MD economics of want and greed 3

From: Wim Nusselder (
Date: Sat Aug 23 2003 - 16:03:13 BST

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    For most of human history political economy has been the
    exclusive domain of political and religious leaders.
    A basic fact of economics is, that almost anything people want
    can be got more easily if (more) people co-operate. (More
    co-operation does not imply larger scale organizations! The best
    way of getting some things is organizing people in a lot of
    small scale organizations that are usually self-sufficient, but
    that collectively back up each other if need be.)
    Leaders organize co-operation. A leader tells or shows people
    what they want and how to get it, if ... they co-operate in a
    specified way. For most of human history being member of the same
    society meant following the same leadership.

    The oldest form of economy is organized around (real or symbolic) family
    relationships. Genealogy provides meaning. To belong or not to belong, that
    is the question. Reciprocity is normative. You help someone else who needs
    help because you are related. Receiving help strengthens the relationship
    and enhances the obligation to do something in return in the future.
    Leadership often correlates with age and a male gender role, because it
    requires building a web of reciprocal relations with oneself as the 'spider
    in the web'. Older males are in most societies in the best position to do
    (or have done) so.

    The defining characteristics of such primary societies (e.g. nuclear
    families) is that there is supposed to be no choice whether one 'belongs' or
    doesn't 'belong' to a society. 'Given' characteristics decide who 'belongs'
    and who is to be excluded from the benefits of 'belonging'. These benefits
    include access to communal resources and sharing in the results of pooled
    labour. Pooling labour and allotting roles, primarily according to age and
    gender, allows for (limited) division of labor, specialization, economies of
    scale and satisfying some wants that can hardly be satisfied alone (like
    hunting mammoths). Primary economy can consist (simultaneously) of families
    (all living relatives), clans (people who's ancestry van be traced to the
    same remembered ancestor), tribes (people who trace their ancestry back to
    the same symbolic or mythological/legendary ancestor), nations (people who
    deduce from common history, language etc. that they must have common
    ancestry) and theoretically even of humanity as a whole.

    A second form of economy originates (in addition to the primary form, not
    necessarily instead) wherever leaders enlarge their influence beyond those
    who automatically 'belong'. They do so by monopolizing some kind of
    power. This power can be of different types. It can be magical, the ability
    of shamans to manipulate fear for that which is not understood. It can be
    military, based on weapon technology and the ability to mobilize and
    organize people against other people. It can also be democratic, based on
    the convention to let a popularity contest determine who gets the law
    enforced right to tell others what to do for a couple of years (within
    restrictions). Coercive relations are added to family (like) relations.
    Additional meaning is provided by supposed virtues like 'nobility',
    'culture' (in a strict sense) and 'civilization'. To deserve power or to
    deserve subjection, that is the question.

    Enlarging society by those in power by coercing extra subjects into
    'belonging' allows for the pooling of more resources, more division of
    labour, specialization, economies of scale etc. The norm is 'fair'
    distribution of the costs (e.g. by taxes) and benefits of enlarging society,
    i.e. distribution in proportion to virtue. Leaders recruit the resources
    needed to exercise power (and mostly so from those who deserve to be taxed
    heaviest). They use -wherever possible- the benefits of their exercise of
    power to consolidate their position by maintaining and enhancing their
    That requires giving their subjects what they want, at least those they
    depend on for their power.

    The defining characteristic of this second form of economy compared to the
    first form is the enforcement of social boundaries (however they are
    defined: geographical, ethnical etc.). 'Secondary societies' can also have
    different sizes. Because of the need of leaders to monopolize power in order
    to stabilize their position, the coexistence of several overlapping
    secondary societies is never stable however. It is most stable if the size
    of coexisting secondary societies is clearly different (e.g. local and
    national) and if the type of power their leaders exercise is clearly
    different (e.g. religious versus military).

    The third form of economy is added by a new type of leader (not political of
    religious any more): the entrepreneur. It is organized with exchange
    relationships. Productivity provides additional meaning. To produce (value
    for others that entitles you to remuneration) or to depend (on others for
    your livelihood) that is the question. Fair dealing (equivalent exchange) is

    The defining characteristic of this third form of economy compared to the
    second form is, that an economic leader, an entrepreneur, does not (pretend
    to) lead (and organize the satisfaction of wants for) a society as a whole.
    The boundaries of the social group that is led by an entrepreneur are not
    clear-cut. That group normally consists of employees, but it can also
    contain suppliers, customers or others that enter into exchange
    relationships with the enterprise. Strong economic leaders make others
    dependent on what they produce (or on the income they provide by buying what
    others produce). It is the inequality of the mutual dependence of exchange
    partners that determines relative power over what the other can get and thus
    the limits of what he/she will want. An enterprise that is the only source
    of employment in a region or almost the only producer or buyer of a
    particular type of goods or services has a lot of power over the wants of
    its (potential) employees, customers or suppliers. Ways in which an
    entrepreneur can make others want what he/she wants them to want are
    advertising and standardization, among others.

    'Tertiary societies' contain a lot of overlapping and complementary groups
    organized by different economic leaders. The boundary of such a group lies
    between those who are dependent but only for a few wants and those who are
    not dependent at all on their leader. With the rise of tertiary societies
    political economy is not the exclusive domain of political and religious
    leaders any more.
    'Tertiary economies' can pool even more resources, enable more division of
    labour, specialization, economies of scale etc. than secondary ones, because
    co-operation doesn't depend anymore on the ability to feel a sense of
    'belonging together' with those one co-operates with.

    The fourth type of economy is organized by ideological leaders. It is
    organized with relations of membership and contribution. Common goals and
    common interests provide additional meaning. To convince others that your
    way of reaching goals or serving interests is the best way or to follow
    others, that is the question. Contributing to the best of one's ability to
    common goals and interests is normative.

    The defining characteristic of this fourth form of economy compared to the
    earlier forms is the voluntary choice to 'belong' or 'not to belong'.
    Ideological leaders make their followers identify with their group by
    convincing them. 'Belonging' or not 'belonging' to groups depends on the
    strength of identification with their common goals and shared interests.

    'Quaternary societies' contain even more overlapping and complementary
    groups. 'Belonging' to different groups at the same time is enabled by
    complex, multi-layered identities. Boundaries are even less clear-cut, but
    can be determined by asking whether someone contributes or not to the common
    goals and shared interests, however little.
    'Quaternary economies' can pool even more resources, enable more division of
    labour, specialization, economies of scale etc. than tertiary ones, because
    people can participate in several different roles at the same time. One can
    be a specialist in one field and a layman in other fields, who can only
    follow what others propose in order to reach common goals and serve shared

    Our present economy is of course a mix of all these forms.

    [to be continued]

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