The world keeps turning and has become quite unpredictable. Check that, it has always been unpredictable, the realization of one’s inability to predict what will happen comes with age.
On one hand, money supply measures around the globe are going through the roof, as is indebtedness. On the other had, the underlying economy, which had barely picked itself off of the canvas, appears to be up again, ready to be pile driven once again. What is one to make of it?
The Bitcoin is once again racing ahead in USD terms, while Gold and Silver peel themselves off of the pavement after encountering a steamroller in their path (as an aside, it will be interesting just how much $1,350 gold and $23.50 silver can be delivered, our guess is, not much.)
Our upcoming eBook, Natural Law and Economic System Fluidity – Marx and Rand together in perfect harmony, wrestles with unexplained economic phenomena such as the seeming impossibly of Capitalism and Socialism coexisting in harmony with one another, which are rapidly becoming important.
The following is a brief excerpt of our latest offering, scheduled to release late this month. Enjoy!
A Tale of Two Responses to Anarchy
In the current economic debate that rages between the productive virtues of what is referred to as Capitalism and the humanistic virtues of the Socialist ideal, it has become fashionable to assume that the virtues of one system, were its guiding principles put into action at once by all of the members of society, would eventually bring about the virtues promised by the other system in a peaceful manner.
This narrow, apologetic view taken by Capitalists and Socialists alike ignores the fact that the systems are wholly incompatible. It also ignores the fact that mankind is in a constant struggle to bring order to surroundings that are inherently anarchic in nature. The only laws that must be adhered to are natural laws, which are explored in section II of this volume.
For purists on either side of the ideological fence, compromise on any point is a slippery slope, and in the sense that the two systems are wholly incompatible, the view is technically correct. However, most economists miss the fact that it is perfectly normal and beneficial for each system to operate side by side. In fact, it is the only way in which mankind can reap the benefits of both systems at once.
All humans live and operate in both systems to some extent. The Capitalistic system is best equipped to organize resources on a grand scale and provide material goods for the greatest number of people, the Socialist system is the system that offers refuge from the rigid and unrelenting demands of the Capitalistic system’s incessant response to anarchy and the demands of natural law.
This refuge is commonly referred to as the family, and it can be observed operating the world over in all shapes and sizes.
The inescapable fact that Capitalism and Socialism are at once incompatible and completely reliant upon one another is the basis for the Theory of Economic System Fluidity.
More to come as we hack and slash our way through the draft.
In the twenty first century, it has become clear to most that there is no divine right or imperative for the existence of an Empire on the earth. As such, an ever-increasing number of peoples have thrown off the yoke of Empire in favor of what has become known as a democratic model of collective governance. Yet simply changing the rules of governance has not put an end to the core ideals of Empire, and governments today that are elected democratically have largely retained the hallmarks of Imperial rule, namely the tendencies toward a central monopoly on the use of force and the right to demand tribute. How can this be?
The purpose of this volume is to gain an understanding of the true nature of Empire and, to convince the reader that Empire, and by extension large scale government, is not only unnecessary, but a great hindrance to human progress. This volume also explores why the Imperial model virtually ensures that the worst elements of humanity will rise to power, where they will ultimately impose their will on their fellow humans by violence. For the violent outcomes that Empires invariably produce are not exceptions to the rule, nor are they merely the norm.
They are literally guaranteed by design.
Once we have grasped the true nature of Empire, we will then will explore the only known antidote to Empire and the only possible means for mankind to rid itself of the lethal effects of Empire on the earth. And it is probably like anything you have imagined.
In the realm of economic thought, there are two extremes. On one end of the spectrum sits the economic equivalent of Karl Marx’s workers’ paradise, known as Socialism. On the other end sits the economic expression of Ayn Rand’s rugged individualism, known as Capitalism. As anyone who has studied these philosophical extremes can tell you, the operation of real world seems to constantly fall somewhere in the space between the two, making strict adherence to either an indefensible position.
While apologists for these extreme positions do a wonderful job of explaining why complete adherence to their ideals by all would lead to an utopia on earth, a careful examination of the arguments, along with a quick glance at how things operate in the real world, lead one to conclude thatevidence of both Socialist and Capitalist ideals can be found in nearly any system.
How can this be? If the extremes are both correct in their reasoning, they msut be mutually exclusive of each other. However, we look around at the world around us, as well as into the depths of our own souls, and we invariabley find an uncomfortable coexistence of ideals that is difficult, if not impossible, to reconcile.
That is, until today.
Our aim today is to reconcile this age old dilemna. Fret no more, fellow taxpayer, for the answer is simple: Socialism works for local systems, while large scale systems are best served by embracing Capitalist ideals.
How can this be? The answer is simple.
Socialism, with its embrace of community property and centralized decision making, is a superior policy for systems until they reach a critical mass. Socialism unwittingly provides the framework in which society cares for its economically weaker members. It is a system which is entered into with the understanding that at least a portion of one’s actions will take the form of altruism, that is, they will work for the benefit of others without the expectation of material compensation. In fact, socialism is the basis for the family unit into which a great deal of humanity enters the world.
Given the barbarities which are justified in the name of profit, it can be said that the basis for morality and human decency most frequently occurs in a Socialist setting. Given the inherent requirement of altruism, Socialism is the system which asks the individual to look beyond themselves. However, as we touch on later, Socialism on a large scale tends to bring out the worst in human beings, as the inevitable onset of poverty quickly diminishes any moral advantage that small scale Socialism may enjoy.
We digress on the question of morality for a moment and instead submit to you an insightwith regards to the corporate structure. It is the revelation that Corporations, entities which are held out as the champions of Capitalism, are, in fact, Socialist institutions (the stunned silence is deafening, please do read on, fellow taxpayer, it will make sense, trust us.)
It is for this reason that wages do not fit well into free market pricing mechanism and instead lend themselves to the “Labour theory of value” which is a base concept of Socialist philosophy.
The logical proof is the following: The employer, employee relationship is based on a set rate per time period of work. Once it has been agreed upon, the wage rate ceases to adhere to free market theory and bcomes a component of the Labour theory of value. The top level managers in corporations that employ persons in an employee capacity become the centralized authorities in what is a socialist realm.
Another proof of this can be found in that property, which is held in the name of the Corporation, is cared for and used by employees. As such, corporate property, as its name would imply, is held in common by subjects who themselves have no property rights in said property. They may be offered shares in the corporation themselves, but this does not directly effect their day to day use of the Corporation’s (their employer’s) real and personal property.
A majority of human beings today find themselves as part of a Socialist entity of some sort, be it a family, household, corporation, or governmental employer (which, for purposes of analysis, behaves in a similar fashion to a corporation). It is within these systems that we have most of our day to day interactions. It is understandable, then, that most people would see a form of Socialism as the basis for a utopian ideal.
However, the members of these same Socialist organizations, the heads of household, CEOs, heads of government, members of Boards of Directors, salespeople, security personnel, customer service agents, and a host of others, well know that the “esprit de corps” which may exist in their organization is thrown aside in their dealings with the outside world. The outside world, where individual corporations collide, is marked by brutal self interest and the protection of private property rights which are the hallmarks of Capitalism.
Capitalism, the system which honors private property rights and glorifies the pursuit of self interest, must be embraced and allowed to operate in an unhindered state as the basis for the interactions between the small scale Socialist systems (families, corporations with employees, and those brave individuals who choose to face the Anarchic system of the world alone.)
The reason that Capitalism must be embraced by the smaller systems is that its principles, namely the laws of supply and demand and the Golden Rule, must be allowed dictate their day to day activities so that the smaller systems can better adapt and survive in a harsh, unforgiving environment. To put it another way, Capitalism is a superior response to the Anarchy in which we all find ourselves, whether we are willing to admit it or not.
However, apart from its invaluable contributions to understanding the material world, even hard core Capitalists would agree that blind adherence to the Capitalist creed would not only lead to a trampling of those less fortunate in society, but the potential isolation of the individual from human warmth, feeling, and dare we say, loss of the ability to love.
For all of the virtues of Capitalism, its potential frigidness at the individual level and lack of a clear moral compass make it unpalatable to the majority as an absolute ideal.
So the answer is simple. Socialism operates on a small scale, Capitalism on a large scale. Marx asks Rand to dance, she accepts, and the world makes sense. As the theory of biologos attempts to bring harmony to the polarization of two views of the world’s origins, our theory of economic system fluidity allows the economist and politician to embrace both the virtues of the Socialist ideal as well as the Capitalist economic imperative.
The final question which begs to be asked is the following: In terms of size, at what point is it appropriate for a system to stop being guided by Socialist principles and to break up into units better able to cope with the Anarchic surroundings, meaning a leap to the Capitalist model, which naturally defines the size limitation of what may be called a functional Socialist system?
While there is no firm answer, it is clear that a Socialist system has reached its limit when it is corporately bankrupt and unable to fulfill its commitments, either morally or financially, to its members.
In the case of the corporation, it must adjust its productive activities and/or release either property or employees into the capitalist system until it finds equilibrium. The released Employees then find themselves, albeit for a moment, in what may be called the free market for labor. In it, they will either learn to compete perpetually in the capitalist environment and form their own small scale socialist entity, or link up quickly with another socialist entity, be it another corporation, state welfare, or the generosity of a family unit.
The fact that both families and corporations can accumulate wealth are proof that socialist entities can and do compete and thrive in a world where capitalist thinking and political structures are an imperative. It is the ability of each unit to adapt to changes and to seize opportunities which makes the difference.
There is much more to say about this but it will have to wait for another day. We leave you with what should now be obvious. When Socialism is employed on large scales, it looses both its ability to compete as well as any moral superiority which it may have enjoyed. When persons are thrust headlong into poverty, which is the logical economic end of large scale Socialism, what were once moral imperatives are tossed aside in pursuit of purely Capitalistic aims in a desperate attempt to eat.
Anyone who has lived such an event will attest that it is in these unfortunate circumstances that the rotten core of humanity is laid bare for all to see. While unbridled Capitalism has its own faults, which are daily brought to light in the media as a reminder of when it has been allowed to run too far. It is this consciousness, and the human desire for mercy, which work to keep the evils of Capitalism in check.
The beauty of the theory is that the normal operation of each system keeps the proliferation other in check, any attempts by government or sovereigns to impose or preserve one system over the other will end in disaster.
Rushing to extremes is for fools, for the Kingdom of God is one of perfect balance.
The following is a Mint classic in its original form. Can the simplicity of Benford’s law, a statistical proof of the law of diminishing marginal returns, explain lower relative growth rates in developed economies? Judge for yourself:
2/4/2011 Portland, Oregon – Pop in your mints…
For anyone who read yesterday’s Mint, you will be happy to know that we do not recall any of our dreams from last night. We did, however, send inquiries to members of the Arkansas legislature to see if they could help us interpret our dream about them. We do not anticipate any response but you never know. If anyone can help to explain it we figure it would be them. Please do not ask why we dreamt about the Arkansas Legislature, for we have no answer.
What we can do, however, is to continue to develop our current hypothesis. As you may recall from yesterday‘s Mint, it is:
“As a predominantly Engineered (Socialist) economy becomes less Engineered and more Organic (Capitalist), it experiences exponentially increasing rates of economic growth. Conversely as a predominantly Organic economy becomes more Engineered, it experiences exponentially decreasing rates of economic growth.”
We will define economic growth as an increase in capital goods within an economy. For lack of a better measure, we have looked at year over year GDP growth in the East and the West. We say for lack of a better measure because in the current insane monetary system where debt is money and money is debt, it is arguable that what is measured as GDP growth is actually the rate at which the economy is cannibalizing itself. But that is a subject for a different day.
For the sake of simplicity, we further postulate that the Eastern economies (China, Japan, etc.) more closely resemble “Engineered” or state controlled economies and that Western Economies (US, France, etc.) more closely resemble “Organic” or Capitalist economies. These may not be perfect definitions on a country by country basis but the general distinction between East and West will give us a good starting point in trying to confirm or deny our hypothesis on a country by country basis. Naturally, the US and China, the world’s largest trade relationship, should be our first case study.
What complicates matters is that there does not exist, to our knowledge, a perfectly Organic nor a perfectly Engineered economy on the planet that would be available for study. Rather, we will encounter a jumbled mix of qualities within a country that will make it seem at once Organic and Engineered. What we are looking for, then, is evidence that and economy is becoming generally more Organic or generally less Engineered and vice versa.
If our hypothesis is correct, we would expect to see an Eastern economy, which is moving from a state of being Engineered to a state of being allowed to grow Organically, grow its GDP at a faster rate year over year than an economy that is moving from a state of Organic growth to a state of being Engineered. We expect that Organic growth not only creates wealth faster but does a better job of maintaining the capital that has been previously accumulated. On the other hand, any attempt to Engineer an economy has the consequence of destroying capital and reducing wealth on a net basis.
We must say up front that part of this growth has to do with an interesting statistical nuance that is known as “Benford’s Law.” In summary, Benford’s Law states that:
“in lists of numbers from many (but not all) real-life sources of data, the leading digit is distributed in a specific, non-uniform way.”
Benford’s Law appears to flay in the face of logic. Why don’t the leading digits (1-9) simply occur 10% of the time, as logic may suggest? The reason is that, as something grows exponentially, as the GDP of an Organic Economy may, the data sets produced such as GDP measured in terms of dollars tend to take longer to double from 1 to 2, or from 1,000,000 to 2,000,000, than they do to double from say 2,000,000 to 4,000,0000, etc. The tendency is so strong and widespread that it even applies to the measurement of natural phenomenon such as earthquakes, infectious diseases, and even pulsars! Should it come as any surprise that it applies to a country’s GDP measurement as well?
Can Bedford’s Law Explain Higher GDP Growth Rates for Developing Countrie
What does this have to do with our hypothesis? We are still wondering ourselves, but we think it has something to do with how the GDP growth percentage increase is measured. For a rapidly increasing GDP number, as we would expect to see in a developing economy moving from an Engineered state to an Organic state, the percentage increases would appear greater for data points between 1,000,000 and 2,000,000, for example. Since Bedford’s Law says that roughly 30% of the readings will start with one, as a smaller economy doubles in size, its rates of GDP growth expressed as a percentage will be higher than those of an economy moving from, say, 2,000,000 to 3,000,000. This rate of exponential growth would decrease and perhaps turn negative in an economy moving from an Organic state to an Engineered state.
To sum it up, the higher GDP growth percentage of an economy becoming less Engineered is because the Engineered economy is starting the GDP growth race from a very low GDP number. Logic and Benford’s Law dictate that it will outpace growth rates of the already high GDP Organic economies.
As an economy, once you’ve gone Organic, there is no turning back. The longer you stay Organic, the more dangerous becomes any attempt to Engineer it. The Dodd-Frank Financial Reform and Health Care Reform are large scale attempts to further Engineer the US’s Organic economy. Is it any wonder, then, that its growth rates should lag those of the East?