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A Comparison of Socioeconomic and Institutional Methods of Explaining the Rise of Capitalist Democracy in England (Moore vs. North & Weingast)

July 18th, 2010 Comments off

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The arguments of Barrington Moore’s Social Origins of Dictatorship and Democracy and of North and Weingast’s Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England on the genesis of capitalist democracy in England mostly supplement each other by examining different variables and processes that relate to England’s evolution. Both works stipulate that England’s capitalist democracy entailed social elements that sought a free economy and did so by political means. Calling said elements the “commercial class,” Moore explains how this class emerged, came to power, and saw its policies implemented. North and Weingast, however, explain how political institutions evolved to allow a free market economy and how the commercial class’ interests translated into a fair, balanced, and checked English government. In a sense, Moore explains how initial conditions established the commercial impulse that would eventually drive free market democracy and how the impulse came to manifest itself politically and legally. North and Weingast, arguing on the precondition of the existence of the commercial class, explain how the evolution of political institutions, driven by economic motives, created a balanced, accountable government that led to a politically and economically free society. Thus the two arguments overlap in how the commercial impulse arrived at the doors of government, but supplement each other as one explains the cause chiefly using socioeconomic variables as the other explains the effects chiefly using institutional variables.

In attempts to explain the rise of capitalism in England, Moore uses socioeconomic conditions, the rise of the commercial impulse and availability of resources, whereas North and Weingast use institutional changes in government, the regularization of public finance. Thus the two arguments don’t necessarily contradict each other; rather, they examine different possible causes of the same phenomenon. Moore argues that market influences, the possibility of enclosing land, difficulty in finding cheap commodities, and the devolution of the connection between landownership and legal power all led to the emergence of the commercial impulse. The booming land, wool, and grain markets along with high food prices and a labor shortage, Moore argues, developed a need to make profit in English agrarian society. Moreover, the high price of resources and widespread availability markets inspired a once agrarian class of people to produce for economic gains rather than for sustenance. In addition, because “the land and tenurial relations based on it had largely ceased to be the cement binding together lord and man,” (Moore, 5) land thereafter came to be viewed as a source of revenue rather than one of political or legal power. Moore points to the burgeoning land market and rise of enclosures as evidence reaffirming his claim that public perception concerning land ownership shifted to one of capitalism. Furthermore, he asserts that the commercial impulse along with the aforementioned variables of resources were the chief causes behind the growth of a capitalist economy. Thus, Moore examines resource endowments and evolution of agricultural profitability to explain the growth and success of capitalist commercialism. On this point he and North and Weingast disagree.

To North and Weingast, the success of commercial capitalism was a result of government’s establishment of a “relevant set of rights…[and] a credible commitment to them,”(North and Weingast, 803) derived from their assertion that “the development of free markets must be accompanied by some credible restrictions on the state’s ability to manipulate economic rules to the advantage of itself and its constituents”(North and Weingast, 808). They argue that with restrictions on the Crown’s ability to practice arbitrary power in the pursuit of public finance and renege on loans, English government earned financial credibility and was therefore able to finance expenditures. This shift to free flowing credit to government trickled down to the public economy beginning when “the Bank of England began private operations…[along with] numerous other banks”(North and Weingast, 825). Thus North and Weingast argue that government credibility led to free flowing credit in the public economy. As a result of this influx of available credit, they argue, private enterprises were able to create new and grow existing businesses. Although the two arguments diverge when explaining the general reasons for capitalism’s success, Moore’s argument is mainly aimed at explaining why capitalism emerged in the first place whereas that of North and Weingast explains why capitalism boomed once it became embedded in the water supply. The two arguments have a more supplementary and overlapping relation when explaining why capitalist interests percolated government and succeeding in translating their philosophy into law.

While explaining how capitalist democracy came about in England, Moore examines how social changes affected policy and the composition of Parliament while North and Weingast examine how changes in financial policy and the new composition of Parliament affected English government. Thus, North and Weingast begin where Moore ends: at changes in financial and monetary policy and a new composition of Parliament. In Moore and North and Weingast’s arguments, these changes in government are viewed as an effect and cause, respectively. Moore argues that the disenfranchisement and resulting dissolution of the peasantry, royal infringement upon free market, and the transformation of Parliament from an exclusive body of hereditary nobles to a “committee of landlords” (Moore, 21) led to a Parliamentary opposition to the Crown that resulted in a government that promoted capitalist democracy. As land became increasingly necessary for successful agrarian capitalism, the practice of enclosing peasant-owned or common land became regular. This practice not only allowed resourceful peasants, or yeomen, to participate in commercial capitalism, but also led to rapidly decreasing peasant population that would have opposed modernization. Moore argues that the Crown strove to protect the peasantry from enclosures to ameliorate public discord by using prerogative mandates to reallocate the jurisdiction of property rights disputes from common law courts to the Star Chamber.

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A Comparison of Socioeconomic and Institutional Methods of Explaining the Rise of Capitalist Democracy in England (Moore vs. North & Weingast) (Part 2)

July 18th, 2010 Comments off

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However, Moore argues, because of the economic implications of enclosures and apparently self-serving practices of the Crown, commercial interests developed in opposition to the Crown. Moore further argues that “the wealthier townsmen turned against royal monopolies…as barriers to their own interests”(Moore, 13). As such, Moore asserts that the unilateral and regulatory nature of the Crown came to represent the final frontier before free market capitalism to an increasingly cohesive commercial class. This opposition came to the forefront of politics as Parliament came to represent the interests of the commercial class. In sum, Moore argues that economic motives drove Parliament to go against the Crown and was able to see its interests come to fruition due to the gradual disappearance of the peasantry and a lack of effective military, bureaucratic, and administrative bodies. Moreover, as Parliament began passing its reforms measures to ensure a free market, the Crown was now subject to a primitive form of impeachment, namely, beheading. On this point the two arguments agree completely. Moore argues that “the Star Chamber…[was] the general symbol of arbitrary royal power”(Moore, 17). Moreover, Moore argues that beside the Star Chamber, there was no major institutional reform because “a flexible institution which constituted both an arena into which new social elements could be drawn as their demands arose and an institutional mechanism for settling peacefully conflicts of interest among these groups”(Moore, 21) already existed. North and Weingast, however, assert that the evolution of English Parliament, monarchy, and court system comprised a near revolution.

The same changes in political institutions are described in both arguments, but North and Weingast treat these changes as much more significant to the development of free market democracy. Identifying that the “execution of public laws and expenditures was not subject to a public budgetary process,” (North and Weingast, 809) North and Weingast why they believe institutional change was sought after. Moreover, the fiscal irresponsibility of the Crown led to a coalition of the commercial class “seeking to preserve personal liberties, rights, and wealth”(North and Weingast). Thus the major impetus to reform was a budgetary one, but the nature of the reforms led to a system of government based upon checks and balances. North and Weingast identify several parliamentary measures taken to reform the budgetary process but in turn created a stable balance between Parliament and the Crown: the passage of the Statute of Monopolies and Triennial Acts, the abolishment of the Star Chamber, the reduction of legal legitimacy of royal prerogatives, and the modifications to land tenure laws. As a result of these changes in infrastructure, North and Weingast argue, the Crown’s ability to practice arbitrary was stripped. An important form of royal arbitrary power, they argue, was the disenfranchisement of political opposition in the form of gerrymandering, calling for detainment of political opponents and excessive bail thereof, and suspension of the writ of habeas corpus. Without such practices, one would face little to no threat of disenfranchisement and thus would be able to exercise political freedom. Thus North and Weingast argue that economically driven reforms to the budgetary process allowed for a balance of government and legitimacy of exercising political freedom. The two arguments overlap in explaining how parliament came to represent commercial interests. Moore, however, explains how the dissolution of the peasant class and rise of the commercial class established a strong, cohesive coalition that politically opposed the monarchy without going into detail as to how the commercial class went about accomplishing its goals. North and Weingast, on the other hand, focus on how the commercial class reformed English political institutions to establish separation of powers, a system of checks and balances, and a relatively laissez-faire government. In sum, Moore explains how socioeconomic trends translated into political trends as North and Weingast explain how political trends translated into legal and institutional trends.

Both arguments attempt to explain how capitalism and democracy emerged in England, and why they arose simultaneously. They both explain why the commercial class succeeded in bringing about a burgeoning capitalist economy, though they do so using distinct variables: Moore looks at socioeconomic trends, specifically the fall of the peasantry and the profitability of agriculture in England to explain the economic victory of capitalist forces, while only briefly examining institutional variables, the changing composition of Parliament, and the abolition of the Star Chamber to supplement his argument.

North and Weingast almost strictly use institutional variables in their assertion, namely the reform of the budgetary process to ensure the regularization of public finance which eventually trickled down into the public economy. Further, both arguments set out to explain how the commercial class arrived at the door of government and allowed for a democracy. Both make points backing up the assertion that commercial interests came to oppose the monarchy, though for different reasons. Moore depicts the opposition to an antidemocratic more as an apolitical opposition that gradually percolated Parliament and thus became political. North and Weingast lack any significant social commentary on this matter, instead relying on how Parliament’s desire to reform the budgetary process developed a balanced and democratic government to prove their point. In explaining both the rise of capitalism and that of democracy, Moore focuses on the cause and the phenomenon using socioeconomic variables whereas North and Weingast focus on the phenomenon and its effects by examining the evolution of English political institutions.

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FAQ: Anarchy in Somalia and its relevance to Anarchism/Statelessness

May 9th, 2009 Comments off

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[First revision. Please use the comments form to send your suggestions for addition, removal, or revision!

For very informative videos about Somalia echoing the information contained herein and much more, please see Stefan Molyneux of FreedomainRadio’s 2-part “True News: Somalia” series, available on YouTube: Part 1, Part 2. ]

Every now and then, Somalia pops into the news for one reason or another. The mainstream media’s view is that it is a place where chaos and warlords reign, and poverty is widespread. In the public eye, it is probably imagined to be a place with AK47-armed militiamen in the backs of pickup trucks, with child soldiers, genocide, and the like. Yet little is known by Westerners about what the real picture in any 3rd world country is like, much less one with institutions as rich as those in Somalia especially institutions which threaten the dominant international political paradigm. “Peace in Somalia” is interpreted by most to mean the restoration of Somalia’s national government this is what the paradigm commands!

Yet in the 15 years between the collapse of Somalia’s government and the first attempts to truly reinstate the federal government via military campaign, the gains Somalia has made without a state have been ignored. Further, nearly all recent major military conflicts in Somalia have been the direct result of the attempts of external forces (the U. N. Ethiopia, etc. to impose a new government created in exile. Unsurprisingly, it is these conflicts that appear in the news as the consequence of anarchy, intended to scare you, the viewer, into further accepting your own submission to your own government. If you do not submit, the news tells you, it will be like living in Somalia. –more–>

Q: What exactly makes/made Somalia anarchistic, or stateless?

Since the fall of the tyrannical government of Siad Barre in 1991, Somalia has not had a permanent national government. Despite this, much of Somalia can not really be adequately characterized as truly stateless. In recent years, control over Somalia has primarily been a battle between 2 major factions, the externally backed Transitional Federal Government and the internally-grown and ambitious Islamic Courts Union. However, the following facts about Somali society suggest some reality of statelessness.

Across the whole of Somalia, laws are neither created nor enforced by any central authority. In fact, the laws are based on the Xeer, a traditional set of laws unique to Somalia. Legal behaviors are defined in terms of property rights, which also means that the legal system is restitutive (or compensatory) rather than retributive (or punitive).

Furthermore, the Xeer completely stands against any form of taxation. Enforcement is carried out either by traditional clan structures or private police forces, both of which are voluntarily funded. While the more primitive elements of Somali life (clan allegiance, religion, etc. are obviously evident in these seemingly anarcho-capitalistic institutions and thus do not make them the best model for a voluntary society, the simple existence of this state of affairs contradicts common notions about the necessity of the state.

Q: Isn’t Somalia a totally messed up place?

By most absolute measures, yes. But so are many other countries in the world, including those even directly modeled after “Western Democracies,” the supposedly ‘best’ forms of government. The real question to ask is.


Q: How has Somalia improved since its central government collapsed in 1991?

Here’s a brief roundup of the positives that have persisted in Somalia, despite political conditions that many critics of statelessness claim would entail an uninhabitable state of nature. While some improvements may be attributable to world technology trends rather than statelessness, something must regardless be said for the fact that improvement is even taking place in the dreaded state of anarchy threatened by those in power if we abandon them.

Law and Order:

  • Some urban areas of Somalia, like Mogadishu, have private police forces.
  • Other areas rely on traditional clan-based legal structures to serve in the function of both criminal and civil law.
  • Taxation is conspicuously absent, yet customary resolution methods still resolve disputes between individuals.

Infrastructure:

  • Electricity is available in less populated areas that lacked electricity before 1991.
  • The prior regime, as in many 3rd-world countries, had a state-backed telecom monopoly that became unenforceable after the regime collapsed. Now, Somalia has telecom services among the best in Africa. A mobile phone call in Somalia is typically less expensive and higher quality than any other in Africa.
  • Mail service is also provided privately.

Education:

  • The majority of schools are privately provided, sustained by fees (around $10/month).
  • The number of primary schools has nearly doubled since before the Somali civil war.
  • Primary school enrollment increased by 28% between 2002 and 2005.

Economy:

  • The post-Barre Somali currency has been stable compared to its prior performance; the obvious reason for this is that currencies are most often debased by government-powered inflation in the form of money printing. Indeed, the arrival of the Transitional National Government to Somalia in 2000 was accompanied by the importation of 30 billion foreign-printed shillings, which caused a currency collapse.
  • Somalia’s media industry has grown rapidly since 1991, growing competing newspapers and radio stations in almost every major area.
  • Prior to the collapse of the government, the Somali national airline had only one airplane. At present, there are fifteen airlines and over sixty aircraft.
  • Overall, two studies (Leeson and Powell et al. conclude that Somalia’s economy has improved favorably in its stateless condition, particularly relative to other African nations.

This isn’t intended to be a thorough representation of all of the good that has come about in Somalia as a result of the central government’s collapse, though it can be at some point.

Q: But if anarchy is so good, how come Somalia is still messed up (and doesn’t look like it’s becoming utopia any time soon)?

The first and most important point in response to this is that in any situation, the absence of government merely represents freedom from centralized coercion. But countries and societies aren’t made up of systems; they’re made up of people first. The collapse of a coercive national government can easily be replaced by many small organizations that use the same level of coercion, and it’s no surprise that warlords sprung up to fill the void in Somalia. The people of Somalia didn’t suddenly change overnight; they were still the same people from that same messed up African nation’s history.

Here are some of the factors stacked against Somalia being a fully peaceful and voluntaristic society:

  • Centuries of Islamic rule, and later partial Ottoman rule (2 things which did not bode well for a society’s stability and modernity after the 17th century).
  • Colonial predations, first by the Portuguese; then by Britain, France, and Italy in the late 19th century. The level of British investment into improving the portion of Somalia they controlled was small in comparison to that of the Italians, creating a rift that would contribute to the tension that would result in later civil war.
  • The makeup of post-World War II Somalia being the result of the regular arbitrary partitions, the consequences of which we know well from similar partitioning in the Middle East.
  • Powerful influence of Soviet aid and ideology, which was assisted greatly by U. S. military aid to hostile neighbor Ethiopia.
  • Almost textbook 3rd-world “revolution” in 1969 under the leadership of Siad Barre, resulting in a powerful central government and the elimination of all things “counter-revolutionary. With it came an attempt to also destroy Somalia’s traditional clan-based dispute resolution methods (which uncoincidentally play an important stabilizing role in Somali anarchy today).
  • Destructive, socialistic economic policies that, as in most similar cases, left the economy of Somalia in shambles following the withdrawal of Soviet aid. (The Soviet Union actually shifted its support in 1978 to rival Ethiopia, abandoning Somalia. )
  • American support for brutal dictator Siad Barre following Somalia’s abandonment by the Soviet Union.
  • International aid attempts creating Somali dependence on the foreign dole, and undermining domestic agriculture (as is the case with nearly every case of foreign food aid). This food aid also became a political weapon for Barre, whose engineered famines helped solidify his power as the distributor of food aid.
  • Misguided attempts at foreign aid following governmental collapse; deployment of “peacekeepers” resented by Somalis; shifting of food aid powers from central government to clan warlords. Foreign aid may very well have continued to provided the resources to fuel a conflict that would have otherwise ended.
  • The 2000 creation and attempted installation of a new government in Somalia in exile backed by the U. N. (currently known as the Transitional Federal Government), whose arrival has ultimately strengthened the Islamic Courts Union by creating yet another reason to fight.

So hopefully that gives you a general idea of just how screwed up Somalia is.

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FAQ: Anarchy in Somalia and its relevance to Anarchism/Statelessness (Part 2)

May 9th, 2009 Comments off

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It’s not a country full of enlightened people; it’s a country full of highly superstitious people (hence the Islam). Yet despite this, the freedom offered by the large vacuum of power has offered comparative gains, even in country plagued by villainous warlords. Remember, it’s almost the same exact Somalis, except without a state; when there was a state, the bad guy was at the top and calling all the shots with the army and police at his disposal.

By removing that state, the bad guys now have to compete on a more level playing field with the actually decent and well-meaning people of Somalia. And while some of the bad guys are still around (we can’t expect them to disappear overnight with a history like Somalia’s), the decent people have shown the success a voluntary society can bring, even among individuals who don’t necessarily have the most rational beliefs.

Irrational religious people, as much nonsense as they believe, have to eat, drink, and do basically most things that other humans do, too. As long as you want to live and prosper, you are bound by rationality to some degree.   And Somalia has simply become a better place to live and prosper as a result of greater economic freedom.

Q: But. pirates!

Ah yes, the infamous pirates of Somalia. Lions, and tigers, and bears, oh my!

The pirate story is as follows: in the Gulf of Aden, pirate groups have formed to capture merchant ships traveling nearby in order to collect a hefty ransom on the crew and cargo. Certainly, this is a clear cut case of theft. We all certainly agree that the pirates aren’t entitled to using violence and stealing for any reason whatsoever.

What’s really suspect is any criticism of what they’re doing by, well, anyone. Commonly ignored is the history behind these pirates: notably, the pillaging of the Somali fish stocks by foreign trawlers, endangering the livelihood of the very fishermen who form the pirates’ top recruiting pool, and the dumping of toxic wastes off of Somali shores by EU countries on the cheap (for the full story, read Johann Hari’s piece in the Independent).

Surely, two wrongs don’t make a right. I don’t believe in collectives, and hence don’t believe that an merchant of some European nationality has to pay for the actions of “his” government, which doesn’t necessarily represent any of the moral obligations he has generated as an individual.

The problem  is really the criticism by countries which do the very same thing that the Somali pirates are doing, but only in a more organized fashion. According to the mainstream view of these Somali pirates espoused by said countries, it’s immoral for Somalis to do it because a) they’re black, and b) they don’t have uniforms. This isn’t explicitly stated, of course; everything is couched in terms of “theft” and “international law” and so on.

What types of ships are the pirates attacking? Sometimes those ships are carrying foreign aid none other than money stolen from taxpayers to be given toward causes they probably wouldn’t agree with if they knew about them. This is the same foreign aid that strengthened the Biarre regime in Somalia as it strengthened regimes all across Africa by destroying domestic agriculture and giving the powers that be complete control over the food supply. While the pirates don’t care about this, it’s ironic that the West accuses Somali pirates of theft and destruction, when that is exactly what foreign aid is made of and accomplishes.

But the hypocrisy is much deeper than just foreign aid. Toxic waste dumping and fish poaching off the coast of New York would result in a severe American military response. According to the mainstream view, the Somalis don’t have a central government sanctioning their patrolling of territorial waters, so when they do it, it’s illegal piracy.

So let’s say, for simplicity’s sake, that Somali piracy is not about patrolling territorial waters and that it’s about arbitrary acts of seizure. I’m sure the pirates would advocate these acts of seizure as indeed being in some collective Somali interest. So when American ships interdict and seize ships in accordance with American environmental protection standards, trade embargoes, customs taxes, outright prohibitions (e. g. narcotics), etc. those too are arbitrary acts of seizure done in the name of national interest. When AMERICA does it, it’s national defense. When blacks without uniforms do it, it’s illegal piracy. The only thing justifying both acts is someone’s say-so. The only reason that this one-sided and hypocritical story wins out in our supposedly “objective” media is that one party is holding all of the guns.

Q: If you like anarchy so much, why don’t you move to Somalia?

Because it sucks there (for a wide variety of reasons beyond its political organization, as outlined above).

Typically, anything that isn’t one of the limited and mainstream “CNN” choices of political philosophy is going to hear these types of accusations of hypocrisy. These accusations naturally fail to respect the nuances of the view being attacked a crude form of sophistry that is often met with thunderous applause. (Kinda like this exchange between Ron Paul and Rudy Giuliani way to miss the point, Rudy applauding morons! )

The simplest thing to point out is that “anarchism” denotes a wide variety of very different views. One mostly false stereotype of anarchism is that it is a political philosophy, much like socialism, communism, or fascism. While this may be true of some strains, it’s important for any rational person to sufficiently differentiate the person with whom he/she is speaking. After all, you wouldn’t want a Muslim you were arguing with to stereotype you as a warmongering Westerner just because you say that you’re American.

The anarchism I espouse is merely a consequence of the philosophy of rationality and personal freedom that comes first. It is not a prescribed system that should be imposed it is just the state of affairs that arises once people start behaving rationally. That the state of affairs in my ideal world would be stateless, and can thus be termed “anarchy,” is more of an afterthought than a central goal. The individual’s pursuit of happiness comes first, in a way that also universally respects the rights of others.

Unfortunately, we live in a world filled with irrationality and coercion, but that doesn’t mean that there aren’t rational choices to be made. There’s certainly nothing rational about putting the cart before the horse. A voluntary society (i. e. “anarchy”) is not an end in itself; it’s just that living in one would make one live a happy and moral life. ANARCHY IS NOT THE GOAL. GLOBAL UTOPIA IS NOT THE GOAL. A happy and moral life is the goal. So moving to Somalia certainly wouldn’t be much help to anyone trying to live a happy and moral life, given the misery and poverty there.

In summation, the central thesis of this FAQ is not that Somalia is utopia; it is most certainly not that Somalia meets every rational standard of respect for human freedom; it is that Somalia’s unique condition of statelessness has enabled Somalia to attain equal, if not superior, levels of stability and prosperity compared to its similarly-situated African neighbors. This success is, again, despite a number of factors that would otherwise make it another African hellhole (history of colonial domination and post-colonial meddling and intervention, irrational and dogmatic mysticism (i. e. Islam and general tribalistic baggage), hostile neighbors, etc. )

Given that taxpayers observing successful living without a massive government is a threat to massive governments, lots of resources are mobilized to frame world issues as if there is a speeding train coming for us which can only be stopped by government superheroes. Next time you hear about anything anarchy-related in the news, expect a healthy dose of vilification from the mainstream media. Soon enough, you’ll be watching cartoons rather than CNN.

[Special thanks for this article go to Wikipedia, one of the world’s greatest time-savers in terms of research aggregation. The benefits of decentralization even helped to write this article!

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Scholarship Essay on Globalization

July 4th, 2008 No comments

“Arguing against globalization is like arguing against the laws of gravity.” – Former UN Secretary General Kofi Annan

When globalization is looked at as a force that creates a tide of incentives against the artificial levies of national borders, it indeed becomes very much like gravity. Trade, capital flows, and most notably labor flows constantly shift to meet new opportunities and press against old-world barriers. Goods are smuggled to avoid taxes, quotas, or prohibition; money is cleverly managed and maneuvered to also avoid taxes, as well as investment restrictions; millions of illegal immigrants pour across borders each year, eluding patrols and immigration bureaucrats, to work for what seem like pittances. The fact of the matter is that the gains to be realized from international trade, investment, and migration are so great that people pay the costs of overcoming massive edifices of coercive economic protection (on both sides of a border).

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The Contingency of Socialist Utopias: Some Problems of Central Planning and Rationalist Design   [Part 1]

June 30th, 2008 Comments off

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From time to time an author or thinker will create a work, often in the Utopian genre, which lays out a detailed design of an ideal society. Fourier’s phalanestères are one example: they are described as the structure of a social unit, all the way down to the number of inhabitants and to the shape of the actual buildings that house them.

The general problem with these plans is that they lack generality over time and space. They fail the test of universality. The following will be my random walk through some of the problems with rationalist institutional construction and the subsequent problems of central planning. –more–>Most people would recognize that a particular building design or architecture can become obsolete. Many would laugh if there were an actual plan to actually construct Campanella’s City of the Sun or Fourier’s phalanxes in the present day. Their reasoning would be obvious: those things were designed in an entirely different time, under different circumstances. This is not to say that those authors and many like them put forth their ideas as timeless and never requiring change (some occasionally have had the delusion of technological growth simply stopping at one point), but a large degree of universality is frequently attached to more abstract kinds of social planning.

Some examples of central design are much more concrete than others, but central planning when it involves a particular kind of physical engineering is not the only instance in which central design encounters severe problems. It can also include institutional design. For a long time, it was thought to be sound business strategy to always have a middle-man for many kinds of transactions. With changes in technology, the middle-man has frequently been cut out, and with good reason: he’s no longer needed. Yet what would happen if, in my ideal construction of a society, there were always a middle man between wholesale and retail? What if I claimed that this middle man led to the greatest well-being of my society’s members? Economics would most certainly stand against me.

Despite that, all kinds of social manifestos, utopias, and even national constitutions establish permanent institutions as a feature of the society. It can be a ruling council of Thirteen, a Guardian class, or a president, a 480-member congress, and a 11-member judiciary. They make the mistake of integrating information available at the current time and creating a set of concrete institutions that are to be held as universal, but are not in fact universal. This is symptomatic of a general problem with leftist thought, which is that it is often too concrete-bound in its approach to society. Those contingent concretes – such as the current distribution of income and power in society – are then used as premises from which “universal principles” are derived, like: there’s always the class of the rich and the class of the poor, and the former always oppress the latter. The problem is that those supposedly universal principles only apply in narrowly contingent cases, which makes them not universal (not even considering whether the derivation of those principles is valid). They ignore changing circumstances and technology (never mind all the other fallacies, like the total fabrication of principles of justice, ignorance of actual factors that cause poverty, etc. )

The general empirical principle underlying this is that no mind or group of minds can ever gather, process, and coordinate all of the information necessary to perfectly govern complex human conduct. Even without any normative principles relating to individual autonomy, the idea of governance – especially economic governance – by few over the many is riddled with problems, in theory and as it has been demonstrated in practice. Every economic agent has a delicately unique and complex set of circumstances and preferences, and has direct access to his own set. Supposing that someone trying to make economic decisions for this person was acting totally altruistically (another very generous premise, again as demonstrated in practice), he would require a means of translating that agent’s changing circumstances and preferences (closely related to subjective experiences of pain, pleasure, etc. into usable information which he then must process to prescribe a course of action which must be then executed correctly. Multiply this process over thousands or millions of people, and there is quite a huge problem. It is wishful thinking already that one person can make decisions for another effectively (people already have enough problems making decisions for themselves), so it must be even more wishful to think that some people can do it for many others, even suspending for a moment the selfish interests of those decision makers.

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The Contingency of Socialist Utopias: Some Problems of Central Planning and Rationalist Design   [Part 2]

June 30th, 2008 Comments off

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Only the free market (which is run by, precisely, nobody) is capable of coordinating the largely diffuse information spread among economic agents into forming an optimum output. This is not just an optimum regarding maximal manufacturing output for the lowest possible cost, a common straw man constructed against the free market to paint it as a cutthroat institution of total efficiency. That notion is just a Platonic hangover as if goods are produced for the goods’ sake which ignores why those goods are created in the first place: to enhance an individual’s well-being. The free market forms an optimum output with respect to the amount of resources available, and, more importantly, to the totality of the individual preferences of all market participants.

Very closely related to the information problem of central planning is pricing or, more broadly, valuation of goods, services, or virtually everything whose control and consumption can be transferred from one individual to another. Valuation by demand is self-defining: what someone is willing to pay for something is what it’s worth. No Platonism necessary, no intrinsicism, just pure empirical fact. In a centrally planned system that prohibits free association, value must be decided; otherwise, there is no meaningful way of allocating produced goods among the members of society. Again, suspending the selfish interests of the appraisers, this leads to bizarre information problems and to the humorous possibility of the “value” contributed by producers exceeding the amount of goods and services available in an economy, resulting in people deserving more than is possible to provide.

Another problem with central planning is, in brief, the actual presence of human beings. Markets can’t be avoided; the free market is all about incentives. Proof in practice of markets is the responsiveness to incentives embedded in human nature, no matter what system prevails. Black markets develop in response to government prohibitions; defying the law becomes a business, where risks are taken but large profits are reaped. In totalitarian systems (especially those with distributive wealth patterns, like in communism) individuals use their positions as or connections with bureaucrats and politicians in order to gain a bigger share of the pie. Even in our purportedly “free” economy in which the government intervenes to harness the “dangers” of the free market, interest groups spend billions of dollars yearly lobbying federal, state, and local governments getting laws passed in their favor to the detriment of others and electing politicians and bureaucrats who use the force of the law to increase business profits.

(Incidentally, the few errant cases in which people’s preferences are static and minimized do not undermine this universality of the human condition, for the reason that incentives can be structured to shun accumulation of material possessions or other conventional measures of well-being. Some tribes have a social value of personal prestige over wealth, and thus individual members will often spend all of their wealth on extravagant feasts for the tribe or on constructing large memorial edifices. )

Up to this point I’ve freely switched back and forth between central institutional design and central planning. Though there is a distinction between the two, they ultimately suffer from the same problems. First, even in a static environment, central design and planning simply lack the coordination of information necessary to achieve anything close to efficiency. Gathering the information is either next to impossible or is so costly to achieve that it defeats the purpose of establishing any institutions in the first place. Then, not only must the institution measure up to the circumstances of the time, it must be resilient and adaptable to the rapidly changing and non-ergodic world. The environment changes. Technology changes. People change. If the institution itself entails an active form of intervention (such as value arbitration, as in Marxism), the central planners constantly face the problem of incomplete and changing information.

Any societal plans that establish hard-and-fixed institutions and that rely on constant governance are prone to disaster, especially when abuse of power is considered. Up to this point, I’ve neglected to address that fact, which is the most important of all: much of the preceding discussion generously takes for granted that those involved in the central planning have no interest but doing their job the best they can. For the most part, that means that I’ve ignored an even more fundamental flaw in central planning. Yet even with that, it still had problems, didn’t it?

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Anti-laissez-faire Ideas since the Founding: 1870-1918 (Part 3)

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As German sociologist Max Weber explained, “The rise of modern freedom presupposed unique constellations which will never repeat themselves. ” These “unique constellations” likely refer to the vast expanses of land and resources in North America, among other contingent facts, which gave rise to the harmony provided by decentralization. Otherwise, freedom must be centrally planned to be had beyond its occurrence through plain luck. Bellamy comments that Americans in the nineteenth century possessed a “galling personal dependence upon others as to the very means of life. ”[11] The founder of the American Economic Association, leader of an organization created to battle laissez-faire economics, wrote “we regard the state as an educational and ethical agency whose positive assistance is one of the indispensable conditions of human progress. ”[12]

Woodrow Wilson, in fulfillment of many of Herbert Croly’s ideas, advocated a “New Freedom. ” In The Meaning of Democracy (1912), he claims that while laissez-faire Jeffersonian ideals furnished “a government of free citizens and of equal opportunity,” the contemporary physical characteristics of the nation were suited to it; families each lived in separate households, employers were closer to their employees, and so forth (arguments very much similar to Weber’s “unique constellations”). Using Glasgow as an example, Wilson draws a metaphorical parallel between the Scottish city’s common hallways in residential buildings being defined as public streets and the “corridors” of large corporations being regulated as part of the public domain. In this, he claims he is fighting against “monopolistic control,” and in turn “fighting for the liberty of every man in America, and fighting for the liberty of American industry. ” [13] Not coincidentally, the Wilson administration heralded the introduction of the discretionary federal income tax through the Sixteenth Amendment in 1913.

Clearly, attitudes toward laissez-faire capitalism have turned significantly against it since the Founding. This is not to suggest that there was unanimity over the issue during America’s formative years, but major policy battles accompanied by successful movements have led to aggregate changes in economic viewpoints. The prominent influences of the postbellum period, such as the Progressives, have nearly eradicated belief in the functionality and even morality of absolute laissez-faire­ governance. Likewise, the public institutions established in the wake of those movements have furthermore ingrained the permanent, expanded role of government in the national consciousness (euphemistically speaking). Even “right-wing” politicians who profess the values of capitalism take their cues from business interests in exchange for financial and political support. Few candidates can plausibly survive electorally on a genuine non-interventionist policy platform. For America, the unabridged free market is dead.


[1] To clarify, any mention of “capitalism” alone still is referring to unlimited, absolute laissez-faire capitalism with the proper host of necessary political rights. Likewise, “liberal” refers to the host of values associated with it.

[2] This is, obviously, supposing that these trade unions are behaving by legitimate and economic means. In the “Forgotten Man,” Sumner attacks unions which restrict the free flow of labor, by limiting the pool of tradesmen in order to artificially raise wages.

[3] Some thinkers were nationalistic, like Bellamy; others were religious, like Ryan; and so forth.

[4] For space considerations, this analysis will not go past the Wilson administration.

[5] Edward Bellamy. “Looking Backwards. ” In American Political Thought, ed. Kenneth Dolbeare and Michael S. Cummings, 293 (Washington, D. C. CQ Press, 2004).

[6] Eric Foner, The Story of American Freedom, 144 (New York: W. W. Norton & Company, Inc. 2004. )

[7] Henry Demarest Lloyd. “Revolution: The Evolution of Socialism. ” In APT, 304-305.

[8] Foner, 144.

[9] Debs, “Revolutionary Unionism. ” In APT, 359.

[10] Eugene V. Debs, “Revolutionary Unionism. ” In APT, 355.

[11] Foner, 129.

[12] Foner, 130.

[13] Wilson, Woodrow. “The Meaning of Democracy. ” In APT, 393-395.

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Anti-laissez-faire Ideas since the Founding: 1870-1918

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Most libertarians would say that capitalism is dead in America. Many on the left would say that it is still raging. It’s ultimately a matter of what you define as “capitalism” (voluntary exchange vs. large corporation mercantilism), but we can be sure that the voluntary exchange aspect is killed day by day, and has been attacked and defeated repeatedly in the past, particularly in the 20th century. But big pro-state changes like that don’t happen overnight. They’re usually preceded by years of philosophy (usually very bad) and state-caused problems, much civil unrest, and are followed by gigantic losses of liberty and increases in dependency on the state. –more–>

Let’s take a look at some of the philosophy of anti-laissez-faire, particularly in its heyday: just before the first World War. There is little doubt the explosive growth of America’s economy was the result of the great human effort, the application of knowledge to production to create technology and capital, and the vast land and natural resources at its disposal. The framework of classical liberal (in full form, laissez-faire) economics pioneered by Great Britain gave great incentive for this process. A century of liberalism arose from thousands of years before of dysfunctional human civilization, growing the population and standard of living of human beings far larger than ever before in any century.

However, following the Civil War and the Second Industrial Revolution, class divisions had grown and fresh voices bemoaned the supposedly unjust distribution of wealth in society, calling into question the validity of the free market. Though lacking true ideological conformity, changes in attitude toward laissez-faire capitalism[1] since the Founding have been generally defined by any or all of three major shifts: most importantly, the replacement of liberal political rights with economic entitlements; closely connected, a new emphasis on collective instead of individual good; and in effect, the belief in the use of government as a valuable tool for bettering those collectives.

Of course, some important qualifications must be made. Firstly, not all objections made to the state of the nation under capitalism in the late 19th– and early 20th– centuries were necessarily at odds with traditional liberal principles. Truly consistent advocates of laissez-faire capitalism such as William Graham Sumner believed that government obstruction of trade unions and other forms of collective bargaining[2], for example, interfered with the individual’s right to freedom of association and self-determination. Broadly speaking, the political environment that permitted wealth to buy power in government was an essential threat to traditional liberty. Furthermore, it would be disingenuous to attempt to collectivize the entire spectrum of objections to liberal society, as they can be vastly different in their moral values, justifications for their principles, and the nature and practical execution of their policies. [3] Overall, the following breakdown is only a brief approximation of the characteristics of those opposed to laissez-faire economics, with a select few of several possible examples.

The Rise of “Economic Freedom” As a Standard of Living

The issues of most profound significance to any attitude toward economic and legal systems are the moral concepts that underlie them. Almost universally, opponents of capitalism believed that wrong-doing necessarily occurred from its implementation, whether in its means or in its ends. Previously, most of an individual’s rights in America were defined by a Lockean theory of natural law. Freedom of contract (and a right to a fulfillment of those contracts) permitted one the ability to freely associate with others economically. However, great disparities in wealth concentration led critics of capitalism to denounce the status quo, which was allegedly caused by the consistent legal enactment of these principles. Factions such as the Populist movement, the Progressive movement, and the Socialist Party of America formed in the antebellum period as a response. [4] The introduction of a new kind of right pervaded these new alternatives to laissez-faire capitalism: the economic freedom.

Karl Marx’s famous maxim, “from each according to his ability, and to each according to his need,” was one widely accepted economic substitute for property rights. Looking Backward (1888), a novel by Edward Bellamy, details a futuristic society that has supplanted competition with economic rights and duties in line with Marx’s axiom.

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Anti-laissez-faire Ideas since the Founding: 1870-1918 (Part 2)

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“The reward of any service depended not upon its difficulty, danger or hardship, for throughout the world it seems that the most perilous, severe, and repulsive labor was done by the worst paid classes…,” states Dr. Leete, a knowledgeable member of the society. [5] Indeed, this was not the case in 1887; the natural system of economic rewards resulting from liberal rights is, first and foremost, based on the mutual exchange of desired values, i. e. supply and demand. “Wage slavery” became a popular phrase to describe status of the common laborer. In The Living Wage (1906), John A. Ryan argues that the “American standard of living” is a “natural and absolute right” of citizenship. Though he argued it as a dictum of Christian values, many other leftists embraced a similar belief, and an ends-oriented theory of economic freedom gained popularity. No longer would individual autonomy provided by rights determine one’s economic freedom, but the level of wages would. [6]

Collectivism vs. Individualism

Logically entailed by the change in moral principles was an insistence that the good of the collective trumps the good of the individual. Since the notion of the fairness of market-defined wages was fully rejected, the market was replaced by newly-found social and moral considerations. Henry Demarest Lloyd, one of the foremost antagonists of Social Darwinism, placed great emphasis on collective governance and production. “Our liberties and our wealth are from the people and by the people,” he contends, “and both must be for the people. ” His use of “the people” is not merely political euphemism, but imperative: “wealth, like government, is the product of the co-operation of all, and, like government, must be the property of all its creators. ”[7]

Historically, a principal element of collectivization derived from stressing the importance of labor, in contrast to the capital-focused Industrial Revolutions of the 1800s. In 1914, Congress announced via the Clayton Act, “The labor of a human being is not a commodity. ”[8] There is no better example of American labor-class activism than the writings of Socialist Party figurehead Eugene V. Debs. In Revolutionary Unionism (1905), Debs argues for the unity of the working class and, in Marxist form, condemns the purported separation of the worker from the rightful fruits of his labor. He repudiates the validity and effectiveness of craft unions- usually selective organizations of skilled workers- underscoring that “infinitely greater than [their] loyalty to their craft is their loyalty to the working class as a whole. ”[9] He fiercely criticizes the structure that denies the struggling laborer his desires, but fervently protects “the product of [the worker’s] labor, the property of the capitalist. ” Then, when the dissatisfied become agitated and unrest begins, the government arrives to silence the menace: “If you… have made more steel than your master can sell, and you are locked out and get hungry, and the soldiers are called out, it is to protect the steel and shoot you who made the steel. ”[10] Debs’ arguments reflected common sentiments of outrage toward a society in which a vast majority of people, though they were a necessary part of production, toiled heavily and possessed little while a tiny group reaped gigantic rewards.

A different form of collectivism, nationalism in the spirit of the times also was a popular source of ideological opposition to the free market. Similar opinions had already a large presence during the Founding in the form of the Federalist Party and Alexander Hamilton, who argued for state intervention as a means of furthering the nation’s economic goals. Bellamy’s Looking Backward, which cued a short-lived but large nationalist movement, extolled the replacement of self-interest with a higher cause: “Now that industry of whatever sort is no longer self service, but service of the nation, patriotism, passion for humanity, impel the worker as in your day they did the soldier,” says Dr. Leete. Another thinker, Herbert Croly, believed nationalism belonged hand-in-hand with democracy, stating “the first duty of a good democrat would be that of rendering to his country loyal patriotic service. ”

The Role of the State

Government would be the primary tool in executing these policies, with force as the only way to guarantee Americans their social and economic rights.

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