A response to Rafal Smigrodzki, Part 2

From: Technotranscendence (neptune@mars.superlink.net)
Date: Thu Dec 20 2001 - 21:16:35 MST

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.)

> New Freedom, where free yeomen till their initially equal parcels
> of land and pay only minimal taxes to support a freely elected

Taxes are coercive. Elections are coercive. You model already has
coercion built into it.

> 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.

> 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.

> 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. 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?) 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

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.

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.

> 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.

> resource in the hands of a few percent of the population,
> has occurred many times here on Earth. What starts as
> a relatively non-coercive system (neolithic farmers easily
> switching to a hunter-gatherer existence) becomes a slave
> or feudal state. You can name Rome, England, Russia,
> France, Latin America and many others as examples.

Which of these examples started off relatively noncoercively and when?
Latin America, e.g., started off with the Spanish and Portugese empires
and though most of it is now democratic states, the basic social system
leaves much of the imperial systems locked in. Recall the de Soto book
discussed many weeks ago? One of his main complaints is that voluntary
systems in Latin America -- the "informal economy" -- is still largely
illegal. Legalizing it would allow people to do their own thing --
still no correcting all of history, but letting them get on with
bettering themselves through longer range planning, wealth accumulation,
and trade.

> Only revolutions and
> technical developments break such states, forcing some
> redistribution of inherited wealth, as opposed to earned
> wealth

Not exactly true. Social changes apart from technology often play a big
role -- and technology is only one factor among many. Let's no reify

> (a very important distinction - I am in favor of the
> inherited wealth redistribution but largely against redistribution
> of earned wealth),

If people earn their wealth, by your lights, can they generally do what
they want with it? If so, then why can't they give it to their heirs --
whoever they choose these to be?

> and allowing the
> formation of a democracy, which is likely to be the first political
> system refraining from beheading thinkers opposing it.

Like France during the Reign of Terror. Democracy in action! Also,
democracies and republics tend to be the bloodies in warfare. We have
only to look at the American Civil War, both World Wars, and US warfare
from the Persian Gulf War to today. Some of this is, no doubt, due to
advancing technology, but part of it is also due to the concept of total
war. When democracies fight they generally see the whole other society
as the enemy -- not just its rulers or military.

> So this is my example - unregulated land market in an agrarian
> society will result in the destruction of freedom, virtual abolition
> of the market and a coercive intervention is warranted to prevent
> this from happening. Of course, merely killing the rich is a bad
> idea - those who do the killing soon get rich, too, until the next
> peasant revolt.

I don't think this will be the outcome for the above state reasons.
This scenario has never played itself out without coercion involved at
every step.

Note also what you're implying: we need to give up freedom to protect

> Instituting progressive land taxation is an option,

Actually, that would lead to economic ineffiency by not permitting
certain voluntary arrangements. Also, the tax money itself will be
wasted on something the taxed did not want, further distorting the
economy. Finally, an agency strong enough to enforce it would be a
threat to the society it existed in. There would be no reason to think
its power would be limited to just keep your model going.

> thus protecting
> the smaller economic units although in the long run the
> development of a technical economy is even better,

But you haven't shown why this wouldn't happen spontaneously. After
all, most people want better choices and those who can give them to them
often make a nice profit. Why would not this dynamic provide?

> allowing relaxation of controls on
> land ownership (if land stops being an important source of wealth,
> oligopoly control is no longer an obstacle to development). By the
> way, I am againt subsidizing small (or any other) farms, the way it's
> done in Europe and to a lesser extent in the US.

So am I. However, I'm generally against all coercive interventions in
society, from subsidizing small farms to taxing big ones to stealing
inherited wealth. I also don't see how a government is somehow better.
That just institutionalizes coercion with no guarantee the government
won't just grow and grow and grow.


Daniel Ust

"Legislation always involves a kind of coercion and unavoidable
constraint of the individuals who are subject to it." -- Bruno Leoni,
_Freedom and the Law_, p13

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