Archive for September, 2009

Free Markets and Property Rights 2: Education, Society and Government

Having now demonstrated the need for government within a Free Market Society, the inherent conflict between absolute property rights and free markets, and the self-terminating and self-contradictory nature of both concepts in the previous article; I now feel it might be entertaining to move on to an area of more practical policy: education.

The liberating potential of a free market might be argued to depend in no small way upon education. By education, one should assume for the rest of my note in no small way that I do not merely mean education of the academic, schools kind, but of the whole variety of skills and training that exist in addition to compulsory education.

After all, education is everything. If you have no education, you can only apply skills that are self-taught (which would most usually take far more time and effort than having the benefit of someone’s help and expertise) or find work that requires little to no skills. It seems obvious, then, that the breadth of one’s education influences to no small extent the liberting potential of the free market grants.

What also seems obvious is that it influences the playing field. For the free market to be free, remember, there can be no ability for established interests to receive an inherent advantage — the point of the free market is, after all, to work entirely on the basis of free competition and trade. However, if only the wealthy have purchasing power of a comprehensive (in the true meaning of the word, as opposed to the political meaning) education, this clearly constitutes a starting advantage for a set of established interests, which goes against the principle at the heart of a free market.

This is, at heart, the most basic objection to the idea of government only intervening to protect property rights and freedom of trade and competition, however, there are others.

Firstly, one has to ask the question as to what makes a government stable. In a debate I have had over the pros and cons of the idea of meritocracy, my most basic objection was that it restricts the base of those influencing government to an inherently unstable leve, where the power is disproportionately concentrated to a set number of people, and therefore no incentive exists to help those outside of this set of people, which contributes to the creation of a social divide.

Though democracy is an inherently more stable concept, as everyone has a certain amount of influence upon government, there are still far more considerations than merely the voting base. There is wealth, which we have gone over in the previous analysis, too great a disproportion in the distribution of which, or too great the scope of purchasing power, resulting in the domination of government by the minority that holds such power. As we have seen, however, education helps to further entrench this imbalance of market power: which would mean that not only would a social divide exist due to an unequal distribution of social power, but all the tools would exist to cement its existance. Or in other words; Disraeli’s “two nations”.

The consequences of this could be considerable, in either direction. Firstly, the privileged section of society might feel a need to protect itself further from the perpetually disadvantaged section of society, and influence government to this end, leading to the re-establishment of a more formal class system, and thus an end to the free market. Secondly, the disadvantaged section of society might get discontent enough to the extent of either revolution, or forcing through radical socail change: which would again mean an end to the existence of an entirely free market.

Of course there is an obvious solution to this: public education policy. The very mention of this idea as necessary to the sustaining of a free market would be enough to make the ears of the APRFM school turn collectively (and individually, of course) green, but we have another classic conundrum here: stick to only private supply of education, and the market is undermined by established interests and the development of a class system, and society becomes so divided as to undermine the legitimacy of both government and economic system. Have a public education policy, though, and you acknowledge the limitations of the market and violate the property rights of some for the benefit of others.

So, at the end of the day, we see that the market is not really absolutely free or absolutely liberating either way, whether APRFM were to get their way or not. So sensibly, things boil down to what’s best for people collectively, or “what’s best for society”. Who’dathunkit? There’s more to society than the free market and property rights?

In defence of Anarchism

As some of you may know, I’m not a big fan of Anarchism. I consider it either to be vulgar, immature right-wing politics for those who want to be anti-establishment without donning a Che Guevara T-shirt, or hopelessly deluded left-wing politics for those who have a hopelessly utopian vision of fundamental human motivations. I’m happy to have a go at either trend, but if you asked me which one I thought was the true definition of anarchism, I would immediately give the former; for I think that in reality, Anarchism would be the wet nightmare of right-wing politics that not even the most extreme capitalist would wish to have.

A real capitalist, of course, would not wish to see a true free market anyway, at least, not if they were busy applying their skills in the modern economy. For one thing, a market favourable to a big business often delivers it the power to try and prevent said market from changing, or at least to try and control the rate of change — stability of the market is something in the interests of any business, so it follows naturally that businesses, even rivals, are not opposed to all government intervention — just some.

Generally, up til here, a Marxist would be agreeing with me, so I’m tempted to turn on marxists next, just to keep the trend up of irritating as many ideological trends as possible. But I’m not going to, because I’m trying to give this a point and some direction, so I’ll come back to right-wing politics, capitalism, and the free market.

Recently, I have been made aware of a trend in ideological (or “intellectual”) thought, that I must confess I did not realise existed beyond the fringes of the internet; that which advances “fundamental property rights”, and an entirely free market. Quite why both ideas go together I am not sure, though I do believe that those who take this disturbingly narrow-minded direction of thought economically and politically may have made the fatal mistake of believing in more than one fundamental truth: for everyone knows that the person who only accepts one premise as true is impossible to argue with.

It is still incredibly difficult to counter this, generally because the complexity of society throughout history being what it is, there is actually no real example that comes to mind of an entirely free market with absolute property rights (to which one is tempted to add, “Thank goodness” or “I wonder why”). This means that it is very difficult to argue that one knows with a certainty what such a society would look like, given lack of historical precedent. One place where it appears reasonable to start, however, is in the basic distinction between the absolute property rights and free market (hereby abbreviated to APRFM) school, and anarchist (of the honest sort, that recognises the oxymoronic nature of “left-wing” anarchism).

The difference is that the APRFM school of thought does not disagree with all features of government — presumably because it can see how in a perfectly ‘free’ society, property rights and freedom of trade might not be achieved (due to the irrationality of free human beings, one supposes, who cannot see the bountiful advantages that come with free trade and absolute property rights). Instead, the APRFM concede that a “strong”, but “very small” government is needed, to enforce property rights, and ensure free trade.

The latter idea is problematic, for in a free market society, it follows that money is (purchasing) power (of whatever is profitable to sell in the market). It also follows that businesses are allowed to expand as the market allows, without restriction, and thus gain more power than they might be allowed to in a regulated market society that had laws to limit the scope of business expansion.

So far, so straightfoward. Now the real problems begin to appear: we have already established the need for government (“to enforce property rights, and ensure free trade”, remember), so therefore the power of businesses in relation to government sets off immediate alarm bells. There are two options: either government is small, and businesses are allowed to dominate government via exercising their market power; or government is strong enough to insulate itself from business interests, in which case it will almost certainly have to be very big. And if it is this big, it stands to reason that it may start to get ideas into its head about society beyond the market, and want to start intervening in ways other than those involving the protection of free trade and property rights.

So either way, a sustainable free market looks unlikely, given that either way you have it, there is at least on powerful interest (or set of interests) attempting to dominate the process of government. Either established businesses will attempt to dominate the process of government to their exclusive advantage, or government will be big enough to get ideas of its own. Heads I win, tails APRFM lose.

That’s one half of the equation — the free market. Believe it or not, it’s not until here that it starts to get juicy, as we get on to (“absolute”) property rights.

The concept of absolute property rights strikes me, I must admit (in fact, I take pleasure in admitting) as a strange one, as it seems to be self-contradictory when one thinks through the possible ramifications. Presumably, absolute property rights entail an absolute right of ownership of whatever is classed as one’s property. It would seem logical to assume that certain basic things are automatically one’s property from birth: such as one’s body, one’s labour, one’s skills. Therefore it follows that with absolute property rights, these uncontested items of private property can also be sold on the market. Or, in a language everyone will be able to understand: slavery.

The thing is, this rather amusingly demonstrates that the all too frequent ideological core of the APRFM school, that “the property rights of some should not be violated for the benefit of others” is breached by the concept of absolute property rights, which is at the heart of their ideology. For if one person owns another in the absolute sense, owning their body, labour and skills, then they themselves have control over said person’s property rights. But if you attempt to limit the owner’s property rights so the slave’s property rights are intact, then you merely breach the owner’s property rights. Absolute property rights is thus a self-defeating concept.

As is the free market. Setting aside the tendency toward monopoly for the time being (which APRFM apparently do not “accept”), absolute property rights would clearly infringe upon the concept of free market, as the market would no longer have a universal consumer and distributer base due to the legitimisation of slavery, but curbed property rights will be a limitation on the market, which would also prevent it from being free. Both rights are at odds with one another, as well as with themselves. Internally and externally, the school of thought is inconsistent.

And this is before we get into anything remotely practical. How APRFM see their ideology being inforced when it comes to intellectual property, for instance, I do not know. Attempt to regulate internet providers, or shut down the survers hosting filesharing sites, and you’re infringing upon the free market and property rights, but leave filesharing websites unchallenged and you’re failing to support the intellectual property rights of artists and record companies. Heads I win, tails APRFM lose.

And then there are areas where enforcement on an individual level of property is so difficult as to be impossible: such as what are currently territorial waters and the oceans. The whole concept of building a school of thought upon two absolute, contradictory and internally contractory premises, whose scope is limited to what is possible for any holder of property, is utterly ridiculous.

In defence of Anarchism? Well, after analysing that, Anarchism looks rather good in comparison.

Democracy and the ways in which my mind doesn’t get on with it.

I have a confession to make. Despite having always regarded myself as “something of a democrat” (which means… democratic, just not too much of a good thing), my voting intentions have never worked very well with the particular concept of democracy most people in this country have.

For instance, before I understood the voting system, and how the terms of the contest varied from region to region, I used to claim that “if Labour were going to win, I would vote Conservative, if the Conservatives were likely to win, I would vote Labour”, unashamedly, even though I could understand the logical problems with this sort of tactical voting, not to mention what it says about your ego that I believed that I was smart enough to vote tactically for good reasons.

I still have something of this idea in me, though watered down by a greater understanding of FPTP and the knowledge that in my home constituency of Leominster, the best opposition to the incumbent MP would be from the Liberal Democrats. However, my University constituency is a Labour seat, with the Conservatives the nearest opposition (to my knowledge), and I cannot help but think that I would vote differently were Labour at all likely to win the forthcoming election (which they are not, at present) than in the context of the present polls. This is because of what perceive to be a fundamental problem with elections, the fact that enough people can prefer one party moderately enough over another to give them a landslide majority, despite the fact that if the magnitude of their preferences were to be taken into account, they would not probably wish to deliver such landslide levels of control.

There are some of you who would probably say that this is meaningless anyway, as the Conservatives have only ever gone past the 50% level once, and that with a “fair” voting system, they would not be delivered a landslide majority, which is fair enough. But even if it’s only a hypothetical consideration in the full, I feel it is still an important one: electoral contests are an imperfect way of reflecting upon someone’s opinions, because even with the most ‘proportional’ voting systems, what is not taken into account is how much of a role you envision for the losers.

Of course, some of you would probably argue Single Transferable Vote as an exception to this, in that you can “divide” your preferences between different parties to quite a sophisticated level in some cases (depending on the size of the constituency, and how much attention you want to give to the ballot paper). But even Single Transferable Vote is tricky: the likely-hood of a vote being “transferred” is hit and miss, and the chances depend on the level of popular support a candidate gains to begin with. I suppose the latter factor puts something of a lid on the chances of a candidate gaining too disproportionately from the appeal of being “marginally better” than the other contestants, but it’s still a clumsy tool. It may, unfortunately, be the best one for addressing this problem.

Still, there are other issues. The problem with the “all in one” nature of British democracy at the moment is that people have to balance the needs of Local Representation, National Representation, choice of government agenda, choice of legislative agenda, their preferences on the level of the individual candidate and their preferences on the level of the national party. The Conservatives have laughably tried to insinuate in the past that this maximises choice in national elections: the reality is that it stretches it to the barest thinnist it could conceivably be.

What is probably more crucial is that we have a greater choice in terms of representative democracy, including greater local devolution and a largely democratic House of Lords, unpalatable connotations though these ideas may have at first. For even if a “perfect” voting system of representation exists, it cannot possibly fulfill all of the needs for each type of political representation rolled into one. Two constitutional experiments in the last decade have shown particular promise: Devolution, and greater bicameralism. It is just as critical that we draw from this pool than attempting to plaster a problem over with electoral reform, be it improving the voting system or primaries.