Commentary · Responses

All This From Gorbachev – The Silly Reign On Economists View

Economists View members are notoriously leftist, and rely on name calling and weak arguments with political bias on a regular basis. There are a number of squatting regulars and they outnumber who seem to avoid commenting on the blog. Every once in a while I feel a compelling need to intervene on what must be moral grounds.

In this posting, which started with an argument by Gorbachev against the western model of fairness, I try to point out a few little problems with someone’s platitudes. The first author states an idealized version of production increases in a division of labor, and the consequential stratification of society that remains constant, over the desires and objections of those people more interested in the application of familial ‘fairness’ than the more material necessity of difference that comes from our real differences in value to each other. The second author complains. The third author resorted to name calling, so removed his comment.

Should you encounter similar problems, my response to these two is the argument you can use.

Reality Bites said…
[As we] … develop technology, it becomes ever easier to produce material things, and yes, there is decreasing labor needed to supply humanity with the basic material good necessary for survival. However there is an unquenchable demand for other goods that cannot be produced by machinery (yet) and so can employ all the people who lose their jobs to a machine. Entertainment as in movies and TV stories along with music and books will always be in demand and no machine can formula a good plot. Machines also need instructions so that they can operate and take over work formerly done by humans. Programmers will always be needed as we need to “teach” machines what to do. Maintenance is health care for machines, unless we can come up with a network of machines that can take care of each other, humans will have to do this work.

In the end, I think the cost to produce anything tangible will fall to nearly zero. Ideally, something like the Star Trek energy to matter converter will materialize whatever we want. It may never get that easy or efficient, but producing THINGS will get cheaper for sure. So what’s left? Ideas and intangible goods. New designs, new fashion, status will always be important and since it’s zero sum, there always will be the need to show or convey status. Humanity will be devoted completely to the intangible, the creator of a popular cup design (or design of any object) will be paid well as his design will be in high demand.

What worries me is what about the people who are incapable of creating good intangible goods? People who can’t create a good story, compose good music, or put together an unique design, what about them? I think there always will be room for them because of social status. They could sell their status, or sell their ability to give someone else status. Like being part of an entourage, or even offering human services like a butler. There will be machines that can fulfill that task, but having a human do it instead could convey status and thus human services will still be demanded and those incapable of inventing or creating can still work and make a living. Unfortunately, there will probably much less opportunity for such people and virtually none to move ahead. Creative people will be honored and gain “wealth” in terms of social status. Since we’ll all have everything material that we’ll need or want, wealth will have to take a different form, again probably social status since that’s zero sum. Uncreative folks simply will not be able to get wealthy because they will not be able to supply what society values the most, which will be based on creativity and new ideas. My vision of the future as I think it will be.

ozajh said:
I can think of two problems with this vision, and there may be more.

1. “Uncreative folks” can join or form armed forces, at whatever level of formality required. At some point losers will accept a lose-lose scenario if it means some level of hurt to the winners.
2. There is currently zero correlation between status/power and true creativity, and the folks at the top will labour mightily to stay there.

CurtD59 Said:

Define “top”. Financial, entrepreneurial, technical, medical, artistic, or political? Are you saying that in the meritocratic fields the best do not reach the top? Or are you saying that you want to redefine best as something other than meritocratic as defined by the field of practice?

If you mean political, do you mean that politicians are not creative? And if so this means that you do not understand their product or service. It is the service that we demand from them. Politicians are in the business of selling the service of resolving conflicts between groups of different interests, when those different interests have differences in belief, status, class, and ambition, and each of whom wishes to use the violence of government, which is it’s only means of action, to serve one group or another. Compromises are not universally available.

Define “true creativity”. What you mean, I think, is to apply change to achieve your desired end, not that people, in a vast cacophony of differences, each try to improve their status and status of their group when those groups have different interests and priorities. Secondly, there is voluntary creativity, such as entrepreneurship and trade, and involuntary creativity, which is to use the state’s violence to forcibly interfere in that creative process to put to alternate ends. As well as cooperative creativity, which provides incentives to apply one’s efforts and investments to alternate ends.

You imply a threat of revolution. In all revolutions, wether violent, economic, or democratic, one power class simply replaces the next, establishes itself as a new power class that attempts to preserve it’s privilege and power. How can this be changed?

Of course, you also suggest that the proletariat will rise up against this lose lose scenario, but there are two problems with this fantasy: First, that middle class revolutions tend to increase general prosperity, but proletariate revolutions tend to produce total destruction of the economy, or over time, drive everyone into greater poverty. The second is that those with ‘something’ happily pay a chosen few to conquer and enslave the remainder, thus producing the opposite effect.

Capitalism can refer to either functions or biases, functions or ideologies.

Capitalism as a set of institutions, incentives and methods of calculation are with us to stay. The world is adopting them precisely because managed economies lack incentives, information schemes, and calculative tools for quickly utilizing people in an increasingly diverse mix of knowledge and labor, and where that diversity increases the value of people’s productive differences dramatically. Religions and ‘common beliefs’ are for slaves and farmers whose land is more marginally different than that of their human workers.

Capitalism as an ideology, or bias, of Laissez Faire that exports knowledge, resource, human and intellectual capital as a means of politically converting the rest of the world is dead. Not because of opinion, but because the need to convert the world has been soundly demonstrated and the institutions adopted.

But social democracy’s policies and devices which burden future generations, rely upon constant aggressive economic expansion, rely upon credit money to fuel consumption rather than productive innovation, and apply disincentive to savings, is just as dead, although not quite yet as in evidence.

The west takes too much credit for it’s political programs, and too little for the gift of profiting from the filling of a continent with risk takers. There is no more magic to the western miracle than there is to the california miracle, and the two philosophies were advantageous, if temporary.

Capitalism as a set of institutions works in increasing populations because it is a means of managing and rewarding people where no human or set of humans can understand the vast complexity in time and productivity. Capitalism as a bias is simply a foolish failure to understand that capitalism isn’t a bias or philosophy but a set of mechanical tools that assist us in working together in increasing numbers.

The question is: why don’t more governments create positive incentives (credit and profit sharing) for private sector profit applied to public ends rather than negative incentives (class warfare and taxes) that make private activities less rewarding and pit the private sector against the state?

Humans exist in diverse beliefs, classes, abilities. All prosperity comes from risk taking by people with specialized knowledge and who can coordinate capital from numbers of others toward a common end. The state can become ‘creative’ by investing (not spending, but investing) in those things that private capital cannot coordinate: infrastructure.

But if class war continues it will not be the leftist panacea, or even the european socialist model that prevails. It cannot be. An aging minority population has no means of preserving its productive status. And if the loss of that status appeals to you, in fulfillment of your sense of unfairness – a biological but not rational bias -, then you might consider visiting the third world. Because you will soon be living there.

We need to alter government so that each class serves the other, while recognizing that we will always have status and classes. It turns out it’s possible. And it’s not even that hard.

While we can redistribute our excesses, what we can redistribute is only what it is possible to do, without the inter-temporal loss of incentives, and without such interference in calculation of the use of property (objects one has understanding of possible utilities) that the groups (state’s) productivity provides it less purchasing power than competitive groups.

One difference between group preferences is in the capitalization or consumption of behavioral discipline (saving or learning), and therefore some desire to consume cultural discipline and offload responsibility onto future generations. This has turned out to be very common under democracy.

Another issue is status, which we tend to think of as economic, but it is largely a function of mating ritual, and as such will be eternally with us.

So we will have capitalism, in the sense that we will have calculative institutions and status differences. We will have redistribution, because it is simply easier to get along if we do so. But we will not have agreement on that as long as government can profit and increase in size by profiting from class warfare. The only way to fix this is not by ideology but by increasing the calculability and record of causality in the finance, tax and credit system that will make political deceptions, errors, and philosophical differences, either commensurable or impossible. And secondly by using the private sector for public good rather than the private sector trying to keep the state at bay.

India is doing the best at this today I think.

Entrepreneurs will just as happily serve common interests as interests that are opportunistic, if they are able to profit from it.