The Katz Challenge: The Big Picture
For those readers who are already beginning to yawn, you’ll find this anything but boring. It may give you hope and even tick you off, maybe both at the same time – – –
The headline question from the challenge — including the bolding — is as follows:
Is it inherent in the nature of free market capitalism for the most wealthy individuals and/or corporations to capture government power? –Mr. Katz
These two sentences from the introductory paragraph also caught my attention – – –
I believe hierarchy is a natural and necessary development of a functioning economy and society. But it seems to me most people believe in “equality” and that the dangers I have described are the results of capitalism itself. –Mr. Katz
Except for the “it seems to me most people believe in ‘equality’ ” phrase, I almost completely disagree, and suggest that that notion is not only incorrect but dangerous to liberty.
More specificaly, although it is indeed “natural” in certain limited contexts and circumstances, I disagree that hierarchy is a … necessary development of a functioning economy and society. Hierarchy is not generally natural or useful for us humans and in fact, if accepted generally it indeed poses serious dangers to us humans, our happiness and well-being.
This is indeed important because, as Mr. Katz points out in the next paragraph, if we are to maintain a free society in the face of the full-court-press in progress to destroy it, “Mass disobedience is critically needed so people must be convinced that freedom is the basis of our civilization and the free market is one of the pillars that maintain it.”
As it turns out, most of our human nature is indeed designed specifically for freedom and liberty, as is any advanced, happy, human civilization, with exchange as the absolutely necessary foundation. That’s what “The Sociobiology of Liberty” in the title to this piece is about.
A preview: Hierarchy is a primitive “might-makes-right” mating tactic, unsuitable for entities that count on information and knowledge for survival. And “equality” among small-group humans refers mainly to “political equality” only. That is, no one has coercive power over anyone else.
OK, I’m probably going to stumble over a couple of sacred cows with my clumsy clodhoppers, but I mean well, so I hope you’ll be tolerant – – –
First — and Ayn Rand notwithstanding — I don’t use the word “capitalism” if I can possibly avoid it. Since there are two different phrases using the word but referring to two almost diametrically opposed systems — “free-market capitalism” versus “state capitalism” — the word is often terminally confusing to the folks we want to reach. Especially if we fail to include the necessary prefix.
Further, the current system which is regularly mis-described as free-market capitalism — and is ass-u-me_d by most folks as the model if the prefix word is missing — is clearly much closer to state capitalism in practice, especially at the upper reaches – – –
“There isn’t one grain of anything in the world that is sold in a free market. Not one! The only place you see a free market is in the speeches of politicians” –Dwayne Andreas, ADM CEO, Mother Jones, July/August 1995
“Capitalism” of either kind also implies that folks who accumulate and employ wealth should get special privileges. The fact they possess wealth should give them privilege enough. They should, of course, get the same property protection etc. as everyone.
So, thanks to a clue originally from James Libertarian Burns, instead of “capitalism” I use “voluntary exchange.”
If you haven’t adopted this replacement for “capitalism,” you might want to consider it. It’s pretty hard — though not impossible — to disrespect or misunderstand “voluntary exchange” and so it automatically removes a lot of trash and garbage from the path we hope to get folks to follow.
If you haven’t yet, try it, I’m pretty sure you’ll like it.
OK, now for the hard stuff – – –
Is it inherent in the nature of free market capitalism for the most wealthy individuals and/or corporations to capture government power?
I would translate that as – – –
Is it inherent in the nature of voluntary exchange for the most wealthy individuals and/or corporations to capture government power?
My quick and dirty answer is, “It is inherent in capitalism but not so much in a system of voluntary exchange.
That’s because the most wealthy individuals often become — and particularly stay — wealthy because they capture government power and use it to stifle upstart competition because otherwise – – –
“Whenever you see a business that’s done the same thing for a long time, a new guy can come in and do it better. I guarantee it.” –Michael Bloomberg on the cover of Forbes, November 25, 1991
Without that government partnership — they now arrogantly and accuratey call it “public-private partnership,” formerly known as “fascism” — new guys would keep things under control by coming in, doing it better, and eating their lunch.
There are still difficult subliminal questions there, and after pointing them out, I’m going to leave them in your capable hands and jump to what I call The Sociobiology of Liberty, an attempt to excavate the foundations of what makes us human from various sources and put them in some sort of coherent order.
Partly by coincidence, the results of that attempt shed a lot of light on our current unacceptable circumstances.
The questions that I’m going to duck are:
1. Are corporations necessary or even desirable? Their ubiqutous deployment is historically recent. They count on governments to officially ratify their imaginary existence and government courts to accept their reason-to-be, which is protecting incorporated folks from liability. Should there be such protection?
2. Is government necessary? If so, should government courts accept and ratify the protections of corporations and wealthy folks from liability? Is that protection really necessary to enable enterprise? How would it change the culture if such protection was no longer legitimized?
Keep in mind J.J. Hill built The Great Northern Railway without government subsidies or protections, in fact, in the face of government interference.
Incidentally, crypto based contracts eliminate a huge swath of the problems of doing business that currently require enforcement. Liability for externalities, however, still remains a problem.
So, in response to Mr. Katz’ question, if both corporations and governments exist, it is certainly inherent in that context for corporations to attempt, almost certainly successfully over time, to capture government’s coercive power. Wealthy individuals just for themselves too, but usually with fewer ill-effects.
In addition to protection from liability, these entities would also like subsidies of various sorts that often come along with the protection package, especially including various kinds of protections from competition as well.
This is up to and including forcible suppression of competitors which is extremely difficult to arrange without using government threats and/or its force-wielding apparatus.
This is my favorite example of an entity using government for protection from competition – – –
The Russian Orthodox Church got a bill through the Russian Parliament prohibiting foreign missionaries because Billy Graham, etc. are luring Russians away from the Russian church. Yeltsin hadn’t signed the bill yet. –CNN, July 15, 1993 [The bill or a similar one subsequently became law. -lrw]
In fact, this sort of use of government protection is the rule rather than the exception. You can find a few other interesting examples here:
So I agree with Mr. Mosquito ;> — the direct answer to Mr. Katz’ question is, “If you just must have a government — and there are reasons — you can almost certainly take Frederic Bastiat’s observation (directly below) as the guidance it will be following over the long run like this – – –”
“When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.” –Frederic Bastiat
Can you think of any examples?
Of course, if that government is a well-designed Republic, it has now been proven it can resist degradation — OK, well, wholesale degradation anyway — caused by that process identified by Mr. Bastiat directly above for approximately 200 years.
Nonetheless, despite the degradation, in a pure market context, large voluntary-exchange entities — corporations or otherwise — are mostly desirable. And, if they haven’t tapped in to coercive government, they’re “moral” to the extent that those participating, either with labor or capital, are at liberty to join or leave, usually under contractual obligations and/or less formal agreements. Stock sales are the usual path for the liberty of capital to come and go.
Remember, J.J. Hill built The Great Northern Railway without government subsidies or protections, in fact, in the face of government interference.
But the problem in such enterprises is the damage they may cause which involuntarily involves otherwise non-involved folks and entities outside contractual agreements, including those completely unconnected with the enterprise. Those are traditionally called “externalities.” Union Carbide in Bhopal, India, is a classic example.
What do you do about those?
OK, now that I’ve ducked those questions – – –
The Sociobiology of Liberty (SBOL) is relevant to Mr. Katz’ observations because, among other things, it illuminates just what role hierarchy played in human evolution and whether it’s useful or not today, and if so, in which form.
To start with, SBOL identifies why, unlike for nearly all other members of the animal kingdom, hierarchy — and thus “might makes right” — is nearly always inappropriate for us humans but nonetheless permeates and shapes so much of modern societies.
It further provides a Big Picture of a huge percentage of why we are as we are and a relatively
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