Political Theory

Communist Money

“…the instability of the capitalist economy and the growth of government are wholly due to governments denying free enterprise the right to supply the good money it needs…”

– F.A. Hayek

 

Money is the lifeblood of the “free market”, but it is not free. The government monopolisation of money is one of the prime factors that has driven the Western world to its greatest levels of inequality since the Gilded Age. An inequality that is unsustainable and unjust.

In the Soviet Union, a central committee set the rules and times for all the harvesting of crops, of wheat, and the price of bread. This repeatedly led to massive shortages of basic foods through the existence of the Soviet empire. Not wholly the fault of the system, the harsh Russian climate takes part blame, and a free market system is also inefficient regarding crop cultivation (the cobweb theory offers a reasonable explanation why, beyond the scope here).

But a large reason for the difficulties was due to the misallocation of resources created by a centralised committee decreeing how the farming should be done, and how much reward the farmers and merchants deserved: Meaning they weren’t motivated to do anything beyond the bare minimum. And in all that time, with all that starvation around them, the Communist Party officials and their friends never suffered a lack. Only the average citizen suffered.

Most central bankers (including Federal Reserve officials (technically a private corporation, but a de facto central bank)) believe in some form of free market. Ask them why they’re capitalists, and they’ll probably tell you something about allocation of resources, or perhaps the history of the free market lifting people out of poverty. Ask them why the same rules of resource allocation don’t apply to money creation, and they’ll have a lot of smart sounding defences: we need a “lender of last resort” or “public utility” or something along those lines.

The truth is that the same rules apply. And just like in the times of the Soviet Union, the people close to the Party (the donor class and top government officials) never suffer from lack. The average citizen struggling for the bare minimum though: tough luck.

To be clear, I do not think central bankers are evil or part of a global conspiracy. Perhaps I’m naïve, but I do believe that if they could do something that benefited both the average citizen and the top of society, they would prefer to do so and would choose to do so. Just as the Soviet central planners would have loved to have been able to provide plentiful bread and meat at low cost for the average citizen (loyal ones at least).

But if forced to choose, they’re going to provide for the oligarchy first, those are their friends and family and they’ll suffer if they don’t prioritise the needs of the ruling class.

We see the results today, massive wealth inequality, with a big chunk of it at the very top being largely unearned.

Sadly, the only people who ever talk about this tend to be gold standard zealots and hardcore conspiracy theorists. If the gold standard worked so brilliantly, they never would have got rid of it in the first place, and reintroducing it now would likely lead to all sorts of mayhem, as it did when Churchill tried in Britain a century ago.

I must note that there is also private money in the form of debt and credit issued between private parties. “How the Economic Machine Works” by Ray Dalio is a good introduction to that side of money. But these private credits and debts are still issued in the currency created by government monopolies.

I’m unsure how to end this essay, so I’ll just state that I believe I have a reasonable and just solution and I shall explain this in the future, and provide a link here when that article is ready.

Political Theory

Types of Inequality

“Calvin’s Dad: “The world isn’t fair Calvin”

“Calvin: I know, but why isn’t it ever unfair in my favour?””

– from Bill Waterson’s Calvin and Hobbes

 

Three types of inequality exist: Just inequality, unfair inequality, unjust inequality.

 

Just Inequality: This exists when people have earned better or worse outcomes.

For example: Person A and Person B have the same job that they perform to the same standard and both earn the same wage. Person A works 20 hours a week and Person B works 40 hours a week. Person B gets paid twice as much money per week than Person B and becomes richer. The inequality between them is arguably justified.

 

Unfair Inequality: This exists when luck distributes unevenly between people.

For example: Person C wins the lottery and thus has more money than Person A and Person B. There’s nothing unjust in Person C’s luck, he didn’t put a gun to anyone’s head and stop them from buying lottery tickets, yet it seems unfair to many people that Person C has so much more wealth than other people, because it seems unearned.

Luck exists as a law of nature, but still it often offends our human sensibilities which tend towards a sense of fairness and expects some sort of even distribution in the world. The promotion of the idea of equality of opportunity is one way that societies try to counter unfair inequality.

 

Unjust Inequality: This exists when people are denied what they have earned.

For example: Person D completes a good job for his employer, but the employer refuses to pay him, and the system is set up so that Person D can’t claim what he is owed. Person D has less money than Person’s A,B and C, but this seems unjustified, since Person D has earned a better outcome than he has received.

 

Most people have no issue with just inequality, though hard-core Communists might still argue that Person A and B should be paid the same. And most people would object strongly to unjust inequality, though hard-core Social Darwinists might argue that Person D deserves to be ripped off if he can’t defend himself. The real debate people have is usually about unfair inequality: how much should it be corrected?

 

People often align on the side that suits them best: if they feel they have less luck in life, they tend to think unfair inequality should be corrected by human society, and if they feel luckier, they tend to think society has no business getting involved in people’s luck. Interestingly, most tax systems take the reverse approach: Person B gets taxed disproportionately heavier for working harder than Person A. Person C often gets taxed less, if at all (depending on the country) for his luck (with a similar result if Person C had a big stock gain instead of a lottery win).

 

Of course, life rarely fits so neatly into one of these boxes. Take scenario A from just inequality again: let’s say that Person A actually wants to work 40 hours a week, but he’s a redhead and his boss hates people with red hair and thus only hires him part-time. He’s still getting paid less for working less, but it starts to seem less justified, since part of the reason he’s getting paid less is for reasons beyond his control. Some unfair or unjust luck has been introduced and complicated the issue.

 

Inheritance is another example of a potential mix of all these types of inequality. It seems just that someone should decide who should receive their property when they die. But it also seems unfair that some people get left so much they haven’t earned, while others receive nothing. And lastly, some of that inheritance may well have been earned unjustly: how much should Bernie Madoff’s children receive? After all, they did turn him in.

 

How should a society account for all this complexity?

An eternal question with too simple answers that cycle around and around, each new age offering an old answer.

Political Theory

A Metaphor for the Agricultural Age

“…then your eyes shall be opened, and ye shall be as gods…”

– The Serpent of The Book of Genesis

 

A quick search on the World Wide Web tells me I’m not the first to consider this theory though I believe I thought it up independently: Could the story of Adam and Eve be a metaphor for passing from the hunter gatherer age into the agricultural age?

 

The fruit they eat contains knowledge and the divine punishment for receiving this knowledge: “…cursed is the ground for thy sake; in sorrow shalt thou eat of it all the days of thy life…Thou shalt eat the herb of the field; In the sweat of thy face shalt thou eat bread, till thou return unto the ground”.

 

To this theory I’d also like to add a component of sexual jealousy. The serpent, an obviously phallic creature, is the tempter and first tempts the woman. What does he gain from having her ruled over by her husband? Is that a metaphor for moving from a polygamous to a monogamous society?

 

And if so, was the hunter gatherer age truly an era with no sexual jealousy, with no toil, where women didn’t suffer at all during childbirth? Or was it that the early farmers, labouring for hours a day to produce their food, looked back at what society had been like before and imagined it must have been a paradise?