This blog will center on the positives and negatives of the two most dominant forms of power distribution in the modern world: wealth (driven by property rights) and legitimate government (driven by democracy).
Number 5,319 on my peeves list revolves around the bullshittery in public opinion which says that capitalism and democracy reinforce one another. This goes back a long way, but sees its greatest reinforcement from more recent conservative stalwarts like Hayek, in The Road to Serfdom. From my perspective, capitalism and democracy are both ways of managing power with completely different principles underwriting them. They make terrible bedfellows.
The fundamental difference is that capitalism places formal power into a tangible form represented by a limited currency, which allows it to be traded, to include loss, gain, investment, and waste by the individual. Democracy places power into the hands of a group by means of a majority vote, carried out periodically. Do we even consider which one of them is actually more fair, effective, or sustainable? Because if you do, it's not a clear case of logical superiority but a case of your personal level of paranoia, identity, and investment in the system. Not only do they not reinforce one another, but they very clearly contradict and undermine one another.
And yet they do the same thing: votes and dollars create power structures based on the values of those who interact with them. They work differently, but both are coercive in some sense. Both provide power to institutional hierarchies and establish social order.
So the question is, which hierarchy should be considered more legitimate, the economic or democratic?
It matters, because once the Utopian idiocy of anti-authoritarianism has been disposed of, you come down to the real question of modern politics: is democratically elected government a better source of authority than authority granted by recognized property rights? No matter what actions you think are morally right, the question of system still applies. Who should bear the responsibility, and therefore have the authority? Really, how should society work?
Capital Games
This needs to be a fresh start for your perspective in order to have any impact, so I must ask a favor: forget all the emotional baggage that the word capitalism has, and think about the actual mechanics of a capitalist system. Let's keep it basic. Capitalism comes from property rights. Property rights are simply a formal declaration of power over something that others must accept: you own it, you retain the responsibility for, and the products of, its use. As owner, you hold the power to use it, burn it to the ground, sell it, or turn it into a work of modern art. The power is yours. It assumes an owner with agency and little else, so the idea can be modified to go along with almost any ideology that assumes agency.
Capitalism, as a system, is the descendant of feudalism, and feudalism was territorial power distribution that focused on ownership by individuals and families, the landed aristocracy. It was George W. Bush's "ownership society" on steroids. In the days of feudalism, namely the Middle Ages, there was no central government supporting this situation; it stayed in place as a matter of the rival groups keeping each other in check, with some help from the Catholic church. The royals were responsible for their property, for managing it, maintaining it, expanding it, protecting it. Imagine a bunch of private businesses owning all territory today, their private armies staring each other down, and you're close. Anarcho-capitalists are probably getting a hard-on right now.
Money had always been important, but the independence of land granted before the centralization of government under nationalism meant autonomy that was almost bizarre from a modern perspective. Owning land, in the old days, was like owning your own country, a fact of life displayed by the territorial divisions in the Holy Roman Empire, modern day Germany. Look at this clusterfuck:
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| "National" boundaries circa 1648, just after the 30 Years' War. |
Capitalism doesn't work quite that way; its basic form has only existed since about the 16th century, so at the same time Germany was a mature feudal order as shown in the above map, the Dutch and English were just playing with the first proto-capitalist states. Capitalism focuses on a central government that supervises and enforces property rights in a more fluid arrangement of possession. The government, as judicial arbiter and spirit of the whole people, holds ultimate agency. Security, no longer a personal responsibility but a public one, opened up risk and reward considerably for those who could create value with their property.
Before capitalism, owning and defending property was always considered a good investment, due to the autonomy of title. Hierarchies based on land control were the essence of the world of kings, knights, and manors. The logic changed after centralized populist governments established dominance.
Capitalism, then, is Ownership Light, supervised ownership subject to government fiat. It holds the same relationship to arrangements of ownership in feudal times as paintball holds to war. The organization with agency here is the US government, and while said government uses their power lightly for fear of losing elections, the existence of eminent domain should kill your illusions as to whether property rights are really rights. They are privileges, the government granting responsibility for property to those who hold title to it and pay taxes on it, unless the owner is blocking "progress" and therefore is doing something unpopular with their property. The government owns the country, and everything else is just assigned responsibility.
Ownership of the property gets exchanged all the time, and the medium of exchange is money. To keep it simple: money is power. If you ever hear someone talk about national issues and say, "It's not really politics; they just want more money." then they deserve to get slapped: money is political. Even those with enough land to grow crops, feed themselves, and avoid the outside world still must pay taxes on their land, so a certain minimum of money wealth is necessary for any control over any property, and therefore, all must participate in the system.
In a world so up-its-ass with freedom talk, the last legitimate way people can compel desired behavior out of each other, the only consistent way to get people working as a group towards a unified goal, is with money.
Money organizes the economy on a macro scale. It's depersonalized reciprocity. Just about everyone understands that people must work and specialize in their labor. Money, an evaluation of the value of work, creates the incentive system by which people know what has value in an economy; this happens because what you value more commands a higher price based on its scarcity, and people who are looking to work respond to that price by specializing in whatever field commands more money. They become empowered by doing what commands these high prices, and can use their increased power, their money, to pay people to do what they want them to do, and those people can then do the same, and so on.
It's a language. Each transaction makes a statement, in pure integer value. When speaking the language of what we value, money forces us to put it in numerical terms - "this item or service is worth five dollars" - and then agree on a value between people. Then, we keep track of the value of what has been given and taken, and try to keep our heads above water. The scarcity of these tokens of value gives it meaning when we make or spend them, as a matter of relativity. Those with more value each individual unit less. That's a matter of human perception, not design. To say money biases anything is to hold a bias against math. "Accounting" is not so much a technical term as a moral one: paying your debts is simply the right thing to do, and accountability makes it work. To succeed, a capitalist must appeal to the value system of the culture he is in. Even basic survival requires understanding and catering to that values system in order to do something of value and be valued by other people. That binds people together.
Thus, money is inherently conservative: as a token of legitimate power, and it can be spent, saved, wasted, and the presence of more or less of it holds a direct correlation to the influence an individual has in the larger economy. The people who are good at this game tend to continue to be good at it, while the money that they already have gives them advantages, it takes money to make money, and so the effects of power tend to snowball up to a point where they are unmanageable. This is what it looks like when society organizes itself, a hierarchy in development. Those who take the concept to be legitimate define such wealth as earned and such power as respectable, and this creates the perception of merit.
The power gives rise to institutionalization and legacy; it is precisely the idea that people are to be held accountable that makes this - and all successful social systems throughout history - work. It's an incredibly flexible system, too. We think of capitalism as individualistic, but obviously organizations and institutions trade, too. Any entity with recognized agency can trade. Communist nations traded during the Cold War... and did so with the goal of making a profit.
Pardon if I gush, but it works fucking beautifully. At least, it does most of the time Those who want to de-emphasize money want to de-emphasize the debt they owe to those who have saved or grown their money. It is precisely because it is unequally distributed that it has meaning. Those dollars that the entrepreneur earned - or even passed down to an heir - represent services rendered. If you think those transactions were invariably made under duress or misrepresentation, then the game you're hating on is the game of life. Duress and misrepresentation are always a matter of degree; manipulating desires is the story of society, and if it came down to it, you wouldn't have it any other way.
The capitalist system is neither humanist nor empathetic by nature, no one is owed anything, but because numbers don't usually lie, you can say that it expresses the values of whoever is using it. But it can be viewed as expressing appreciation. When you buy something, this is you saying, "thanks for making this and giving me control over it. Here's a token that can later be redeemed for something of similar value." No one looks at it that way today, but that's a cultural problem and not a problem with the money-and-property system.
The power gives rise to institutionalization and legacy; it is precisely the idea that people are to be held accountable that makes this - and all successful social systems throughout history - work. It's an incredibly flexible system, too. We think of capitalism as individualistic, but obviously organizations and institutions trade, too. Any entity with recognized agency can trade. Communist nations traded during the Cold War... and did so with the goal of making a profit.
Pardon if I gush, but it works fucking beautifully. At least, it does most of the time Those who want to de-emphasize money want to de-emphasize the debt they owe to those who have saved or grown their money. It is precisely because it is unequally distributed that it has meaning. Those dollars that the entrepreneur earned - or even passed down to an heir - represent services rendered. If you think those transactions were invariably made under duress or misrepresentation, then the game you're hating on is the game of life. Duress and misrepresentation are always a matter of degree; manipulating desires is the story of society, and if it came down to it, you wouldn't have it any other way.
The capitalist system is neither humanist nor empathetic by nature, no one is owed anything, but because numbers don't usually lie, you can say that it expresses the values of whoever is using it. But it can be viewed as expressing appreciation. When you buy something, this is you saying, "thanks for making this and giving me control over it. Here's a token that can later be redeemed for something of similar value." No one looks at it that way today, but that's a cultural problem and not a problem with the money-and-property system.
This does not mean that we're looking at a panacea here. The fairness of the system is a matter of perceptions and it is very easy to come to the conclusion that you have been treated unfairly in your own quest for whatever you think you deserve. There is no known way to perfectly match the growth of the money supply to the growth of value of services rendered, so inflation and deflation happen all the time, based on gold production and fiat currency management. And many people who take risks are incredibly stupid about it, which can destabilize the system. Information and allocation of attention present problems for everyone, in every system.
But the incentives to manage risks and acquire relevant information are better here than in any other system. Capitalism is about risks, and pressure on the individual is built in. That's as natural an action in the social world as in the natural world, where predators burn calories to chase prey, hoping for a return greater than the expenditure, a caloric profit. Success depends on whether the product is more valuable to people who have the money to buy it than the costs of producing it. If it happens, then there is growth; the value of the good creates more wealth, which serves as more incentive power to produce, which creates more wealth. It's perpetual motion. The pressure resulting from this dynamic is responsible for all economic empowerment throughout human history.
But the incentives to manage risks and acquire relevant information are better here than in any other system. Capitalism is about risks, and pressure on the individual is built in. That's as natural an action in the social world as in the natural world, where predators burn calories to chase prey, hoping for a return greater than the expenditure, a caloric profit. Success depends on whether the product is more valuable to people who have the money to buy it than the costs of producing it. If it happens, then there is growth; the value of the good creates more wealth, which serves as more incentive power to produce, which creates more wealth. It's perpetual motion. The pressure resulting from this dynamic is responsible for all economic empowerment throughout human history.
Spending Votes
Democracy is based on the moral idea that every individual has equal value. You are entitled to the exact same voice, with the same degree of power, as every other voter.
I will focus on representative government here, because I don't know a single person so stupid that they believe the incredible inefficiency of direct democracy is worth it. The ballot box operates on many of the same principles that making money does for those aspiring to have power in the system; acquiring votes means convincing people to vote for you, giving the impression that what you're selling has more value than what the competition is selling, and then basically trying to convince the most valuable demographics that you are doing this with every election. It's still about values, and marketing principles apply. This is a game, just like capitalism. The parties are establishment products, and the bigger the system, the more necessary parties become.
Voting requires an institution with power that people can get elected to. Centralized institutions have serious advantages, namely in dealing with 'tragedy of the commons' type situations and when defending from other institutions that have power. The idea is fueled by popularity of an individual leading to a perception of legitimacy. It's important for the element of legitimacy: the government is basically just a command bureaucracy with the representatives being those who establish its rules, so the election thing is the only element of it that creates the perception of anything more than another tell-you-what-to-do body.
Votes are a currency just like money is a currency. There's little difference in actually making the choice; the choice of a politician is a choice of a provider of a service, and buying a product is not so much a simple convenience but more like an affirmation of the value of the service or product you're acquiring, along with - in theory - admitting to the value of the person creating the good. The difference is in giving up something of scarcity to you, which happens with money but not voting. Either way, people are making a value judgment, and should admit their responsibility or at least complicity in it. They never do, but the democratic way says that they should.
This cannot be stressed enough: while dollars must be earned according to the rigors and values of others in the system, votes are an entitlement, granted to each individual for every election, and with no pretense to merit besides the voter managing to not be in jail at the time. There's a vague idea that elections should take place frequently enough to get rid of incompetents before serious damage is done, and seldom enough that the elected reps have time to prove their ideas, but these concerns directly conflict with one another and term length is basically arbitrary. So is the specific system of voting, between winner-take-all plurality voting, anti-plurality voting, Borda count, Condorcet's method, etcetera; economist Ken Arrow basically proved that no voting system can be "fair" in the sense of accepted definitions of fairness.
As it stands, dollars can be invested, saved in the long term to build empires. Not votes. The individual will always have one vote, every two or four years, and that vote is a "use it or lose it" proposition. There is no investment that can give you more votes than other people. It doesn't matter if you can't balance your checkbook or if you think a "veto" is Spanish for "a whale's vagina". A complete idiot's opinion counts for as much as the most educated, erudite, and respected man's opinion ever can. This is egalitarianism, raw.
There is no risk of failure, except failure as a society, which no voter will ultimately blame himself for. There is no risk of losing your voice, no risk of waking up on election day to find that you spent your last vote to get two doubles and a lap dance at Babydolls. There is no better system in the world for stupid people.
In America, particularly, elected officials try very hard to convince us that they aren't so much manipulating society for future votes so much as regulating it to make it "fair." But this supposed fairness is, obviously, a subjective matter, and we should all know by now that people come to self-interested conclusions when deciding what's fair. So when everyone at all levels of society is given the right to vote for a champion who "represents their values," and obviously the majority of those people will be closer to the bottom of any given hierarchy than the top, what the hell should we expect them to do?
Their perception of injustice is encouraged and facilitated by institutional media. This isn't a state run media, of course: they have no particular investment or interest in the particular party or economic class as it stands, just in the overall power structure. Plus, it lives in a competitive ratings arena, so they have every incentive to tell people what they want to hear for the sake of drawing in viewers. So they dive to that lowest common denominator on a daily basis, like so much else endemic to democratic systems.
The underlying, unequally distributed currency of democracy is attention. Manipulating attention gives advantages and disadvantages to gaining power throughout the system, just as it does in the brand awareness category for businesses. The attention economy underlies all institutions.
For the wannabe elected, the perceptions fuel power more directly; it comes down to mob-rule style popularity, formalized peer pressure, government through the same mechanism that high school kids use to choose the prom queen, and as every professional athlete and pop star knows, nothing is more fickle, nothing has a shorter time preference and a shorter memory, than the mob.
The necessity of maintaining popularity keeps any kind of serious enforcement of discipline or rigor from creeping into an elected government in almost every society that practices voting. In the name of justice, the sovereign is expected to make people's lives easier, and not to hold fast for standards. We like our kings merciful to a fault. How often do you really think the guy pushing people to do better wins popularity contests?
So what kind of standards do people want the sovereign to relax? There are plenty, but the most obvious are the standards of producing what other people value, through the opposing capitalist system.
So what kind of standards do people want the sovereign to relax? There are plenty, but the most obvious are the standards of producing what other people value, through the opposing capitalist system.
The Democratization of Wealth
What we have here is institutional competition between business and government, but it's a strange form of competition. The government has explicit power to tell people what to do, but everyone hates when they use it and they need to get elected, so they prefer a softer and more positive incentive power, using dollars which they tax away from the wealthy, lending credence to the ideal of earning what you get. The typical story today focuses on corruption by the monied classes in government, which shows a certain expectation that all these property rights are extremely conditional, but it also assumes that the rich are conniving bastards who don't earn their money or use it well.
The clearest objection to the thesis of this blog is that people support markets, and so the conflict between property and democracy does not really exist. The people will vote to retain property rights.
But deep down, we all probably know that this is bullshit. People have supported property rights so long as the average person's stock of wealth was expanding. The support always gets soft when recessions hit, when a handful seem to get outsize rewards through market machinery, and when the actual authority that people with money have over culture becomes too obvious. Knowing this, the market system has become increasingly compromised to the democratic popularity contest over the last century. People actually support artificial market-like constructions; a real market wouldn't be nearly as wasteful, or have the appearance of such short-term-obsessed wealth, as the American market. A real market would be efficient, to include limiting the consumption of the average person. A real market would encourage people to team up in institutions for the sake of mutual aid of all kinds. But instead, the nation is the institution and the markets are subordinate to it, so market principles of autonomy are simply thrown out when enough people feel their welfare has become less than it should be.
America has had a middle class for several decades now. Because of this, people look at purchases with a sensibility that seems to override good sense about their budget constraints. There is little or no discipline in the way that we spend money, undermining everything about "market efficiency" a capitalist might think applies. That's affected out entire viewpoint on what a healthy economy should be, and that's effectively by design. We want money to communicate what we value, but we don't want to be hemmed in by it. We want money to have symbolic power to show our approval of iPhones or Toyotas, but we don't really think of ourselves having to earn the money to buy them against any kind of resistance. Opportunity and income are owed to us: if we see limitations from a lack of money, it seems unjust.
There is an agenda to this, whether the people pushing it realize it or not: the egalitarians want to make buying more like voting. We want the money to show what people value and where our production should be allocated, but not to show what people deserve to have.
I think lots of people would like to create a situation where people's income from actual work is used for leisure and entertainment products alone, extras, consumerist purchases that say something about your identity instead of commodities that should be free, and that this is the best way to be capitalist. They want a world where all income is discretionary income. The extremes, of people needing to work to survive and people building empires of business, would be avoided.
But I think other people simply want everyone to have all the money they feel they need. This would destroy the power of money, as what gives it value and brings supply and demand into accord is the scarcity of it, but that's the point. See money doesn't actually bring supply and demand into accord unless we consider money a legitimate gauge of value produced: we still want more things, even if we run out of money. So we'd like to see that go away, and it enrages us when a little thing like not having currency gets in the way of us having what we want when other people in society obviously still have the wherewithal to produce it. We want the connection between how much valuable work people do and how much they can have to disappear, obviously for what society considers necessities, but even for luxuries.
Armed with a fiat currency and too much estrogen, politicians use economic manipulation to "show they care" and boost their election prospects with complicity from everyone involved. The results of the vote over the long run show it:
This has all been legitimized with an intense narrative about exploitation and victimization by the capitalists. For people who view inequality as a good versus evil situation, anything that creates inequality is a form of corruption, including demands from those who work that they have more power, property, and influence than those who don't. At the end of the day, those types of people believe that people who produce should be doing so out of self-sacrificing love for mankind, not for the sake of incentives. What they accept in the meantime is an idealized vision of the people creating a good world by setting the power hungry against each other, both in democracy and with capitalism maxed out on competitiveness, managed by anti-trust, progressive taxes, regulations, and the ever popular inflationary currency. They'll take the status quo only because they can't seem to get slave morality to take very well for those with the confidence and competence to organize modern industry.
Does it work? Sure! It sounds great, so long as you can take everyone who still produces things for granted. You have to have a sucker in here, someone willing to work as if their ass is on the line, despite a safety net that clearly shows that it isn't. Germany is finding out about this right now, as the EU pushes it to subsidize other European countries. Supposedly, it helps keep the European economy and shared currency humming along if all of Europe is spending money. The logic is impeccable:
If we tax the money away from you and give it to consumers, then we're helping you, too, by giving you an opportunity to earn it back. That way, you don't get bored!
At the end of the day, the maintenance of the middle class comes down to this. The ideology of the market-democracy hybrid preaches merit as a simulacra at the best of times and a damned lie invented for the sake of the rich at the worst of times. Markets power individualism in the best of times, and in the worst of times, markets repress the spirit of the individual by forcing him to conform to jobs he doesn't like, buying products inferior to what he would prefer, and thus must the people be subsidized.
The clearest objection to the thesis of this blog is that people support markets, and so the conflict between property and democracy does not really exist. The people will vote to retain property rights.
But deep down, we all probably know that this is bullshit. People have supported property rights so long as the average person's stock of wealth was expanding. The support always gets soft when recessions hit, when a handful seem to get outsize rewards through market machinery, and when the actual authority that people with money have over culture becomes too obvious. Knowing this, the market system has become increasingly compromised to the democratic popularity contest over the last century. People actually support artificial market-like constructions; a real market wouldn't be nearly as wasteful, or have the appearance of such short-term-obsessed wealth, as the American market. A real market would be efficient, to include limiting the consumption of the average person. A real market would encourage people to team up in institutions for the sake of mutual aid of all kinds. But instead, the nation is the institution and the markets are subordinate to it, so market principles of autonomy are simply thrown out when enough people feel their welfare has become less than it should be.
America has had a middle class for several decades now. Because of this, people look at purchases with a sensibility that seems to override good sense about their budget constraints. There is little or no discipline in the way that we spend money, undermining everything about "market efficiency" a capitalist might think applies. That's affected out entire viewpoint on what a healthy economy should be, and that's effectively by design. We want money to communicate what we value, but we don't want to be hemmed in by it. We want money to have symbolic power to show our approval of iPhones or Toyotas, but we don't really think of ourselves having to earn the money to buy them against any kind of resistance. Opportunity and income are owed to us: if we see limitations from a lack of money, it seems unjust.
There is an agenda to this, whether the people pushing it realize it or not: the egalitarians want to make buying more like voting. We want the money to show what people value and where our production should be allocated, but not to show what people deserve to have.
I think lots of people would like to create a situation where people's income from actual work is used for leisure and entertainment products alone, extras, consumerist purchases that say something about your identity instead of commodities that should be free, and that this is the best way to be capitalist. They want a world where all income is discretionary income. The extremes, of people needing to work to survive and people building empires of business, would be avoided.
But I think other people simply want everyone to have all the money they feel they need. This would destroy the power of money, as what gives it value and brings supply and demand into accord is the scarcity of it, but that's the point. See money doesn't actually bring supply and demand into accord unless we consider money a legitimate gauge of value produced: we still want more things, even if we run out of money. So we'd like to see that go away, and it enrages us when a little thing like not having currency gets in the way of us having what we want when other people in society obviously still have the wherewithal to produce it. We want the connection between how much valuable work people do and how much they can have to disappear, obviously for what society considers necessities, but even for luxuries.
Armed with a fiat currency and too much estrogen, politicians use economic manipulation to "show they care" and boost their election prospects with complicity from everyone involved. The results of the vote over the long run show it:
- People don't want to have the burden of saving money for retirement, so cue Social Security.
- People don't want to worry about not being able to eat and live in a house, so cue food stamps and HUD.
- Failure to figure out how to get health care gets you Medicare and Medicaid, plus a whole new mess of subsidies with the recent legislation.
- Lenient bankruptcy laws are the rule in America particularly.
- Lots of people want regulations on producers and employers, so people can just assume that products are safe and ethically made without doing due diligence.
- Anti-trust laws eliminate the concern over monopoly exploitation which might otherwise require people to act as socially conscious buyers.
- We have mortgage help of various sorts, including a large tax deduction, which is being debated precisely because it's failing at its primary task: to help the middle class buy houses. Since it helps investors and the evil rich more than most, lots of people would like it to disappear.
- "Good conscience" legal principles allow for nullifying contracts that are deemed exploitative.
- Free lawyers if you get arrested.
- Cradle-to-grave education subsidization.
- All infrastructure in transportation, energy, and communications have been subsidized into existence, often on conditions of equal access for everyone.
- Plus much more!
Does it work? Sure! It sounds great, so long as you can take everyone who still produces things for granted. You have to have a sucker in here, someone willing to work as if their ass is on the line, despite a safety net that clearly shows that it isn't. Germany is finding out about this right now, as the EU pushes it to subsidize other European countries. Supposedly, it helps keep the European economy and shared currency humming along if all of Europe is spending money. The logic is impeccable:
If we tax the money away from you and give it to consumers, then we're helping you, too, by giving you an opportunity to earn it back. That way, you don't get bored!
At the end of the day, the maintenance of the middle class comes down to this. The ideology of the market-democracy hybrid preaches merit as a simulacra at the best of times and a damned lie invented for the sake of the rich at the worst of times. Markets power individualism in the best of times, and in the worst of times, markets repress the spirit of the individual by forcing him to conform to jobs he doesn't like, buying products inferior to what he would prefer, and thus must the people be subsidized.
Markets will never die, but if they look like they're actually empowering those with wealth instead of just systematically pulling the genius from them, they might be made irrelevant. So if you're one of those who actually thinks that producing for others will grant you respect and real influence, if you pull overtime for the sake of maximizing production, if you work your ass off in high-demand fields because it's what society needs, instead of what you feel like doing, if you actually place any faith in the concept of accountability instead of the biases of the victim classes, then ask yourself: do you really think they'd let you get away with it?
And more importantly: you know they're just using you, right?
Don't strain yourself. They aren't worth it.
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