Saturday, August 9, 2014

Where is the Social Value in Economics?

What do we lose when money is the only thing that talks?

Reading the Arthurian tales of Sir Mallory, one is struck by the essential political nature of economics, at least its economics. Those who are in, get money and lands. Those who are out, have them stripped. It really puts the political into political economics. The Norman conquest of England was a decidedly non-romantic example of this, with all the plum estates going to the French invaders. Today, economics has been on a centuries-long quest to remove politics from economics, making of our society a mechanism of pure market and money relations. While that process has many advantages, it is very destructive to social structures that were so rich in times when economics was a by-product of the main priority, which was political and social standing.

We get the benefit of money talking ... that anyone can go to a restaurant or hotel and be served, no matter what their social standing. We get reductions in corruption, and increases in economic efficiency, as business decisions can be made without reference to politics or other considerations. We get the freedom of creating businesses to address the most varied and obscure needs, and of being customers on the receiving end. On the other hand, social standing has become itself a creature of money, rather than of other virtues. Our politics have become a chase for money, rather than the reverse. There are advantages on both sides, but the new system only works if money really rewards activities that are socially virtuous. And that is highly questionable.

These days, money derived from crime, from financial fraud, from legal tax evasion and corporate cronyism and abuse of customers and employees, from environmental pillaging ... all smells as sweet as money from government service, nursing care, or technological innovation. Economic distinctions are no longer made on the basis of virtue, and indeed the most nurturing professions are typically paid the worst while the most pathological are paid best. Perhaps that is because normal people are unwilling to undertake, or unskilled in, the darker arts of making money the modern way, such as evading the law in every possible way, destroying every unwritten bond of civility and trust among companies, customers, and employees, and lying about it as a matter of course through public relations.

Surely it is difficult work. Does that mean it should also be well-paid work?

While economic efficency by way of ruthless capitalistic competition is a good thing in many ways, our society could use extra mechanisms to reward socially beneficial work, (and discourage harmful pursuits), beyond the current motivators of self-satisfaction, the occasional medal, and a smattering of non-profits and government functions dedicated to non-market goods. The applicable negative motivators are typically regulation and legal prosecution, which are surely good but woefully insufficient.

The classic and brutal way to align social and economic objectives is to nationalize everything, and have the state direct all work with its social goals first in mind. China exemplified this method until giving in and going with the capitalist system in the 1980's. It is just not a practical method of organizing a large economic system, or even a small one, really, with its lack of proper information leading to poor and arbitrary decisions, even if well-intentioned. It is conceivable that an eventual computerized economy might correct this defect and allow planning at the requisite scale and detail. But since the core issues and drivers are human desires, frequently of the most inchoate nature, this is still unlikely.

Another method one might consider is to pay everyone the same. Competition could take place on many other levels, such as power, pleasantness of work, spiritual reward, etc. But the take-home pay of everyone employed in the economy would be the same, and if work does not generate enough money to pay that wage, that work would, and probably should, remain undone. I think that there are a lot of good points to such a system. It diverts competition to far more interesting and rewarding aspects of life and work than money at the same time that it provides dramatic fairness across the economy. The current pay structure is far more socially constructed than the ideology would have it, and far less tethered to anything like "worth" or "performance". Would the flow of talented people going to Wall Street to waste their lives be as torrential if the pay were not an issue? But it is also impractical since, as we see in the political system, pay can be rendered in many forms, under the table, etc. And what to do about investment income, entrepreneurs, self-employed novelists, and all the other forms of making a living? It would become a serious mess, though perhaps not so much more of a mess than our current tax and income system.

Something more modest might be a more active taxation scheme that relieves those in beneficial professions from taxation while raising taxes on those in socially damaging professions. The government would develop a massive schedule of lines of work, and each line would be assigned some appropriate tax rate. But how? It might be conceivable to do this in a democratic fashion by adding an extra poll to the census that asks people's opinions of various lines of work. Such a popular opinion of everything from lawyers (perhaps by sub-type) to fast food workers to defense contractors could be used to put a number on that profession's overall social benefit index, used to figure its tax rate. Unfortunately, there are an infinite number of types of work, and different conditions within each, making such blanket judgements highly suspect, even if a popular poll were not involved.

So we are left with nibbling around the edges of the great capitalist monster, with Pigovian interventions such as a hefty Tobin tax on all financial market transactions, which would dampen the bonfires of Wall Street. And taxes on carbon, cigarettes, strong regulations against financial fraud, etc. And of course strong Keynesian and supplementary policies that insure employment for everyone at a decent living, whether private or public. But more should be done, and squaring that circle is a great continuing project in political economics.

The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations. It has pitilessly torn asunder the motley feudal ties that bound man to his “natural superiors”, and has left remaining no other nexus between man and man than naked self-interest, than callous “cash payment”. It has drowned the most heavenly ecstasies of religious fervour, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation. It has resolved personal worth into exchange value, and in place of the numberless indefeasible chartered freedoms, has set up that single, unconscionable freedom — Free Trade. In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation.

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