economy and discuss it. At the most basic level, we are regularly committing ourselves to a shared unreality. We are trapped inside this neoliberal fog of propaganda, this endless torrent of schizophrenic blahblahblah in the Media, facing an army of Zombie ideas that never knows a permanent casualty. The people, who should be trained to understand how the System works, are, many of them trained in irrelevant esoterica, which is just a mathematically difficult version of Lesson One, used to legitimize nonsensical pontifications. To their credit, some economists and pundits try to free themselves and us, to discredit Austerity, for example, as bad economics and foolish politics, but for too many their first commitment is to losing the argument in this now-antique neoliberal dialectic.

End of Rant.

Plume @ 34: Basic pay ratio laws, living wage floors, universal education, health care and upgraded transportation, plus guaranteed work would do it. Government guarantees all these things, as it should.

Yes, these are at least among the kind of things we ought to be talking about, given that we live in an economy already so seriously hierarchical.

In the spirit of decentralization, we should also be thinking about ways to make it much less centralized.

When I look at the U.S. economy, after the neoliberal “market liberalizations” that began with deregulation in the Carter Administration, and accelerated under Reagan and Clinton, going into overdrive with Bush’s financial deregulation prior to the GFC, the creation of giant sectoral conglomerates stands out as a serious problem.

Now, the old vocabulary is all about “markets” where they don’t exist, and the model is particularly idiotic: the model of monopoly still taught in Econ 101 is one where the firm has “no competition” and therefore faces a “market” “demand curve” that is sloped “downward”, meaning that the archetypal monopoly elevates price by restricting output, because more output drives down price. The alternative is a firm in “perfect competition” (often explained as a firm facing so many competitors, that the firm is not even aware that’s output decision affects price).

So, the critique is of “monopoly” in this highly restrictive sense of “market power” (a particularly diffuse concept) as the capacity to restrict output to raise prices, and the canonical remedy is “more competition”.

I am an actual expert on the economics of industrial organization, and I can tell you that this substitute for “thinking” is so insanely stupid, that it leaves me wanting to scream and run from the room. It is not like it is not possible to be far, far more sophisticated and still “mainstream”. It is that there’s no pressure to eliminate this fairy tale.

In the landmark antitrust case against Microsoft almost twenty years ago, a Dean of MIT’s business school testified for Microsoft using exactly such a primitive intellectual foundation, and though the Judge called him on the quality of his testimony, the profession did not.

Ever since the GFC of 2008, critics of the enacted financial reforms have attacked the TBTF problem. But, I do not see any one making much headway. It’s really hard to make the case against an economics profession that is locked into some heavy-duty stupid, talking learnedly about systemic risk and prudential supervision with no understanding, and a popular vocabulary of monopoly and market competition that doesn’t have words or proper concepts.

The reality of the Financial Sector is that uniting strategic control in a few, absurdly large units, is a recipe for inefficiency, control fraud and racketeering on a global scale. The Universal Bank is a very, very bad idea when there’s nothing else. Command-and-control does go wrong when centralized at scale. Duh. But, it is a discussion we cannot have in the neoliberal fog.

Intellectual Property is probably an area where the old vocabulary of concepts from economics is at its strongest. The absolutely ridiculous amounts charged for medicines of dubious medicinal value is truly scandalous. But, even there the redoubtable Dean Bakers of the world make little headway. I live in Hollywood, and I like to tweak locals, by challenging the prices charged for “renting” movies for streaming or “buying” licensed music from, say, Apple’s iMusic Store. That we’ve reduced the resources that go into an hour’s recorded entertainment by two orders of magnitude without reducing the nominal “price” isn’t as scandalous as killing a terminal patient, but it still reflects bad economic policy that impoverishes millions (a little bit) to make very few (and not creatives for the most part) absurdly rich.

Bruce @38,

That was an excellent “rant.” One of the best things you’ve written here, IMO.

One especially good part from that excellent post:

We used to know this about propaganda, that propaganda is founded always on the synergy of the Big Lie and the Half-Truth. Well, this is the Big Lie. As I am always having to repeat, there are, in fact, very few actual markets in our money economy, and most of the prices you encounter are formed in administrative processes: the prices you encounter are administered, which is to say, that prices are mostly tools of command-and-control. Not alternatives to, but artifacts of. Our economy, our economic system is dominated by hierarchy. More than half the U.S. labor force works for organizations with more than 100 people and the vast majority of people participate in the economy in employment or in analogous contractual relations and in a commerce of administered exchange.

Yes and yes and yes. Capitalism is centralized by nature. Especially in its “mature” form of corporatism. As you say, it’s hierarchical, top down control, concentrated among very few people, relatively speaking, who also use the power of the state to further their own wealth, power and consolidation. Centralized power using centralized power to centralize power.

The Big Lie, as you mention, is to make of it some kind of wonderfully liberating dispersal of autonomy, wealth, opportunity, etc. etc. to all and sundry — away from Big Gubmint. It’s quite the opposite.

And the other part of the Big Lie . . . as you mention, that we can either have this or Stalin has been incredibly effective. That we have no other options. One obvious alternative is to set things up in an actually existing dispersal and decentralization of power, wealth and opportunity . . . . along the lines Chomsky, Wolff, Alperovitz and others have discussed. True decentralization of public and private power. Both. The neoliberal lie is to both claim there are no other options, and to say they’ve already solved the problem of centralization.

Hi John —
Based on the comments on this thread, it doesn’t seem like Lesson 1 sunk in.

Bruce @38 —
“as militant left-authoritarian socialism lost its sense of idealism and power, after the death of Stalin”
I kinda need a short refresher on Stalin’s sense of idealism. Care to have a go?

It was not Stalin’s personal sense of idealism that I was referring to (though I have no doubt that he was, in addition to being murderously ruthless, a true believer, but, rather, the sense of many that socialism was a potent set of ideas and an organized political movement that might make the world a better place in political struggle against the power of an unjustly privileged and oppressive establishment and against many reprehensible prejudices.

Left authoritarianism is not something anyone today is likely to have much personal acquaintance with, so even if I could mimic it for you, I doubt that even on CT, anyone would recognize the accent. Orwell’s Homage to Catalonia is excellent, if you want a kind of well-observed flavor for how it played out in real time, without rote Manicheism of any kind and from a determinedly personal and liberal philosophical perspective. Reading about a figure like Harry Bridges, the Australian-born American union leader, might be educational, as well.

In any case, political anacyclosis has its inflection points, and in the case of the Soviet Union and Communism, the death of Stalin at the halfway point between the fall of the Romanovs and the fall of the Berlin Wall certainly marked one.

I’m a bit confused as to John’s audience and aim here. I think he wants to broaden the the thinking of the moderately educated orthodox. This is a worthy aim, given the harms that arise from simple belief in Economics 101. Yet, in laying out the basic tenets of economics, he is exposing their weakness and narrowness to anyone of moderate intelligence who has not already been indoctrinated. We learn, for instance, that opportunity cost just means that choices must be evaluated in the context of the perceived alternatives. Or that poor people are best placed to know whether their more immediate need is food or car repairs.

So the book won’t sell in the US (where Eco 101 pervades the air), may comfort some social democrats in the UK and Australia, and it is just possible that some libertarian-inclined students may revisit their beliefs. Is this last effect worth it?

Haven’t read all the comments, so apologies if someone has mentioned this already, but w/r/t int’l ‘food aid’: most donor countries currently give it in cash earmarked for the purchase of local food. The U.S. is an exception here, continuing to “tie” food aid, i.e. to ship actual grains (and other commodities). Untied aid (i.e. cash) is, as the OP suggests, preferable.

On this pt, see e.g.: William A. Munro, Review of Jennifer Clapp, Hunger in the Balance: The New Politics of International Food Aid (2012), in Perspectives on Politics v.12 n.1 (March 2014), p.281.

Bruce, I wonder if you are doing a bit too much with the “central planning” shorthand. As I understand it, especially as talked about by say Brad DeLong, it suggests that governmental central planning tends to have serious problems because it is largely divorced from price signals and market discipline (meaning that it doesn’t allocate well on price and is insulated from getting punished for poor allocation by competitors). While some pseudo-monopolies are divorced from price and market discipline (see cable companies for example) most large businesses are not.

BW,
thanks for the link.
I had just written a comment about my perception of the differences betw your view and JQ’s but the computer ate it, prob. just as well. I do wonder why you don’t use the word ‘oligopoly’ (which I always thought was a useful one). Also, though a non-economist, I wd say (or my impression is) that there are market prices in certain sectors, ‘administered’ prices in others. You seem to think there are virtually nothing except administered prices. I don’t pretend to know, just throwing the issue out there.

Also, a government, especially a local community government, is going to be far closer to the actual ground of any business than Corporate HQ, which may well be thousands of miles away. And a local government, which employs local folks, is going to have a much greater stake in making things work than that far away corporate HQ which already has shipped thousands of jobs even further away.

A government of the people, by the people, has a far greater incentive to make things work for the people than any business. A business has every incentive in the world to make things work for the very top of the heap, and that necessarily means screwing over the vast majority of workers, oftentimes customers, and the earth, always.

Give me a locally planned, community based, publicly held business any day over one with the driving goal of making a tiny few rich — often from great distances.

” collecting used food from restaurants ”

by which I mean “collecting unused food from restaurants”

Tim Worstall @59
I’m sure the rats and cockroaches don’t think of it as waste. =)

I did warn that Quiggin would have trouble convincing people of neoliberal Lesson One just so he can talk them back to social-democratic Lesson Two, back in the comments on one of the earlier draft posts.

It’s on especially clear display in the comments to this post. It’s also a problem that must necessarily be confronted and fixed if the book is to successfully upsell third-way-neoliberal policy planks, in the 2010s rather than glorious 1990s. I don’t know how that would be done, however.

P.S. Just as an aside. An awful lot of CONSUMED food is also waste. I don’t think anyone with open eyes could really think the world as it is, is EFFICIENT. Desert eco-systems are efficient, modern capitalism isn’t.

Reason, I tend to think that things like being able to attend university, not having to worry about medical bills or having a genuine say in whether someone is firing remote controlled missiles at third world farmers in my name are more important to my autonomy, agency, dignity etc than being offered the choice of half a dozen brands of sugared water.

I would not surprise me to learn that Worstall disagrees but I note that according his definition, a price comparison website has ‘agency’.

Oddly enough, it does not take a lot of research to find that many ordinary people under authoritarian socialism thought it gave them much more autonomy than the systems they replaced. The autonomy of being mechanics, doctors, engineers, teachers rather than the passivity of being peasants. That’s what they fought so hard for.

I find John’s posts slightly depressing. They are cheerful, intelligent, well-argued, and almost entirely mislead on the issues facing us collectively. This is because economics profoundly misreads history – it is not by trade between self-interested individuals that we have come to our present dangerous level of wealth and power, but by painfully leaning how to build organisations of ever greater scope, reach, coherence and internal coordination. Orthodox economics largely ignores this process (when not insisting that it is impossible or unnecessary); marxists and many others try to convince themselves that the wealth and power will remain when the organisation disappears.

Both the social democratic and neoliberal solution to the threats we face involve creating even higher levels of organisation – ones encompassing the entire globe – to manage the world’s ecology, climate and human societies. They differ on what needs managing. Since both lack any real grasp of what is involved, neither asks the sensible question of whether this is possible. One the evidence of the ongoing train-wreck of US politics (360 million people), the state of permanent crisis that is China (1.3 billion) and the squalor of India (1 billion), the likely answer is no. Discussion of alternatives might start from there, but won’t.

Bruce Wilder: “Now, the old vocabulary is all about “markets” where they don’t exist, and the model is particularly idiotic:”

My example is always the energy sector, because it’s so clearly a non-market process and people persist in talking about it as if it’s a market one. (And because it’s a fundamental world problem right now.) When economists talk about energy, they like to talk about people driving cars and buying light bulbs and turning their thermostats up or down as if there were billions of little decisions that affected energy use. But there aren’t. There are only hundreds of large energy producing facilities in even a large country.

And when people plan whether to build one or not, it’s never a matter of waiting for the market, as long as the government is fairly functional. You don’t let people run out of electricity and then wait for market forces to cause someone to build a large generation plant. Nor do you speculatively overbuild. Planners sit down with current and projected population figures, estimates of industrial use etc. The same pretty much goes for refining and distributing oil and gas.

Between overt decisions to build or not build and subsidies — the energy sector is hugely subsidized in various ways — there’s no market determining production, only various governments’ decisions. The economic concept of an energy price as it affects consumers is like the price of a basic food staple: it may or may not have anything to do with actual costs of producing that staple, and in a stable society there never will be such a necessary relationship.

So getting actual costs of energy, which include externalities, to influence how energy gets produced is a political process and not an economic one. The government starts putting out subsidies for one kind of power, stops writing permits to build plants for another kind of power. Consumers as always are forced to take whatever “choices” their highly expensive infrastructure provides.

Boy oh boy, you try to have an opportunity cost/efficient transfer party and the next thing you know the Stalinists show up and start breaking everything.

Capitalism does align well with the (rather perverse) brand of Puritanism than infects American culture. To an unfortunately large segment of the population, rewarding the “good” (ie the rich) and punishing the “bad” (the poor) is as important result as creating growth/wealth.

And when one makes a specific criticism, the answer is always that the problem is caused by regulation. “Capitalism can’t fail, it can only be failed.”

@69 “Oddly enough, it does not take a lot of research to find that many ordinary people under authoritarian socialism thought it gave them much more autonomy than the systems they replaced.”

Likewise for National Socialism — it was a pretty good job creator from what I understand. Ignoring the gulags and the camps of course. Heard the leading proponents of the two systems even had a treaty for a while.

T,

We’ve already been through this here at CT. The Nazis were and still are clearly right wing and nothing about their system was ever remotely “socialist.” It was always SINO. Socialism in name only, chosen for propaganda purposes to gain support of German workers. Once in power, they immediately and violently threw those workers under the bus, into jail, shot them, exiled them, criminalized their unions, their activism, etc. etc.

The American right are kissing cousins to the Nazis and Fascists, with an all too similar ideology and hate-list, and a part of it are card carrying members of neo-Nazi and neo-Fascist groups outright. This is the case for part of the European right as well. Actual socialists, OTOH, are in diametrical opposition to any incarnation of Nazism or Fascism.

@78
I even provided a nice picture for you. Now give me a couple of paragraphs on the wonders of Stalinism. I know you got it in you.

https://en.wikipedia.org/wiki/File:Bundesarchiv_Bild_183-H27337,_Moskau,_Stalin_und_Ribbentrop_im_Kreml.jpg

@79
I’m not saying they were remotely socialist. You stated that @69 “Oddly enough, it does not take a lot of research to find that many ordinary people under authoritarian socialism thought it gave them much more autonomy than the systems they replaced.” I’m saying likewise for National Socialism. Many ordinary people liked that, too.

@Sebastian H 06.17.15 at 7:45 am

@No, there is quite a bit inherent about it that makes it more removed. Governments very often try to wave away price signals and they face very little competition pressure.

In democratic states, there’s supposed to be competition from other political parties who offer something better. In business, there’s supposed to be competition from other companies who offer something better. In both cases (and not just in states), it somehow often happens that this competition offering something better never appears and everyone offers the same rubbish, so there is room for avoiding consequences by means of collusion and by manipulation from outside. In both cases (and not just in states), your success depends not directly on whether you’ve been beneficial, but on whether you manage to convince people that you’ve been so, so there is room for avoiding consequences by means of deception.

Still, there are quite a few differences of principle. For example, the state at least belongs to the public, theoretically; its only official purpose is to serve the public and it is subject to debate and reform by the public. A business theoretically belongs to its owners and shareholders; its official purpose is to serve them by obtaining money from other people by any means that don’t get the state’s police on its heels, it is not subject to debate and reform by the public and the only thing the public can do about it is to choose individually whether to buy or not (apart from affecting it through the state, that is). Furthermore, business is secondary, since maintaining competition and preventing monopoly in business can only be ensured by means of state regulations. States can sometimes be more insulated from the consequences of some harmful decisions simply because they are entrusted (for a good reason) with decisions that have more long-term effects. It’s like assuming that state actions are inherently more bloody based on the fact that the national armies haven’t been privatised yet. Business taking over state functions usually keeps the monopoly but increases its abuse.

T @83,

You’re confusing me with Peter T.

F Foundling@85,

Good points. The right-libertarian dream of (very close to) an all private society rests on that bogus idea. That just the transfer of power from the public to the private realm immediately ends corruption, inefficiency, the abuse of power, etc. etc and sets us all wildly free. It’s actually quite laughable, given the massive examples from history and the present of private sector atrocities.

If, as you mention, the state hands over its military to private forces, abuse and misuse of lethal power isn’t going away. It may even — and I think definitely will — increase beyond the already obscene levels of misuse and abuse. It will not lessen. And in cases where new monopolies are formed, as with a switch to private incarceration, there is a virtual guarantee that abuses will increase. Throw in the profit motive — which governments, at least theoretically, don’t have — and you have major incentive to screw over the population in question. What incentive does a private jail system, for instance, have to spend time, energy and money on health concerns for inmates, or safety, or nutritional, etc. etc.? The less they spend, the more they make for themselves. A government system has no real incentive to continuously cut costs to pad their own wallets. Yes, they’re constrained by budgets, too. But they don’t have to present profit reports quarterly, etc. and their pay doesn’t come from the surplus value created by workers in that particular enterprise.

@82
“but in this case Western anti-Communism “like yours” is what led to the Molotov-Ribbentrop pact, as well as to Hitler’s unchecked rise and thus to WW2″

First off, I admire your mind reading skills. And second, thanks for telling me that what you infer is my kinda thinking “led to the Molotov-Ribbentrop pact, as well as to Hitler’s unchecked rise and thus to WW2” That’s the consensus view. Settled issue.

Glad we agree that “Stalin does suck.”

Sebastian H @ 53: Bruce, I wonder if you are doing a bit too much with the “central planning” shorthand. As I understand it, especially as talked about by say Brad DeLong, it suggests that governmental central planning tends to have serious problems because it is largely divorced from price signals and market discipline (meaning that it doesn’t allocate well on price and is insulated from getting punished for poor allocation by competitors).

I wasn’t advocating for, or criticizing, governmental central planning, in whatever form. I was criticizing the rhetorical convention by which we talk politics and policy as if markets and market prices organized the economy as opposed to the administrative fiat of bureaucracies. That convention has its origins, as I understand it, in political propaganda and struggles of the 1930s and 1940s, in which an urgent need was felt among reactionaries in the West to both draw sharp contrasts with actually existing Communism and to push back against the politics of strong trade unions and the social welfare state. Hazlitt’s One Lesson belongs to the era of that propaganda effort. I imagine Brad DeLong’s thumbnail caricature of the dynamic between the right-wing advocates of business interests and more moderate defenders of the emergent social welfare state was roughly accurate.

I wasn’t proposing to re-open those now antique controversies about whether socialist planning was superior to market capitalism and why, or vice-versa. I was objecting to a rhetorical vestige of those controversies as obsolete and misleading, to wit, the cliché, “market economy”.

When Hazlitt talks confidently about the economy as a System, he is basing his analysis largely on a model of the economy as a system of markets, in which markets arrive at an equilibrium price and those prices allocate resources. To say that that analysis is not engaged in close observation of the actual economy is a gross understatement.

Now that we are not engaged in a death struggle with totalitarianism in whatever form, it seems to me that we could revise our understanding of how the economy actually works, to refer to processes and institutions that we can observe. Being able to have political discussions and disagreements that are reality-based seems to me to require terms of reference that refer to things we can observe in common, a consensual reality that does not involve fantasy pretence.

I’ve made the point that the vast majority of people who work for wages or salaries in the actual economy, do so as part of hierarchies. The archetypal employment contract is adapted to the needs of hierarchy: the employee agrees to do as he’s told, in exchange for a fixed wage, with a contingency — if employee doesn’t follow rules and do as he’s told, he’ll be fired. Being fired is costly to the employee, because it is hard to find another job at the same wage. The employer offers employment on a take-or-leave-it basis.

It seems surreal to turn around and talk the politics of economic policy, while pretending there’s a “labor market” and a “market wage”.

Discipline is clearly in play, here. I just wouldn’t call it, “market” discipline, since it observably isn’t.

Bruce,

What do you make of the constant refrain from the right that “workers are worth what someone is willing to pay them, and not a penny more”?

That points to your comment regarding the actual absence of a labor market.

It also points to a rather despicable use of the word “worth” in the first place, but that’s another story.

ZM @58

in the region where I live the small regional city has a Foodshare program (there are a network of these) which collects and distributes food that would otherwise go to waste.

There are similar programs in the U.S., but according to the earlier-referenced NewsHour segment it often costs farmers something to save (and transport) food even for this purpose — hence, absent the right incentives, they still end up chucking a lot. Haven’t looked at the NRDC paper itself, but the NewsHr segment in summarizing definitely made it sound as if some of the waste comes at the pt-of-production, i.e. farmers throwing produce out, as well as at the pt-of-consumption, as T. Worstall mentioned above.

@90Plume @88engels John

“Lenin established state capitalism in Russia, and Stalin made sure it continued, by any means necessary.”
Thanks for clarifying your position. It’s not always obvious where someone stands. And parsing the difference between a self-described libertarian socialist and other socialists is not necessarily obvious w/o explanation, at least to me.

Engels — Plume was kind enough to give a paragraph on the wonders of Stalinism from his perspective — there weren’t any. (Plume – that’s my reading of what you said.) And from his earlier posts that wasn’t clear to me. I don’t know your views and I’m not going to put words in your mouth. Feel free not to respond. I asked a legitimate question as shown by Plume’s answer. My take is that you’d have a different view than his.

John — I’m a little flummoxed on how to integrate the two lessons. The two lessons are pretty straightforward and show that restricting choices for the poor is not the best way to improve their lives. The comments section shows that this is not obvious as demonstrated by the folks that were uncomfortable with cash transfers rather than transfers in kind of food or housing. That’s exactly the response you want from non-economists who now have to start working through the issues. Maybe further examples in the opportunity cost section would be helpful. Maybe put in more examples with restrictions on choice unrelated to transfers and inequality. If folks buy onto that argument, the same point made in the context to transfers to the poor would better highlight the contradiction. This is pretty pertinent given what’s happening in Kansas, Wisconsin, and other states that keep adding restrictions to transfers. The comments surprised me a bit.

WB@98: How agreeable of you!

From the OP
The problem of poverty is huge, in rich and poor countries alike. Around the world, nearly a billion people live in extreme poverty, living on less than $US1.50 a day.

Is that the current World Bank figure? For a while the needle had seemed to be stuck, acc to WB (or UNDP) figures last I checked, at 1.2 billion living on less than the equivalent of US $1.25/day. JQ’s figure suggests a slight improvement, though these varying estimates are just as likely to be a result of different methods of calculation, I suppose.

From the OP
many advocates of development aid dismiss food aid as a short-term ‘band-aid’, and argue that the aim of aid should be to provide the ‘right’ kind of assistance, as measured by subsequent economic growth. Advocates of aid initially focused on economic infrastructure and industrial development, and have more recently turned their attention to health and education.

I think this may be too simplistic, even for a bk aimed at a wide audience. There’s prob still a constituency for big infrastructure projects in some poorer countries, albeit prob more attention on how the different elements (infrastructure, health, education, agricultural reform, water, sanitation, etc) can be made, if possible, to fit together. Also more attention to environmental effects (e.g. large dam projects). As for food aid, as pointed out above most of it (though not from the U.S.) is now given “untied,” i.e., as cash. It’s still short-term, but often necessary given persistent food shortfalls from various causes. Recent figures (circa 2012) for chronic malnourishment were approx. 870 million (approx. 850 million of whom were in developing countries).

Well that’s the thing. We don’t worry so much about when harvests are good. (Though if we don’t address climate change, we are going to be worrying a lot more than in olden times.) As it stands at this moment, when harvests are bad, we can substitute something else, or order from somewhere else. There really aren’t many significant scarcities, anymore. The former scarcity of (most) goods has been solved by a couple of centuries of technological advancement. The only remaining scarcities compose a fairly short list: 1. your own individual time, 2. desirable real estate near the beach, 3. wildlife ecosystems, 4. seats at a popular music concert, 5,6,… etc. etc.

But the concept of opportunity cost DEPENDS upon scarcity. That’s why you had to choose: because time and resources to make things were scarce. The new (18th century) price system was posited as the best way to do this, after the ancien regime collapsed. It’s why money is still under control. But we don’t really need the new 18th-century system anymore, either. It had upset the prior millennia of the traditional social hierarchy, and now after only 300 years it is already changing into something else, again.

This undermines the strategy of countering Hazlitt by explaining why “market prices won’t in general equal opportunity costs for society as a whole (Lesson 2).” Because opportunity cost DEPENDS upon having to choose, and having to choose depends upon the scarcity of goods, but there is no relevant scarcity anymore. The short list of remaining scarcities can be taken care of by things like individual preference for enjoyment, by bringing the most desirable real estate into public park systems, by instituting lotteries, and by other site-specific choice mechanisms.

There is however one OTHER function of the price system. This is to reward individual merit to spur individual effort, and to prevent free riders and lazy bums from getting too far.

Thus there have been two, very different, functions of the price system: allocation by scarcity and opportunity cost (now becoming defunct), and the social psychology of encouraging people to justly make their own new place in the worldly material hierarchy of scarce wealth.

Well the scarcity is disappearing. But the social psychology of defining the “kind” of people that we want to live among, is still strong as ever. Almost every other way of adjudicating that — by neighborhood councils, by local votes, by setting good examples, etc. — pales in comparison to the simplicity and expeditiousness of the price system.

From the tenor of comments above, it would appear that the proponents of changing or eradicating the price system seriously underestimate the present strength of the social expectation of gradation by merit. The idea that an individual will step-up to become a responsible citizen simply if given more “autonomy”, and the idea that an individual should be the only judge of his or her own merit, is not yet credible to most people. (In fact most of the left-wing steps gingerly around the discussion, and usually falls back upon protestations about individual freedom.)

Significantly however, the technological economic system itself, having forced the end of scarcity upon us, is ALSO undermining any credible promise that it once had, to reliably reward merit. it is clear to everyone that most people are not getting “ahead” no matter how hard they work, and on the other hand, people at the top end of the scale are rewarded in excess of their merit.

Thus the market system is naturally killing both scarcity and the need for merit: the market system is inexorably killing itself.

This has led to a sense of crisis. And to very revealing responses from left, right and center.

On the right, the idea is to simplify, simplify: to cleanse the new 18th-century system so that it works on “first principles”. They say, “There is true scarcity; and we need a meritocracy.”

In the technocratic center, the idea was to mitigate the worst excesses, (because obviously the bare system can never work as advertised: there are scientifically-defined “market failures” and the like), and then to see what happens next. But the most honest and scientific of them however are now stumped by the return of “secular stagnation” and by the acceleration of disemployment in high-productivity sectors by automation, which appears to be permanently consigning most people, both labor and entrepreneurs, to low income growth, no matter what happens. Because these things MAY mean that the system is indeed transitioning into something else, for which neoliberalism is obsolete. That’s why people like Brad DeLong, Joseph Stiglitz, Adair Turner (whom I believe is coming out with a new book this year) are among the most interesting people to read right now.

Then we have the left, which is a hodgepodge. Most of the left appears to believe that the secondary manifestations of this crisis (i.e., politics, economics, wealth concentration, racism, gender, etc.) are the primary causes of the crisis. Most of the left misconstrues both merit and scarcity: As to the question of merit, the statement goes something like, “Let’s give everybody a guaranteed income, and after that, the rest of us are not to judge what each individual does with it.” Yet the left says this, while often ACCEPTING the principle of scarcity: that government spending should be kept under control, that goods must be allocated, and so on. Most of the current left does not appear to understand that scarcity is at an end. Perhaps this is because the left is heavily environmentalist (which is a good thing), and so the left has swallowed the erroneous notion that everything else is scarce too.

T #104: “Scarcity is a real issue for the poor…”

Scarcity of MONEY is the issue for the poor! There need be no scarcity of food, education, healthcare and housing. There are plenty of resources on earth to give 10 billion people or more a middle-class standard of living. That fact undermines the value of the concept of “opportunity cost” for the analysis of the future. The reason money is scarce is because it is kept scarce, due to the false but widespread belief that resources are scarce and to protect the widespread belief in the hierarchy of merit for those who aspire to ascend in it as well as those who have already benefitted by it (i.e. the rich).

World per capita gdp is about $13K. I suggest asking your neighbors how they’d feel at $13K per year. People making middle class incomes do feel constrained although you think they shouldn’t. Whose choice is it how they feel?

Anarcissie #106, exactly. Almost all scarcity has been made illusory, by the very productive success of the system. But those in power depend upon the illusion. Note however that they are not the primary cause of the problem. If almost everybody else didn’t believe that things are scarce, and if almost everybody didn’t bow to the social psychology of a material meritocracy of personal effort, then the whole system would already be transformed into something else, and the ruling class could do nothing about it.

Another thing that pisses me off to no end. Conservatives often go on and on about how the poor should make do with less, and if they don’t, that’s the crux of their problem. They need to just shut up and accept their poverty, and “economize” with that fact in mind.

But ask a stinking rich person to do with less, and their high dudgeon kicks into overdrive. “Why that’s un-American to ask us rich folks to take a little less and pay our workers a little more!!”

Logically, the folks who should make do with less are the people who already have so much more than everyone else. Asking the poor to make do with less is adding the proverbial salt to a gaping wound.

@105 btw — the concept of opportunity cost doesn’t just apply to necessities. It’s just the notion that tradeoffs exist including what to consume, work vs leisure, and now vs the future. You may argue that the choices become trivial at some point. But anyone faced with those tradeoffs is better off if they can choose than if they are imposed upon them, especially the poor. And since the poor are forced with these choices today, it’s better that they can handle the tradeoffs themselves with cash than someone giving them a slab of surplus cheese or a housing voucher when they’d rather spend the money on education or healthcare. The point of the Two Lessons.

T #113″ “the concept of opportunity cost doesn’t just apply to necessities. …including what to consume, work vs leisure, and now vs the future.”

Sure, because some things remain truly scarce, such as personal time, as I wrote in #103: “The only remaining scarcities compose a fairly short list: 1. your own individual time…” But that is rather outside of the Two Lessons, if technological advance increasingly obviates the need for labor to cure scarcity, as appears to be the case.

But getting back to necessities there’s no doubt that giving cash to the poor is a good way to go. The question is, how much would you give them? I would give each of them US$100,00o a year. What is your number?

@112 Lee
I sent 113 before I saw 112. Those are very good points (although I’m unclear exactly about the differences between 1 and 2.) The behavioral economists and psychologists seem to be spending a lot of time on the relationship between happiness and relative wealth and income. There seem to be happiness effects on absolute income as well — people in wealthier countries are happier on average than in poor countries. And the decline in leisure time and increase in two income families even among the upper middle classes suggests that many folks are going for income rather than leisure or home work/child care/family care. These tradeoffs still seem to exist even in wealthy societies. Not many folks seem satiated — they want more of some things whether they cost money or time.

@114 Cranky
I completely agree. The stress of being poor and constantly under severe financial constraints is a huge mental burden on the ability to make decisions. The gov’t can help by making default choices that will work for “average” people. But the ability to chose and make tradeoffs if your situation is not average is very valuable. (Lesson Two) I’ve been trying to stick with the OP.

Plume

I wonder whether “detesting capitalism” is really the right approach simply because a lot of the detestable features we associate with capitalism have reoccurred under socialism. Corruption, bureaucracy, sectarianism, racism, chauvinism, environmental degradation and growth mania have all emerged within socialism.

Focusing on detestable symptoms diverts the Left. One detestable symptom is the fact that in the US one child is shot every hour (one third killed).

Marx gave capitalism some measure of acknowledgement but then highlighted the damage and crisis it was structurally doomed to inflict once various countervailing tendencies were exhausted.

Unfortunately, it is possible to conceive of a nice capitalism (for a few generations) where a welfare state deliberately taxes profits and returns the purchasing power back to those who produced the output. Our bookshelves are full of naive paperbacks proposing this sort of “Civilising Capitalism” outcome. Most of the posters above, including John Quiggin, exhibit this mindset.

The basis of nice capitalism is Keynesianism where workers get a heavily restricted share of money of one type (cash earnings) but capital gets money of a different type (weakly restricted finance). Finance plus politics is then used to accumulate capital. This is the cloak our economists hide under. It all looks so nice and pleasant. They honestly think that

To help poor people, give them money … Overwhelmingly … giving people money is more effective than most, if not all, forms of tied assistance in improving well being and life outcomes.

However once a period of war and empire is over, debt, unemployment, and falling wages necessarily emerge and inexorably increase over time. In fact Marx’s predictions become clearly apparent since the 1960’s – Capitalist structural crisis tendencies

So the issues that should occupy progressive people are the structural issues of long-run increasing debt, increasing unemployment, and falling wages. Here there is only one cause – the private accumulation of capital through exploitation of the public.

It is just too easy to wail against the fact that:

The problem of poverty is huge, in rich and poor countries alike. Around the world, nearly a billion people live in extreme poverty, living on less than $US1.50 a day.

You cannot deal with poverty, inequality, homelessness, racism and climate change without addressing the ultimate structural root cause.

The discussion between T, Lee Arnold and Plume illustrates one of my points: they all assume choice is related to wealth, and wealth results from “the system”, so if we re-arrange or refine the system, then wealth can be spread around more, and more people will have more choice.

In fact, as BW points out, the wealth results from a system that coordinates and controls people – a massive set of interlocking hierarchies. Take away the hierarchies, and the wealth evaporates. In simple terms, if it takes 10,000 people closely coordinated to build a bulk carrier that then enables ore to be moved around the world in 100,000 tonne lots (and another 500,000 to work the ports, mines, railways, shipping agencies….), that coordination does not happen by accident, nor is it maintained except by shaping all those people so that they fit together without too much friction. Almost all of that shaping is ideological – force is a very clumsy instrument.

If you want autonomy, be a hunter-gatherer. You can do whatever you want pretty much whenever you want. No chiefs, and if your companions vex you, change bands. If you want, collectively, the power to have 100 ice-cream flavours on offer, then you have to be the sort of person who will follow the myriad rules of city and employment and political life. Autonomy and material wealth are pretty much opposites. If money is choice, then it’s choice earned by doing what you are told most of the day and, for many people, not even being able to conceive of doing whatever they want at any time.

@JQ 125,
thanks

Boy oh boy, you try to have an opportunity cost/efficient transfer party and the next thing you know the Stalinists show up and start breaking everything.

Boy oh boy, you try to have an opportunity cost/efficient transfer party and the next thing you know the Jonah Goldberg Liberal Fascism (‘mustachioed smiley face’ TM) fanboys show up and start breaking everything.

Chris @121,

I want an end to all systems of control by the few over the many. Capitalism is perhaps the first such system in history that actually needs to spread to stay alive, so it’s worse than pretty much all the rest. Other forms of hierarchy could sustain themselves in fixed places, at fixed rates, without the need for endless growth and further consolidation. Capitalism is different. It has to grow or die, and it can’t grow without exploitation — of workers, consumers, the earth, other systems. It, unlike previous systems of control, can’t allow competition or stasis. It has to control markets and expand them. It has to extend its network everywhere. It has to use government and governments to centralize its power and spread that power. As mentioned above, it has to use centralized power to centralize power.

The socialism you mention, IMO, was never socialism, at least as I understand and use the term. I don’t advocate for any system that has ever been tried on any national scale to date. At least not in the so-called modern era. Real democracy, by whatever name, is the answer and it’s never been tried. Dispersal of power to everyone is the answer. Flattening out hierarchies to the greatest degree possible is the answer. Egalitarian structures for equal access, equal chances, equal shots at fulfilling our individual potentials . . . . that’s the answer. Capitalism prevents this. What might be called caesarian socialism — Camus used the term — isn’t the answer.

In short, valuing all human beings equally, valuing all work, never, ever allowing any cadre to set rules to advantage that cadre, etc. etc.

There is no poverty if all of us have an equal say, an equal voice, an equal place in the system we build and design for us, for all of us. Heretofor, all systems have been designed for the few, built by the many, supported by the many, so the few reap the vast majority of benefits. To me, it’s just common sense that the collective we shouldn’t accept this. The collective we should work for the collective we, never for a few.

Is it actually true that we can produce enough goods for everybody? Put aside the prodigious size of labour-intensive education and healthcare sectors and it’s still obvious that liberal democracies have steadily sucked at producing certain physical assets, like houses that people want to live in located in neighbourhoods that people want to live in. Insofar as local-level government or community processes have been involved, they have mostly attempted to foist housing problems on other localities.

Even in commodities that we’ve become pretty damned efficient at producing, people keep coming up with new requirements. Even if we can’t eat more chicken, we can demand that technological progress go toward better living standards for the chicken before it’s eaten. Even if we can’t purchase more refrigerators and washing machines, we can demand more options and more features and more just-in-time manufacturing (just so that we don’t pay for the bit where the fridge sits in a warehouse).

That aside, even in the 1980s the state capitalism of the late Soviet Union still sucked at producing shoes that people wanted to wear, despite producing prodigious amounts of shoes.

William Timberman,

“The idea of stewardship is attractive for its religious resonance on the one hand, and its echoes in the political idea of public service on the other, but I wonder if it could be broadened into something as fully fleshed out and politically relevant as the isms of the 20th century once seemed to be.”

On a small scale there was a legal case about a river in New Zealand brought by the Indigenous traditional owners, the Iwi. It took a long time for them to get standing (ie. a judge agreed to hear the case), but the judgement was to legally recognise the river as a person in its own right, and to look after its wellbeing and interests the court appointed the river two guardians – one chosen by the Iwi, and one chooses by the Crown.

That was in 2012, and I am not sure what the tangible outcomes have been over the last few years. A newspaper article indicated the Iwi were hoping to engage the wider river community in the stewardship of the river.

We have a slightly similar program about to start locally which is called Keepers of the Creek, this is where people take on duties to observe sections of the creeks and look after them, but this is not a legal outcome like the case of the river in New Zealand, and I am not sure if the Indigenous traditional owners will be asked to be involved or not.

Quick elaboration on above comments: I’m not sure how it is for others, but conversations like these force the donning of several different hats. There’s one for the way things are, and how to deal with that; there’s another for the way things really should be, at least in my view; there’s still another acknowledging the likely impossibility of radical changes; another that seeks to push things as far as possible within current boundaries, and so on. A realist’s hat, a cynic’s hat, a pragmatist’s hat, a dreamer’s hat, etc. etc. I sometimes mix them up without realizing it. It’s difficult sometimes, in this crazy world, to keep them straight.

But when all is said and done, I’m a diehard radical democrat and egalitarian and seriously think our current system is insane. I think we should strive as much as possible to make our current system fairer, on the way to replacing it altogether. Chris’s concept of “nice capitalism” isn’t what I want. It’s just slightly less destructive than neoliberalism, but not sustainable either. Kind of like the difference between a broken arm and an amputation. The former is preferable. But both are far from good, much less ideal.

Plume

Yes, I understand where you are coming from.

You want to end all political and economic exploitation and oppression and as you are aware you still have “wealth”.

That is fine and there is nothing you have said that I disagree with. However the GFC and fossil fuels means we have to tackle the accumulation of private capital even if this does not eliminate corruption, chauvinism and destruction of the environment, homelessness and mistreatment of refugees etc etc.

You are seeking a socially classless society, but you have to tackle the mechanism that creates economic classes first.

david @138,

No reason why you need major hierarchies to do any of the things you’re talking about. We’ve just been brainwashed into thinking we need massively steep hierarchies in place — by the people at the top of them, soaking up the wealth, telling us they’re essential, telling us we need them to be at the top.

In fact, even in our current capitalist system, ironically, local governments give us examples of how things can work with mild hierarchies in place. A typical local government has roughly a 4 to 1 pay ratio. Federal government is generally in the 5 to 1 range. And, yes, I know, pay isn’t even close to being everything. But this tells us that it is indeed possible, even in capitalist societies, to have relatively few tiers and still get things done.

A Fortune 100 company pays its CEO (on average) a thousand times the rank and file, or more. Compare that with the local government. Now extend this to titles, duties, flow charts, and throw in rotational leadership, and you can radically flatten those hierarchies that are such a huge part of our current capitalist structure. Push that down into the earliest stages of life, make education free and universal from cradle to grave, do the same for health care, public transportation, guarantee safe food supplies, water, etc. etc. . . . and you build up a society with hundreds of millions of people capable of manning the gears efficiently on their own. Self-management. Self-government. Self-provisioning as much as possible.

Democratically supported. Supported democratically.

We’ve moved from abolishing hierarchies and radical alteration of meanings in ways of living, to proposing existing local and federal US government as an exemplar in terms of “non-major” hierarchy, payscales, and ways of living.

This feels like Holbo’s two-step of terrific triviality, really.

I do not like your “etc. etc.”. I must ask you to elaborate. You want guaranteed water. I like guaranteed water, too, but that implies a hierarchical bureaucracy that manages water infrastructure and presumably pays the labour that actualizes this maintenance. Is local government hierarchy okay if it obtains repeated democratic mandates? The locally-elected legislature exercises supremacy over, e.g., the plumbers union local, right?

A quick perusal of the 20th century suggests that people often blame foreigners instead. Rich foreigners, perhaps, but the really important thing is that they’re foreign.

Proposing cash transfers in the context of a Sennian famine is a confusion of the causes of such a famine – the problem is not incentivizing last-mile infrastructure, the problem is a combination of state incapability (e.g., Japanese conquest of British Burma) and state legitimacy (e.g., Indian demands for local provincial sovereignty leading to rice-hoarding and therefore collapse of any willingness to sustain compensatory inter-regional transfers).

That is to say, cash transfers would be equally impossible if a hostile country annexed a good chunk of the tax base on one hand, and then amongst your remaining subordinate governments, the richer ones voted to give nothing to the poorer ones.

On the other hand, if you could the state capability to implement cash transfers and the state legitimacy to seize the cash from the localities being net transferred from, then you shouldn’t really have problems distributing rice either. The actual gain is a public choice one: preventing ancillary motives (e.g., price support for rice farmers) from capturing and then distorting policy or implementation. US international in-kind support is not chiefly dangerous because it undermines food producers in recipient nations – many areas of the world, including rich areas, are permanent food importers – it is chiefly dangerous because it is abruptly withdrawn when the US has a bad season. In-cash support would be less vulnerable to this volatility.

Plume

In history there are may types of classes. In ‘just today” there are just two types of classes.

1) Sociological – based on level of income irrespective of the source.

2) Economic – based on the source of income irrespective of the level.

Only 2 creates economic crisis, unemployment, austerity, catastrophe.

However history is still a factor. Today’s differences in source of income only exists because of historical violence when massive portions of the populations were dispossessed of their means of subsistence and original landowners were forced off their land by European musquets, cannons, sabres and and microbes.

Once expelled from their livelihoods they had no option but to sell their working capacity to whoever they could find and under whatever conditions they had to take. Many went into service, many went into the military, many went begging and thieving, many died and many ended up working for masters, initially in small machinery shops but subsequently in larger and larger shops as industry grew.

Developments were slightly different in transplanted settlements such as Australia and North America, but the result was the same.

This system was protected by a undemocratic State all through the 18th and 19th centuries against many attacks from Levellers, Diggers, Populists, Chartists, Utopians, Socialists and Trade unionists and Communists.

So, from this background, as new generations were born, new adults had no option but to also seek employment at whatever meagre amount they could get and again, the State ensured that this amount was low and political organisations of workers were kept in check.

This flow of humanity into low paid jobs producing goods and services they cannot afford to buy, allows others to receive income even as they sleep in their feather-beds.

So a small investor earning $30,000 from investments is in a different class to a factory worker who earns $40,000 making widgets for Walmart. The investor earning $30,000 will have completely different expectations for what the State does than the factory worker on $40,000.

There is more complexity particularly in OECD economies, but nonetheless this is the fundamental structure that must be changed. This class structure is the basis of modern capitalism and all the crisis tendencies that then arise. They are not resolved by “giving money to the poor”.

Chris Warren @149
“So a small investor earning $30,000 from investments is in a different class to a factory worker who earns $40,000 making widgets for Walmart. The investor earning $30,000 will have completely different expectations for what the State does than the factory worker on $40,000.

There is more complexity particularly in OECD economies, but nonetheless this is the fundamental structure that must be changed. This class structure is the basis of modern capitalism and all the crisis tendencies that then arise. They are not resolved by “giving money to the poor”.

I think this is poppycock in the modern world.
1. Being a peasant may be more autonomous than being a wage slave but it doesn’t represent relative empowerment.
2. Most people in richer countries earn some income from accumulated assets (even if it is income in the negative sense of not paying rent)
3. Very few earn income only from assets thoughout their life.
4. The modern middle class life is an asset intensive lifestyle – it is impossible for this lifestyle to exist without some accumulation.
5. Pensioners can either live off capital income and savings or provided for from general taxation – ultimately the effect is the same – a transfer from the working to non-workers. This may be a generations struggle but it is not in general a class struggle.

People worried about excessive inequality may be concerned that your view of the world may be becoming a more realistic one, but that doesn’t mean it is in general a useful way of looking at things.

poppycock

your 1) is irrelevant
your 2) is true but is consistent
your 3) does not change anything
your 4) is part of the complexity I mentioned
your 5) is a red herring. Retired workers are still workers and only receive the benefit they provided for their parents.

Plume: “And the richest 20% of the world consumes 85% of its resources. Obviously, that leaves 15% for 80% of the globe. No one can make a moral or rational case for this obscenity.”

I have mentioned this before, but low income earners in advanced economies are in the top 10-20% of income earners globally, because global income disparity is much greater than income disparity within advanced economies.

david: “Is it actually true we can produce enough goods for everybody?”

It depends what you mean by enough. There are too many goods being produced and used now which is responsible for our many environmental and sustainability problems. However people do not need so many goods as historical accounts of the past show us, they can just live simply. If everyone lives simply then that would help solve the environmental problems and the inequality problems too as since everyone can just live simply there wouldn’t be inequality.

A lecturer at uni just published a new book of collected essays on simple living:

“I am pleased to announce the publication of Samuel Alexander’s new book, Prosperous Descent: Crisis as Opportunity in an Age of Limits, which is the first book of his collected essays to be published this year.

The paperback of this book is available here:
http://clicks.aweber.com/y/ct/?l=FvRxk&m=3iCwPAMoVwid6Dr&b=hU24k2_m4a384Rwzx_Fg6w

For those who would prefer an electronic version, thefollowing link provides access to a pdf of the book on a ‘pay what you want’ basis. While the suggested price is $10, if you are unable to pay, then the book can be accessed for free.

http://clicks.aweber.com/y/ct/?l=FvRxk&m=3iCwPAMoVwid6Dr&b=UFkqFXNBo4xyjpKWRTpowg

Samuel Alexander declined several separate approaches by the premiere academic publisher, Routledge, because he wanted to reserve the right to give away his new book for free in a way that no conventional publish would allow. While we may not want to go into business with Sam, we can all be grateful for his generous activism.

Please share these links with your social networks. It is a small act that could send ripples through culture further than we might first think. Thanks for your support.”

Branko also nicely illustrates how very hard it is to build large social systems: money alone has not helped many of the countries on this list:

http://glineq.blogspot.com.au/2015/03/v-behaviorurldefaultvmlo.html

david 06.18.15 at 4:10 am @ 143:
‘… I do not like your “etc. etc.”. I must ask you to elaborate. …’

I have heard that Marx complained that people wanted him to write the menus of the restaurants of the post-revolutionary world.

js. 146
…I think Sen is utterly compelling that famines at least in the 20th century aren’t caused by food shortages in the traditional sense. So that raising “entitlements”, e.g. through cash transfers, would be very much to the point even there.

ok. That’s why I put in the qualification about political factors.

T. Worstall 148
on the absolute poverty numbers. What line you draw makes a huge difference.
yes.

@Lee Arnold: My impression is that innovation in that area (energy) is not being translated into reality as quickly as you suggest, but it’s not something I know that much about, so I’ll bow out of the argument on that.

Peter T @156,

Is it your belief that the purpose of an economic system is “to produce wealth”? If so, there’s the problem in a nutshell. The purpose of an economic system should be to fulfill the basic needs of 100% of society, first and foremost. From that point, if it moves in a kind of Maslow’s hierarchy path, so be it. But it’s Prime Directive should be to take care of all fundamental human needs. Until it does that, it has no business even discussing “wealth creation” for anyone.

Our system has it ass backward. It was created to make a few people very rich, and if the rest of the population manages to survive along the way, well, that’s just a nice side-benefit. The idea of “trickle down” is actually nothing new. It’s fundamental to the capitalist system from Day One. Our economic system doesn’t exist to make sure workers have what they need, and can provide for their families. It exists so that workers make their bosses rich. Everything else is less than an afterthought.

That, to me, is criminal.

From the Millennium Development Goals Report 2014 (UN Development Program) as summarized here:
http://www.undp.org/content/undp/en/home/mdgoverview/mdg_goals/mdg1/

“1.2 billion still live in extreme poverty [less than $1.25/day, (apparently) 2010 figures] even though poverty rates have been halved between 1990 and 2010 and the MDG target has been met.” The chart at the link breaks down, by region, the percentage living on less than $1.25/day in 1990 and 2010. There were fairly marked improvements in Southern Asia, S.E. Asia, and Latin America/Caribbean. In sub-Saharan Africa, however, the reduction was less impressive: from 56 percent to 48 percent.

p.s. to 165: As T.Worstall said, if one moved the extreme poverty ‘line’ to, say, $1.50/day or $2.00/day, the numbers deemed to be living in extreme poverty (i.e. below those figures) would go up somewhat.

engels @154
Thanks for the reply. That dissolves any ambiguity.

Peter T., Lee Arnold

As stated by Lee earlier, ever since agriculture humans had severe inequality. And we lived in a Malthusian world with growth in the hundredths of one percent for 100s of year until the industrial revolution. Life was short and brutal for most. An extraordinary share of the world’s population were slaves, serfs, and low castes. So how do you make the transition from Malthusian growth and almost no growth-enhancing technological change to a industrial society that produces 3% growth and allows the world’s population to increase from the hundreds of millions to 10 billion? Not a trivial problem. It was the possibility and actualization of this growth that lifted 1 billion Chinese and Indians out of severe and unrelenting poverty in our lifetimes (and it was export led growth to capitalist countries that turned the trick.)

Today in he U.S. we’re living through a concentration of income and wealth that mirrored the Guided Age and beyond with peak with inequality in 1929, at about the same level of inequality we have today. It took the depression and a world war to stop the trend last time after about 50 years of continuous concentration. The recent consensus among economists is that that level of concentration actually slows growth. The crisis of increasing inequality can last for a long time. We’re 30 years into this one, 20 years shorter than last time….

I don’t see society devolving into smaller governmental units as Peter T would like. We’re faced with the issue of dealing with nation states of of tens if not hundreds of millions of people. The right structure isn’t obvious although a bunch of the current problems are. There isn’t a successful model to turn towards. The most avid socialists on the thread seem to disavow the Soviet model as a bastardization of socialism or no socialism at all. I don’t see anyone putting China forward as a model and rightfully so. And were certainly in an age where autonomy is highly valued which limits our alternatives. So I’m all ears.

In terms of the OP, John is right on. We should get what we can right under the current political constraints especially if it can improve the lives of the poorest at no cost. People have to get over the fact that cash is the best way to help and that poor people should be trusted like everyone else to make decisions in their own best interests and that of their families. If that notion can’t get support on this thread after John explained it so well, it’s probably doomed for a while. (And I’m with him that education and healthcare/insurance do deserve special treatment.)

floopmeister @129 fuck off

Education is public good despite what our new overlords keep telling us. The markets for healthcare/insurance are particularly tricky in that participation needs to be mandated for the private markets to work (versus single payer) Hence the special treatment. I’m not so sure with housing. There have been a bunch of studies looking at public housing v. vouchers v cash as alternatives to help the poor. If anyone on the thread is familiar with those studies I’d be interested. A lot of the problem in housing seems to be zoning from what I recall. And there’s a long ugly history of racial discrimination in the private and public mortgage markets as well.

T @171
Re housing, I agree zoning (or put more generally planning issues) are a large part of the problem. The problem is that housing cost is dominated by land cost, and that in turn is dominated by externalities, infrastructure provision and NIMBY local government intervention.
My concern is that given supply blockages, just using cash subsidies on the demand ends up doing no good – land prices eat up any benefit. You need real supply side intervention (in whatever form it takes – maybe determined by local considerations).

* By real supply side I mean policies that actually increase the supply, not policies that make the rich richer.

@144 & @ 145 — There is the well-known syndrome wherein people with strong beliefs cling more strongly to those beliefs the more they are challenged, regardless of the validity of the evidence. Maybe it is universal; it is certainly widely observed (global warming, global not-warming, guns, gun control, creationism, Evolution, race, identity, etc.)

So it may be that belief in hierarchies of merit (whose dark underside is scarcity and penury), real or potential, is one of these quasi-religious beliefs. In that case, as david suggests, the reduction of scarcity will result in not only a political crisis (as those who rule through scarcity scurry about trying to preserve it) but a religious crisis as well, and foreigners, external or internal, may be used as scapegoats while new scarcities are created to alleviate the political and religious crises.

An alternative development would be to figure out what appetite is sated, or pain alleviated, by the belief and practice of meritorious hierarchy, and see if it might be replaced by something less injurious.

T,

I’m willing to concede the point about relative inequality overall. Though this can sometimes miss further breakdowns of key costs, as mentioned. We do know, however, the gap is widening. I think it was Oxfam that had to redo their own numbers in just a matter of a few months. I need to recheck this, but I think they went from the richest 85 people holding half the world’s wealth . . . to the richest 80 . . . in just months, while seeing the trend as getting worse.

In our recent “recovery,” pretty much 100% of the gains have gone to the richest 10%, with roughly 95% going to the richest 1%. This, as far as I know, is unprecedented. While the rich have always seen the lion’s share of gains, I can’t recall such an overwhelming concentration in any previous recovery before. Maybe JQ, Bruce or some other poster has contrary data.

Suffice it to say, the problem is getting worse, not better.

Plume @168

LFC, To me, a major problem with those stats is they leave out why those people are making just 1.25 a day in the first place.

These figures do not say that approx. 1 billion people are making less than $1.25/day. The figure says approx. 1 billion people are living on, or surviving on, less than $1.25/day. The figure, standing alone, does not say what the source of their income is — in some cases it might be wage labor, in other cases it might be begging on the streets, in other cases it might be transfer payments, in other cases it might be catching fish, eating some, and selling some occasionally in a market, in other cases it might be growing something and selling it occasionally, etc. etc.

To say that a statistic does not reveal what the causes of the statistic are is not a “problem” with the number. Numbers of this sort in general tend not to contain an explanation of themselves on their face (though there may be some exceptions). If I said “person XYZ earns 30,000 dollars a year,” and you came along and said “the problem with that number is that it doesn’t explain why or how XYZ earns 30K a year,” would that make sense as a critique of the number? Not really. That a number doesn’t contain an explanation is not a problem with the number, it just means the number may not tell one all of what one wants to know.

Which is a long-winded way of saying that while I generally share your dislike of exploitative multinationals, I’m not too happy about the way you have put the opening of your comment @168.

@Plume
Here’s a more substantive point: The fact is that extreme poverty (however defined in terms of a precise income cutoff) has various causes, and multinationals paying low wages are probably *not* the prime cause of poverty of this ‘extreme’ sort. Indeed, factory workers being paid low wages in poor countries often make more (or have more income) than than their counterparts who stay in villages and don’t move to cities. That’s one reason why people take these factory jobs, even though the pay is low and the conditions bad and sometimes unsafe. So I don’t think that among the main causes of extreme poverty is (to quote you) “a Multi-National corporation … paying a worker over there pennies on the dollar.” (Which is not to defend multinationals’ pay scales or other practices.)

p.s. Cities in poorer countries would not be bursting at the seams in terms of population (as many of them are) if people didn’t think that their economic opportunities, however constrained, were in many cases greater in the cities than in the countryside. This ‘deruralization’ in terms of population movements has been going on for quite a long time and is continuing. And corps. continue to site their garment factories, e.g., mainly in or around urban areas, at least afaik.

I agree the corps. should raise wages.

Or, to connect this directly to the post: if you wish to make the poor richer, bend the system such that there is more command of resources at the lower level: make union membership compulsory, use tariffs to keep high-wage production onshore, centralise industrial bargaining, direct government money to promote the industries judged most likely to provide good jobs…All cheerfully anti-market.

There was an article in Asia and the Pacific Policy Society: Policy Forum by Adrian Pisarski arguing affordable and social housing should be categorised as infrastructure rather than welfare:

“Affordable and social housing in Australia needs to be considered as infrastructure rather than welfare, and in many ways it doesn’t matter which level of government has responsibility.

What matters is that resources are maintained to grow and reform how we provide social housing within a broader portfolio of affordable housing. After all, social housing is an asset that belongs to taxpayers, which ideally would be put to work for the benefit of all citizens, especially our most vulnerable.

If housing is viewed as infrastructure then affordable housing is essential to a productive economy, just like the provision of roads, rail, airports, water and electricity. For too long Australia has dealt with housing as a private commodity or as a welfare provision, and it is high time we think about the housing system as a whole.

We must rethink the purpose of housing, and see it as an essential component of a healthy, productive and engaged population.”

http://www.policyforum.net/house-of-cards/

Peter T,

Thanks for the clarification.

We are in an impossible dilemma, due to the rapid, cancerous expansion of global capitalism. That dilemma takes many forms. But perhaps the worse form is this:

We have catastrophic, deadly levels of inequality, and we are running up against the absolute limits of the planet to sustain human life and much of nature — primarily because of destructive human activity connected with the endless growth of that global capitalism.

But in order to raise living standards for the poor and the lower middle (in our current system), we have to increase the very thing that is driving us up against those limits. In order to do the moral, ethical and right thing — radically reduce inequality — production and consumption levels will increase. Right now, the richest 20% consume 85% of all our resources. What happens when the “bottom” 80% starts to consume like the top?

The World Wildlife Fund, in their annual report, doesn’t tackle that issue (consuming like the rich) specifically. But it does talk about the impact of everyone on earth just living like the average American. If that were to happen, we’d need four entire earths to meet resources demands. Four. Even if we do nothing, we’ll need two entire planets by 2030.

To me, logically, the only answer is to radically downsize production and consumption, especially at the top, and lift up standards of living from the bottom up in such a way that it doesn’t add to the overall levels of new consumption and production.

In short, we’ve painted ourselves into a corner, and sticking with capitalism means we die there.

No, it’s not a very subtle point. The problem with the Right is it’s for capitalists; the problem with liberals is they’re for capitalism.

Capitalism is not a thing? I would think a collective practice of domination and exploitation might be an actual thing which would in turn affect other things. Or to be ontologically precise, could be construed as such a thing. No?

Engels,

That’s true.

I think a good analogy for that is:

Capitalism is like cigarettes. Conservatives want to smoke the unfiltered kind. Puts hair on your chest! Liberals want to put filters on them, thinking they can mitigate some of the damage.

We anticapitalists believe it makes a hell of a lot more sense to just get rid of the damn cigarettes altogether.

Capitalism versus socialism is a question of who runs the economy, which is an important question. But what really matters is what the people who run the economy do with that power: what policies are implemented. It’s entirely possible that if the economy was collectivized people would just implement the policies of capitalism in another name if they thought that was the right thing to do, and it’s entirely possible that in a private economy business owners could implement socialist-style policies if they thought that was the right thing to do, although market forces would certainly make that difficult to organize without some government regulation.

Perhaps not, but if you can’t expect people to implement reforms, why would you expect them to make communism happen? We are all part of the system, and the system can only make change happen when historical forces are aligned for them to happen. If people have the power to instate communism, then they also have the power to create radical social democratic reforms within capitalism.

UserGoogol: Capitalism versus socialism is a question of who runs the economy, which is an important question. But what really matters is what the people who run the economy do with that power. . . if you can’t expect people to implement reforms, why would you expect them to make communism happen? We are all part of the system, and the system can only make change happen when historical forces are aligned for them to happen.

Anarcissie: Capitalism is not a thing? I would think a collective practice of domination and exploitation might be an actual thing which would in turn affect other things. Or to be ontologically precise, could be construed as such a thing. No?

reason: Capitalism is neither the panacea it’s supporters claim or the monster its opponents claim. It is just a method of organisation. The organisation doesn’t set the goals or the constraints (nor does it discover science and technology).

I do think the multifarious institutions and conventions that form the political economy, qua social and political and economic system, are frequently experienced by participants as alien and puzzling.

What we do individually does seem to have knowable and certain consequences; our intentions ordinarily align with our self-conceptions, our habits follow a predictable channel; the existential improbabilities seldom merit consideration, that we may be risking life and all to cross a street for the trivial satisfaction of greeting a friend or consuming an overpriced, over-hyped cup of coffee isn’t something we consider, except as spectators on tragedy, in news or fiction.

Yet, we remain embedded within this complex social construction that does constrain us, does define our choices and options, defines what a street is, that we should have to cross it, and how we should cross it safely — that is, the conventions we should observe and teach to children — “look both ways, use the crosswalk” or, should we assume the role of driver upon the street, “pedestrians have the right-of-way” and “stop on red” — and provides the crosswalk and the street that we should travel it, and defines many of the objects we should pursue in travelling the street or crossing it, as occasions arise.

We are all of us relying on the kindness of strangers in the fog of complexity that is the modern world: hoping that the driver of the car upon the street will respect convention and leave us to cross the street in peace and in whole possession of life, limb and property. The figures in Hazlitt’s tale of a broken window, all hope the baker is baking healthful bread, the tailor sewing a durable suit, the glazier skillfully fitting quality glass. Whether they do, is, if we are not impossibly naïve, something we presume, with reservations, just as we know that mostly we can safely cross the street, but that someone, somewhere, every hour of every day, has not made it safely across.

That we have this now very, very complex “system” of social, political, economic cooperation, chock full of artifacts and conventions, is familiar to us in frustration, even if we are ignorant of the history of its construction. We are all of us following rules, and often in the breach, all our moral sense transferred to conforming to the instrument of the rule (which, as I say, we probably don’t really follow, so much as we temper our violation according to our individual lights) with only a vague and imperfect sense of consequences, consequences masked by chance and ignorance of the interpretation of experience and calculations that have gone into the contingent “design” of the rules. Crossing the street in a purely libertarian society, stripped of conventions backed by authority, would presumably be a game of dodge-em or chicken, followed in cases of lethal error by one or another player, by vendetta. But, crossing the street in our society, when marred by fatal error, may be dismissed in authority’s judgement as an unintended accident, and carry no moral opprobrium or little penalty, though the consequences are real and tragic; while a violation of a rule with no immediate consequence — driving under the influence or violating a speed limit where the risk taken has involved no consequential “accident” — can involve a fairly serious penalty. Institutional authority makes costs and their distribution synthetic and systemically counterfactual to “real” consequences; the nominal is not a simple mask for the real and “opportunity cost” becomes surreal.

A highly developed, complex political economy carries with its complexity this distinct dilemma: how to control and judge the performance of public authority, especially in attenuating risk and waste.

“The System”, it seems to me, is a kind of a synecdoche representing this problem of public authority and how the problems of exercising public authority should be thought thru. “Capitalism” can be a useful label for the historical emergence of a set of modern institutions and political expectations contradistinctive to the foregoing “feudalism”, but I think in this discussion, the problems of public authority made manifest in that historic emergence are our focus.

“Capitalism” becomes shorthand not for a “system” so much as for a kind of mythology rationalizing, and apologizing for, a particular style or scheme for governing the further evolution of the exercise of public authority — an ideology, if you like.

Adam Smith’s great Inquiry into the Wealth of Nations, founding the discipline of Political Economy, was explicitly a guide for thinking thru how public authority ought to be exercised amid the emergent modernity driven by the disparate striving of a commercial economy loosely coupled by money and developing a deepening division of labor. Marx’s great work was subtitled, A Critique of Political Economy, and he attacked the rationalization cum apologia further developed from Smith by Ricardo and others. Hazlitt is offering a fundamentalist variation on the rationalization cum apologia, known as neoclassical economics, itself a further (bastard?) descendant of Adam Smith’s thinking.

I was trained in neoclassical economics and I rail against it, rather self-consciously, “from the inside”, cheerleading for its aspiration to epistemic integrity and scorning its ambitions to be a civic religion for an oppressive oligarchy.

My complaint against neoclassical economics is that it blocks and retards productive political debate on how public authority ought to be exercised and governed, by propagating lies about a “market economy” that does not exist. The differences between the loosely-coupled money economy that we actually have and the mythical “market economy” conjured in the imaginations of the faithful center on problems of knowledge and risk, rules and insurance, and involve the institution and exercise of hierarchical authority, something that pervades our actual political economy and is largely ignored (or pigeon-holed where it can do no harm to predatory or parasitic interests) in the theory of our political economy, most especially as that theory is propagated as neoliberal ideology.

I think getting smarter as a society, as a polity, about how to exercise and govern public authority has the potential to meliorate the consequences of its collective stupidity regarding the exercise and governance of public authority. I cannot say I am optimistic; betting on stupid is usually safer, where human politics is concerned, but humans are a species of idiot savants, capable of amazing leaps in understanding. Even if the actual system is about to break, as it surely appears to be, due to its inadequate governance, and a great crash of population and civilization follows, maybe the breakdown will trigger a disenchantment of the polity and a consequent exchange of priests for competent technicians and mechanics.

I cannot say I find Plume’s case for a different religion and different priests “system” convincing. Facing uncertainty squarely in the absence of a well-thought-out and shared theory is more likely to be paralyzing than it is likely to be galvanizing. People never know enough, to not-make mistakes; the best you can hope for is that they understand well-enough the system they have inherited and are free enough from cant to learn from their mistakes, and to continue the endless work of social construction and repair. We can work a revolution in our thinking, but the best we are capable of, in relation to the actual system, is reform followed by reform, and the worst . . . well, stupid is not as limited in its potential as genius.

engels: That’s fair enough. Although I’m fairly optimistic about the possibility of change “within the system,” I was probably picking an unrealistic extreme examples for dramatic effect. I mean, I do think that in principle business owners could implement socialist-style policies if they really really wanted to, (and I purposefully added that bit about regulation to acknowledge how difficult it would be to actually accomplish that even if they did), but that’s rather unlikely, because well, they have a certain role in society and that role discourages them from toying with such ideas. Ideally you might be able to persuade business owners that such policies are just the right thing to do, but some level of government intervention is necessary, whether that be pure socialism or just social democracy.

Plume @196
????
“I never said capitalism increases living standards. I don’t believe it has, except for a very small portion of humanity. I think the evidence shows it’s radically lowered living standards for the many, in order to raise them for the few.”

I never said you did – I meant that SUPPORTERS of capitalism claim that it has.

But regards your second sentence – really? – compared to what exactly?