RE: capitalist religion (was: NANO: _Forbes_ cover story)

From: Barbara Lamar (
Date: Thu Jul 19 2001 - 22:58:17 MDT

Warning: the following is a rambling collection of thoughts rather than a
coherent essay.

Daniel Ust wrote:

<In the US, in the late 1970s and early 1980s, the Savings & Loans were
"deregulated." Specifically, restrictions were loosened on what they could
invest in. However, the FSLIC -- deposit insurance for the Savings &
Loans -- was NOT disbanded. ... it's deposit insurance that is to
blame and the particular deregulatory path taken with regards to the Savings
and Loans enhanced the problems with deposit insurance.>

The S&L crisis is a good illustration of the relationship between public
services and government regulation of human behavior. Federal insurance
doesn't work without federal regulation. The same relationship between
service and regulation exists within certain corporate structures (thus, I'm
writing of human behavior in general rather than with respect to any
specific economic system). Public and HMO-financed healthcare are further
examples. Because costs and benefits aren't directly related for any
individual service provider or consumer, the government or HMO must regulate
both the allocation of benefits and the manner in which services are
provided. Doctors and patients complain that accountants and bureaucrats are
practicing medicine; but without regulation, the systems would probably not
function at all.

While it's easy to grasp the relationship between benefits, costs, and human
behavior at a personal level, most people seem to find it difficult to
project this relationship to large groups. As Daniel wrote, <Most
commentators> (I'd broaden that to include most people in general) <believed
that the Savings and Loan Crisis was caused by
deregulation and from that derived the notion that deregulation does not
work.> And yet, given the alternative courses of action open to each
individual decision maker within the s & l industry in the late 1970's and
early 1980's, it would be difficult to imagine any outcome other than
irresponsible behavior.

To the extent an economic system separates costs and benefits, the behavior
of each individual must be controlled by something other than the free
choice of the individual. Within relatively small groups, or larger groups
whose members have been suitably indoctrinated, individual behavior can be
governed by such things as love, shame, and social pressure. Within larger,
more culturally diverse groups, more violent means of regulation are usually
required. (Perhaps it's wrong to say that someone who decides to take a
certain action because of social pressure is not choosing freely. Maybe any
decision should be considered freely chosen unless it's influenced by
physical force or the threat of physical force.)

The control of human behavior comes at a high cost both in terms of
maintaining adequate force (eg. with respect to tax collection, the salaries
of tax auditors, collections officers, special agents, judges, prison
wardens) and of lowered productivity of the "controlees," who will spend a
portion of their time attempting to evade the controls. Any system that can
function without the necessity of devoting resources to controlling human
behavior has an immediate advantage over systems that require such control.

While control via physical force does not seem to be very practical, control
through indoctrination would seem to be fairly efficient in some respects.
(Which brings to mind something I read a while ago--in a comparative study
of native American cultures, the authors found that the cultures with narrow
ranges of appropriate behavior allowed their members more personal freedom
of speech, contract, and so forth than cultures allowing a wide range of
personal expression)
The enforcement costs of control are lowered through the use of early
childhood indoctrination; however, there would seem to be a cost to the
society in terms of lowered creativity and less flexibility. Cultures
allowing greater behavioral diversity would be better equipped to cope with
rapid environmental change.

I don't think there's any doubt that the present century is and will
continue to be one of rapid environmental change (I use the term
environmental change here to include technological change). Cultural
diversity would seem to be quite desirable; but the freedom of the
individual to act according to his or her own decisions--thus allowing the
economy to function more efficiently--also seems desirable. This combination
of cultural diversity and individual freedom seems to have been possible in
the past only when people have lived in small, self-governing groups. I
haven't thought the following through carefully, but I've observed that some
Internet communities and e-commerce joint ventures have characteristics of
small, self governing groups. For example, most members know each other and
continuing business relationships are built on mutual trust rather than law
(in many cases, the members reside in different countries and their dealings
are outside the jurisdiction of any legal system). Although some
geographically based governments have banned the Internet (and some
corporations limit the flow of information within and from the corporation),
these governments and corporations will find themselves at a such a great
disadvantage they'll either fold or liberalize their rules. Possibly the
Internet will facilitate the creation of societies whose members enjoy both
cultural diversity and individual freedom.

Anders Sandberg wrote:

< Saying that capitalism is not an universal solution
to every problem is a truism; it is more interesting to look at questions
about what alternatives exist and when they might be applicable, and
whether one can propose systems of allocation that are better.>

Centralized control of a large, geographically diverse population always
seems to result in disproportional control of resources by small, elite
groups at the expense of the other members of the population. This seems to
happen regardless of the type of economic system. Centralized control has
seemed to be necessary in order to finance and control large-scale projects.
I've been wondering lately if it would be possible to form joint business
ventures without hierarchical management systems to engage in large-scale
projects. If so, there seems to be no need for centralized government, and
people could actually live in small, self-governing groups. Someone will
probably say that this wouldn't work because the strong would inevitably
conquer the weak--thus weak villages would be taken over by their stronger
neighbors. But I'm not sure this is true. As N. Machiavelli wrote in *The
Prince*, it's difficult to take over and rule a group of autonomous
individuals--you constantly have to reconquer them. A world of small
self-governing villages would probably lack certain things, such as the
Egyptian and Mexican pyramids, the terraced mountainsides of the Incas and
other monuments to slave labor. But perhaps these things aren't really worth
the cost in human suffering.


This archive was generated by hypermail 2b30 : Fri Oct 12 2001 - 14:39:50 MDT