Competition

I got into a debate on Twitter earlier that helped me to sift through a lot of the reasons I have for thinking the way I do about the economy and ethics in general. The main point, I believe, is that human selfishness and competition are simple facts and that we must decide how we can manipulate those factors in order to produce a better system. The failings of past systems were the result of human nature and the way we responded to social structures, so we need to design a social structure that reduces the likelihood of unfairness or injustice or what have you.

I doubt I need to delve into feudalism or mercantilism to explain why they were bad systems. They were bad because they were less efficient and they distributed the fruits of labor unjustly (I’m vastly oversimplifying the case). With that in mind, we should analyze the history of capitalism against the criteria of it being just and fair and efficient. Volumes have been written on this subject, so I intend to provide a very summary view of what I think are some of the most important critiques of capitalism and how they relate back to the title of this post.

For anyone that has taken even only a single¬†economics course, capitalism sounds fantastic. It distributes goods efficiently and people are rewarded for work in such a way that it is perfectly in fair with regards to the rest of the market. However, it seems to fly over everyone’s heads that these sorts of results are only possible under conditions of perfection: perfect information, perfect competition, etc. It should be no surprise to anyone that we have nothing like perfection in reality. People and corporations lie and there is hardly perfect competition anywhere in the market. In fact, it seems that there is vastly more competition among buyers than there is among sellers. There is vastly more competition among employees than there is among employers. Not only do we lack perfection, but the ratio of power leans heavily against the average individual.

What results from this? Unjust distribution of wealth. People lie and manipulate to make sure the die is cast in their favor. People group together to form corporations and use their combined power (reduced competition!) to prevent those whom they employ from grouping together also. By necessity it seems, there must be fewer businesses than there are people. Therefore, there is less competition among businesses than there is among individuals. As buyers of labor, employers therefore hold more power than the potential employee, the seller of labor, because while there are only¬†n businesses, there are some 2n (or whatever the number may be) people who could potentially fill that job. The idea here is, “If you don’t work for $7.25 an hour, I guarantee the next person in line will.” This creates a race to the bottom, resulting in incomes for people that are lower than what their work is actually worth. In other words, you are paid less than your production value to your company. Conversely, when a product is sold to you, it is sold with profit margin. That means that while you, in terms of productivity, are being shortchanged, the businesses and their owners are getting more than what they put in. This is all due to the competition mismatch and guarantees that without some sort of outside intervention, the economy will tend towards a polarized distribution of wealth with workers on the poorest end and capitalists on the richest.

It should come as no surprise that workers, historically, have revolted against this pattern in capitalism (cue the populist response to the Industrial Era). From this we get government intervention and labor unions. Governments come in and attempt to distribute some of the profit back to workers who were unfairly paid (and, later on, we get more welfare). Labor unions attempt to unite workers as one entity in order to reduce competition among them, thereby decreasing the buying power of the employers. Cue the prosperity of the middle class.

All I’ve done is described with extreme brevity what happened in history. Yet people look back on the policies of the Industrial Era with some sort of twisted nostalgia, as though it was those policies that brought on the middle class. Such is not the case, as history has shown. As I’ve explained, it is impossible for a middle class to exist for long when competition among the workers causes accelerating, increased profit margins at the end of the employer and reduced wages on the end of the employee. There is a fundamental mismatch of competition between employers and employees and there is no way around it. To pretend as many seem to want to do that we can live in this system is to think very shortsightedly. With outsourcing, automation, and other labor-saving devices combined with decreased government regulation and regressive taxation, the economy is once again chugging right along in the direction of polarization. It is inevitable by the logic of capitalist theory itself.

That’s not to say that I’m not optimistic. I’m not sold on alternate theories quite yet, as I’ve yet to see one that produces the vast amounts of wealth that capitalism does. All that said, it seems readily apparent that Marxist-socialist critiques and ideas should be fused with the current state of things. One of my favorite economists, Richard D. Wolff, has a book that I like to recommend to people that advocates for a lot of socialist reforms that could coexist with a capitalist structure. His concept of worker-directed enterprises is particularly interesting and I think it should be a major point of reform going forward. Read that or watch some of his videos if you’re at all interested in the idea of a more just economy. It’s inspiring during a time when the news is rarely good for anyone who isn’t in the top one percent.

Competition

Freedom Isn’t Free

I’m going to hijack a phrase used commonly by American nationalists for the purposes of this post. “Freedom isn’t free” to the average American refers to the idea that a primary reason that Americans have the freedoms they do due to the fact that American soldiers die on the battlefield to protect the freedoms of the civilians. I’m not here to dispute this or to agree with it, but I am here to apply this phrase to something rather different.

I’ve written before about how I feel about the idea of freedom. I do not believe that a society with a smaller government inherently has more freedoms than those societies with larger governments. A society that allows oppressive corporations to exist is no more or less free than a society with an equally oppressive government. Freedoms are not about government – they are about the exercise of power over the individual. If anything has the power to influence my decisionmaking, then I lack some amount of freedom in that situation. If the government taxes me less, but my employer also pays me less, then my freedom with my money is neither greater nor lesser – it has not changed. Anyone or thing that exercises some amount of power over another is limiting the freedom of that other person.

The general lesson to learn from this point is that my actions affect yours, and vice versa, even though we may not ever meet. The decisions I make have consequences beyond my own life and my own circumstances, whether I like it or not. This may seem obvious, but most of us do not live our lives as though this were true. Most of us try to live moral lives, though we slip up. We sometimes say things we don’t mean or do things that we regret. We understand how our actions like telling a lie can have negative consequences, but we have been well trained to ignore many of the impacts of our financial decisions. How many of us concern ourselves with who our money is going to when we spend it? Do we consider what corners are being cut when we try to save a dollar by buying our socks or our broccoli from a different company?

It seems to me that the blame for the negative changes in America are largely the fault of average Americans. Though it feels better to blame politicians and big bankers and so on (and they are hardly faultless themselves), they are merely the consequence of a larger problem: us. The fact is that we pushed the facts out of our mind that people were getting rich by exploiting workers and paying them a pittance, by spraying our vegetables with chemicals that slowly kill us, by feeding our livestock grain they weren’t meant to digest and medication to hide it, and the list goes on and on and on. It didn’t take a whole lot of investigation to figure things out, but only now are we beginning to really have a significant reaction about it as a society. Only now is it becoming common talk.

This should come as no surprise if you understand that burying our heads in the sand is a common pasttime of Americans. We were the people who defeated the oppressive regimes! We stomped out the influence of the British, we took in the immigrants and gave them jobs, etc. We have been taught from birth that the American story is unique in that we did not begin as oppressors (right native Americans?), but as the conquerors of the oppressors. American history quite frankly has not had enough questioning of authority built into it. Sure, we have a few examples, but they, for one reason or another, are largely glossed over in the classroom. By the time we leave the classroom, most of us are more than eager to go out and pursue that American dream or we are so disillusioned with the lie of that dream that we give up and try for second best. So few of us think back and wonder how it truly came to be this way.

To begin my conclusion, we may be stuck at the bottom of a dank hole with the boots of the elites holding us down, but we were the ones that started digging. There were no boots holding us down at the beginning, but the promise of lower prices, of cheaper products, of endless entertainment, and so forth enthralled so many of us that we began to dig. We dug deeper and deeper, eventually trading in the shovels we wrought on our own power tools bought on loan from the elites. Eventually we found ourselves at the bottom of the hole. Some of us still believe we can (and should!) find those legendary artifacts of the myth of consumerism, but more still are angry at those who hastened our digging with their power tools and hold us down with their boots. They have forgotten who started it all – it was we who began digging, and with our own shovels no less. The elites with their boots were merely opportunists.

As I’ve said, I don’t mean to justify selfish opportunism, but we’re the ones who rewarded the opportunists by giving more of our money away. We looked at a system that we knew (or should have known) was unsustainable. It sent our money straight from our pockets into a few select individuals, all the while poisoning our neighbors and even ourselves. We even protected that system when it came around to hard times by authorizing our politicians to bail these people out when they screwed up, all while we remain wrecked. It seems rather clear to me that maybe we got what we deserved for keeping our heads in the clouds and believing that consumerism could save us. I think it’s about time we turned away from those myths and stopped rewarding a system and a group of elites for perpetuating that consumerism. I think it’s about time that we try something new – something that heals the soul and mind instead of distracting the body.

Freedom Isn’t Free