No Return to Equality

I sometimes receive correspondence from readers off the blog, so to speak, and a recent one picks up on Monday’s piece about free markets v. capitalism. I don’t think capitalism needs much defending it - clearly it works overall.

Nor do I buy the ‘inequality’ complaint, as if this is something new and associated uniquely with modern capitalism. It began with the first steps away from the ‘1st Age of Hunting’ when some humans discovered the institution of property by excluding outsiders from their pasture land in the ‘2nd Age of Shepherding’ (they preferred to fence their livestock from wandering away or outsiders from wandering in and helping themselves to the livestock). In time, other humans applied the institution of property to the ‘3rd Age of Agriculture’, preferring to fence their fields off from wandering livestock eating the crops and outsiders trampling over the crops.

These developments created inequality. Those who were part of the insider groups – those who led them and those who worked for the leaders – lived better than those who didn’t and those who stuck with hunting in the shrinking territory unclaimed by the property owners or too distant to be reached (that is, outside the Mediterranean and Western European lands; and later in the East across the Asian continents).

The rest of the world remained in totally equal societies and economies, that didn’t change much until the property-owning societies ‘found’ them in the geographical explorations from the 15th century onwards. As Smith noted the gap between the poorest labourer and the prince in 18th century Britain was much smaller than the gap between the poorest labourers and the ‘savage’ princes on North America and Africa (Wealth Of Nations, WN I.i.11: p 23-24) The reason was in the advanced division of labour in the unequal 4th Age of Commerce then emerging fairly rapidly from the great disruptions after the fall of the western Roman Empire nearly a thousand years earlier.

Some evince a desire to return to the ‘simpler’ life of nature of those previous equal societies, though quickly modify their desires once they realise what they would have to give up just to reach their simple-life goals. Not only would all the elements of modern society (good and bad) be absent but they would have somehow to revert to the knowledge needed to exist solely within the bounds set by nature, and, crucially, the population levels sustainable by what was available for the equal basics of food, coverings, and shelter, i.e., not six billion but something less than a hundred million, may be fewer.

Fine, if you and your descendants are among those not eliminated in the largest world genocide ever contemplated; but if not, then within a short time. Happy hunting. Of course, you first have to persuade everybody else to choose suicide and leave the planet to you. Good luck.

Unequal Growing Share versus Equal Shrinking Share

Mark Anderson (The Ottawa Citizen, 8 July) discusses ‘Beleaguered Capitalism does a pretty good job defending itself’ and after a discussion of the issues he inserts this piece in the middle:

“In the National Post last week, columnist Yaron Brook noted that capitalism is becoming a hard sell, and not just in places like South America, where a handful of countries lead by Venezuela and Bolivia have pretty much abandoned free-market economics in favour of various nationalist, socialist, or national-socialist programs. According to Brook, everything from England's nationalization of the Northern Rock bank, to the U.S.'s rejection of trade bills with Colombia and South Korea (and threatened renegotiation of NAFTA), to the massive sovereign wealth funds of countries like China and Brazil, bespeaks a global pull-back from the principles of free-market economics.

The reason? "The lack of an intellectual defence of capitalism has left free markets vulnerable," writes Brook. "No one could morally defend self-interest."
Well, perhaps not no one. Next to Brook's column is another by Peter Foster eulogizing the great Adam Smith, capitalism's founding father. Smith argued that free market economics -- industry in the explicit service of self-interest -- was not only morally OK, but necessary to increase a nation's overall wealth and living standard.

Far from being a flint-hearted ogre, "Smith was very concerned with improving the lot of ordinary people," writes Foster.

The problem, though, is that in a free-market economy, the lot of some people (owners/executives) improves faster than the lot of others (workers), which eventually breeds resentment, which gives rise to socialist/nationalist sentiments, which hampers business and throttles the free market economy, which decreases national wealth and overall living standards.

A rational analysis of the two competing systems, capitalism and socialism, would lead one to conclude that a society is better off if everyone gets a piece, however inequitably shared, of an ever-growing pie, rather than equal pieces of a shrinking pie.”

Comment
That seems a pretty good and clear statement to me. Read it all HERE:

From this and other columns by Peter Foster I have seen, The National Post must be a pretty good newspaper, especially because it prints discussions of the issues from more than one perspective; always a sign of serious debate that is worth thinking about.

I think the basic issue is summed in the last sentence I quoted: ‘society is better off if everyone gets a piece, however inequitably shared, of an ever-growing pie, rather than equal pieces of a shrinking pie.”

I would add ‘growing’ after ‘everyone get a piece’ to read ‘everyone gets a growing piece, however inequitably shared, of an ever growing pie, rather than a equal pieces of a shrinking pie'.