I was interviewed by Nigel Warburton for Five Books about Rousseau, [so here are my thoughts](http://fivebooks.com/interview/christopher-bertram-jean-jacques-rousseau/), as edited from audio of our conversation, and so reasonably spontaneous. Of course, the real starting-point should be the man himself.
From the category archives:
Books
My discussion of intellectual property inevitably raised questions about my argument that property rights are not natural rights, but are socially constructed and, in the modern world, exist only as part of the legal structures created and enforced by states. The “moral rights” of artists over their creative works has been raised as a suggested counterexample. In fact, this example reinforces my original argument. Two cases arise, both of interest:
In the United States, the moral rights of artists were effectively unrecognised by law until accession to the Berne Convention 1989, and remain extremely limited. The result is that, once an artist has sold the rights to her work, she has no control over its subsequent use, unless she can make a case separate from moral rights, for example that use in an advertisement misrepresents the artist as endorsing the product. So, for example, it’s perfectly legal to use London Calling to advertise Jaguars, or to clip Fortunate Son to fit a jingoistic ad for jeans. Moral rights are widely recognised, and may generate social opprobrium for those who violate them (as with other misuses of property rights) but they have no legal standing.
In France and other European countries, artists have inalienable moral rights over their work, to prevent misuse of the work by the initial or later purchasers. This is not a property right, but a constraint on property rights. To the extent that moral rights are recognised after the fact, they constitute a taking from the purchaser of the property right. To the extent that they are recognised when artists sell rights to their work, they (like any restriction on alienation of property) represent a constraint on the property rights of the artist. Melanie Safka recognised this, in an ironic fashion, in her classic Look what they’ve done to my song, Mawhen she wrote
It’ll be all right ma, maybe it’ll be okay
Well, if the people are buying tears
I’ll be rich someday, ma
Coming back to the general issue, property rights and (perceived/socially accepted) natural rights have features that mean they tend to coincide in some ways and conflict in others. Most obviously, they are both associated with the general feeling of rightful possession, so that a system of property rights is more stable when it coincides with natural rights. On the other hand, natural rights are mostly perceived as inalienable and indivisible, while property in its ideal form is infinitely transferable and divisible. Moral rights for artists are a classical example of the clash between inalienability and unfettered property rights but the same clash arises at every point in the production process.
Another draft extract from my book-in-progress, Economics in Two Lessons. It’s the last part of the section on “predistribution”, dealing with Intellectual Property. Next up, “redistribution” through taxation and public expenditure.
As always, encouragement is welcome, constructive criticism even more so.
A bit out of order, this is another draft extract from my book-in-progress, Economics in Two Lessons. It’s part of the chapter on income distribution, meant to follow the section on unions, and precede the Australia-US data point and the discussion of corporate profits. After this, I plan to conclude the “predistribution” part of the chapter with a discussion of intellectual “property”, then move on to “redistribution” through taxation and public expenditure.
As always, encouragement is welcome, constructive criticism even more so.
Over the fold, another extract from my book-in-progress, Economics in Two Lessons. Encouraging comments appreciated, constructive criticism even more so.
Predistribution and profits
As we’ve seen in previous sections, the social constructions of property rights and institutions surrounding employment makes a big difference to the determination of wages and working conditions. These social constructions affect ‘predistribution’, the distribution of income and wealth that arises before the effects of taxes and public expenditure are taken into account.
Predistribution is equally relevant to the other big source of personal income: profit derived from private businesses and corporations. Without legal structures designed specifically to protect businesses from the risks of failure, profits would be far less secure, and the difficulty of establishing and running a business much greater. Corporate profits are not a natural outcome of a market society, but the product of specific structures of property rights introduced to promote corporate enterprise.
The risks of running a business in the 18th century, and well into the 19th, were substantial and personal. There was no such thing as bankruptcy: a business failure meant debtors prison, where debtors could be held until they had worked off their debt via labor or secured outside funds to pay the balance.
After a brief and disastrous experiment in the early years of the 18th century (the South Sea Bubble), joint stock companies were also viewed with grave suspicion.
The prevailing view was Quoted in John Poynder, Literary Extracts (1844), vol. 1, p. 268. [1]
Corporations have neither bodies to be punished, nor souls to be condemned; they therefore do as they like.
This is often misquoted as
“Did you ever expect a corporation to have a conscience, when it has no soul to be damned, and no body to be kicked?
Adam Smith was similarly scathing, though with more of a focus on the principal-agent problem
The directors of such [joint-stock] companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own…. Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company.
Exceptions were made only for specially authorised quasi-governmental ventures like the East India Company, focused on foreign trade. In general, limited liability companies were not permitted in Britain or most other countries. The partners in a business were jointly liable for all its debts.
These same rules applied in Britain’s American colonies and continued to prevail in the United States until the middle of the 19th century. The introduction of personal bankruptcy laws put an end to debtors prison, greatly reducing the risks of running a business. The creation of the limited liability company was an even more radical change.
These changes faced vigorous resistance from advocates of the free market. David Moss, in When All Else Fails, his brilliant history of government as the ultimate risk manager, describes how the advocates of unlimited personal responsibility for debt were overwhelmed by the needs of business in an industrial economy. The introduction of bankruptcy and limited liability laws took much of the risk out of starting and operating a business.
By contrast, in Economics in One Lesson, Hazlitt doesn’t mention limited liability or personal bankruptcy and seems to assume (like most defenders of the market) that these are a natural feature of market societies. More theoretically inclined propertarians have continued to debate the legitimacy of bankruptcy and limited liability laws, without reaching a conclusion.
This debate over whether bankruptcy and corporation laws are consistent with freedom of contract is really beside the point. The distribution of income and wealth is radically changed both by the existence of these institutions and by the details of their design. In particular, the massive accumulations of personal wealth made possible by capital gains from share ownership would simply not exist. Perhaps there would be comparable accumulations of wealth derived in some other way, but the owners of that wealth would be different people.
A crucial policy question, therefore, is whether current laws and policies relating to corporate bankruptcy and limited liability have promoted the growth of inequality and contributed to the weak and crisis-ridden economy that has characterised the 20th 21st century. The combination of these factors has produced absolute stagnation or decline in living standards for much of the US population and relative decline for all but the top few per cent.
There can be little doubt that this is the case. As recently as the 1970s, a corporate bankruptcy was the last resort for insolvent companies, typically leading to the liquidation of the company in question. As well as being a financial disaster, and a source of shame for all those involved. For this reason, nearly all major companies sought to maintain an investment-grade credit rating, indicating a judgement by ratings agencies that bankruptcy was, at most, a fairly remote possibility.
Since that time, bankruptcy has become a routine financial operation, used to avoid inconvenient liabilities like pension obligations to workers and the costs of cleaning up mine sites, among many others. The crucial innovation was “Chapter 11”, introduced in the Bankruptcy Reform Act of 1978.
The intended effect of Chapter 11 was that companies could reorganise themselves while going through bankruptcy, and re-emerge as going concerns. The (presumably) unintended effect was that corporate managers ceased to be scared of bankruptcy. This was reflected in the spectacular growth of the market for ‘junk bonds’, that is, securities with a high rate of interest reflecting a substantial probability of default. Once the preserve of fly-by-night operations, junk bonds (more politely called ‘high-yield’) became a standard source of finance even for companies in the S&P 500.
At the same time, legislative changes and the growth of global capital markets greatly enhanced the benefits of corporate structures, while eliminating many of the associated costs and limitations. At the bottom end of the scale, the ‘close corporation’ with only a handful of shareholders, became the standard method of organising a small business. This process was aided by a long-series of pro-corporate legislative changes and court decisions (notably in Delaware, which has long led the way in this process, and where vast numbers of US companies are incorporated). At the top end, the rise of global financial markets from the 1970s onwards allowed the creation of corporate structures of vast complexity, headquartered in tax havens and organised to resist scrutiny of any kind.
At the behest of these corporations, governments have negotiated agreements supposedly designed to ensure that corporate profits are not taxed twice in different jurisdictions. In reality, using a combination of complex corporate structures and governments (notably including those of Ireland and Luxembourg) eager to facilitate tax avoidance in return for a small slice of the proceeds, the effect has been to ensure that most global corporate profits are not taxed even once in the countries where they are earned.
What can be done to redress the balance that has been tipped so blatantly in favor of corporations. The obvious starting point is transparency. Havens of corporate secrecy, from Caribbean islands to US states like Delaware must be made to reveal he true ownership of corporations, in the same way that tax havens like Switzerland, used mostly by wealthy individuals, have been forced to disclose the ownership of previously secret accounts.
The use of complex corporate structures to avoid tax is a much more difficult problem to tackle. Some measures are being taken to attack what is called “Base Erosion and Profit Shifting’, but past experience suggests that slow-moving processes of this kind will at best keep pace with the development of new forms of avoidance and evasion. It’s necessary to re-examine the whole structure of global taxation agreements. Instead of focusing on the need to avoid taxing corporate profits twice, the central objective should be to ensure that they are taxed at least once, in the place where they are actually generated.
More generally, though, the idea that corporations are a natural part of the economic order, with all the human rights of individuals, and none of the obligations needs to be challenged. Limited liability corporations are creations of public policy, useful to the extent that they promote the efficient use of capital but dangerous to the extent that they facilitate gross inequalities of income and opportunity.
I just added an item to my collection of graphical curiosities: a 1948 pamphlet, published by The International Book Store in San Francisco, “The Communist Manifesto In Pictures”.
You can get the PDF version for free. I’m interested in it mostly as a data point in the history of American graphic design. The International Book Store seems to have had some graphical flair:
I don’t own that one. I don’t imagine the contents – apparently republished from Soviet Russia Today – are as fun as the cover.
A lovely vignette at the Chronicle by Christopher Phelps about a late night encounter with a bookstore. Which reminded me that somewhere in my office I have a first edition of Spartacus, signed by the author, that I should give to Phelps next time I see him (don’t tell him).
Ada Palmer’s Too Like the Lightning is finally out (Powells, Amazon), so that you can read it too (I’ve been impatiently waiting to share it with everyone I know). As Jo Walton says here, it’s wonderful. It does something that I think is genuinely new (or at least, if other people have pulled it off, I haven’t read them). Palmer is a historian (here’s an interview I did with her on her book about Lucretius’ reception in the Renaissance) and approaches science fiction in a novel way. Her 25th century draws on the ideas of Enlightenment humanism, but in the same ways that, say, America draws on the writers of the Declaration of Independence and the Federalist Papers. Which is to say that it takes the bits that seem useful, reinterprets them or misinterprets them as new circumstances dictate, and grafts them onto what is already there, throwing away the rest. Palmer does this quite thoroughly and comprehensively – her imagined society is both thrown together in the way that real societies are, and clinker-built (in the sense that she has evidently really thought through how this would be related to that and what it might mean). [click to continue…]
I’m currently working on a section of my Economics in Two Lessons book dealing with minimum wages in the context of predistribution policies, so I thought I would compare Australia with the US, where the idea of a $15/hour minimum wage is currently a hot topic. In Australia there are two kinds of minimum wage. The PPP exchange rate is estimated at $A$1.30 = $US, which is fairly close to the market exchange rate at present, so I’ll give both $A and estimated $US equivalents
The standard minimum wage for workers aged 21 or over is $A17.29 hour ($US13.30) applying to employees under standard award conditions. These include four weeks annual leave, sick leave, employer contributions to pension plans and so on.
More comparable to the situation of US minimum wage workers are “casual” workers, employed on an hourly basis. Casual workers get a loading of at least 25 per cent, bringing the wage up to at least $A21.60 an hour ($US16.60), to compensate for the absence of leave entitlements. In addition, they have entitlements including:
* “Penalty” rates for weekend and night work (usually a 50 per cent loading, 100 per cent on Sundays)
* For workers employed on a regular basis, protection against unfair dismissal.
The policy question is: what impact have these high minimum wages had on employment and unemployment. That’s too big a question to answer comprehensively, but we can look at the obvious data points: the official unemployment rates (5.7 for Oz, 5.5 per cent US) and the 15-64 employment population ratios (72 per cent for Oz, 67 per cent US). So, it certainly doesn’t look as if the Australian labor market has been crippled by minimum wages.
Note: I’ll respond in advance to the widespread misconception that Australia is a special case due to mineral resources. Mining accounts for about 2 per cent of employment in Australia, and (because most mines are owned by multinationals) its contribution to Australian national income is also so, probably around 5 per cent.
* Workers aged 18 get about 70 per cent of the adult minimum, equivalent to around $US11.50 for casuals. But the great majority of US minimum wage workers (about 80 per cent) are 20+.
I was a late reader (late enough to cause considerable worry, I now understand). But when I did read, it was all I wanted to do. I read every comic I could get my hands on (I stayed with the Beano till I was 13 or so — my dad let me get a weekly delivery of Thunder [1] (which quickly merged with Lion, which quickly merged with Valiant, which…) on condition that I also get Look and Learn (which I devoured as enthusiastically as I did Thunder, so it was a smart move). Jennings and William were the cordon bleu of children’s writing, obviously, and later on I got to Geoffrey Trease, Henry Treece, John Rowe Townsend, Penelope Lively, Jill Paton Walsh, Peter Dickinson; and all of those were, rightly, approved of by all adults. But I read everything Enid Blyton wrote. Including the Malory Towers books which, I vaguely realized, must have been aimed at girls (being books about girls in a girls boarding school), but just didn’t care. They were so embedded in my head that when, in my teens (early, not late, I’m glad to say), I graduated from the Beano to Marvel comics, I wondered (and still do) whether Peter Parker’s girlfriend was named after the awful (but pitiable) Gwendolyn Lacey. What was so appealing about them? Nakul Krishna has a wonderful, contemplative and adoring, but sharp analysis, at Aeon, which explains it all. Read it there, but feel free to discuss it here (I am really curious how many of our readers read the Malory Towers books in childhood).
[1] Link is to a site with almost every single Adam Eterno strip. Mergers of comics were frequent, but Lion and Thunder was a rare case in which the junior, second billed, comic, provided most of the stories to the new title — several survived into Valiant and Lion, even after Lion’s name was off the masthead. Most notably, the brilliant Adam Eterno.
Over the fold, an extract from my book-in-very slow-progress, Economics in Two Lessons. I’m getting closer to a complete draft, and I plan, Real Soon Now, to post the material so far in a more accessible form. But for the moment, I’ll toss up an extract which is, I hope, largely self-sufficient. Encouragement is welcome, constructive criticism even more so.
I’m reading Russell Muirhead, The Promise of Party In A Polarized Age: [click to continue…]
We acquired this fridge magnet at some point.
Nice use of Papyrus. Nice combination of Papyrus with whatever that faux-handwriting script font is.
Fits with Henry’s link to an incongruous appropriation of Beckett.
Suppose we wanted to make a collection of cheerful thoughts from depressed writers. You can’t spell ‘unhappiness’ without the happiness! What else might be included?
We’ve already had Janice Rogers Brown on Samuel Beckett as feel-good self-help guru. Now (from a bit of Molloy I was reading last night), here’s Beckett on the quantified self movement, half a century before it was a movement.
Update: I hadn’t realized that today was the 100th anniversary of Beckett’s birth.
First things first: thanks to everyone who dug deep (or shallow) to purchase (or just freely download) a copy of Reason and Persuasion, allowing us to enjoy evanescent ecstasies of semi-upward-mobility into the 5-digit sales range on Amazon for a period of some days now. Now please keep that Amazon aspidistra flying for the next several years running and we’ll have ourselves a standard textbook! (Sigh. I know. No hope. If I want sales like that, I have to update Facebook more than once every 4 years. And be on Twitter. Shudder.)
As I was saying: it is also fun to watch the (no doubt CT-fueled) evolution of the ‘customers who viewed this item also viewed’ Amazon scrollbar, associating our Plato book with all manner of comics and science fiction. I hope the present post shall further enrich that eclectic mix.
Back in December I posted about how I would like a history of semi-popular philosophy of mind, to complement the history of science fiction. Many people left genuinely useful, interesting comments, for which I am sincerely grateful. Today I would like to strike out along a semi-parallel line. Science fiction film, with its special effects, has a strong phenotypic and genotypic relation to stage magic. Georges Méliès was a stage magician. But sf is older than film; stage magic, too. We might enhance our sense of the modern origins of the former by coordinating with the modern history of the latter. I just read a good little book, Conjuring Science: A History of Scientific Entertainment and Stage Magic in Modern France, by Sofia Lachappelle, that doesn’t make the sf connection, but makes it easy to make. (It’s an overpriced good little book, I’m sorry to say. Oh, academic publishing. But perhaps you, like me, enjoy library privileges somewhere.)
It contains some nice sentences, certainly. For example: “While Robertson was presenting his phantasmagoria in an abandoned convent and professors of amusing physics were performing their wonders, scientific and technological innovations were impacting the world of the theater at large.” (118)
As I was saying: history of modern stage magic. I’ll quote passages, and comment, and supplement with relevant images. [click to continue…]