market capitalism
As an ideology, market capitalism is based on the premise that the effects of market mechanisms are fully understood, and that the assumptions, which support the ideology, adequately accommodate the dynamics which prevail in the human condition. Those ideological assumptions are that unique ideas are wholly dependent on unique individuals. And if those individuals are not personally enriched, the ideas will not be appear. The ideological claim is that the exploitation of these “facts” is the most efficient method for resolving any problem in the human condition that may arise.
This approach to things has serious problems.
First, how the effects of market mechanisms play out in highly technological mass societies have never been, and are not now, fully understood. The reason is that the number of variables which impact complex economies rise to astronomical levels. As a result, no single human brain, or group of brains (in terms of current technology) has the ability to control for all of the variables (or, for that matter, even identify what all the variables are,), which could impact any particular economic process. This lack of ability to control for the effects of all variables introduces the element of randomness as a factor in economic processes. That is, whether or not a particular enterprise succeeds or fails depends on whether on not all of the impacting variables have been accounted for – but this precisely the kind of a priori knowledge that is not possible. Therefore, whether or not all the impacting variables have been accounted for in a particular enterprise is a random event since it depends on knowledge that is not available. This is not to say that a successful enterprise is a purely random event. Competence may be an element in the equation, but it is not sufficient. Success in any economic enterprise is always dependent to a significant degree on “good luck” (a random event). However, there is a primitive, intuitive human mental reflex that makes the assessment that the achievement of success equates directly and solely to skill. But the above analysis demonstrates why this cannot be so with regard to economic predictions. Therefore, a problem arises because of this reflex. That is, because a random event has produced success in a particular undertaking, the conventional wisdom in these circumstances will attribute the effects of the random event solely to the skill of those in charge the successful undertaking. This confusion of “luck” with “skill” accounts for much of the current distortion of wealth distribution.
Incidentally, the most responsible method for each corporation to make an economic assessment is to first draw a conclusion drawn from an economic analysis, and then apply a probability assessment to that conclusion to account for the random element. This revised conclusion should be the basis for corporate action since over the long run this conservative approach would insulate the corporation from a random catastrophic failure. However, it would also insulate them from the random spectacular success. And therein lays the problem. Responsible corporations would appear to be run by mediocrities as compared to those in charge of a spectacular success, as long as the conventional wisdom attributes a random event as evidence of skill.
Next, we deal with the ideological assumption that unique ideas are wholly dependent on unique individuals. Some of the most important ideas in human history were formulated by two people simultaneously - the discovery of natural selection by Darwin and Wallace, the invention of the Calculus by Newton and Leibniz. There is also the interesting case of Mendel who discovered the fundamental principles governing inherited traits. However, since he published in a rather obscure journal his work was not known, but those principles were rediscovered by others several decades later. It is apparent from history that the rise of unique ideas is contingent on the knowledge base available. From that knowledge base, when many minds are considering an issue, that issue will be resolved if the knowledge base is sufficient for resolution. For example, if Einstein had not existed, would we have Relativity? It may have taken a decade or two longer, but a sufficient knowledge base was there and, therefore, so too was access to the theory. When Crick and Watson were working on DNA, their primary concern was not if they failed we would not know about DNA, but rather with all the minds engaged on the issue, someone else would crack the problem before they did. It is apparent that the claim of “uniqueness” has been transformed to one of being “first” - that is, only a claim to priority. Therefore, the ideological assumption is bogus.
Incidentally, this line of reasoning allows us also to see the bogus nature of the concept of “intellectual property”. If I think of an idea and later you think of the same idea completely independently, in what sense can the idea be said to “belong” to me? It is apparent that any idea is the common patrimony of the human species. It doesn’t “belong” to anyone in particular. It “belongs” to anyone who can think it, understand it and make use of it.
Finally, we consider the ideological assumption that personal material enrichment is the primary human motivation. This is undoubtedly true when the human condition is one of destitution. That is, if you were ill fed, sheltered or clothed, remedying those circumstances would be everyone’s primary motivation. But once those basic needs have been satisfied, there is a question as to, in what circumstances, and to what degree personal enrichment remains the “primary motivation”.
In the 1960’s the UAW bargained to eliminate compulsory overtime. If personal material enrichment were the primary motivation, why would they do this? After all, the workers got time and a half for regular overtime and double time for holidays, producing the possibility of doubling their income over the course of a year. Why would UAW members want to be liberated from that potential? Also, there is the case of Richard Feynman. The University of Chicago made an attempt to hire him away from Cal Tech and he agreed to talk with them under one condition. And that condition was that they not discuss what they intended to pay him. Examples such as these are revelatory as to the limitations that apply to the personal material enrichment assumption. After the issue of destitution has been resolved, it seems apparent that in some situations for some people, personal material enrichment is not the primary motivation.
The most important ideas in human history have not come about as a function of personal material enrichment. In fact, these only appear when a different dynamic is primary. If we consider such seminal thinkers as Copernicus, Galileo, Newton, Leibniz, Darwin, and Einstein, none was personally enriched as a direct consequence of their intellectual achievements. In this group, Newton is an interesting example. He did have a high interest in the acquisition of personal wealth. After he achieved fame because of his achievements in physics and mathematics, he was rewarded by a political appointment to a position in the British Mint, which allowed that concern to be satisfied. But consider the issue of primary motivation - it is apparent that Newton’s was not the acquisition of wealth, as important as that apparently was for him. If it were, he would have attended to the wealth acquisition first, and then pursued his interest in physics and mathematics. But his priorities were exactly the reverse. That is, his primary motivation was to pursue to his interest in physics and mathematics and only after that had been attended to, did wealth acquisition come to the fore. Also, it would have been apparent to Newton that his work in physics and mathematics had no practical applications in his era and, therefore, no potential to be wealth producers in themselves. Yet it was those non-personal enrichment ideas that he pursued single-mindedly during the years when his intellect was most vigorous. It seems apparent that personal material enrichment is not the primary motivation for the development of unique ideas. Therefore, this ideological claim is also bogus.
From this line of reasoning, should the conclusion be drawn that the mechanisms of market capitalism are valueless? No, since properly framed, the use of those mechanisms creates the most efficient process known for the production and distribution of most (but not all, housing being a notorious exception) material goods. This is so because of the random element in effect in any economic process. We know because of the variety that exists in human brains, different brains will come to different conclusions about that process. Because of the random element, none of those differing conclusions can be known to be correct a priori. But post priori, simply by the luck of the draw, some of those conclusions will more accurately reflect the actual events than others. That is, the cumulative effect of many different competing conclusions in action across a market is the most efficient method known for neutralizing the element of randomness in serving that market.
Proper framing consists of replacing reliance on the bogus ideological assumptions of human dynamics with the actual dynamics that apply in the human condition.
First, if personal material enrichment is not the dynamic at work for the development of unique ideas, what is that “different dynamic” and when does it apply?
That dynamic is the opportunity for self-realization. Self-realization means having the chance to manifest that special uniqueness with which evolution has endowed each individual, and it applies whenever an individual’s current economic condition is perceived as being sufficient to her/his needs. Such individuals have discerned that evolution has endowed them with a meaning and identity that transcends their defined meaning and identity derived from other sources. In other words, they have a “right” to such self-realization. With regard to the Feynman example, it is apparent that his “self-realization” was primarily concerned with the quality of the physics he would be able to do at Chicago as compared to Cal Tech. If that wouldn’t improve, he wasn’t moving – regardless of the opportunity for greater personal enrichment since his current economic condition was sufficient for his needs. Of course, prior to Darwin, no one would have appealed to this line of reasoning. But certain individuals had an intuitive grasp of the idea. That is, once they have identified a passionate intellectual interest, that interest became the primary focus in their lives, with fame and fortune being decidedly secondary considerations.
We now understand the dynamics that generate unique ideas. They appear whenever the knowledge base is sufficient to support them and there are many minds manifesting their special uniqueness in their pursuit of understanding.
Next, we address the issue of “priority” in market mechanisms.
We have previously determined the claim that a unique idea arises from a unique individual is unjustified. The maximum that can be claimed is that some individual has priority in its development. How should “priority” be assessed in drawing up market rules? Getting good ideas in play as soon as possible to improve the human condition is highly important, so some recognition by the market is justified for priority. However, it is also highly important that such a unique idea become an unfettered part of the knowledge base as soon as practical, since expansion of the knowledge base is essential for the generation of new unique ideas. It is often the case that the first developer of a unique idea does not fully comprehend all of the implications of that idea, but other minds do. Since getting good ideas in play as soon as possible is highly important, we also want to reap the benefits for the human condition that those other minds produce in working out the implications of the idea. These conflicting imperatives can be resolved by allowing the initial developer of a unique idea “ownership” rights for five years. We know ownership of ideas cannot be justified, but the adoption of this fiction is the most practical way to resolve the conflicting imperatives. However, going beyond the five year limit is not warranted since it would unjustifiably slow down the unfettered access to an expanded knowledge base, and allows the “fictional assumption” to approach the status of a factual recognition of “the ownership of ideas”. We know the principal of ownership of ideas is false, and to the degree that “principle” prevails in market mechanisms, it promotes another unjustified distortion in wealth distribution.
In summary, proper framing of market mechanisms (that is, correcting for the bogus assumptions) reveals their true value. While they are insignificant in generating unique ideas, once those ideas exist, such mechanisms provide the most efficient means for exploiting them to benefit the human condition through the production and distribution of improved of material goods. However, that is their sole value. The use of those market dynamics for the resolution of other issues arising in the human condition presents the potential for serious violations of the principles enumerated under the section on Human Decency.
- Home
- Introduction
- Part 1
- Truth
- Insights
- The Human Condition
- Education
- Human Decency
- Enlightenment
- Part 2
- Culture Demystified
- The Elite
- Mediocrities
- Self-regard
- Self and Society
- Part 3
- Morals, Ethics, and Virtue
- The Concept of Evil is a Bad Idea
- Religion
- Patriotism
- Freedom
- Market Capitalism
- Wealth Distribution