On the Proper Functioning of Economies

Posted on 09/11/2011 by

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Much is made about the proper form of economies. Comparatively less is made of their proper functioning. Economies are taken to be black boxes; their internal workings are regarded with nearly religious awe. Some propose to simply leave economies to their own devices, befitting their deified nature. Others insist that altars and holy relics – that is to say, regulations and government oversight – can be arranged to better facilitate the divine will.

In short, economies are seen as ends in themselves, with all else being means to those unknowable ends. Unemployment and falling wages, for example, are sacrosanct expressions of the most holy Economy, and are thus justified without any further consideration.

Rather than the priests of old whispering “It is God’s will” over the dying person, the modern priests blandly intone “It is a natural function of the economy” to the unemployed person. Each is fatalistic in a similar manner; however, the priests of old were trying to console the incurable by prayer and devotion. The modern priests – economists, politicians, and other handmaidens of Capitalism – are justifying not doing anything to cure the curable.

In doing nothing, the sacred black boxes of economies can apparently function unimpeded. Prayers of “structural unemployment”, “business cycles”, and “quantitative easing” do not beseech a god for mercy, but rather justify the absence of mercy. The harshest gods of history once demanded that hearts be ripped out of chests for sacrificial purposes. The modern god Economy expects people to willingly extract their own hearts.

It should go without saying that economies are not gods, nor even black boxes. They are abstractions of the constant commercial interactions between human beings. Every moment which passes has commercial activity taking place across the world; this is the basis of every conceptual economy on the planet.

The notion of an economy is a useful one, but it is only a tool: It describes the monetised result of the aforementioned commercial activity. I say monetised, because typically a commercial arrangement involves a currency in which the activity is denominated.

‘Economies’, therefore, make it easy to talk about and apply taxation policies, amongst other things. Economies, however, should not supplant the real-world activity of human beings. But supplant economies do when they are ends in themselves. No longer do the individuals involved in commercial activity do so for their own benefit, or even the benefit of their community. They work to support the ends of economies.

Because an economy is an abstraction of commercial activity, it is difficult to conceive of it in a concrete sense. It is therefore very attractive to relate ‘economy’ to an observable economic system, something heavily structured and formalised. In a sense this is an unfortunate game of pin-the-tail-on-the-donkey, where the donkey represents various facets making up an economy, and the tail is the notion of ‘the Economy’.

In the age-old tradition of sucking up to the rich, the tail was pinned at the highest level of wealth accumulation. In other words, stock markets.

Governments are as much to blame for pinning the tail nowhere near where it belongs, as are the wider masses. Governments are run for the pleasure of those who pay no taxes, so conflating stock markets with ‘the Economy’ is best seen as a thoughtful gesture to their masters. The wider masses, desiring to become masters themselves, did not particularly object to this, as they fancy the opportunity to be filthy rich.

Stock markets are clearly not economies in and of themselves, but simply another component of the abstraction. However, governments have a knack for pointing at the stock market, calling it ‘the Economy’, and ensuring that ‘the Economy’ does not suffer unduly. The results are predictable: bailouts, tax breaks, nepotism, corruption, and the infamous revolving door.

As has been made abundantly clear, fewer and fewer people can own more and more of a given stock market. This is called concentration of economic power, and one of the symptoms of this concentration is known as the ‘business cycle’. The cycle has nothing to do with business, and everything to do with too few people owning too much. Their bad decisions – also known as rampant gambling – have tremendous repercussions, due to their excessively vast economic power.

Although a stock market is mistook for ‘the Economy’, governments have extremely pervasive and invasive powers throughout the wider economy. Taxation, for example, extends beyond the stock market and touches nearly every level of commercial activity.

Thanks to this, whenever stock markets are out of sorts, governments will trip over themselves in order to shore up ‘the Economy’. Their exclusive method is to suck the greater economy dry and then hand that wealth over to the owners of the stock market. They do this almost primarily out of egregious ignorance and stupidity, with a healthy dash of corruption to keep things interesting. Be that as it may, the result is that the wider economy suffers greatly when a small facet thereof is deemed to be in trouble and needing ‘assistance’.

Here arises the crowning immorality of believing that economies are ends in and of themselves. Because stock markets are conflated with ‘the Economy’, this means that stock markets are granted the pleasure of being ends in themselves.

Since these markets can be, and are, consolidated in the hands of the proverbial 1%, the commercial activity of the wider economy is effectively the means to the ends of the 1%. This arrangement is enforced by not only top-down economic structures, like corporations, but also by governments via taxation and favouritism in the enforcement of law.

This is clearly not the best of economic settlements.

What we see is that potentially all commercial activity, the fundament of an economy, only incidentally provides benefit to the vast majority, the 99%. Whatever benefit does accrue to them is only incidental to the accumulation of benefits to the controlling interests of ‘the Economy’. Such situations are generally called slavery: large numbers of people working for a small fraction of their labour-value, for the benefit of a tiny elite.

The solution to this situation is simple, probably too simple. Let us assert: economies are means to ends. With that, the edifice of defending inhumane notions like structural unemployment cannot hold water; unjust arrangements like taxing the poor to bail out the rich are all the more unpalatable.

Why this is so is relatively straight forward. Even though economies are means to ends, they are still the abstraction of wide-spread commercial activity. However, instead of the abstraction being the important concern, it is the underlying activity which is paramount. The abstraction is necessarily a method to further the aims of those huge numbers of human beings constantly engaging in commercial activity.

The vast preponderance of people simply want to derive benefit from their commercial activity; these are the ends which people seek. Because of this, economies by definition require that economic power is distributed as widely as possible, so that the means to successfully meet those ends are easily available. In this way, economies as means to ends support the establishment of just, humane economic settlements.

With this perspective, instead of economies being effectively weapons of mass financial extortion for the 1%, they are conceptual tools for the broadening and deepening of commercial opportunity. Economic power, instead of being concentrated, must be axiomatically distributed: the 99% are empowered because they are the prime movers of any given economy.

To summarise in closing: The proper functioning of economies is to facilitate the highest number of possible commercial activities to the entirety of humanity. Only when this is realised can an economy – or any facet of an economy – be considered just and humane.

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Posted in: Distributism, Reform