From: Mark Steven Heyman (markheyman@infoproconsulting.com)
Date: Thu May 19 2005 - 00:55:20 BST
On 17 May 2005 at 11:29, Sam Norton wrote:
msh:
> Capitalism is a socio-economic system in which the means of
> production of essential goods and services are privately owned and
> managed by individuals or small groups. <snip> To use De Soto's
lake
> analogy, the capitalist scenario is one in which the lake and
> hydroelectric plant are privately owned and the power thus
generated
> is sold for more than its creation cost. This "excess value" is
then
> pocketed by the owners. A non-capitalist alternative would be
> community ownership of the lake and plant with the produced power
> sold to consumers at cost. Another non-capitalist alternative
would
> be community ownership of the land and lake, with private
> development of the plant at private expense, including fair rent
> paid to the landowners. As the private developers would in this
> case have a monopoly over the production of an essential service,
> the consumers of the service would determine the fair profit due
the
> developers.
sam:
Well, to nobody's surprise, we have different understandings of what
capitalism is. In my understanding of capitalism, all of the above
options are capitalist, in so far as there is a conceptual embodiment
of physical resources (ie an extension into the fourth level of the
MoQ, allowing the conceptual embodiments to go off on purposes of
their own). I note that you haven't tried to link in your
understanding of capitalism with the MoQ.
msh says:
Well, this is good, really. Because if you accept as "capitalism"
either of the non-cap alternatives I've proposed, then you and I can
probably live together in the same world. However, my first
alternative removes profit from the picture, and my second
alternative allows consumers to place price limits on a monopoly
product produced for profit. I can't imagine any real capitalist
going along with either of these options. And if De Soto views
either of these options as "capitalist" he better put his economics
degrees under lock and key. So, I'll assume that this is your own
idea of "capitalism", and suggest we come up with a different word to
describe it. How about the fully-realized economy (FRE)? But, great,
this means we can drop De Soto and hash this out between ourselves.
sam:
Would you be happy to accept the following as a summary of your
position: capitalism refers to the control of economic resources by
single individuals, or, rarely, by a small number of such individuals
acting in concert?
msh says:
That's close. Let's just go with the first sentence of my
description: Capitalism is a socio-economic system in which the
means of production of essential goods and services are privately
owned and managed by individuals or small groups.
BTW, the notion of "essential goods and services" is a bit of nuance
I've added for my own purposes. I think a high-quality socio-
economic system is possible even with a private sector of for-profit
producers, as long as the private sector is regulated to prohibited
negatives effects on the environment and society as a whole.
sam:
If so, it seems to me that the heart of the description rests with
the question of _control_, and is not an economic description as
such. In other words, it doesn't engage with economic questions, only
with political questions.
msh:
Well, political decisions can have direct effects on the economy, so
I wouldn't make such a sharp distinction. That's why I talk about a
socio-economic system, rather than just an economic one.
> msh before:
> The question I'm hoping you'll ask yourself here is, if all de Soto
> cares about is making sure that the title of the land is
established
> by law, so that the potential of it can be fixed, then why not opt
> for common ownership of land via the State? Very simple, very easy
> to administer. Then all those entrepreneurs who want to use their
> genius to derive profit from the common lands need only pay fair
> rent to the common owners. See, I think all his talk about
> establishing clear title by law, is really about securing private
> property rights for existing landholders, while ignoring the moral
> dimensions of land ownership in the first place. ... it's the FIRST
> sentence above that you need to answer. If De Soto really does
have
> at heart the best interest of the poor, why would he advocate a
> system that requires private rather than community ownership of
land
> and resources? The vast majority of people in so-called third-
world
> countries don't own land.
sam:
Well, as I said before, de Soto is NOT advocating a system that
requires private rather than community ownership. He is advocating a
system that transposes the enforcement of ownership from social
customs and physical power (levels 3 and 2 of the MoQ) onto the
conceptual level 4. So community ownership of the HEP and lake is
just as capitalist as private ownership of the HEP and lake,
according to de Soto's analysis.
msh says:
As I said above, I'd be very surprised if De Soto considered as
"capitalist" any system that prohibits private profit. I think your
MOQ analysis of what De Soto is talking about is fine, and I think we
can make some progress with it; I just don't think it's an analysis
of capitalism, which is why I've suggested we use a different word.
I like your idea of "a system that transposes the enforcement of
ownership from social customs and physical power (levels 3 and 2 of
the MoQ) onto the conceptual level 4." I think this would certainly
be a good idea. However, I don't see how we can make this move,
except in a strictly hypothetical way, UNTIL we can morally justify
the current distribution of land among private owners. To simply
grant legal right to existing landholders without consideration of
how they acquired the land in the first place is not going to work.
That is, we first need to institute some idea of agrarian reform.
This is in fact what several countries in latin america have tried to
do, Guatemala, Nicaragua, Chile, even recently in Venezuela, only to
have their attempts at reform crushed or greatly impeded by western
capitalist power.
sam:
There is here, though, the issue about individual rights. Your
analysis seems to give all political control to the group. I'm not
sure how that allows any transcending of level 3 (leaving aside the
wider questions).
msh says:
I'm not sure what you have in mind here, so we might need to explore
this further. I don't think you are suggesting that, in order to
transcend level 3, individuals must be free to do whatever they want,
regardless of the consequences to others. So, I guess I need more
information.
> sam:
> De Soto's principal concern is that those activities of the poor
> which are outside the capitalist framework are vulnerable to
> predation by those with physical power. So for example, he runs
> through various countries (Peru, Philippines, Egypt) describing the
> economic size of the assets OF THE POOR and argues...
>
> msh:
> This seems counter-intuitive, if not unintelligible. Who are these
> poor people? Are you talking about squatters on public land, or
> trespassers on private land?
<snip>
> As above, what does this mean? How did the poor come by these
> assets? If they have created this vast wealth, what does it mean to
> call them poor? Are these people producing essential goods and
> services for profit, or are they merely self-sustaining?
<snip>
> But, see, all of this suggests that the answer to the problem is to
> simply grant legal title to these once poor people who have, what,
> somehow produced wealth by shall we say extra-legal means?
<snip>
> They are neither the problem nor the solution. They are the
> exception. How did they acquire use of the land? And are their
> efforts self-sustaining or for profit? That is, are they now
> capitalists by the definition given at the start of this post? If
> so, saying they are the solution is saying that capitalism is the
> solution, which is precisely my point re De Soto. Why does he
> reject the alternatives? Unless you can answer that question we
> really won't get far in this discussion.
sam:
Your analysis assumes that the poor have no resources. People are
'poor' in so far as they have nothing which is recognised by the
global institutions, even if they in fact have lots of economic
wealth. What de Soto is describing is a process whereby that wealth
can gain a conceptual representation, shift from the lower levels of
the MoQ to level 4, and thereby become infinitely more productive,
to the benefit of them all.
msh says:
Who is this all? You are talking about a small fraction of poor
people who have done what? Squatted on public or private land and
started their own banana business? If they are on private land, how
do we resolve the dispute that is sure to come? If they are on public
land, how do we morally justify privitizing it for them and not for
others? This leads to what I've already said, below...
> As I said
> before, still unanswered, this simply ignores the moral dimension
of
> private land ownership in the first place. If De Soto doesn't
> address this issue, and simply assumes that private land ownership
> is the best way to go, then he is not so tacitly embracing the
> capitalist model without considering the alternatives. So, what
> textual evidence do you have that De Soto has considered and
> rejected the non-capitalist alternatives I suggested above?
sam now:
His analysis of capitalism doesn't recognise the distinctions that
you draw as being between 'capitalism' and 'non-capitalism'. It would
see the distinctions you draw as being to do with the political
control of such assets are represented. Your understanding of
capitalism, so it seems to me, is about level 3 issues - which group
is going to be in control of the honey pot, and how is the honey
going to be shared? Whereas de Soto is saying that there is no honey
without the transition to a level 4 analysis. Enabling the creation
of the honey is prior to questions of distribution.
msh now says:
Ok, I can see that. Then the question you and I should be exploring
in our attempt to develop the FRE model is whether or not the best
level 4 analysis of the problem suggests a private ownership type
solution to honey-pot creation, or the deconstruction of the private
honey-pot entirely, or some other middle way. That is, we as FRH,
must take into account the moral dimension of the privitization of
land when that land is to be employed as a means of production for
private profit.
> msh said before:
> Ok, so the bureaucracy is inefficient. Why? The state is in the
> complicated position of having to monitor the status of private
land
> holdings and yet register and otherwise permit use of land for the
> generation of private profit. Things are simplified tremendously
if
> all land is held in common, and people who wish to profit from it
> simply pay fair rent to the common landowners.
sam:
Or, governments in third world countries can copy the example of the
United States government during the nineteenth century and bring the
extra-legal economy within the bounds of the legal economy, thereby
enabling the transition from lower level economic relationships to
the level 4. It was those actions of the US government during the
nineteenth century which enabled the creation of wealth.
This does - let me hasten ;-) to add - ignore all the questions of
destruction of the indigenous American tribes etc.
msh says:
Glad you added the wink above. The "liberation" of wealth in the US
up to the 1930's is neither an equitable nor a pretty picture. The
level 4 economic solutions embodied in The New Deal, along with the
massive injections of state cash due to WWII, had the positive effect
of preventing violent revolution, but at the same time saved the ass
of unrestricted capitalism, which, somewhat controlled during the
40's through the 70's, has come back with a vengeance since the
Reaganomic 80's.
sam:
But as I keep saying, that is the political issue that remains to be
resolved. My point is that without the conceptual transition from the
lower levels to level 4 then there is no 'capitalism'. There are
biological and social level behaviours, in all their complexity,
nothing more.
msh says:
And I agree that the solution will come from moving to level 4, but
this does not mean that privitization of the means of production is
the best idea. That's what we need to decide in this thread, I
think.
sam:
You might like to return the favour, and try to articulate in your
own words what my understanding of capitalism is. I'm not convinced
you've understood it.
msh says:
I understand it. I just think what you're talking about isn't
capitalism, not if your model allows for the exclusion of private
ownership of the means of production. So, let's drop the word and
use FRH-inspired socio-economic system (FRE) instead. It will make
the discussion much simpler.
Best,
Mark Steven Heyman (msh)
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