Sunday, January 15, 2006

Cue Card Libertarianism - Harmony of interests

As I said here recently, no man is an island and neither should we be. In a free society, we each gain an incalculable boon from the existence of others. Just some of the benefits of living in a free society are the following:
  • the learning and knowledge we may glean from others -- being able to stand on the shoulders of geniuses underpins all subsequent scientific, technological and artistic advances;
  • the love, friendships and artistic gifts we may share with each other;
  • the 'seed capital' produced from prior production that may be made available to us for our own projects;
  • the abundance of wealth and technological progress made possible by capitalism which makes our existing lives happer, healthier and longer than they would otherwise be.
So what good is sitting alone on your island. "Come hear the music play!"

In a free society, all the many benefits to be gained from others are non-sacrificial ones. Advancement, wealth-production, love and friendship... all derive not from plunder and conquest, but by cooperation and voluntary exchange. By mutual benevolence. As David Kelly explains in his book Unrugged Individualism, "Benevolence is a commitment to achieving the values derivable from life with other people in society, by treating them as potential trading partners, recognizing their humanity, independence, and individuality, and the harmony between their interests and ours." A free society is not do-eat-dog, since we all gain incalculably from all those who are 'winning.'

Benevolence is both the result and the pre-condition of enjoying the fruits of a free society. Robert Le Fevre, for example, in explaining ownership [audio] -- how you acquire it, and why it's to everyone's advantage to respect boundaries -- also explains implicitly the need and result of benevolence in the principle of property ownership. (You might want to compare Le Fevre's presentation to my own on the same subject. Or you might not.)

The field of economics also helps explain the harmony of interests amongst free people. The Law of Comparative Advantage, while somewhat difficult to grasp, is just one side of an economic coin explaining the harmony:
Free people are not a threat to each other. Your neighbour may be bigger, stronger, more efficient, more productive, and even better looking, but it's to the advantage of both of you to keep working at what you do best. (If you didn't do it the other day, and this still sounds screwy, then try the Desert Island Game. It's a good introduction to this important idea.) The law of comparative advantage, first identified by David Ricardo, recognises that no matter how poor you yourself may be at your work, if both you and your neighbour specialise in what you each do best, then at the end of the day you are both better off. The best way, for example, for the Swiss to get grain is not to grow grain, but to make cuckoo clocks and watches so they can trade for grain. And when they do, we're all better off.

If you think the Law of Comparative Advantage seems to make no sense, then don't worry, you're not alone. As PJ O'Rourke writes in his book Eat the Rich, "Todd G. Buchholz, in his book New Ideas from Dead Economists, says 'An insolent natural scientist once asked a famous economist to name one economic rule that isn't either obvious or unimportant.' The reply was 'Ricardo's Law of Comparative Advantage.'" If you're struggling with the concept, and the game doesn't help explain it, O'Rourke's short explanation is one of the best on record, and undoubtedly the only one using Courtney Love to help explain things.
In a free society there is room for all. The Law of Comparative Advantage explains how the less able contribute to the more able, to the great benefit of both. On the other side of this coin representing the harmony of interests of free people is the Pyramid-of-Ability Principle identified by Ayn Rand -- this principle recognises the enormous contribution made by the more able to the less able:
As George Reisman puts it, the law of comparative advantage explains the "contribution of the cleaning lady to [noted inventor, Thomas] Edison"; by contrast, the Pyramid-of-Ability Principle explains the "contribution of Edison to the cleaning lady." What Edison makes possible for the cleaning lady is much, much more than she coudl have achieved under her own steam. As David Kelly explains: "The men with the greatest minds and talents confer on others much more value than they ever receive in return, no matter how much wealth they acquire, [while] the least able receive much more value than they create."

The concept that integrates this principle is what Ayn Rand called the Pyramid of Human Ability. Rather than the strong exploiting the weak, as popular wisdom would tell you is the case, the 'weak' are far more 'exploitative' of the strong. But the strong are not complaining; they just keep right on producing.

Frederic Hamber explains the reason: it is our minds, not our muscles that are the real source of wealth and progress:
Contrary to the Marxist premise that wealth is created by laborers and "exploited" by those at the top of the pyramid of ability, it is those at the top, the best and the brightest, who increase the value of the labor of those at the bottom. Under capitalism, even a man who has nothing to trade but physical labor gains a huge advantage by leveraging the fruits of minds more creative than his. The labor of a construction worker, for example, is made more productive and valuable by the inventors of the jackhammer and the steam shovel, and by the farsighted entrepreneurs who market and sell such tools to his employer. The work of an office clerk, as another example, is made more efficient by the men who invented copiers and fax machines. By applying human ingenuity to serve men's needs, the result is that physical labor is made less laborious and more productive.
Now, there is one crucial caveat to all this. There is a harmony of human interests in all respects except one: Force! When the gun comes out to force people against their will; to take by force or fraud the fruits of another's production of creative effort; to shackle, by force, the great creators and producers in order to make them milch-cows for the unproductive and the non-creative... when such a situation occurs, then no-one wins, and the 'harmony of human interests' is torn asunder. Such an existence really is the 'dog-eat-dog' situation of popular complaint, in which each of us is potentially a threat to each other. Our minds cannot owrk by compulsion, and if the fruits of productive work are subject to plunder, production will be meagre indeed.

The absence of initiatory force is the very pre-condition of a free society; in the absence of force, we have the opportunity to enjoy the very real fruits of freedom and the harmony of interests enjoyed by free men.

Main linked Articles: Cue Card Libertarianism - 'No man is an island' - Not PC
The gains from trade: understanding comparative advantage - LibertyGuide.Com
Desert Island Game
Ricardo explained by O'Rourke
Pyramid of ability and individual moral worth - Will Thomas
Time to celebrate man's mind - Frederic Hamber
Cue Card Libertarianism - Force - Not PC

Linked Books: Unrugged Individualism - David Kelly
Eat the Rich - PJ O'Rourke

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3 Comments:

Blogger Icehawk said...

a) Tragedy of the Commons. Transaction Costs. Market Failure. Haven't we been here before?

Yes, enriching others helps each individual: but often screwing everyone else helps an individual more. It all depends on the situation and the individual. Which is why pragmatists prefer mixed systems with markets in most situations, but with regulation in those situations where markets don't work well.

b) Uh, your attacks on Marxism are attacks on a straw man, and as such are not very honest.

Your dishonesty is that Marxists don't bitch much about the more able exploiting the less able. They bitch about the undeservedly rich exploiting the undeservedly poor. It goes with a view that social class is largely inherited.

I've never heard a Marxist bitch about the $150 million made by Chester Carlson, inventor of the photocopier. Instead, they bitch about $150 million inheritance of Paris Hilton.

Are you seriously trying to argue that Paris Hilton's ownership of large amounts of inherited capital is because she is vastly more able than those who work in the companies she owns? And that the lives of those who work in the companies she owns are enriched through her great abilities as a capitalist?

I agree with you about Carlson deserving vast wealth for inventing the photocopier - which is one reason I'm not a Marxist.

But I don't think Paris Hilton is equally deserving as Carlson simply by virtue of having great-grandparents who were squillionaires, and parents and grandparents who failed to spend faster than their vast investments compounded. Which is a reason I'm not a Libertarian.

1/16/2006 03:51:00 pm  
Blogger PC said...

b) Icehawk, you said: "Instead, they bitch about the $150 million inheritance of Paris Hilton. Are you seriously trying to argue that Paris Hilton's ownership of large amounts of inherited capital is because she is vastly more able than those who work in the companies she owns?"

Well, no, I haven't argued that, and nor am I. However, Paris Hilton's $150 million (if such is in fact her personal fortune; I confess I don't really follow her personal fortunes too closely) takes nothing away from you or from anyone else. Only a flawed 'zero-sum' argument would say that her owning riches meant that somehow you were harmed thereby. The fortune was her parents' [?] to give; the existence and disposal of that fortune neither pauperises nor diminishes you or I or anybody else.

And just as the work of an office clerk is made better by Carlson's photocopier, so the path of the traveler is made better by the existence of the Hilton Hotel chain -- even if you yourself don't use either, their existence adds to the sum of things that affects you in a positive fashion either by cheaper reproduction through effficient copying, or by cheaper
accomodation because of greater supply, and better standards due to greater competition.

a) Icehawk, you also said: "Tragedy of the Commons. Transaction Costs. Market Failure. Haven't we been here before?" So we have, and as I've said before:
1)whatever so-called market failures you can cite and no matter how bad such faiures are claimed to be, they pale into insignificance as compared to the manifest failures and iniquities of governments. Further, as I've also said before, the problems that government claims to be fixing (by force) invariably come down to problems of their own making. Real 'market failure' is less numerous than you imagine, and less damaging than you maintain.
2) The solution to both the Tragedy of the Commons and the problem of Externalities is the recognition and protection of property rights. (I'm not sure what you're claiming is a problem with Transaction Costs - I'm assuming it is Externalities you meant to include in your list?)

1/16/2006 04:28:00 pm  
Anonymous Sus said...

No, Icehawk. You certainly aren't a libertarian.

As for the notion that 'screwing everybody helps an individual more'; how sad.

Why? Because in business, the ideal situation is where both parties prosper. Screwing someone is hardly going to get you repeat business. You'll only do it once & more fool, you.

It also goes without saying that those employers who respect their staff ultimately receive more productivity from them. In other words, miserable bastards - because they do exist in an imperfect world - invariably shit in their own nests eventually.

I also disagree with your statement that 'pragmatists prefer mixed systems with markets in most situations, but with regulation where markets don't work well'.

The reality is that 'the market' will always work - because it is simply the concept of supply meeting demand. If there's a demand for something, suppliers will vie for it. If there's no demand, there's no need for supply.

Regulation, or interference within the marketplace is what upsets the applecart. There are two clear examples in both the NZ broadcasting and housing markets.

The state insists upon dishing out public money to make programmes to fulfil its so-called 'charter obligations'.

But if the programmes are good enough and there's a demand for them, the makers will find backers in typical business fashion. Plenty of people subscribe to Sky for preferred programming. They pay for what they want. But the state stepping in means it forces programmes upon the public whether there's an interest or not. In other words, it decides what we should watch! Good old we-know-best statism at work again!

And re housing, wherever the state steps in 'to help the poor' we invariably end up with a (politely) less than desirable suburb/housing area - which only goes to artifically raise the prices of the surrounding non-state housing areas, making it harder than ever for those on lower incomes to own their own home in a nicer spot.

That's the thing about socialism: it tends to crap on the very people it purports to 'care' about.

Wrong C-word, I'm afraid. 'Control' would be a better one.

And as for Paris Hilton being 'undeserving' of her inherited wealth: who are you to decide who's deserving or not? That's entirely subjective. In my subjective opinion she happens to be one of the silliest cows imaginable, but that's beside the point.

Her great-grandparents had the foresight to create fabulous wealth, (via a service that the public obviously wanted!), ensuring their family's wellbeing, comfort and financial independence for generations to come.

We should all aspire to such forethought and generosity.

Yes, generosity. Because if you've got more; you've got more to give. You can't help the poor by being one of them.

1/16/2006 04:58:00 pm  

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