Economics (6) Good Capitalism & Bad

Good reasonning requires precise language. While capitalism seems (to me) to have been what has enabled almost all advancement by humans around the world, I still hear people attack it as if it were their bane. People learn much of their vocabulary by observing uses by other people, which works imperfectly. Thus, many expect that capitalism is about everything that goes wrong instead of it being about everything (both good and bad). (This kind of confusion occurs with great regularity: “socialism” is where government controls the means of production, regardless of the political ideology; this feature is almost as prevalent as capitalism: I have never met a person who has dealt with any government that was not in some way socialist.)

I offer here a attempt to clear up some of the confusion by suggesting that capitalism can be practiced in either of two forms: “proper capitalism” (good) and “criminal capitalism”. This dichotomy is not as clean and absolute as I would like. I offer here some common examples of criminal capitalism:

  • when your gangsters show up and force people to work in your factory or mine
  • when you load a contract with fine print that significantly affects the exchange
  • when you lie about significant aspects of the deal, like who owns what you are selling or what attributes the product actually has
  • when you use insider information to disadvantage your trading partners
  • when you loot and pollute the environment, aka. the commons that is really owned by all of society

I suggest a simple litmus test for proper capitalism: you must be able to envision how every participant in your deal(s) can profit, that is, the value realised by the participant at the completion of the deal is seen by the participant as greater than it was at the beginning. Fools will deny that this is possible because they believe that life is a zero-sum game. But capitalism has generated great wealth for all of society by exploiting the win-win scenarios.

The primary mechanism by which capitalism generates wealth is the “free market” where the defining freedom is the freedom to decline (to not participate, to walk away). In a free market, people participate only if they see a profit for themselves. A properly regulated free market, with support from the legal system, generates so much wealth over time for all the participants (and, oddly enough, even the onlookers) as to affect the courses of nations.

Politics (5) Machiavelli Ideals

A reliable source suggested I check out a thread of postings on web site by an author and scholar, starting with this on Ex Urbe.  As was predicted I was strongly ambivalent about it.  The series presents a view of Machiavelli as a person worthy of study, with sizable portion of praise.

Long ago, I abandonned any view of Machiavelli as real person.  I now see him as an ideal.  And I an easy enraged by people quoting “the end justifies the means”.  Most who use that line appear to have not the slightest inkling of what it means.  Maybe, the translator responsible for English version of his masterpiece distorted it, but I equate that phrase with the Biblical admonishment “You will know them by the fruits of their labours”.

As I understand it (and preach it), your objective in any course of action cannot of itself provide any moral justification for your actions.  As a learned, rational person (as might have learned from the master Machiavelli), you are to look to the historical record for an outcome or outcomes that match your objective.  If such an outcome exists, then clearly you are to use one or other of the methods that produced the desired outcome.  Absent that outcome being actually achieved at some point in history, then look to the outcomes that resulted from each method you consider to know which to avoid more strongly.  You have no justification for expecting a result that never happenned from the application of any method.

The ideal Machiavelli was a champion of empiricism.  We study the master in his ideal form that we may become more like that ideal.  The evidence of history is always more compelling than any model derived from it.  Models (mathematical, algorithmic, narrative, analogue, etc.) that do not match historic outcomes are trash, while the great ones go beyond matching to accurately predicting outcomes.  Such models are the sources of human power.


Politics (4) Political Correctness

In the lead-up to the climax of the 2016 US general election (for the president et al.), I heard far too much about the issue of ‘political correctness’ (PC) and especially how it would no longer be needed if the right man won.  I have calmed down enough to be able express the absurdity of such claims.

The need for and practice of political correctness has been with us since before the recording of history.  It springs up as one of two possible methods for avoiding the rathe-full expressions coming from a community one is stuck in.  Communities do not tolerate the intolerable, regardless of it being innate (like hair color — try being a “ginger”) or being a mutable behavior.  The offending person must hide the offense.  In the case of immutable characteristics (such as skin color), the only recourse is to avoid being noticed (even to the extent of exile).  Beliefs and other behaviors, can be hidden by diligently guarding against words or actions that reveal what the community will not tolerate.  Or the person can effect a change of personality to not speak or act in a manner that offends.

Persons with intelligence and persons with education have a tiny advantage vis-à-vis the average person, and in modern societies the accumulation of these advantages result in such persons influencing the societal norms.  For example, science has produced overwhelming evidence that homosexuality is innate and not a “matter of choice”; thus, we are abandonning the practice of punishing homosexuality, as it serves no benefit to either the individuals or the community.  Science has contributed to better understanding of not just economics, human development, education, and law enforcement, every aspect of society, with commensurate reformulation of norms and practices.

Those persons who have loudly resumed offending decent people because they imagined that their candidate would ‘reset’ the societal norms, merely show how little they understand of reality.  While a significant leader can have much more influence than the average person, the weight of public opinion exceeds that of any individual.

Moreover, there are two basic patterns of response to authorities.  Some people accept truth as it comes from authoritative sources (authority begets truth), others of us judge the merits of the source by the truths it presents (truth begets authority).  We in the second group are slow to accept new leaders, and equally slow to accept change that is not supported by long collected truth.  Thus the swings affecting PC are not symmetric.  Tough!