The Wealth of People

Caterpillar Inc. made headlines a while back when it attempted to freeze wages amidst windfall profits (“At Caterpillar, Pressing Labor While Business Booms,” 7/22/12). Supply side economics which epitomizes free market capitalism basically holds that water will find its own level. But the most prominent and earliest theorizer of capitalism and the author of The Wealth of Nations also wrote The Theory of Moral Sentiments which begins thusly, “How selfish so ever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others... .” Here Smith clearly looks at the agora as a human arrangement in which empathy plays a significant role. What for instance would happen if to quote Yeats “mere anarchy is loosed upon the world,” with every individual giving into all his wishes and desires without any consideration for the path of destruction he or she was leaving in their wake. How free is the free market? In order to live in society we abide by a social contract through which many of our instincts are tamed or channeled into directions in which they help both ourselves and others. Psychoanalysts employ the term “compromise formation,” in reference intrapsychic attempts to mediate conflict. But this very concept can be applied macrocosmically in terms of considering how the market may regulate itself. One paradigm is the Spencerian Social Darwinist view in which the “survival of the fittest” governs both economic and social transactions. The countervailing position looks at altruism as naturally selective; mutually beneficial exchanges result from the nurture and care that one displays in showing consideration for the needs of others. Under this paradigm Caterpillar would have been more generous with its salaries.

Broadening Your Event Horizon

Pandora by Jules Joseph Lefebvre (1882)

You go to an otolaryngologist for throat problems, but an ichthyologist if you’re the old man in the Hemingway novel and want to know what fish your wrestling with. Herpetologists are consulted about the representation of snakes in Egyptian mythology and if you want to understand Vladimir Nabokov, who collected butterflies, then you’d better know your lepidoptera. See an arachnologist if you have a question about spiders. If you’re interested in charitable matters then get used to the word eleemosynary and if you’re the kind of person who is always anticipating questions don’t feel bad if you’re accused of prolepsis. It could be worse. You could be rebarbative or morganatic, which is to say that you may be one of the royalty, but you won’t be able to pass on your title. There are so many more quotidian words to describe human aspirations. I’d rather be a quisling than a person who sells out his own country. I’d rather suffer the psychoanalytic condition of après coup than a mere trauma. Bipolarity and borderline disorders are such ubiquitous diagnoses these days that they literal demand bigger words with little tails like casus belli. I would much rather suffer a paraphilia than be a simply pervert. Irredentism is a conversation stopper, but what would you prefer an ugly silence or another boring and destructive civil war since there are always those little breakaways that are not going to happily allow themselves to be reconstituted into the whole. Are you just a utilitarian who’s read his Jeremy Bentham and John Stuart Mill or consequentialist? Getting down and dirty do you follow the Chicago school and supply side economics or do you hearken back to Herbert Spencer’s social Darwinism? Call a spade a spade. Don’t settle for being a game theorist when you can, following Philippa Foot, become a prodigy of trolleyology. Why study loss aversion when you can pursue neuro-economics? Tinnitus is annoying, but tintinnabulation can be majestic. Everyone wants a six pack, but an extended word is not a distended stomach. It need not be a Pandora’s Box. It’s a form of prestidigitation that will broaden your event horizon.

The Woodstock of Capitalism

Capitalism encourages individual initiative. Socialism and Communism squelch it. By responding to the profit motive, productivity is increased as is innovation. By comparison economies predicated on the collectivity are less expansive. When the Soviet Union and China opened their economies to free enterprise they experienced huge growth spurts. However, while a free society may lead to the growth of private enterprise and mercantilism, it requires a kind of regulation that is not necessary in the already regulated economy which Marx termed “the dictatorship of the proletariat.” Individuals as Thomas Hobbes would have agreed have to be protected against each other or self-will will run riot. That’s why it’s almost disconcerting to read that one of the great capitalistic juggernauts of all times, Warren Buffett’s Berkshire Hathaway, is run totally on trust. Thomas Hobbes would have been shocked to read the headline of Andrew Ross Sorkin’s recent Dealbook, “Berkshire’s Radical Strategy: Trust” (NYT, 5/5/14) In the piece Charlie Munger, the vice chairman of Berkshire, is cited on the occasion of the company’s annual meeting, which Sorkin describes being “known as  'Woodstock for Capitalists.'” “By standards of the rest of the world, we overtrust,” Sorkin quotes Munger as saying. “So far it has worked very well for us.” Sorkin offers another Munger quote from 2007 thusly: “A lot of people think if you just had more process and more compliance—checks and double checks and so forth—you could create a better result in the world. Well, Berkshire has had practically no process. We had hardly any internal auditing until they forced it on us. We just try to operate in a seamless web of deserved trust and be careful whom we trust.” Herbert Spencer, who was responsible for the term “survival of the fittest," turned Darwin’s natural selection into a capitalist concept which rendered a dog eat dog view of human existence. But Munger obviously puts much stock in altruism which in the Berkshire model can also be naturally selective. If there had been a stock called Altruism, it would hit the ceiling every time Berkshire held one of its Woodstocks.

Social Darwinism Redux

Herbert Spencer

Jerry Z. Muller’s essay “Capitalism and Inequality” (Foreign Affairs, March/April 2013) addresses a central issue our time: “the rise of economic inequality.” The disparity in educational opportunity and achievement is also addressed in the piece. Marx’s Das Kapital and Adam Smith’s The Wealth of Nations are two of the great modern primers on capitalism. But Muller is no slouch in analyzing the rise of “market mechanisms to control the production and distribution of... goods and services” in the “seventeenth and eighteenth centuries. “Throughout history, most households had consumed most the things that they produced and produced most of what they consumed,” he remarks. “Only at this point did a majority of the population of some countries begin to buy most of the things they consumed and do so with the proceeds gained from selling most of what they produced.” It’s like like e=mc2, a simple equation whose implications hit you right between the eyes. “Commodification—the transformation of activities performed for private use into activities performed for sale on the open market—allowed people to use their time more efficiently, specializing in what they were relatively good at and buying other things from other people.” Though increasing political freedom may have lowered the bars preventing some classes previously excluded from participating in such commodification, Muller concludes “that the inequality that exists today….derives less from the unequal availability of opportunity than it does from the unequal ability to exploit opportunity.” Here is where Darwin comes into play or is Herbert Spencer who coined the term social Darwinism more apropos? Why do some people succeed while others don’t? And why should some activities be rewarded so handsomely while others aren’t? Teachers receive low pay while a small group of global venture capitalists make fortunes that are greater then the GNP of certain countries. Further, how many of those who chose less remunerative work do so because they like it rather than out of fear that they would not succeed in a more competitive arena? Globalization has exacerbated these inequities since those elites that have attained knowledge and power tend to dominate an ever larger marketplace (whose transactions take place in the cybersphere, where social media increase opportunities for exploitation at an exponential pace). From a trickle down economic perspective, one might say, so what? But what are the ramifications culturally and psychologically--which inevitably brings us back to the question of education. A small percentage of the population around the world is receiving a increasingly higher level of education while the rest of the world’s population just gets enough to make them marginally employable. Muller’s analysis of economic inequality is thus a paradigm of the inequities of education both here and abroad. Muller concludes by quoting Marx and Engels to the effect that “what distinguishes capitalism from other social and economic systems is its 'constant revolutionizing of production, uninterrupted disturbance of all social conditions, {and} everlasting uncertainty and agitation.'” However the loss of the incentive to grow and produce is the price that must be paid by societies that attempt to seriously ameliorate the inequitable conditions in which they formerly thrived. If this is dysfunctional sounding, it’s, at the same time, a state of affairs that has its own, albeit inhumane, logic  n’est pas?