Debugging society - part one

Debugging society - part one:

Thoughts on free markets and a capitalist economy

I believe our current economy and capitalist system to be deeply flawed, unjust and ultimately doomed. Let me state a couple of the reasons why:

It's flawed because it encourages all the wrong mechanisms and motivations. Free market advocates quote the fundamental mechanism of supply and demand and competition as the driving forces that keep the system healthy and alive.

Competition is what I call a destructive motivator. Meaning that to thrive in a competitive market it is to your advantage if your competitors (opponents?) struggle. This is not a healthy situation, not productive for society as a whole. Cooperation on the other hand is a constructive motivator. It is good for you if your partners thrive. If competition is the only viable motivator (as seems to be assumed) how can it be that even in a capitalist system the greatest leaps in productivity come when people cooperate? Rebuilding after a war, causing “economic miracles”? Building up to a war? Why, if competition is the only viable option, do we expect friends and family to work by wholly different and opposite principles?

Supply and demand is a broken system as well. There are lots of things that are in huge demand and are not in the hands of capitalism to supply (rightly so). Think about our natural resources like air and water. The demand is huge and never-ending. Yet at the same time they have no monetary value attached to them. Which means it’s not, cannot be, in a capitalist’s interest to invest in, or even just to conserve them. But the alternative also isn’t possible. We cannot attach a price value to natural resources as that’d mean poor folks would only get three breaths a day or something…

Another key observation is an individual worker's productivity. In previous centuries, when work mainly consisted of manual labour, all workers were pretty much equal. Sure, if you put in twice as many hours as your neighbour or are twice as strong as him you might manage to work twice the land he does. But basic physical principles prevent huge differences in work productivity. Not any longer. Technology has changed all that. A farmer using modern machinery can easily be a hundred times as productive as one that doesn't. A logger with modern equipment cuts down a whole forest in the same time even Hercules needs to cut down a single tree with his axe. A good software developer is light-years ahead of a bad one. This increase in an individual's productivity is a good thing. It is enabling. Only because humanity invents ever more powerful tools do we progress and are able to sustain our numbers. And yet, capitalism punishes these advances. Oh sure, the one productive farmer is rewarded for his work. Yet the 99 others that are now without work are now without work- read: unemployed. This too, should actually be a good thing, because they are now free to pursue other venues. Yet their choice of alternative occupations is severely limited by what the market supports. Unemployment is only bad because it is made so. Think about it for a second: How often did you say “If I only had more free time I could…”. Unemployment is the ultimate in free time. Granted you need a system in place to keep the 1 worker that supports the 99 unemployed happy and working. The current system’s answer is to punish the 99 and make them all compete for the 1 worker slot. Is there really no alternative? More on this in another post (as it is a topic that interests me very much because my job as a software developer is basically making other people’s jobs superfluous).

It’s unfair because the old saying of money breeds money is just all too true. I think I don’t even have to argue this point much. Once you have a million it’s easy to make the next. Even if you didn’t even deserve (earned with your own labour) the first to begin with. It’s unfair because it actively sustains and supports the current global imbalance. It’ll never be in our best monetary interest to share our resources with the poor, yet it is in our interest to use their labour. It’s unfair because work is valued crassly to the advantage of the already rich. The further away your job is from work that is necessary, from work that actually must be done, the more money you’ll get for it. Imagine that! The more needless and dispensable your job is the more money you’ll get for it. Someone working the fields until his fingers bleed every day of his life just to support his family doesn’t even compare to someone working the stock market 20 years of his life and retiring early. Someone selling lottery tickets earns more than the local bakery… I’m lucky; I’m pretty much at the top of this chain. I enjoy a very high luxury standard of living for typing stuff on a keyboard each day without any real risk of starving or even losing my standards. But is this fair? Should this be so?

It's doomed because of all the reasons stated above (individual productivity increasing through technology, money piling in fewer and fewer places) and because it’s already failing in a downward spiral. Take a look at the world today. How many are we? Common wisdom has us believe that free market capitalism is the best option, the survivor, the winner, the dominant. I’d go so far to even argue that point. Seriously, of those people – how many do even participate in capitalism? How many of them have more than a dollar a day at their disposal? Less than that and you do not really participate. I bet if you view it that way capitalism doesn’t come out all that well. And if I had to guess again I’d say the group that’s not actively participating in, but just being controlled by, capitalism is increasing faster than the other one.

Disclaimer: I don’t have the slightest clue about what I’m talking here. These are all just personal observations and first stabs at refining them into some more or less coherent arguments. If you agree/disagree/have strong opinions on the topic yourself – feel invited to cooperate and shape my views ;-)


  1. Just, er, picking a nit: you state that technological progress killed many menial jobs. Granted. But then you list as examples farmers, loggers and _programmers_?

    OK, so modern machinery radically changed the amount of land a farmer could farm or a logger could log -- but what does this have to do with the difference in productivity between a good programmer and a bad one? Hey, you probably could out-program me any day with a simple text editor on a 286, even if I had a state-of-the-art development environment on a machine worth your monthly salary. So the job of a programmer is one of the examples where modern tools still are secondary to brains and experience.

    Just my two Euro-cents,

  2. Hi,

    ok, captialism sucks. I am with you on this one. It is just so difficult to come up with a working alternative which could function on a global level. For a long time it looked (at least for the more idealistic, like me) as if a communistic or at least socialistic society could be the way to go. It did not work out though, mainly because the ideas collide with human nature. I think, you just don't get the majority of people to do something for "common good". Or even if you could, a minority of opponents can be enough to ruin the system. Even small, isolated "societies" like sects, communes etc. fail, because they cannot live up to their ideals. On the other hand, humans have proven very successful as a species so far. Too successful, actually, since I guess what will finally break us is, that there are just too many of us. But since world population is growing fast, we cannot be too wrong from an evolutionary point of view. Maybe 2 billion happy, healthy, well fed human beings worldwide would be better and more fair than the current inbalance between rich and poor. But you tell the 4 billion you'd have to get rid off for that.


  3. <disclaimer>
    This is just off the top of my big head and without having given it any kind of methodical and analytical thought.

    I'll take the upper part of your posting first, else I'll never get this finished.

    It seems to me that on a small scale, capitalism works. Granted, at some degree of complexity and size, the system seems to break and produces all kinds of unfairness and even suppression, but this is, I believe, due to badly or even maliciously thought-out laws and rules rather than to some fundamental flaw in the concepts of supply and demand. After all, this "supply and demand" thing merely describes human nature. See, maybe I'm brainwashed by my whole cultural background, but offering more money for better value and less money for shoddy work seems natural to me. I do go the extra mile and pay the extra Euro for good food or a good concert, and so does everybody I know. Maybe it's not food, maybe it's clothes or cars or books or blowjobs, but people generally are willing to pay more for something they like better than something else.

    And, as an aside, it's not the fault of this concept of "money" either: You want my nice flint knife? OK, gimme two beaver pelts. Want to sell your bike? I offer you this nice piece of paper that says "EUR 1000".
    Same thing really, only more beaver-friendly. Money is just a battery to store work and effort and care.

    So let's have a look at the natural ressources you named as an example for supply and demand being broken. What you describe is called the "Tragedy of the Commons" (http://www.garretthardinsociety.org/articles/art_tragedy_of_the_commons.html),
    auf Deutsch "die Tragik der Allmende".
    In short: whenever there is a commons, people gain by using it. And using it. And using it...
    And this problem is not restricted to clean air or clean water that become polluted -- it applies to such things as international fishing, local parking space, family planning, mainframe time, tourism and department budgets.
    You cannot expect people to not use commons, or even just use them responsibly -- in fact, depending on how they define "responsability", you might not even want them to. All you can do is create laws that restrict some (ordinarily perfectly natural) behaviour that has proven harmful. World wide population control, anyone?

    So, to sum it up: blaiming environmental problems on capitalism is like blaming the falling apple on physics. It's not capitalism's fault, although it is most often observed in a capitalist context; instead, it is a far larger social phenomenon.

    signing off for now and heading for lunch

  4. The underlying factor that produces common good in capitalism is cooperation, too, not competition. Every form of trade, when done by two parties of roughly equal power, is a form of cooperation: Both sides win,
    otherwise they wouldn't trade.

    This is a basic fact that many people fail to see even when doing business: They try to enforce the harshest contract possible which is massively tilted in their favour, and do not realize that trying to build such a contract is suboptimal for them and society as a whole (as it leads to less "deals" being done).

    The worst thing that can happen is that a trade that is fair and would be beneficial to both sides does not happen.

    This raises an interesting aspect regarding legal systems, too: Because if fair trades between people is what creates wealth and quality of life, then the role of the legal system and the government should be to faciliate trading.

    This means that a good legal system would allow me to draft a contract with someone in a bar on a paper napkin, in 10 lines, and neither side in the agreement would have to fear being ripped off.

    It is interesting to see the respective sizes of contracts in different countries: I signed a contract in the US, and it was 16 pages. A similar contract in Germany was still 6. And when I signed one under Norwegian law, it was 1 1/2.

    There is no doubt that our current world order has massive distortions and serious ill-effects. But whenever we design a new system, we should not neglect that trading and cooperation are essentially the same , and if you do not allow people to trade freely (as some societies tried to do) you will end killing a lot of cooperation.


  5. In reply to Yendi's programmer productivity question:

    The point was not that brains and experience make the difference between a good and a bad programmer - obviously they do. The point was that technology made it possible to have an order of magnitude difference in productivity in the first place. Even when both programmers are at the same technological level.
    At least I can't think of any non high-tech job where, let's say, a hundred fold difference in productivity is possible between a good and a bad professional.

    regards, Sören