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July 29, 2004
Those Who Are Without

Barfly Colman made a suggestion for a follow up on the discussions on Billmons Minimum Wages piece.

“It seems to me that [discussing what aims an economy should have] is seldom if ever approached these days: everything is cast in terms of the free market and how wonderful it is.”

The need for such a discussion is fundamental to our societies. But when was the last time you did hear a politican openly recognizing it this clearly:

The diversity in the faculties of men, from which the rights of property originate, is not less an insuperable obstacle to a uniformity of interests. The protection of these faculties is the first object of government. … The most common and durable source of factions has been the various and unequal distribution of property. Those who hold and those who are without property have ever formed distinct interests in society.
James Madison in The Federalist, No. 10 cited in An Economic Interpretation of the Constitution, Charles A. Beard, 1913

Madison sees the first objective of the government as the protection of the distinct interests of those who hold and those who are without.

The second part has been lost somewhere. Nowhere but in younger constitutions one finds remnants of the compromise that has been so fiercely fighted for throughout the last two centuries.

Article 14 [Property, Inheritance, Expropriation]…
(2) Property imposes duties. Its use should also serve the public weal. …
Article 15 [Socialization]
Land, natural resources, and means of production can, for the purpose of socialization, be transferred to public ownership or other forms of collective enterprise by a statute regulating the nature and extent of compensation. …
Current Cuban German Basic Law

Societies develop on compromises. These need discussion and arguments form both sides of the aisle. We do know that the right side is strong these days. The speakers list of the DNC convention may represent some middleground. But the communists have vanished – even as scapegoats.

As Colman says – the basic discussion on the aims of the economy, on redistribution of wealth, on the service of the public weal, seems gone. Thereby the economical compromises throughout the world have tilted to the right side – nationally and internationally. The government misses the objective Madisons sets out.

As Madison recognizes, the free market of ´those who hold´ is only one side of the spectrum. What should be the modern version of the compromises? And what is needed on the left side to achieve them?

Posted by b on July 29, 2004 at 10:30 UTC | Permalink
Comments

It is clear that the “natural” state of economy is fuedalism – an enormous majority of wealth in the hands of a few and the rest powerless and impoverished. Roosevelt’s New Deal gave more power to the powerless, not to move toward communism, but indeed to prevent it. The middle class is a creation of government – it provides a buffer between the haves and the have-nots (the middle class is the have-some’s). Globablization has already all but destrioyed the American blue collar middle class, and the white collar is not far behind as tech jobs go off to Bangalore.
Madison’s compromise – that “property….also serve the public weal” was the premise upon which inheritance taxes, etc were based. It took a real threat of revolution by the “peasants” for the New Deal to go through.

Posted by: fasteddie | Jul 29 2004 18:19 utc | 1

I’ve been trying to think of a cogent way to respond to the question of compromise, but I cannot get beyond the problem w/ markets. Markets are not democratic mechanisms in any real, social libertarian sense. Markets operate on the idea that one dollar equals one vote, and this automatically marginalizes members of the population who have little or no capital in which to participate. How any fair compromise can be arrived at under these terms is beyond me right now, especially given that the majority appears resigned to channeling their needs through such a narrow political spectrum.

Posted by: b real | Jul 29 2004 19:22 utc | 2

Well I guess this topic would take some heavyweights in economics if we are to be serious. But anyway we can chat.
As you know I spent 39 years in one socialist country and with almost 50 years of experience I assume we have seen it all. After WWII there was confiscation and nationalization. With more people being poor (because of a rigid and undeveloped capitalism “in nappies” and also because of the war) it was a celebration for “people”.
“We’ll all be the equal” they chanted. Ahh, you wish! We end up all being poor except “political class”.
At a first faze we copied USSR and we had centralized economy. Didn’t work as it never worked anywhere else. We had factories built for purely political reasons not economical.
Off course they couldn’t make profit even in an economy with double wire around it (not to mention open market) and the fact that peoples salaries were low didn’t help a thing. So state has to put tax money in it all the time to keep them work. Others who were “productive” off course had to pay for that so never had a chance to experience “fruit” of their productivity. They felt betrayed. In this faze there was close to nothing private in our economy. Government decided everything in production field and administration. Salaries were equal everywhere for same positions.
Then we had kind of “break” with USSR (all tho politically it was earlier in 1948) and we “invented” “self-management for working class. Sounds great cause now it’s decentralized and “working class” has an opportunity to decide on a lower level. All tho huge factories were still ‘helped” by government , smaller one’s were able to have their own policies. Yap…it was on the paper…”working class” spent more time making decisions then actually working. And it all was useless and waste of time cause government actually in every single case employed all executive people who really decided all decisions, who choose among “working people” those who will be able to decide etc. So it was all corrupted. Still we haven’t seen many ( if any) companies going bankrupt. But in 70-ies and early 80-ies at least it started to make kind of difference where you work. And if you were lucky to have good connections you could end up working for some good company ,foreign trade for example and not only that you’ll have x times better salary but you can have a bank account in Switzerland accumulating your foreign commissions etc. And yes hell, we had a soft (and illegal) capitalism knocking back on our doors.
I will not bother you with what happened later but I can only tell you this: I knew Balkan war was breathing to our neck when two working people in a family couldn’t afford to by laundry powder in Bosnia (for example). It was that easy to pin-point the other nations as responsible for this situation while in reality there were elite on all sides who stole enormous amounts of people’s wealth and found that war is going to make them bloody rich while they are accomplishing what their foreign bosses asked them to.
Long post again.Sorry.

Posted by: vbo | Jul 30 2004 4:24 utc | 3

vbo writes:

Well I guess this topic would take some heavyweights in economics if we are to be serious. But anyway we can chat.

No, we’d need the economists to work out how to achieve our aims rather than to tell us what our aims are.

Posted by: Colman | Jul 30 2004 8:07 utc | 4

b-real has trouble imagining a truly fair market system, given the “narrow political spectrum” in which we are forced to work. I hope that is a reasonably accurate synopsis b-real. Many share that trouble.
Now I’ll dangle from the end of a long limb, as I sometimes do, knowing that I might have to eat crow later. From this precarious position I see things getting better within the next decade, but not before a period of unpleasantness, maybe even extreme. Call it necessary pain before the cure. And maybe the cure will be extreme too, compared to the multitude of proposed solutions we are accustomed to hearing. (A little of this, a little of that, a new alliance, a new leader, monetary reform, etc.)
I expect to see a new age, which is in the process of emerging now. Nobody seems to know the details (who can predict the future?) but it will be a lot better. The reptiles have taken their chance and they are blowing it. Do your best to help defeat them permanently.

Posted by: rapt | Jul 30 2004 15:16 utc | 5

@rapt close. i’m saying that i have trouble seeing how one can have a democracy framed around a market system, which is predicated on one dollar signifying one vote, not one person being one vote. If we are talking about a democracy set up for currency and property, not people, then it could makes sense. But I see no compromise possible if the goal is equal opportunity and access in whatever forum/function for all peoples. My remark about the narrow political spectrum is refering to the social and political blinders that prevent us from adequately considering whether compromise is truly possible and desired, and what it might look like. And maybe it has limited how I understand the issue. Perhaps my definition of or use of the concept “market” is too narrow, I’m not sure, but I am fairly sure that the interests of a minority who cannot be bothered with placing community above self will not act in the interests of the majority. Priviledged people can always opt out of struggle.

Posted by: b real | Jul 30 2004 16:41 utc | 6

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