Jim Devine writes:
>> (BTW, it's strange -- if not outré -- that Hayek would emphasize a
>> situation where scarcity doesn't play a role. Usually economists of
>> his ilk emphasize scarcity über alles, even defining economics in
>> terms of it.)
Hayek's point (one of many) is that markets are a subset/example of a large
phenomena -- spontaneous order. It is not useful to think of Hayek as a "mere
economist." He is addressing a broader variety of philosophical and
methodological issues as part of his political project of advocating markets as
opposed to central planning.
>> I'd guess that if you were to throw these folks on a desert island,
>> they'd fight (not necessarily in a violent way) until they formed a
>> state to manage their common concerns, including the management of the
>> use of force and the creation and enforcement of individual rights.
>> That state might be a one-person dictatorship (if one of them can
>> figure out how to hog all the weapons), a two-person tyranny over the
>> the third (more likely) or a three-person democracy. But laws and
>> rights do not drop from the sky and enforce themselves.
>>
>> With only three people, favorable conditions, and normal
>> (non-Trumplike) personalities, I'd guess that the three-person state
>> is most likely (and that the initial fight over what to do would end
>> quickly). But the point is that they'd have to come together to
>> regulate each individual's behavior (and to decide when such
>> regulation isn't needed). Again, laws and rights are not innate in the
>> mind; nor do they enforce themselves.
We are so fundamentally different. I participate in numerous organizations,
including my immediate family, my firm, my temple, etc. There are numerous
diagreements and conflicts among participants in these organizations, but the
conflicts are managed through, for a lack of a better word, "bargaining," not
though resort or appeal to a third-party enforcer.
>> A three-person democracy would likely be akin to "primitive communism"
>> of socialist lore, with the democratic state, the society, and the
>> economy merged into a single institution instead of each one of the
>> individuals setting up a stand and engaging in trade without any
>> collectively-decided laws or order. Trade would likely be more a
>> matter of what Polanyi called "reciprocity" instead of market-style
>> exchange: it would involve people doing things to help others because
>> they expect the others to help them. "Market" interaction is
>> intimately intertwined with (and constrained by) social linkages and
>> political cooperation, so that it would be almost impossible to
>> separate these three "spheres" of human interaction from each other.
>> Solidarity, rather than individualistic greed, would prevail. In fact,
>> feelings of solidarity help a society get over the initial phase of
>> creating collective organization.
You write as if there is a clear dichotomy -- market exchange in capitalist
societies is based upon greed, while market exchange in non-capitalist
societies is based upon soldarity. This dichotomy seems axiomatic to you. I
don't see it. I see greed 2000 years ago, and I see solidarity in the good old
USA in 2011. I do agree that something happened in the modern project that,
intentionally or inadvertently, freed the greed impulse from religious and
cultural restraint, but that is far off topic from the original point --
whether self-interested individuals are capable of engaging in successful human
relations without a coercive state.
>> Actually, if all economic transactions and social interactions could
>> be totally reduced to relationships between pairs of individuals, then
>> greed does promote mutual self-interest to be directed at market
>> activity, which in turn "can be the basis for successful human
>> relations." But serious economists know that the rub with this Ayn
>> Randian (or Rand Paulian) utopia is that individualization of all
>> human life -- with only one-on-one links -- is unrealistic, even with
>> markets.
>>
>> 1) First, there are a lot of what economists call "externalities"; one
>> textbook says that they are "ubiquitous." I'm a baker, I'm not just a
>> seller of bread. I also might be polluting the water and the air
>> (keeping my costs as low as possible, as profit-maximization demands).
>> If a small percentage of society controls the productive non-human
>> resources, they can use that power to exploit the rest (what's called
>> a "pecuniary externality").
>>
>> 2) There are also so-called "public goods" that cannot be provided by
>> individual action alone: it the US paid for its legal system
>> (including the system of property rights) totally from voluntary
>> contributions rather than from taxes, the legal system would be
>> totally under-funded as long as people cling to classical American
>> individualism. Either coercion (i.e., taxes) or social solidarity
>> (which encourages voluntary contributions) is needed to deal with this
>> problem.
Well, yes, but the fact that you must rush to the hard cases, the reasons even
everyone but anarchists recognizes there must be a state in some form, supports
my point that for the overwhelming number of market interchanges there is no
need for a coercive element.
>> Let's do an experiment to see if this theory works: abolish the state
>> and its enforcement of contracts and see what happens. Do you have
>> President Obama's phone number? Maybe he could arrange the experiment.
We do have examples. We have black markets, from the drug trade, to prison
trade, to markets under Soviet style socialism. We have the example of piracy
(i.e. the rules among the participating pirates), going back to the 17th
Century to Somalia today. We have international trade, for which enforcement
of contracts is often all but impossible. We have international agreements
between states, which have no coercive enforcement mechanism. The mixture of
self-interest and trust permits these agreements to be entered into, followed,
resolved, etc. with no inolvement of a coercive state.
>> > Where is the society, ancient, feudal, pre-capitalist, capitalist,
>> > communist,
>> post-capitalist, that did not have fundamental rules against theft and
>> recognizing
>> property rights? <
>>
>> A case can be made that property rights are universal in human
>> society. But that's only when there's no civil war or the like going
>> on; it's a mistake to look only at ordered societies. All we can say
>> is that a society _needs_ property rights to avoid civil war and the
>> like, which is one thing that Hobbes said (in effect).
Yes, legally sanctioned "property rights" are beneficial because they avoid the
transaction costs of having to constantly argue or fight about posssession and
control of resources. Coase couldn't say it better himself.
>> (Actually, it depends on the kid: many 4-year olds also have a sense
>> of solidarity with each other. Toddlers can be annoyingly generous!
>> [*] But at other ages, market-style individualism takes hold,
>> especially in a society that promotes those values.)
Interesting that you advocate the juvenile as opposed to the mature
sensibility. Very Rousseauian
>> > It is only when we get to statist and/or socialist states, where economic
>> > activity is
>> centrally directed and market activity is criminalized, where the entire
>> market economy
>> is a black economy, that we see the need for a large coercive apparatus to
>> enforce
>> economic rules and decision-making.<
>>
>> I have no brief to make for undemocratic state-socialist ("Stalinist")
>> societies.
>>
>> But it's easy to think of capitalist societies which have large
>> coercive apparatuses (the spell-checker won't accept the Latin
>> plural). Look at all of the cops in the US, along with the FBI, the
>> National Guard, etc. And that's a rich country. Look at the court
>> system -- and the jails -- that enforce the laws. Look at the private
>> security forces that corporations have. (Hobbes would add: look at all
>> the locks and security systems that people have in their houses and
>> apartments.) The US does not rely on the goodness of human beings
>> (their ability to channel greed into to pure buying and selling
>> activities the way David seems to be doing) to defend property rights.
I would point out that most of the coercive apparatus in the US is related NOT
to (1) enforcing contracts, or (2) even enforcing theft and fraud laws, but to
enforcing laws relating to "victimless" market transactions and other behavior,
such as the prohibition laws, etc.
David Shemano
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