A response to Rafal Smigrodzki, Part 2

From: Smigrodzki, Rafal (SmigrodzkiR@MSX.UPMC.EDU)
Date: Sun Dec 23 2001 - 11:21:10 MST

From: "Technotranscendence" <neptune@mars.superlink.net>

> On Monday, November 05, 2001 4:26 PM Smigrodzki, Rafal
> SmigrodzkiR@MSX.UPMC.EDU wrote:
> > OK, here we are - let's imagine there is a new planetary colony,
> I argue from valid theory _and_ history. You can make up fantasy worlds
> that fit any claim you want to make. Does your model capture anything
> relevant about reality? (Rhetorical here, since I answer below that is
> does not. To me, it's kind of like the "corn economy" used by Adam
> Smith. See Peter Lewin's _Capital in Disequilibrium_, pp 47-52.)
> ### Imaginary worlds are quite useful to analyze principles. Game theory
> dissects simple behaviors under controlled conditions, like the
> observation of bacterial colonies on agar prepares the doctor to face the
> real infections afflicting humans.
> BTW, can you give valid historical evidence of the beneficial effects of
> the absence of a government on social development (I mean *total* absence
> of a government resulting in great improvements in quality and quantity of
> human life)?
> > New Freedom, where free yeomen till their initially equal parcels
> > of land and pay only minimal taxes to support a freely elected
> constabulary.
> Taxes are coercive. Elections are coercive. You model already has
> coercion built into it.
> ### OK - you made my day. Let's say the colonists just arrive haphazardly
> from other planets, in small groups, like the Native Americans,
> Polynesians, Easter Islanders. With no constabulary, individuals with a
> penchant for rape and pillage will inevitably act up. A tribal warfare
> system will inevitably develop (or can you give me historical
> counterexamples?)
> -------
> > As is usual, some farmers are more ingenious and hard-working than
> > others and in the emerging cash economy earn enough to buy land
> > and hire some of the less smart ones to work there, for a smaller,
> > market-determined pay but without the hassle of running a business.
> > Soon the land owned by the big farmers and their offspring covers a
> > greater and greater fraction of the available land. Since having more
> > land gives you a better credit position, the rich can easily survive
> > periods of bad weather and famine, while some of the average
> > farmers are eliminated by chance - a few hectares of crop eaten by
> > locust, a desperate need to feed the family, a quick sale of land, and
> > before you know, there is an underclass of landless laborers, unable
> > to compete with large farms, unable to buy land (you need to have
> > money to buy land but since most money in this economy comes from
> > land, you need land to buy land). This works like a ratchet. The
> > landless
> > people are willing to work for a pittance, as there is a large supply
> > of
> > them (it's much easier to produce a few humans than a new plot of
> > land, so barring pestilence, war and famine, there is more people
> > than land), they have no choice (there is no industry on this backward
> > pimple of a planet)
> Another unrealistic assumption. I'd expect some industry to arise and
> technological progress -- unless there were strict controls against it.
> ### How many thousands of years did take to invent the wheel (counting
> from the first emergence of ungoverned humans)?
> A government (usually a bad one) will form well before industry, and
> without stability offered by a good government, hardly any research will
> take place.
> -----
> > and they can only work for the large landowners,
> > as the small farmers do not need hired hands or couldn't afford it.
> This is no more than the basic economic scenario of Karl Marx being
> played out in an agrarian society on another planet. Notably, it's not
> the scenario that has ever played out in a real agrarian society without
> massive coercion involved.
> ### Coercion always comes first - government comes later. This played out
> in hunter-gatherer and agrarian societies hundreds of times (again, Native
> Americans, Polynesians......)
> ------
> > Every ten laborers you have working for you
> > means you can buy out another small farmer who is in trouble.
> > The freely elected constabulary will not do anything because
> > no crimes are committed. An oligopoly controlling land forms
> > spontaneously, stifling competition, slowing progress, ruthlessly
> > destroying its opponents. The rich soon form a hermetic
> > aristocracy, buy control of the government, and change the
> > name of the colony to New Colombia.
> This is unlikely for many reasons. One, as more land gets bought up,
> the incentive for people to band together against further buying up will
> increase.
> ### What do you mean exactly? Communes putting together their monies to
> buy land from the rich? Where on Earth did they form (aside from those
> insignificant credit unions)?
> ------
> Such cooperation happens "spontaneously" in many instances --
> from small businesses helping each other out to various corporations
> (why wouldn't landowners just hire the right people to manage their land
> for them and run it like a corporation?)
> ### Precisely what types of "small businesses" are going to help each
> other out, trying to stop land consolidation and how?
> Landowners do - they hire accountants, overseers, and hundreds of cheap
> peons to do the work, if such laboreres are available due to the scarcity
> of land.
> ------
> and other contractual
> agreements to ward off mergers and the like. (Sometimes, it's
> inefficient to do so, but beforehand, we can't always be sure that
> voluntary behavior is inefficient or that coerced behavior can do
> better.)
> ### Who is going to ward off mergers??? Why? How?
> We agreed there is no coercion allowed in this experiment, so you would
> have to be pretty smart, trying to stop landowners from consolidating
> their holdings by marriage.
> -------
> Two, land will go up in value if some want to buy more and more of it.
> The price will rise, meaning that owners of it will make more money.
> There's no way to tell how much, but this already shows how your
> scenario is a bit unrealistic.
> ### You are forgetting that the large landowners make more money than the
> small ones, both gross, and sometimes even per acre (they can afford the
> expensive, imported machines). The less land available for sale there is,
> the more difficult it is for the small operators to join the game.
> ------
> Three, you assume that inheritance alone will preserve large estates.
> Historically, this has not been the case. In fact, inherited wealth
> often declines after a time. Surely, there are exceptions, but even the
> biggest family fortunes tend to get consumed over time and less
> entrepreneurial and frugal family members take over.
> ### Historically, that *was* the case, at least in countries with
> primogeniture (or can you give me specific and numerous counterexamples?).
> "From rags to rags in three generations" is mainly a phenomenon of the
> capitalist society, where you need to be on your toes to stay on top.
> -----
> > This process, the concentration of a crucial and non-expandable
> Land actually is expandable in many ways. One, land that was formerly
> marginal can become profitable if it's physically altered, e.g.,
> cleared, irrigated, and plowed. Two, if the price of land increases
> overall, then more marginal pieces will be economically usable. Three,
> land can be created in the sense of reclaiming land from the sea or even
> building islands. Four, things like agriskyscrapers could create new
> land on top of old land -- if they became economical. We can't just
> assume static amounts and values.
> ### This is orthogonal to the issue of land concentration - land is
> expanded only if there is population pressure, with total demand for food
> exceeding the supply. It does not result in an unlimited supply of land at
> competitive prices - entrepreneurs cannot make money by offering cheap
> "land" in skyscrapers to undercut the traditional landowners (as opposed
> to memory chip makers being able to flood the market with every new
> advance in technology). Marginal land sometimes offers a refuge for
> subsistence farmers, but with enough pressure even they might end up being
> displaced.

End of part 2


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