Analysis:
The Hard Land
Ownership, in the common understanding of the word, means more than mere possession. It is a special and desirable claim upon that which is held. Its roots go deep, both in the here and now, as well as in the histories of families. There exists within many a vague understanding that ownership is an ancient idea. Surely, a government that wants to foster a society based upon something ancient, desirable, and clear is offending no one in so doing.
Perhaps it would serve a discussion of the high good flowing from ownership if the term were first rigorously explained. Such an opus would certainly do no harm, and it might clarify just what qualities and character an "ownership society" would have.
A survey of law and real estate textbooks reveals that just about any definition of ownership includes two important parts. The first part has to do with the rights and interests that inhere to ownership. These include the right of use, the right of enjoyment, the right of exploitation, and finally, the right of disposal. The second part, which lashes itself to each component of the first part, is the exclusivity of rights. In other words, ownership means possession without compulsion to share.
It is that second part of what defines ownership—the exclusivity of rights and interests—that animates strongly individualistic yearnings. What a person owns is his, and he can do with it as he pleases: he can use it, he can derive enjoyment from it, he can develop it, and he can lease it, sell it, or otherwise convey interests in it. Through this special relationship of the owner to the owned, the possession might be brought to no good end; but it might also be used as an instrument for prosperity of the owner and betterment of the society.
Adam Smith, the putative "father of economics," described enlightened self-interest as the greed within the economic person that compels him to profit from his labor and the capital at his disposal in such a way that he improves not just himself, but all of those who come to him instead of his competitors. If he is free to use that which he possesses as he sees fit, then in his most rational actions, he will mitigate the wasting of his possessions, he will minimize his costs through the most efficient means of production, and he will pose to sell his output at a price that will break the backs of those who would compete against him.
Ownership, then, is a linchpin that holds the spinning wheel of a person's aspirations for self betterment to the wagon of the greater economy that craves efficiency, modest prices, and quality of goods; and so, as a hand fits to the glove made for it, the other benefit is that an owner will be far less prone to the destruction of the things in his possession, for they are the means by which he will continue to labor for personal reward rather than another's detached gain.
Henry David Thoreau epitomized the American spirit of independence, particularly as he pressed his claims of ownership over his possessions, both those material and those within himself. He took the full measure of his ownership by using the land he claimed, by deriving the pleasure of isolation it offered, by exploiting it, and by choosing not to dispose of it. He even went so far as to fairly brag that he drank from the pond in which he had urinated. Such is the right of exploitation, whatever form it may take. For one man, it might be to lay waste to the property in search of minerals; to another, it might be to foul the water with his own urine. What binds two such very different exploitations of a piece of property is that the owners have no competing interest for their rights to do as each, in his respective way, sees fit with what is his and no one else's.
Before the time of Thoreau, and in another country, the philosopher Jean-Jacques Rousseau had already set forth the foundations of criticism of private property that would later blossom into the fierce words and theory of Karl Marx and others. Rousseau said that private property—having a set of rights that, by their very nature, excluded others—was harmful to a society, for it separated individuals from one another, giving them a stake in their own interests to the exclusion and detriment of the larger society in which they lived and in which their lives took on collective meaning.
To Rousseau, the idea of an "ownership society" would border on the oxymoronic: ownership is defined by the exclusion of others; but society is the coming together of individuals in common interests, not exclusive ones. How could a collective of individuals be a group if each was fenced off—walled off—from all the others?
And to what end would each individual go in such a world? Some of the students of the Austrian scholar Georg Hegel saw the end as a corrupting disease called alienation. Separation sub-divides within the afflicted: first, the society is set aside from the person, for the society is out there; then the friends and neighbors are set aside, for they are on the other side of the fence; then the family is set aside, for the boundaries of self have become evident in possessions, not in people; then, and finally, the owner is set aside from himself, for there is nothing of him that is not defined by what he owns (even as it is being expropriated for subsistence wages) rather than by what he is.
The Young Hegelian, Karl Feuerbach, brought into this analysis the Christian god who, by His perfection and the unspeakable sacrifice of His son, had placed the mortal man as nothing in comparison. Religion could give expression to, and solace in, the misery of life; but it simply could not offer respite from the perfect Hell of being alone among the pale shadows of those who, at the end of the day, must be excluded, for what begins as a right will inevitably and inexorably become an imperative.
An ownership society is no society at all. It is the progressively lonely land that breathes fire into the individual as it lays corrosive waste to any sense that greed is wrong. The mythical outcome is, of course, that out of this hungering cacaphony of the many crying "I" will come the magnificent symphony of the one shouting "We": alone within the walls of that which is owned, and having the right to exclude all who would seek accommodation, a modern world can somehow be built.
And the lost soul of a nation can somehow now be saved.
The Dark Wraith has spoken.
Published 1/24/2005 01:06:09 AM
<< 28 Comments Total
I'm wondering if Rouseau does not mischaracterize exactly what participating in society entails? How often do individuals share 'common' interests? It is it not because of Rouseau's constructivist rationalism that he believes that "rational" men would certainly all agree on the same course of action? Thus, any deviation from the "rational" course of action is the result of irrationality or error on the part of the individual(s) not conforming.
It boils down to an excuse for totalitarianism because the leader/legislator (those who are able to determine "rationally" the correct course of action) must, as their duty, select the rational course of action for the other members of society. Because, it is for their own good (the people will thank them later, once they become rational too). It's absurd to believe that there is one rational course of action for society - which in and of itself is not a being with a conscience and a will of its own - it is merely a group of individuals each his or her own ability to value different ends, and then select the means by which those ends are attained.
The fundamentals of ownership and enforcement of contracts are precisely the reasons why a society of vastly different individuals (all attempting to acheive different ends) are able to not only coexist, but do so in a way that benefits the other inidividuals in society. The price mechanism and the profit motive (which would not function without private ownership) developed as they did because they solved the ecnomic probem for society better than any other structure.
Good morning, isonomiac, and welcome to The Dark Wraith Forums.
Your counterpoint is appreciated. I must ask you to suffer me a few hours to rejoin, as I must now go to teach a class. Today is the first day to plow through the ground of elasticities of demand and supply, so I anticipate a look from my students that will quickly pass from 'deer in the headlights' to 'possum under the bumper.'
I shall hope that, as usual, they will come away more enlightened than they entered.
Perhaps not.
The Dark Wraith gathers his most authoritatively furrowed brow.
But what is the process by which things come to be "owned"? It appears to me that, historically, anyone who had the power to do so seized that which "belonged" to someone else- seizing land from indigenous peoples around the world, then either displacing or killing them, seizing resources of others then finding or creating a legal pretext for doing so (just ask any Native American), and so on. The only new angle that I'm seeing today is that the number of tangibles that can be claimed and protected under the rubric of "property" is expanding, so that the "water resources" of a nation can be defined as the entire aquifer and all rainwater; these can then be handed over to private investors like Bechtel by the World Bank, when a country is heavily in debt.
Good afternoon, isonomiac.
I shall post several comments over the course of this day to address your analysis. Ultimately, I should end with a comprehensive statement, but such an endeavor is elusive: the article, "The Hard Land," summarily spanned a great deal of turf in the world of intellectuals over the past several hundred years; and the disjunctions among the parts should be hard to resolve, especially with respect to some comprehensive binding of the disagreements of the thinkers.
First, most people would agree that Jean-Jacques Rousseau was a romanticist, both as that term would be used loosely and as it would be used more taxonomically. His vision of the world that came before—a vision of some utopia lost in the course of history and men's greed—is but an echo of similar myths that pervade religions across the world and across time. That Rousseau pressed this lost Eden into the service of some plan for a future, better world could be forgiven if not for the obvious fact that it never existed to begin with.
It may seem odd to say so, but Karl Marx was a romanticist, too. His portrayal of Medieval society was at best somewhat selective; but more importantly—and despite occasional protestations to the contrary—Young Hegelians in general were influenced by Rousseau, whom I have noted above as constructing his theory of desirable social order from false premises.
That should not deter us, though. Anyone who has taken a basic course in logic knows that a conditional statement that derives true conclusion from false premise is, in its entirety, a "true" statement.
Adam Smith did not go so far as to do so, but the later, so-called Austrian School of Economics scholars would later posit something implicit and fundamental to the classical economics model: society is an externality of economic life.
[Now, before I go any further, allow me to define for the general readership what the term "externality" means in economics.
An externality is a cost or benefit borne by those not party to the transaction from which the externality arose. If the side effect creates a cost, then it is a "negative externality"; if the side effect creates a benefit, then it is a "positive externality."
Thus, a person who rides only a bicycle suffers a negative externality from the pollution created by cars. The economic transaction among the car's owner, the car's manufacturer, and the producers, distributors, and vendors of gasoline did not include in their transaction a valuation of the cost that would be paid both implicitly and explicitly by the bicyclist.
On the other hand, a program for vaccinating children generates a positive externality, since a child could avoid being vaccinated, and he or she would still not catch the malady for which the innoculation had been deployed because no other child would become infected and then infectious.]
Okay, back to the main point. To an Austrian School of Economics scholar, the "economy" and the "society" both arise as side effects from the private transactions of individuals pursuing self-interest. To the extent that markets are left to their own devices, the three central problems of economics—what to produce, how to produce it, and for whom to produce it—are driven by prices, which then allocate the scarce resources among their competing end uses in the most efficient (i.e., minimum marginal cost) manner.
So the "market" economy resolves the three parts of the economic problem in the very most efficient way possible, since greed at the level of the "person," be that person an actual human being or a business entity, will drive towards minimum costs to maximize profit.
But what, then, underpins a market economy? The alternatives to this organizational form are the "traditional" economy and the "command" economy.
If the traditional economy does not underpin the market economy, then how could tastes and preferences—which predicate, shape, and define the consumer demand curves—exist at all? Many have been the marketing specialists who honestly believed that they could entirely "create" demand out of nothing, only to find out that such magic is rare and only fleeting.
Also, if some form of command economy does not underpin even the most market-oriented of economies, how can the vast histories of the world's economic organizations—so very much predicated on the essential role of central authority in scarce resource allocation—be explained? The price vector as the efficient allocator is a Johnny-come-lately invention, floating as it does on a thin film above structures far more ancient and enduring.
Insisting that, in some way, "forces beyond the control" of everyday people prevented the price vector from coming fully into its own for thousands and thousands of years drifts perilously close to Marxist blather about historical "oppression" of the working class. Surely only the most Libertarian of thinkers would claim that the price vector is the sword by which modernity has broken the chains that enslaved the world of all yesterdays.
Such an argument is every bit as mythical in its construction as Rousseau's ontological utopianism.
The Dark Wraith will return later to bray further.
The President of the United States has again brought to the table of the citizens' consideration his vision for...
Corporate States of America
Good evening, isonomiac.
Let me now address some more of your post. You said, in part, "It boils down to an excuse for totalitarianism because the leader/legislator (those who are able to determine "rationally" the correct course of action) must, as their duty, select the rational course of action for the other members of society. Because, it is for their own good (the people will thank them later, once they become rational too)."
Upon that point, you are correct only if those who are enculturated to a different structure of decision-making have this imposed upon them. To many, the market economy is every bit the totalitarianism of any dictatorship; and it is far worse, for there is no face to it. To slay a market that has brutalized a class of people with prices they cannot afford is impossible. Remember: one component of the "economic problem" is for whom to produce. The market economy solves this problem with brutal simplicity: goods are produced for those who are willing and able to pay the prevailing prices.
That means, among other things, that people may very well starve to death, die of exposure, suffer agonizing pain, and endure all manner of deprivations in a pure and unfettered market economy because the price vector is allocating the scarce resources in the most efficient manner possible, and that entails allowing those with the money to command the composition of goods and services created, the manufacturing techniques for those goods and services, and the distribution of those goods and services to the ends that compete with the most capital for purchases.
No more brutal tyranny could exist, since nothing can be done to kill the tyrant, who has become diffused among the millions of consumers, the millions of manufacturers, and (worst of all) the unyielding mathematics of free markets.
Tyranny is tyranny, whether it is imposed by an unfeeling beast of humanity or by an unfeeling beast of physics.
This brings me to the next point you made. You stated, "It's absurd to believe that there is one rational course of action for society - which in and of itself is not a being with a conscience and a will of its own - it is merely a group of individuals each his or her own ability to value different ends, and then select the means by which those ends are attained."
A society may or may not have a conscience; but it unquestionably has consciousness, which is expressed in its body of law. In our form of governance—a republic—the rule of that body of law supercedes each person and each group of persons. To the extent that it manages to hold that cold fist over the participants in the society, it is most definitely a fearsome master; and to the extent that it selectively holds that fist against the weak at the behest of the strong, it becomes an even more fearsome master to both the weak—ever in its shadow—and to the strong—ever mindful of the consequences of falling from the grace of power's immunity to the fist.
That rule of law ensures a common interest of all people under its domain. But more broadly, the underlying law—the jus gentia that the Roman orator Cicero noted among the nations of the world—places most of humanity under the commonality of something greater than the individual and even greater than the nations in their severality. Laws might very well be made by men, but only the most obstinate observer would deny that those men have, from the most remote reaches of antiquity, been propelled by guiding principles that form a basis for that law of nations that the Romans saw (as did the Greeks before them) wherever they went in the world.
Who, then, calms the savage within us that we have channeled into free markets that make us unfree even as they let us be as we will in our basest greed? It might very well be folly to claim, as Marx did, some cycle of history that would ultimately rectify the pain that the controllers of capital visit upon those burdened by the guilt of being unable to bear the weight of the price vector. But it is no folly to see that any tyranny will have its day, and then its day will be over.
Perhaps the day that one monster is toppled is the same day that yet another will rise to replace it, but that is the way of the world. And the market economy will meet its end one way or another, sooner or later.
You see, people eventually weary of being alone.
The Dark Wraith has spoken.
Good evening, Mr. Goat. I am amazed that both you and OddJob have managed to offer here on The Dark Wraith Forums work of cartoonists who are among my favorites. Wiley's Non Sequitur is a big treat for me, since I hardly ever have the chance to see it, anymore. I have on my office wall one of his cartoons from some time back in which a snorting pig/reporter confronts his rabbit/editor about censorship their newspaper is doing in its coverage of business and political news. (In the last panel, the pig/reporter is drowning his sorrows at a bar over being fired while the bartender is consoling him by saying that no one reads, anymore, anyway.)
Perhaps I should devote a section of The Dark Wraith Forums to up-and-coming (or down-and-out) political cartoonists. Although they wouldn't get paid, they would get an audience. It's a thought.
I suppose some cynic is going to say that such a feature would be an exercise in redundacy, since this blog is a real joke, in and of itself.
Geez, this blogging thing is harsh.
The Dark Wraith tries to look serious.
Good Evening Dark Wraith,
I find your response thought provoking, though I do not share your opinion of the market. The extended order of the market provides the individual participants a guide by which to coordinate their expectations, while simultaneously increasing the chances of everyone involved of a greater command of goods and services. Its power to coordinate vastly disparite information spread throughout the individuals in society is what enables it to answer the economic questions as efficiently as you mention. It is merely a system of rules of conduct - a means by which all participants greatly enhance their chances of not only surviving, but prospering. The market induces individuals to contribute to the needs of others without knowing who they are - or caring about them. You seem to think this is a weakness, while I believe it is one of the market's greatest wonders.
The market is able to coordinate expectations, while increasing the chances that all participants will have a larger slice of the pie, admittedly by continuously disappointing some expectations along the way. Yes, it is the case that some people may be impoverished in an unfettered market economy, but I would like to make two points about this situation.
(1) The market system gives individuals the best chance for creating wealth and prospering. No other way of organizing such a great number of individuals is flexible or responsive enough to produce and allocate goods as efficiently - and it is because no one person can possess all the particular information required to make the decisions of what to produce, how much, how many, etc. (1b) I believe a strong case could be made that the market order has improved the standard of living of a great many people since the industrial revolution. My point is that though expectations are at times frustrated, over the long run the size of everyones' pie does increase.
(2) Any system that attempts to consciously produce and allocate goods by human design in order to conform to some idea of social justice would be both arbitrary and inefficient. I am going to abstain from commenting about the efficiency of the market, because I believe you have already made that point. In the interest of brevity, I am also going to forgoe the proof that intervention in the market must be of an arbitrary nature (though I would be happy to discuss this issue further in a subsequent post). Though I will say that there is no way that one can reconcile interfering with the distribution of goods in the market with the concept of equal justice before the law. In order to achieve the arbitrary ends, whatever they may be, the liberty of certain individuals must be infringed upon.
I would argue that being subject to arbitrary coercion of other men is by far greater tyranny than voluntarily participating in an order which increases my chances of wealth and prosperity, albeit in a cold and unfeeling way. (Where, if I suffer a setback, it is not due to the will of another human being, but is the result of a fair process.)
I will close with quote from Adam Smith, with which I am sure you are familiar, but I think it is apt: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest." Have a good night - great discussion.
Good morning, isonomiac.
Something you said caused me to go through my shelf of economics principles textbooks. You wrote, "[I]f I suffer a setback, it is not due to the will of another human being, but is the result of a fair process..." (emphasis added).
The question I had was whether or not I had any introductory textbook that did not address the issue of fairness. I found that all of them did so, and to the last one, they made the point (as I do on the first day of every class I teach) that our positive (objective) theory specifically and categorically excludes any consideration of fairness. Pulling one at random, I quote from page 38 of Economics, 5th Ed., by David C. Colander (McGraw-Hill/Irwin, ©2004):
"[W]e (economists) can't tell government what's fair. That is for the people, through the government, to decide."
Drifting into the world of fairness in economics opens a whole world of heartache (as well as a whole, very irritating sub-discipline called "Welfare Economics"). Most specifically, the classical theory of market economies can make no representation about the fairness of outcomes, since we don't—in fact, we cannot—care about whether or not results are fair by one standard or another.
As Colander points out, that is the realm of the political process, which might very well have implications on the type of economy that will be shaped within a nation, but the theoretician can look only at processes and outcomes, given the decisions that have been made or the policies under consideration.
As a last note, "fairness" actually is being studied in economics, and this work is, in my judgment, meaningful to the extent that it is forcing economics to face the full scope of the scientific method. The sub-discipline of "Experimental and Behavioral Economics" offers economists a means by which the term "science" can more legitimately be applied to our field. A decent overview of fairness and economics in post-Communist Eastern Europe is available in the Winter 2003/2004 edition of the World Policy Journal. A great article about the inclusion of fairness considerations can be found in the Diekmann article, "The Power of Reciprocity," in The Journal of Conflict Resolution (2004; 48: 487-505); unfortunately, you must purchase a subscription to view this article online.
At the end of the day, however, the fundamental theory of economics, as we preach it here in the United States, is that fairness is off the table as a topic of discussion in positive economics. And that, in my opinion, is for the best: as I preach about the great wonders that modern capitalism has done for the world, praising its fairness of outcomes would only slow me down as I tried to keep a straight face.
The Dark Wraith maintains his academic decorum for yet another day.
Good Afternoon Dark Wraith,
I agree that positive economics has no business judging the "fairness" of different outcomes of the market process. But doesn't catallactics have something to say regarding the fairness of the actual process? Suppose A and B play a tennis match. The fairness, or just-ness of A winning as opposed to B winning is meaningless - as long as each player adhered to the rules, ie. as long as the process was just.
So, if my business venture fails (or I am a wage earner and I lose my job) and I wind up destitute on the streets, as long as the reason that my business failed was the result of individuals adhering to the laws of just conduct (and not the result of say, an arbitrary ruling by which my competitor gained a State granted monopoly), I have no grounds to call the outcome "unfair." I may be upset and discouraged, but I was not unjustly treated.
Perhaps I am still committing the error of commenting upon the "fairness" of the outcome, but I don't think so. Isn't the reason then, that judging the "fairness" of outcomes is off the table in the principles text books because economists assume that the process is fair more or less by definition?
I have always found it odd that one who holds so firmly that an unfettered market economy is the only way in which we can freely function is so unaware that that is exactly what one experiences playing the game Monopoly.
I find that game vile. It has almost no redeeming value that I can think of, and it's exactly what an unfettered free market creates.
I'm not unaware of the enormous value of a free market, but I'm also not blind to the obvious fact that it too has a horrible downside.
- oddjob
DW, LindiB posted a question for you, too.
- oddjob
Lindibee, I suspect you are correct, and while you apparently are referring to the way Europeans helped themselves to the Americas, I think that is simply one variation on a theme. I would imagine that historically ownership was very closely tied to the success of armed might and not necessarily much else.
We still haven't found a way in which to create Western-style ownership and economies without destroying older societies that have been referred to as primitive, even when it has become clear after the fact that imposing our style of society and economy, despite the fact that in theory it should provide the greatest benefit to the largest number of individuals in the transformed society, does nothing of the kind.
- oddjob
Good Morning Dark Wraith,
Please disregard my previous post. Upon further consideration you were absolutely correct in stating that positive economics cannot/should not comment on the 'fairness' of market outcomes, or even of processes. Though I would submit that economists may comment on the effectiveness of using certain means to achieve desired ends (ie does the minimum wage alleviate poverty, if a firm utilizes a new technological procedure will it reduce costs?), but it may not comment on the 'fairness' or 'justness' of those ends or means. That is for other social scientists to consider.
Good morning, isonomiac.
I am most relieved that you withdrew the position concerning the fairness of one economic system versus another. As you noted, we leave matters of that nature to other social and behavioral scientists (and then we furtively roll our eyes when they actually start talking about it in our presence).
As I discussed in an earlier post on this thread, the idea of fairness is beginning to be recognized in economics as a factor in the decision-making of economic agents, themselves; but that's an entirely different discussion from one in which we as economists assess the fairness of outcomes.
The results of some (admittedly rather primitive) experimental economics studies that have been done in the past several years on how economic agents interact in the presence of what they perceive as unfair rules or outcome matrices comport powerfully with phenomena I watched first-hand when I was a business consultant. As a trained economist, I saw no rational sense in how certain officers and directors of small corporations that were in their developmental stages would act to destroy what they had worked so hard to build. It made sense on a human level, I must say; but it made no sense from an economics perspective. Now that I have seen similar results coming out of simplified, but very similar, studies under controlled conditions, I grasp that I was allowing a narrowness in my economics training to keep me from seeing a genuinely rational, economic behavior.
What's really annoying me is that the game theorists are only marginally recognizing and incorporating what might be a dominant principle that guides transactional decision-making under certain conditions of uncertainty and power, resource, or information assymetry.
Then again, perhaps you've heard the old joke:
Why would any perfectly sane, rational economist publish papers in game theory?
Because he'll be granted tenure automatically, since no one understands a darn thing he's written; and more importantly, no one on the tenure committee would dare to admit it.The Dark Wraith will be quiet for a while, now.
[Economist jokes never get roaring laughter.]
I've never spent so much as an afternoon in a university Econ. Dept., but I know enough from the Ent. Dept. I spent quite a bit of time in to know why there would be no roaring laughter there.
It's too close to the truth for anything but silent pain from most of the staff, and the snorts of cynical recognition from the rest.
- oddjob
That reminds me of another old joke,
How many economists does it take to change a light bulb?
None. The invisible hand does it. They don't call it the dismal science for nothing.
Oh, my gawd!
I might have just set off a round of economist jokes.
The Dark Wraith runs for cover.
A study of economics usually reveals that the best time to buy anything is last year.
Marty Allen
---------------------------
I'd rather be vaguely right than precisely wrong.
J.M.Keynes; Found in Forbes magazine 01/25/1999 issue. In the Numbers Game column by Bernard Cohen
So many blogs and only 10 numbers to rate them. I'll have to give you a 9 because you have a quailty topic.
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