On Mon, 18 Aug 1997, Max B. Sawicky wrote: > > If risk is seen as a friend and an equal opportunity for entrepreneurship, > > then inequality becomes just a reward system for those willing to take the > > risks that drive wealth creation. . . . > > This is interesting but perhaps a little too ingenious to > attribute to popular debate. There is an individualist > ideology which holds that people choose their risks > and ought then to take the consequences of their > choices, just as they are entitled to the rewards of > a fortuitous choice. If your point is that the way this > is viewed is politically important, I agree. It's a little > more mundane than what I would think of as risk > theory, however. I am not sure it is separate. In the last twenty years, we have seen usury laws repealed and a whole range of high-risk financial forms legalized based on expanded ideas of what risk can be managed safely -- the key point of much of Bernstein's conclusion. That idea that speculation is really just intelligent risk-taking which can be rewarded at usurous levels has permeated culture and created at least part of the reverse sentiment that those who do not risk deserve their poverty. My point in bringing up the psychological studies that Bernstein details is that even as he documents why risk became legitimized, he also explores why risk-taking is a more problematic endeavor for those without capital in the first place. Even when risk appears equivalent for rich and poor, he details why the poor will end up avoiding it. Our culture has massively absorbed the first lessons of risk management over the twenty years but hasn't even begun to link it to this second aspect. The Left may condemn the casino society but we haven't developed a full language to deal with the differential effects of risk for the rich versus the poor. This isn't necessarily a deep theoretical issue, but then many basic insights of risk management are not that hard to describe, just not always intuitive until you do the math or studies. > > both equitable. In the broadest speculations of socialist theory, have > > market socialists grappled with that balance? > > The market socialists devolve to welfare statism in this > circumstance, which is perfectly well-taken in the context of that > system. I would say you have to be a rather extreme leveller to > argue against any scope for voluntary individual risk-taking, with > its attendant rewards and losses, but I don't doubt that the more > left among us would take exception since in their vision capital > is more-or-less completely socialized. In some ways, the more interesting aspects of risk management are in the Grameen Bank and community banks around the US. Many of them socialize risk across multiple individuals, creating collective support to avoid both the fear of complete individual risktaking by the poor and create collective responsibility for loans. In those lending practices, there is direct acknowledgement that risk is too hard for individuals at that level of poverty, so some kind of collective support is required. This doesn't erase risk but collectivizes it in interesting ways, an important model for any form of market socialism that might have collective entrepreneurship by small enterprises or work groups. --Nathan Newman
