Talk for Dangerous Ideas Southampton on Economic reform

Friday, 3 October 2014 at 16:43
Earlier this week, the Dangerous Ideas Southampton group held an event to explore the concept of money and various projects in place around the country aiming either to make it work in a more socially progressive way, or do without it altogether. Graham Woodruff, the technical directory of the Bristol Pound and Frank van Lerven, a researcher from Positive Money spoke on how local currencies and non-debt created currency, respectively, helps significantly in that progressive aim.

I was delighted to also be one of the speakers. I wanted to share some ideas on the inherent trait of markets to concentrate power, and start some conversations around that and its implications, together with briefly presenting some measures besides monetary reform to make markets less collectively damaging while opening space for broad social development. Here is my talk:

Here is the transcript:

"Rather than ask what is the problem with our money system, I'll start by asking what is the problem with our economic system and how might our progressive values be more truly and fruitfully reflected.

Broadly speaking what do I mean by progressive values? I mean valuing equality of opportunity, and the view that it's in everyone's interests to collaborate with and support each other, in our communities and in society as a whole, and that by doing that, quality of life, scientific and cultural development and sustainability all improve.

Regarding our economic system, my premise is that determining access to and control of resources through a market and the exchange of property is at the heart of the problems we face, because a market economy inherently dis-empowers the large majority and obstructs free collaboration.

Of course there are people who claim the issue is that markets are corrupted by government connections and big subsidies, and just need to be set free for a better society. On the other hand there are those who claim there is insufficient regulation to make markets work for everyone rather than just the few, that if excesses were better controlled and markets were perhaps a bit less globalized then markets as they are, are a reasonable way to organize an economy.

I'd like to briefly challenge both those views and offer some ways of steering us towards a better system.

If markets are set completely 'free' then the state is reduced to its core function of protecting private property, and the process of cumulative competitive advantage takes over. Essentially, small differences in wealth and circumstances get amplified by exchanging property for profit. If you have control over a bit more resources than most of the people you trade with you'll tend to be in a slightly stronger bargaining position. You can better take advantage of economies of scale, you can afford to take more risk for better potential returns, but you also have a bit more flexibility to pick when, how and with whom you trade to reduce your risk. Conversely if you have less control of resources you'll be in a weaker bargaining position because you have less flexibility, choice and scale. Left unchecked the disparity compounds and this 'free market', for-profit trading process inherently ends with a wealthy few effectively controlling everyone else, economically, politically and socially.

But what about keeping the economy (the management of resources) organized around markets, but with regulation focused on protecting its growth and continuation in a more sustainable way, perhaps as they were before the 1980's and the financial 'big bang'?

While this kind or protective regulation of markets necessitates some restraint and provision of social safety nets (inc benefits, labour rights and minimum wages, together with tighter control of what can be traded), it does nothing to alter the inherent growth of large economic and social inequality (from which social classes form). It's for that reason of large power disparity, that the kinds of corruption between business and government that we see are inevitable. In other words if we want rid of the corruption and injustice we must massively reduce the inequality of economic and social means, that a market economy brings.

So then what kinds of reforms or regulations could help bring the most robust progressive change and reduce the destructive power concentration of a market economy?

Besides monetary reform and reducing debt burden and the exploitation that comes from that, which is extremely important, here are two more reforms that are gathering popular support and which connect with values that everyone can relate to, as well as integrating in a progressive way with the existing market paradigm.

First up, Unconditional Basic Income, or UBI. This takes the progressive value of caring for each other for the benefit of all to a logical conclusion and makes a dignified existence unconditional on accepting market determined wage labour. Everyone, regardless, of status and wealth, receives the same basic amount, which allows a healthy standard of living. In this way we would have our many intrinsic motivations for learning, making, contributing and collaborating freed from the narrow and corrosive filter of what can be used to concentrate wealth and so justify the existence of a paid job. Nevertheless the market and wage labour would still exist, but the scope for exploitation and wholesale wastage of human potential would be substantially reduced.

Funding for UBI can be sourced through streamlining existing social safety net schemes, combined with monetary reform and potentially tax reform. The question of how certain jobs get done can be answered simply through a) market mechanisms which find the price at which people are willing to do them, and b) there being more scope for automation since menial wage labour is not depended on for a livelihood. UBI has been tested very successfully in many parts of the world.

The second innovation I'd like to introduce is tax reform. Currently our tax system is a complete birds nest, riddled with loop holes and large bureaucratic overhead. With income tax bands and inheritance tax it also sets up ideological conflicts which obstruct progressive social development. A far simpler, more effective and just form of tax, which Thomas Piketty has recently helped to gather support for is a flat rate* net financial worth tax. In other words all private property, from savings, to land, to materials and other resources would be taxed, per annum at a flat rate, for everyone. By linking in with insurance provision it would be much harder to evade, and since everyone pays the same rate, much harder to complain about. By making the tax revenue redistributed for the large part evenly (making up all or part of a UBI), inequality is effectively reduced. Also by making ownership of property only worthwhile where it is being put to productive use, money and land hoarding would be largely diminished and markets could find a more socially tenable place in our society – until we're ready to move beyond them."

* Actually it seems Piketty proposes a variable rather than flat rate. I currently think that providing distribution of most of the revenue was evenly spread, a flat rate would be more achievable and perfectly sufficient.


The Work That Work Does

Monday, 5 May 2014 at 20:45
When discussing social, economic and political reform, the subject of work, or having work often comes up. It is a contentious subject, with much of the disagreement being about 'jobs', how to create them, how the employed can and should organize, and the relationship between the employed and unemployed. Around these issues are various perspectives or narratives that support the mainstream 'left' and 'right' political positions.

The mainstream political position

Starting with what those mainstream left and right positions have in common:
  • Jobs are good for people and the economy.
  • Exchanging work for money (or economic opportunity) is in principle a fair and effective mechanism for stimulating both essential and beneficial economic activity.
  • Because there is no better way, jobs are necessary.
Accompanying those shared beliefs are naturally some common rhetoric, or aims, such how important it is in a recession to 'get people back to work' and for the government and public/private sector to work together to create more jobs, or how the solution to unemployment or low wages is for capital to be invested in reinvigorating our industrial base, services or the technology sector. Offered in support of job creation are observations of how those out of work often suffer a reduction in self-esteem, social engagement and general health.

There is also a shared belief in and revering of a strong 'work ethic', which is seen as the root of a productive citizen and a productive economy. This connects with the common understanding that if we all pull together and coordinate our efforts then everyone is better off, but if some are lazy this makes it harder for the rest. (It is an understanding that would have been perfectly clear from our long history as nomadic hunter gatherers, where everyone doing their bit and looking after each other was the best way to survive and prosper.)

Where these two corners of the mainstream political ring differ on the subject of employment (and unemployment) is in their emphasis on public and private control of the enabling resources and thus opportunities for economic participation, and what kind of social safety net should be in place.

While the gap is narrowing, traditionally the 'left' favour more public (government) control over resources and thus employment, as well as a slightly more substantial social safety net for the unemployed. Similarly the 'right' favour more private control of resources and thus employment, and a more meagre social safety net. From this, then, the left appear to be more collectivist, while the right individualist. However, such a division is not so clear cut.

Both mainstream left and right are a product and advocate of hierarchical social order through the concept of private property and markets, including the wage labour market. Hence the larger public or state sector involvement of the left is subservient to those power and opportunity concentrating institutions (as well as the power concentration of political class). Similarly the right's common championing of freedom for all is undermined by the very same institutions, which inherently act to distribute freedom in an extremely uneven way.

In their own ways, the mainstream left and right political approaches are both authoritarian, since they both operate in and propagate established social hierarchies with strong concentrations of power. At the same time they function as a double act, with their back and forth serving to maintain conditions for the majority within a liveable band and so as not to undermine the established social order. For this reason, for all the improvements in living conditions that the left establishment have at times supported, unless thinking is taken beyond jobs and labour rights, people will remain subject to the same opportunity and power concentrating mechanisms of markets and the endless struggle to maintain living conditions in the face of it.

Between work and jobs

Coming back to jobs, as an exchange of work for money (wage labour) they are simply one component of the market economy paradigm. But work also serves a more immediate and corporeal purpose, of getting stuff that needs doing done.

This mixing of the two different functions or meanings of 'work' – wage labour, and getting useful stuff done – is how the elements of genuine productivity, utility and human development get mixed up with serving the capital eating machine.

A common defence of having work be stimulated by the institutionally created need to 'earn', is that it increases productivity and ultimately collective benefit from increased work. Of course in a world where the same economic and political institutions tirelessly concentrate the profits of work and the benefits of capital and where there has long been sufficient methods and technology to ensure everyone's basic needs are well taken care of without the drudgery or squalor that is currently prevalent, such a defence makes little real sense.

The incentives to do work need no helping hand from a social elite to move people to productive action. The perpetual human needs and drives for sustenance, meaning, understanding, connection, contribution and creativity push us to action all on their own. The extent to which a social elite stimulate and direct work, and thus serve to concentrate power and cement their position, is the extent to which the utility of work is shifted away from collective benefit to the perceived benefit of that elite (within the bounds of dependency of a parasitic relationship).

Another defence of the market economy paradigm is that money or the flow of capital is simply a liquid mediator for what is generally useful and desired, thus helping the most beneficial work to get done. The idea is that some needs or desires create demand, which stimulates supply, enabled by the flow of capital. But this is very far from an accurate picture, due to the element of profit, power and opportunity accumulation inherent in markets. Those with increasing power and opportunity increasingly get to judge what is useful and desired, and how best to exploit resources (including wage labour), while the rest are increasingly left in a position of having to get with that program. There is also a precariously positioned middle band who are kept on the rat race through status competition and the appeal of perpetually updated creature comforts. Those with less wealth can taste a little of that lifestyle through taking on more debt - another major component in the wealth concentrating machine.

With the more fundamental idea of what work is, exerting effort to achieve some aim and meet some needs, it's easy to understand the social and economic benefits of it, completely beside the current market economy paradigm. If not used and challenged regularly the mind and body atrophy, becoming weak and sick. Work, in the general sense is the primary means through which the mind and body are engaged. Work is also one of the primary ways through which social bonds and meaningful relationships are formed. Since fundamentally work is about doing something useful, it's hardly surprising that doing it has a big impact on our sense of being useful and making a contribution.

The gatekeepers of work and the impediment to synergistic collaboration

In this general sense, work is crucial to human survival and health and carries with it its own intrinsic motivators. The question then is how are people best enabled to work, in this general sense of the word? The obvious answer is through economic and social opportunity. Now, in a society hinged on wage labour, employers and capital holders are gatekeepers for that economic and social opportunity. It's well known that opportunity to start and resource a new business is far from equally distributed and for most people making ends meet necessarily means finding an employer willing to employ them. There's also the fact that many new or old businesses completely depend on having others in a position of needing employment and thus is a weak bargaining position for their wages.

Since a basic property of markets is to concentrate economic (and thus most other kinds of) power and opportunity, it, together with the most wealthy employers act as a choke on the ability of most people to do useful work, tightening or loosening according to whether some particular work or skill can be of profit to the employer. From this perspective, 'wealth gatekeepers' is a more accurate term than 'wealth creators' for those holding the choke. Untold opportunities for innovation, cultural development and joyful living are lost through the institutions of wage labour and a market economy. If we wanted to find those not only selfishly profiting from but significantly increasing the hard graft of others, in other words parasites, it should be clear where to look.

But naturally, identifying individuals in that elite position and blaming them for the ills of society is almost as irrational and counter-productive as blaming the poor for not working hard enough. Those at the top may often do their best to stay there, at the expense of others, and have much to answer for from a moral perspective, but they are also a product of the paradigm they are so successful in. If those particular people were not there, there is no shortage of others that would and are in a position to take their place in a heartbeat. And at any level of the pyramid there are many that hold the same faith, ready and willing to perpetuate its pathological culture.

Due to the concentration of power and opportunity, the effect of the wage labour, market economy paradigm is sadly an epic failure to harness the synergies of equipoised collaboration (our needs are equally important), and a shoehorning of society and economic activity into a threat-focused selfish (my needs are more important than yours, and we're in competition) mode of operation. Of course this is the aggregate outcome, it is not to say that everyone feels exploited by and miserable at work, because there are clearly many exceptions and we find ways of looking on the bright side. It is also not to say that some employers cannot be progressively minded, or that as an employee you cannot sometimes work to empower yourself and others - necessarily, many jobs are also useful work. It is simply a recognition of the general, systemically resulting case of our wage labour and market economy paradigm, which concentrates power and opportunity, a behaviour which our top heavy social and economic hierarchy completely depends on for its existence.

A better way

To more fully realize the synergistic potential of collaboration from enabling people's ability to work, the dominant emphasis would need to shift from accumulating profit to more evenly distributing economic opportunity and allocating surplus to sustainable, collective and shared gain, where it will yield the greatest multiplicative power, by enhancing everyone's ability and opportunity to do work. The process for determining that allocation of surplus would be in the same spirit as for enabling work – non-authoritarian, collaborative and equipoised.

There are various examples of such progressive decision making processes succeeding where they have been trialled, often in hostile environments, over the last century. Online there are countless examples of successfully allocating resources in large projects in the open source world, using far more fluid and collective decision making processes than typical in the corporate or government sectors. Offline, perhaps the biggest example of more egalitarian economic and political organization is the Spanish social revolution in Aragón and Catalonia, during the civil war of 1936-39.

More recently the concept of participatory democracy (distinct from 'representative' democracy) has taken root in many countries, such as Brazil, where in Porto Alagre over 50,000 people participated in forming the city budget between 1989-1999. The World Bank reported sustained high public engagement throughout the period, large improvements in public services and reduced inequality from the experiment, which has since been extended in other cities around the world. Notable in this experiment, as remarked by former British diplomat Carne Ross, was the drop in divisive partisan politics, and the rise in a more collaborative and inclusive attitude, as people were less boxed into party identification or political class.

In the UK the Transition Towns movement is spearheading the way to a more collaboratively and sustainably managed economy. The Occupy movement which began in 2011, for all the frustrations some people had with it, has opened up the conversation about such socially progressive decision making and economics, and spurred many people to go on and begin to put those things into practice in their communities. This is clearly not something that is beyond human will or ability to do at scale.

The divisiveness of wage labour and its supporting rhetoric

From both mainstream left and right, the rhetoric around wage labour often stirs tensions and conflicts between the most pressured parts of society, whether majorities or minorities. The virtue of having a strong work ethic, for instance, is one common source of divide and conquer rhetoric. Here wanting to apply yourself to useful work is conflated with being willing to compete for available wage labour and accept the going rate, regardless of how liveable it is. In this way those struggling economically are set against themselves, since those unwilling or reluctant to enter into the wealth concentrating market economy paradigm are labelled as having a bad work ethic, or being a drain on others.

From this divisive and narrow perspective, the victims of cultural and economic poverty traps are blamed for their plight by those either within or on the margins of it, not grasping the larger institutional reasons for their and others hardship. To fuel this self-defeating venting, the tabloids gleefully provide an ongoing parade of extreme outlier cases of where the social safety net leads to tragic excess or abuse, with the bilious invitation to grind your teach over how hard you're working for so little, while they have more without the toil.

This basic approach to leveraging the common respect for work ethic for the purposes of concentrating power or protecting privilege can be spun in numerous ways. For example, there is a narrative that suggests if you're concerned about added competition for your job from immigration, then you could be a xenophobe, your work ethic is lacking and you aught to just get more competitive. A related narrative is commonly found inciting tensions between native and immigrant workers: "You take a modest wage but you work hard to support your family, and now these foreign workers are coming to undercut you and take your jobs. Your miseries are their doing." This is the 'look over there!' approach, since of course both native and immigrant are in a similar boat, doing the best they can, and the downward pressure on wages is simply a result of market forces. In all cases, the problem of economic hardship ultimately has less to do with work ethic than with the institutionally created pressure to compete for wage labour.

The ascent of innovation and technology is another area of conflict with wage labour. With wage labour as the gatekeeper of economic opportunity, the more technology advances, the harder it becomes to create jobs that couldn't be better or more profitably automated. You don't have to be a Luddite to be concerned about being displaced, and your livelihood taken by a computer or robot. In this way technology becomes a tool for further power concentration, as much or more than one to better and more broadly empower people. But this is not a conflict between technology and work, because work always remains. It is purely an issue with the wage labour, market economy paradigm and the choke it holds on opportunity for participation and engagement.

Our relationship with and protection of our environment is a particularly tragic and catastrophic area of conflict with wage labour (but not work). Since our market economy, wage labour paradigm creates an insatiable hunger for extensive growth, and at least a political and social pressure for new jobs, we end up destroying our home to feed our cultural disease. How often do we hear the sickly refrain "Yes, it's sad about the [forest, park, river, mountain, wildlife and pollution, loss of community resource, your children and grandchildren's future] but this development will create jobs. People need jobs. It will be good for the economy. Vote for jobs!"

War, while not only a huge profit maker (perhaps the biggest) and provider of jobs, also serves to smother awareness of and action towards social reform (although the period immediately following a war can be more conducive to reform). In tandem with economic austerity measures, having an enemy or some desperate situation that needs coping with, keeps you in a state of short-term, threat-focused thinking, in which conflict, competition (for possessions, rather than between ideas) and just getting by, become all that matter. Again, this scenario is a fertile source of divide and conquer rhetoric: "How can you undermine our unity in facing this threat? While you're complaining and talking about vain hopes, the rest are working hard to keep us all secure and fed. The time for talk has passed. Your ideas are dangerous, and you'll keep quiet and get back to work if you know what's good for you." and such like. This is not a conflict with work, which through ongoing and open communication can better adapt and find the best solutions to problems, but with threat-focused social hierarchy which plugs into the idea of wage labour.


To conclude, the socially progressive stance is not to create jobs, but to create, or more broadly share, opportunity to do work. The distinction is crucial, because while a strong work ethic is surely a fine thing, to make that subject to employment is to severely constrain its individual and collective utility and to perpetuate the essentially master, servant relationship of the present social order.

The work that 'work' does, then, is to make work harder, and less rewarding for those doing it. Our independence, personal responsibly and liberty are all better taken care of without a gatekeeper of opportunity. By returning to the core meaning of work, we are liberated to ask, for a given aim, not how can we create some job(s) or private profit opportunity, but what is the best work to meet it? How can we work in the most effective, healthy, respectful and enjoyable way?

As a progressive alternative to the earlier list of uniting mainstream political assertions, the following is suggested:
  • It is work, distinct from jobs, or wage labour, that is good for people and the economy.
  • Exchanging work for money (or economic opportunity) is a primary mechanism for ensuring ongoing exploitation and wasted human potential, through the power concentrating property of a market economy.
  • Useful work provides its own intrinsic motivators, and without the leach of market based profit incentive, the collective and individual utility of work and cooperation can increase.
  • Because there are better ways, jobs will become unnecessary as those ways are explored and implemented.

Will The Real Capitalism Please Stand Up

Monday, 14 April 2014 at 15:23
What some would simply call 'Capitalism', others would call crony-capitalism, state-sponsored capitalism, 'free market' capitalism, or 'really existing capitalism'. Where does this contention come from?

Capitalism is an approach to economics which applies the concepts of private ownership, and private profit through trade to all forms of economic activity which they can be readily applied to. Central characteristics of Capitalism include capital accumulation, private control of the means of production and wage labour. Central to the conceptual basis of Capitalism are the ideas of a competitive market and 'free trade'.

It is those ideas of competitive markets and free trade that are usually the cause of disagreement over what counts as 'Capitalism'. Take for instance the comment:

“How unequally economic opportunity is distributed and how much corporate and government corruption is found in society today, and what great waste and suffering that results in! That's Capitalism for you.”

Some would respond to that with “Well, the problem isn't really with Capitalism, it's the government interfering with and over-regulating the market and getting in bed with big business. So what we have now is crony-capitalism. What we need is more free and competitive markets.”

Others would respond in practically the opposite way “Well the problem is with unchecked free markets and insufficient regulation. What we need is more responsible state management of capital and markets, to ensure more competition and opportunity, and thus a more equitable form of Capitalism.”

To resolve the contradiction it is helpful to be clearer on what a market is and the conditions necessary to sustain one on a large scale. A market is a space which facilitates and aggregates trading activity – the exchange of goods, services and assets. Implicit in this is a transfer of control or ownership between parties in a trade; markets imply private property and the exchange of it.

Once such a space for the exchange of private property is established, an inherent characteristic of markets begins to manifest; the concentration of power and private wealth. This happens through cumulative competitive advantage, where small differences in economic wealth become amplified over multiple trades, leading to ever greater inequality. (While this is more acutely and quickly felt with economic retraction or non-expansion, it remains true even with economic growth.)

Because of this wealth concentrating characteristic, markets present an increasingly unhappy situation for the majority of people influenced by them. Thus for markets to persist they must be protected (from said majority) and regulated to keep general conditions within manageable bounds. Without such protection of property and regulation, markets would simply break down, hence these are necessary conditions for markets to persist. Since a market is fundamental to Capitalism, regulation of markets and protection of property 'rights' are also necessary conditions of Capitalism. It is generally a government that performs that market maintaining role. Indeed some institution with the same sort of powers as government, whatever name it took, would need to exist to perform this essential oversight and protection of markets.

It is easier to maintain a market, and thus Capitalism, in a growing economy, because the growth offsets to a degree, or at least delays the biting point of market led wealth concentration. This is one of the reasons why there is such mainstream focus on keeping the economy growing. How bound to that task a government is, is a simple measure of how aligned they are with Capitalism. In fact, in an economy without extensive growth, Capitalism along with the market would soon fall apart, tending to revert to some form of feudalism from which the modern form evolved, along with more extreme violence.

Following the above through, the very idea of 'free trade' is problematic. At face value it simply means people being at liberty to trade what they want, without coercion. However, as wealth concentrates through cumulative competitive advantage, economic opportunity and thus freedom to trade and bargain shrinks for the majority (as they find themselves between a rock and a hard place) in line with that wealth concentration. Hence, 'free trade' is made a contradiction in terms by fundamental market operations. No imagined 'revolutionary' reset of wealth distribution will change that – so long as the market-economy paradigm remains intact, the same conditions will re-emerge.

This exploration of markets and 'free trade' also explains how markets naturally become less competitive over time (without extra-market disruption or oversight). As power concentrates there is less leverage and opportunity, under standard market operations, for others to compete for that enlarging concentration of economic wealth. Beyond this basic market characteristic, taking the profit incentive (or addiction), it makes perfect sense for concentrated power to lobby for legislation and subsidies which protect and enhance that power and thus the established social order. Where individual financial profit and capital accumulation are the dominant objectives, it makes sense to seek 'free trade' for the self, but much less sense to seek it for others.

Consequently it is simply a logical move to reduce resistance to further profit and power, for government and business to become largely the same thing, at a certain level. Any system predicated on the accumulation of profit, markets and private ownership – that is Capitalism – will arrive at the same logical conclusion, that for concentrated wealth to continue and grow, it must become intertwined with (or otherwise act as) government, either overtly through a State controlled economy, or through networks of lobbyists, friends in high places and preferential treatment of them. Similarly, the use of military force to secure and protect resources, or market friendly conditions, foreign or domestic, can be rationalized as simply taking necessary and reasonable steps to protect business interests, which happily coincide with 'national interests'.

In such an environment vigorous competition may still take place. But for the most part, even where the public/private entwining has not advanced much, this competition happens within economic strata – a few actors at the top heavy distribution and most in the long thin tail – and in the context of as much inequality as the bulk of individuals making up the market can bare. (The possibility to substantially increase individual economic wealth is always there, but is increasingly marginal, in line with inequality of opportunity.) So, even though a sense of dog-eat-dog competition for scraps may be pervasive, in terms of how large concentrations of economic power get used, there is little competition, due to the high concentration of wealth into few hands.

Competition is often mentioned in relation to innovation; finding better and cheaper ways to do and make things to help meet people's needs and desires. However, the kind of environment most conducive to innovation, where people have time and space to develop ideas, explore and experiment with possibilities, and where information is shared freely, is precisely the kind of environment that a market controlled economy tramples on, replacing it with high stress, short-term, threat-focused thinking, and competition for possessions more than between ideas. Therefore, when evaluating innovation, competition and Capitalism together it is important to distinguish the sort of competition that Capitalism engenders.

While the degree and type of competition and how 'free' a market is, may be idealogical facets or aims of a proponent of Capitalism, they are not defining features of Capitalism, there is and can be no particular non-arbitrary qualifying measurement. The extent or lack of economic competition and 'free trade' in a society is simply a measure of how far a market controlled economy has been made to run on, without some intervention to rebalance economic opportunity. To say 'true Capitalism' exists only in some specific and early stage of market economy development is to make Capitalism an arbitrary, perpetually lost fantasy of an aspiration, immune to criticism. If Capitalism is taken as something that can exist, then it must be defined at least by concepts that can evidently be in dominant operation in society - in this case, markets and private property.

In summary, where there is an economy that is predominantly controlled by market forces (exchange and concentration of property), and where private property is protected by some form of government, Capitalism is in effect – however many or few people there are enjoying the benefits of 'free trade'. This is true whatever system of social safety net is in place, so long as that welfare arrangement remains a support system for continued market operation, and does not undermine the narratives (relating to wage labour, wealth creation and the profit incentive) which justify and aid its continuation. It is also true even if the form of government attempts to have a more anarchic than hierarchical flavour.

It follows then that what may pass as Socialism, or socialist policy can itself be a crucial support system for Capitalism, serving to sustain social conditions at a level which allow a market-economy to continue. Social struggle itself can thus serve the same master (even where it also leads to better living conditions) if it operates within its supporting narratives, such 'a fair day's pay for a fair day's labour' (accepting the authority of markets and that people aught to earn to live), and in general where that struggle validates or reinforces social hierarchies.

In conclusion, providing those conditions of a largely market controlled economy are met, there is no crony-capitalism, there is just Capitalism. And corporate capitalism, state controlled capitalism, 'social democratic market-economies', neoliberalism, or somewhat more laissez faire capitalism, are all variations on what is fundamentally the same thing – private profit seeking and capital accumulation through markets.

Disputes over the level of market regulation and property protection (and even what counts as private property), or the tax and welfare system, simply determine the rapacity or stage of power accumulation, and do not fundamentally make a different system, providing an economy (and thus society) remains predominantly controlled by market operations. Having said that, regulation, and social and economic legislation which springs from a different paradigm - one outside of but not immediately contradictory to a market economy - does have the potential to strengthen the support and build the conditions for radical and progressive social change, to a place beyond Capitalism. Two examples of such reforms are:
* Transitioning the tax system away from trade or income tax to an almost wholly property tax based one.
* Introducing an unconditional basic income to more widely spread economic opportunity and thus economic and social participation.

More on markets and progressive economic policies:

Money as Debt
Positive Money
Equality Trust
Basic Income

Markets and the Non-Aggression Principle

Thursday, 2 January 2014 at 22:43

Markets rule the world. But whether they are the most equitable,efficient and sustainable way to manage economic activity is questioned by a growing number of people.

A market is a space or system for facilitating the exchange of goods and services (trade), and in various forms they (or collectively 'the market') control and influence most economic activity around the world.

One of the moral and utilitarian defences of market based economies offered by those who favour them is known as the Non-Aggression Principle, which it is suggested is compatible with and helpful for markets. NAP in essence is the idea that the initiation of force against any individual (or by extension their legitimate property) except in self-defence, is an affront to freedom and reason. To initiate aggression or violence, in trade or any other conduct, would undermine morality and the prospect of society and progress. NAP is grounded variously in:
  • Nature and instinct: there is generally a natural inclination to peaceful relations where possible, since it opens opportunities for synergy, and there is often a high cost or risk to violence. That is, NAP is generally in the self-interest of individuals.
  • Utilitarianism: The best results or highest utility is almost always reached by avoiding the initiation of force or aggression, or following NAP.
  • Objectivism: A school of thought developed by a figurehead for free-market supporters and neoliberalism, Ayn Rand, places the ability to reason as our means of survival and progress and recognizes violence as antithetical to reason. NAP derives from the primacy of reason.
Historically NAP can be found or trivially derived from the thinking of many ancient cultures. It is, for instance, a direct consequence of the Golden Rule (in its negative form): 'Do not do to others what you would not have them do to you'.

While there are some tricky scenarios for NAP, it is a fairly well supported concept across the political spectrum. Free-market advocates like it most where it explicitly incorporates a concept of private property, and because it speaks to the universal values of freedom, security and peace. It appears to create a moral foundation for the accumulation of private wealth, and the right of that not being interfered with by anyone else. You, and everyone else, can be free, pursue your self-interest in the form of amassing private property, and be morally sound at the same time. What's not to like?

The problem

Problems form around the concept of private property and how as it grows and concentrates it impinges on the freedom of others. If economic activity is largely marketized and commodified, so that most resources are privately owned, then those with less property have less freedom, and in proportion to their lack of wealth specifically tend to be at the mercy of those with more property.

Friedrick Heyak one of the most influential thinkers relating to neoliberalism wrote in "The Road to Serfdom":

"Economic control is not merely control of a sector of human life which can be separated from the rest; it is the control of the means for all our ends."

Milton Freidman, former economic adviser to the US government and a pioneer of neoliberalism and free-market ideology said:

"The problem in this world is to avoid concentration of power - we must have a dispersal of power."

A fundamental value of neoliberals (the modern mainstream face of Capitalism) or supporters of free markets is that of not being controlled by anyone else, and, through NAP, to extend that state of being to everyone else. But, at the same time, the nature of markets,through the mechanisms of private property and competition, is to concentrate wealth and power, by cumulative competitive advantage.The rich get richer and the poor get poorer.

Any country that has any anti-monopoly regulations, or a welfare system, or any kind of tax and publicly funded spending recognizes that power concentrating nature of markets and private property. Anyone who has played the game of Monopoly knows it.

The concentration of power and the resulting loss of freedom can be understood as structural violence, committed through the economic system by those with more wealth, against those with less. This structural or systemic violence need not be conscious or premeditated, and may be rationalized in many ways, with various well felt intentions and be largely culturally inculcated. However, in terms of often great physical and mental harm, and stunting of opportunity and freedom, this violence is being done through the hierarchy of the economic social order, in which the most rich benefit the most in terms of financial gain from it. It is a collective participation in violence, which is one reason why it can be hard to identify our personal involvement with it.

To be clear, the suggestion is not 'rich people are bad'. It is that almost anyone, well intentioned as they may be, were they to become rich relative to those around them would through their choices, rationalizations of privilege and participatory actions, end up contributing to the structural violence of a market controlled economy – such as is championed by neoliberalism and Capitalism in general. Still without neglecting the cultural influence it is also true that having and being in a position of superior socioeconomic class, leads to an increase in unethical and antisocial behaviour, as the research of Paul Piff et al shows. A key reason for this is that the cues and opportunities that stimulate and maintain the development of empathy between people, break down and thin out as social class arises – which is clearly bad news for NAP.

Thus there is a fundamental contradiction in the basis of neoliberalism or market led economics that notionally support NAP:

The means of resource allocation and cooperation that is supposed to honour and imbibe freedom, is the means by which freedom (and peace and security) is taken away.

This internal contradiction between the nature of markets and the universal value of individual freedom is disputed by neoliberals free-market supporters in various ways, for instance:
  • If a trade is agreed freely without force and according to the law then there is no violence, there are simply two or more parties exercising their free (as in uncoerced) will. This is the meaning of free-trade.
  • If all regulation is removed with the state serving only to protect property rights the market will regulate itself. The market is efficient.
  • Wages will settle to a point that sustains the market and thus the people participating in it, and people are free to compete.
The 'if trade is willing, there is no violence' argument works fine, so long as there is a freedom from asymmetric dependence between those trading. However, there very often is such a dependence. Wherever you need something more from who you're trading with, than they need something from you, and circumstances present little alternative, you are less free than they are, regardless whether you agree to the trade. The more desperate a situation someone is in, the more potential there is to exploit them in trade.There are an estimated 30 million slaves in the world today. Perhaps most of them at some point signed an agreement for a loan or contract of work. Does that make their exploitation non-violent? The violence if not always direct, is systemic and stems from large imbalances of economic power and opportunity. The fact that something is done willingly does not address any inherent injustice or violence in the situation.

The idea of efficient markets usually refers to the price of a stock very quickly taking into account all information. If one company announces an offer for another company, the stock price reacts accordingly. If there is a drought, the price of grain goes up, and so on. The result is the price of any product or service quickly tends to the value of what those in a position to trade attribute to it, given all new information. This is taken as a reflection of fairness, because the price is settled independently by demand and supply. However, this line of reasoning does not account for the nature of markets to concentrate economic power, resulting in large numbers of people often not being in a position to trade and increasingly being excluded from economic activity. Also the more that economic power concentrates the less independent prices become,as that power develops the ability to control supply and thus scarcity and price. In terms of development and use of human potential, markets are very far from efficient, because of how they concentrate economic opportunity and narrow the focus on making money, where the allocation of wealth depends to a large extent on luck.

Wages will indeed be controlled by supply and demand, and it would not make sense for a market to drive down wages to a point where sufficient consumption to maintain the economy and distribution of wealth could not continue. Obviously what makes sense and what actually happens aren't always the same thing, and the mechanism of debt allows a way for wages to fall further while, at least for a time, consumption is maintained. In any case, however equal the opportunity to compete is made (and in practice the deck is inevitably very stacked against the majority), the power concentrating nature of markets remains, and thus too the structural violence of market based economics.

Of course many other defences of market led economics are offered, but these move away from claiming compatibility or alignment with NAP. They are often of the form 'these results are just nature at work, and markets are simply an expression of that', or take a more compromising position of 'it is dreadful, but look at the benefits' while seeking to claim human progress as a result of the development of market economics, with greed being revered as the prime motivator of innovation and cooperation. While such positions are similarly conflicted, or only half the tale, we'll stick with discussing NAP issues here.

Making freedom and security the essential values

If ultimately freedom and security are the most important values for supporters of market based economics, especially for neoliberals and anarcho-capitalists, and NAP is seen as a result of self-interest and reason and the basis of morality for which there is a natural inclination, then surely NAP would be realized even more with the free organization of people without the necessity or imposition of trade, or the enforcement of extended property rights arising from a market model? If NAP is so firmly grounded in self-interest, reason, morality and natural inclination then surely the degree of intervention, control and protection of concentrated wealth by a state (itself a concentration of power) is a measure of how much the market has gone against NAP and failed society?

Anarcho-capitalists (the extreme position of 'markets know best')believe that the protection of private property can be provided as a service by the market itself, and that all economic activity is best and most fairly managed by the market, without any presence of a state. But the power concentrating, and thus freedom taking nature of markets is not recognized. In a sense this shouldn't be a problem for anarcho-capitalists, because without any controlling authority people could manage resources as they like, with trade or using a sharing or gift based paradigm. Even the concept of trade and property would be free to morph into something more inclusive and collectively orientated. That is, anarchism is fundamentally not constrained to any particular predefined economic model.

Neoliberals on the other hand, believe that markets present the best and most efficient way of managing an economy and spurring progress, but that the conditions to maintain markets must been forced. They believe that a strong state, independent from the market is necessary to protect property, enforce law and act in those few cases where markets may fail, with the absolute minimum of regulation, for instance to break up monopoly or to lessen information asymmetry (some economic actors being considerably better informed than others) that leads to further concentration of power.

Neoliberalism is interesting in that it recognizes more of the nature of markets to concentrate power, and how that is counter to NAP, but maintains that there is no better alternative. While aligning itself in principle with NAP it is generally averse to the state enacting socially orientated policy that would impinge market activity, seeing that restriction of freedom as the greater transgression of NAP than the structural violence of a market based economy. Of course, as a direct result of having a market controlled economy, neoliberalism (or any other political system that tries) is unable to keep the state and government independent from the market and those with the most power in it, or to effectively break up monopolies (or monopolistic groups and cartels) or address information asymmetry or other market failures.The systemic result is imperialism and mass exploitation as opportunities for it arise.

As a direct consequence of having markets dominate economic activity, everything else which depends on the economy, that is everything, including the government, the state and its policies,ends up being largely controlled by markets. This leads to the conclusion that the state itself, including its various redistributive policies in the form of taxes, regulations and welfare, is a convenient institution for the concentrated powers of markets. Thus where the state moves to interact with 'the market' and the wider sphere of public life, it does so with the overriding rule of protecting the overall concentration of economic power it shares a mutual dependence with. In other words, the state, as it exists in a neoliberal political system (such as in the UK and US), does exactly the opposite of what Milton Friedman, the pioneer of neoliberalism, says must be done to address the 'the problem of the world' - the concentration of power.

To avoid facing and truly tackling these conflicts of reason at the heart of pursing both individual and collective freedom together with a market controlled economy, it is necessary to restrict how we think and our access to information. Avoidance of joined-up thinking is the main one, achieved through culture, eduction and media and the natural aversion to cognitive dissonance. But there are various common responses to help avoid stepping outside the neoliberal paradigm, such as the catch-all pragmatism of 'yes there are problems, and it is terrible, but there is just no better alternative', with grim totalitarian rule wearing a 'socialism' t-shirt, or a return to direct feudalism being the alternatives in mind. The tragedy is that from within the threat-focused mindset that leads to and comes from adopting market and private property based economics, those really are the alternatives and neoliberalism about the best that can be hoped for. The overlap of all these approaches can be appreciated to some extent from the filmed meeting of Nixon with Khrushchev in Moscow, 1959. What is called for is a paradigm shift.

In summary, due to the very nature of markets to concentrate power and economic opportunity, and thus impinge on the basic liberty and well-being of an increasing number of people, markets, as a primary way of managing an economy, are not compatible with NAP. Similarly,where markets have a controlling stake in an economy, the state cannot realistically be independent, and thus under such circumstances nor is it compatible with NAP. Even where the institution of the state is dominant, and it makes some attempt at more equitable distribution of economic opportunity, to whatever extent power remains systemically concentrated we can expect NAP to be violated, through the effects of social hierarchy or class.

All of this is not to say markets and the state must be abandoned tomorrow. They've been with us for at least ten millenia and are rather ingrained into our culture. There are, however, some policy tools that integrate with the current political and economic institutions which would facilitate a broader distribution of economic opportunity and thus progressive social change, even utilizing some aspects of markets. These include a shift away from taxing profits more towards taxing property, and implementing an unconditional basic income, funded from the tax base [a]. These specific methods stand out because they provide a clear and gradual path, through what level they are implemented at, towards eventual freedom from markets and concentrated power.

The logical conclusions of a market dominated economy [b,c], and how a paradigm shift might begin [d], are discussed in the links below.


Non-Aggression Principle
Milton Freidman:  from 1:18
The Golden Rule
30 million slaves today
Nixon, Khrushchev meeting
Piff, Paul K. et al. 2012 "Higher social class predictsincreased unethical behavior" PNAS 2012 109 (11) 4086-4091

Further discussion


* Illustration by Escher, 'Relativity' 1953

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