Sunday, July 16, 2017

. . . and its Discontents





In my last entry I made the case that after millennia of slow progress in human productivity, in the last 250 years there has been an exponential growth of that productivity. As a direct result of that growth in productivity mankind has finally made the commitment to universal human equality. Never in the course of human history has mankind been both more free from want as well as fear.

That’s my story of human history and I’m sticking to it; but what about man before history. After all mankind has been around for at least 200,000 years (and according to recent findings perhaps 350,000 years[1]) and history has been here for less than 10,000. Three authors make the point that life before history was a lot different. I will begin with a quote from one of them.

"[I] attribute the social and psychological problems of modern society to the fact that society requires people to live under conditions radically different from those under which the human race evolved ..." --The Unabomber

And so also begins Robert Wright’s essay, The Evolution of Despair that appeared in Time Magazine in August 1995. In that essay Wright a writer whose area of interest is evolutionary psychology makes the case that for most of human pre-history, humans lived as hunter/gatherers and he emphasizes the social structure was far more communal than society is today or has been for a long time.  Looking at the hunter/gatherer societies that still exist today he notes that people live “in close contact with roughly the same array of several dozen friends and relatives for decades.”[2] All this is healthy for everyone involved.  Depression, child abuse, and suicide rates are all vanishingly small or non-existent in these societies.

In 2016 Sebastian Junger in his book Tribe revisits this problem of how we live now and how mankind lived for most of its existence.  He notes the salutary effect of the communal nature of these societies.  An additional point of emphasis he makes is that these societies were much more egalitarian. People, men and women, shared responsibility and authority in almost equal measure. There was little disparity in wealth and property was very much communally shared. However, with the advent of first agriculture then industry the structure of society changed to one that is hierarchical and patriarchal where one’s rank in society was a measure of his how much property he owned.

How does all this compare to modern society? I think if we are honest with ourselves we come to the same conclusions for the most part that Wright does. He notes that modern society is rife with social isolation. At the time of his writing he states that the 25% of Americans were living alone compared with 8% in 1940 and we are often strangers to our neighbors. Our family relations spread out across the country and even the world so just from shear distance family bonds are stretched to the breaking point.

Wright goes on to note that technology plays a significant role in fostering this social isolation.  He makes the case that the automobile allowed for the development of suburbia where every man’s home is truly his solitary citadel. The town square, where we transacted our social, civic, and commercial interests, was replaced first by the shopping mall and now by Amazon and Facebook.

He quaintly notes the isolating effect of television and the VCR where he notes that the average American was spending 28 hours a week in front of the TV. How much more screen time do we have today with TIVO, computers and smart phones.

As an evolutionary psychologist Wright makes the case that we are not wired to live this way and it is taking a toll in the rates of child abuse, depression, suicide and the dysphoric zeitgeist we all perhaps feel at least a little.

“In America I saw the freest and most enlightened men placed in the happiest circumstances that the world affords, it seemed to me as if a cloud habitually hung upon their brow, and I thought them serious and almost sad, even in their pleasures.”[3]

One might think that democracy would have a mitigating effect on this dysphoria but de Tocqueville felt quite the opposite was true. In his chapter Why The Americans Are So Restless In The Midst Of Their Prosperity he notes even or especially at this relatively egalitarian stage of American history that there are three concurrent reasons for this restlessness.  

As each individual is responsible for their own destiny they have an insatiable desire to maximize that destiny. At the time de Tocqueville wrote this it meant acquiring property which since the dawn of history was the measure of a man.

Since everyone is allowed to compete we are all vying with virtually everyone (or to be honest, at the time, white males) so it is with great difficulty to break away from the pack.

If everyone is relatively equal, when one does compare oneself to one’s neighbor, one tends to notice those who are slightly ahead so one gets the impression they are always a little bit behind.

To all this I would add my own theory as to what fuels our discontent in the midst of so much abundance. Throughout my early entries I kept reapplying de Tocqueville’s term salutary servitude that he used for dogma.

We have the salutary servitude of the markets that allow us to get paid sometimes handsomely for the most highly specialized service and then have the ability to purchase virtually any good or service that is our pleasure. However, how frustrating is it when the car wont start, or the computer freezes, or the freezer doesn’t, and they are just too complicated for us to manage so we have to pay someone else to fix or replace them.

We have the salutary servitude of government that provides a regulatory framework to, as much as possible, ensure smooth transactions throughout the marketplace. However, how frustrating is it when every time you turn around you need a permit for this or a zoning easement for that. And don’t get me started when some bureaucrat in Washington (or even Providence) thinks they know how to practice medicine (or law or education or architecting) better than I (we) do.

Finally, we have the salutary servitude of representative democracy where we select public servants to represent our interests thoroughly, thoughtfully, and selflessly. Let’s just say human nature being what it is this could be a lot more perfect than it is. As a result we feel the servitude more than we feel the salutary.

Each of these is extremely salutary in that they promote our health, safety, material wellbeing, and as I pointed out in my last posting underwrite our moral principles. But it is still servitude.  We lose our sense of agency. We are in fact wholly dependent on others for much of our existence. Perhaps the “Don’t Tread on Me” flags that have sprouted up across this country are an unconscious rebellion against precisely this “benevolent” servitude.

In addition we lose our sense of urgency.  If the refrigerator goes down and the contents spoil we just go out and replace both the refrigerator and its contents. There is no do or starve. Mankind has worked hard to get away from that brink but something is lost for having done that.

As Wright points out, no one is buying a one-way ticket back to pre-history.  There are some legitimate reasons for that which I will get into in my next entry.  Nonetheless, I think it is worth pondering what is lost with what is gained and considering how individually and, perhaps more importantly, communally we might recapture at least some of what we have lost.


[1] http://www.bbc.com/news/science-environment-40194150





[2] Robert Wright The Evolution of Despair Time Magazine August 1995.
[3] Democracy in America Volume II Section 2 Chapter XIII Why The Americans Are So Restless In The Midst Of Their Prosperity Alexis de Tocqueville

Sunday, June 25, 2017

Civilization





I recently went to a talk on slavery in my hometown of Warren Rhode Island where the slave population like the rest of Rhode Island was 10% of the population before the Revolutionary War. Since the rate in Massachusetts was 2% and Connecticut was 3% Rhode Island was the hotbed for slavery in New England.  What to me is astounding is not that the rate was so high in Rhode Island but that it was so low in the rest of New England. The fact that it was so low elsewhere amazes me because for all of human history up to that point slavery in some form was normative behavior. If you consider colonialism as a means of offshoring the institution then slavery really didn’t become universally institutionally condemned until the last half of the last century.[1]

I don’t think this happened due solely or even principally as a result of a great moral awakening but was largely the product of new technologies, abundant cheap energy sources (i.e. fossil fuels) and capitalism. 

Paul Kennedy, in the introduction to his book, The Rise and Fall of Great Powers, makes the case that Europeans and their descendants became the world leaders for at least the last 250 years because they lived in a system where relatively small nation states were constantly competing culturally, militarily, and perhaps most importantly economically. As a result in this hyper-competitive environment, virtually every significant technological and engineering advance from the steam engine to the microchip originated in Europe or the United States. These engineering marvels allowed man to replace manpower with brainpower and fossil fuels. At this point mankind could finally afford to see that slavery (at least when it is right next door) is morally repugnant. *

As with slavery the liberation of the “weaker” sex has only come as a universally acceptable standard in the last 50 to 100 years.[2] Prior to that for most of human history, societies were heavily patriarchal and dominated by men. I would maintain that when the value of brainpower exceeded that of brawn both actually as well as symbolically women were allowed for the most part to take their rightful place in the world. Women are taking full advantage of this. Colleges and profession, that were almost or actually exclusively men only clubs, (My alma mater and profession) are now majority female.

To be sure, indentured servitude and slavery as well as gender bias still exist in the world but civilized mankind universally condemns them.   We are not perfect but, in the spirit of the founding fathers, we are more perfect.

And the driving force behind all this liberating creativity is capitalism.  It is capitalism that unleashes the creative spirit of inventors and artists and entrepreneurs to continually come up with services and products that increase human productivity and make the enslavement of our fellow man obsolete.


During the 20th century mankind ran an experiment. For most of the first half capitalism competed with communism (not socialism). Communism failed and in the process killed more people in absolute numbers and perhaps as a  % of mankind than any other institution** in human history. After the collapse of the communist economic system and the more or less the universal embrace of capitalism throughout the world more people have been raised out of poverty both as an absolute number and as a percentage of mankind than any time in human history. 

For most all of human history the problems of mankind were problems of “not enough,” not enough food, water, shelter.  Today for all those who have escaped poverty in the last three or four decades those are no longer problems. Another way of looking at this is that the maldistribution of wealth has improved more in the last 4 decades than any time in human history.

Yes our over abundant life style causes us problems. This also is unique in human history. We have too much trash in our landfills, we put too much CO2 into our atmosphere, and perhaps we have too many of us. If we have to have problems these are the kind of problems we want to have. They are solvable collectively (see Paris Climate Agreement) but also we have the freedom to make choices around them individually. We can choose how much trash we create, how much carbon we use, how many kids we have.

On the one hand I think we take for granted the blessings of the abundance that surround us. Furthermore, it relies on a vast complex interconnected set of systems, institutions, and relationships to function. It is not clear to me exactly how fragile the system is. Certainly when large air carriers are grounded world wide because their computer system goes down, this is a hint at how fragile the system might be. War, pestilence, or environmental upheaval could upset the system on a global scale and send us back to an earlier darker age.

On the other hand there is a darker side to the present age we live in as it is.  There is a feeling in all our abundance that something is not quite right with the world we are living in.  There are a lot of ideas of just exactly why we feel that way.  In my next blog I will touch on a few of them.


* de Tocqueville notes that in Athens their were 20,000 citizens in a population of more than 350,000; the rest were slaves. [3] I am not sure the treasures of Archimedes ***, Aristotle, or Aeschylus would have been there to pass down to us if they had day jobs. So while we have assigned, hopefully permanently, slavery in all its forms to the dustbin of history, I would like to acknowledge a profound sense of gratitude to the servile classes who for eons were the engine that propelled civilization forward. They gave the leisure class the time to enrich themselves, admittedly, first but then all of us to the point that we could forgo their exertions in favor of more humane means of production and a more abundant lifestyle for all of us.

**Genghis Khan may be responsible for a higher percentage of deaths but the data on this is hard to find.

*** Yes, Archimedes lived in Syracuse not Athens but the principle is the same and I couldn’t forgo the alliteration.

Addendum: Last Tuesday I attended a lecture at Brown titled What Money can Buy; Entrepreneurship, Ethics, and Human Flourishing by Peter Boettke, professor of Economics and Philosophy at George Mason University. Over the course of his lecture he made many of the same points I have above, of course in a much more learned and erudite manner. Two points he made I would like to reiterate here.
The first is graphically illustrated below.  Around 1950 there is a flex point where the number of people not living in poverty accelerates (probably coincident with recovery from World War II). Then around 1980 there is a steep and persistent plunge in the number of people living in absolute poverty (probably coincident with the end of communism). The result is that the number of people living in absolute poverty has gone from more than 90% of the world’s population to less than 10% with most of that change occurring in the last 50 years.


The other point that he made was that while life as Hobbes described it may be ugly brutish and short mankind’s propensity to barter and trade as Smith said gives mankind the opportunity to build lasting trusting relations with non-related peoples on the other side of the river, on the other side of the border, on the other side of the world. Boettke suggests that capitalism is not only the wellspring of unprecedented prosperity it has the salutary effect of fostering what peace we currently have.


Geoff Berg



[1] Universal Declaration of Human Rights Article 4
[2] Universal Declaration of Human Rights Article 1

[3] Democracy in America Volume II Section 1 Chapter XV The Study Of Greek And Latin Literature Peculiarly Useful In Democratic Communities


Tuesday, June 6, 2017

Capitalism the game we play; Choosing the Refs




Disinterested : free of any interest especially of a pecuniary nature :  impartial
 
Capitalism is the game we play and government creates and enforces the rules. Money (capital) is the marker by which we keep score in the game. As much as possible we want the rule makers and enforcers to be impartial and free of any interest especially of a pecuniary nature. We want our politicians disinterested. 

Now if the people who are writing and enforcing the rules are playing the game that is communism where government owns the means of production (capital). That is one of the minor reasons why it ultimately failed but the principle reason why it wasn’t fair. 

On the other hand, if the people who are playing the game pay the people to make rules and call it the way they need it that’s bribery but for many people across the political spectrum that is also campaign finance in its current state.  While campaign contributions don’t go directly into the pockets of the politicians, if there livelihood is proportionally dependent on the largesse of their contributors then they are not free of any pecuniary interest and are no longer disinterested. Whether it is the lament of this influence of the 1% or the cries to “Drain the Swamp!” people across the political spectrum recognize a problem.

Free:    1) Made or done as a matter of choice and right: not compelled or restricted
One of the hurdles, and rightfully so, in crafting meaningful campaign finance reform is the first amendment. “Congress shall make no law . . . abridging the freedom of speech . . .”
Free     2) Not costing or charging anything
Free speech is a sine qua non of democracy and this is most especially true of political free speech. That said when it comes to campaign financing its not the speech that is being paid for but the airtime or print space to make it accessible. So is “free speech” really free if it cost money? Do the Koch brothers or George Soros really have more free speech than I do just because they have more money? I think most readers from across the political spectrum feel that the answer to the last question should be no.

So is there a way to get money out of the political process at least in terms of campaign finance and still protect free speech? I have some ideas about this but at least for the time being I am not going to be prescriptive. What I would like to do instead is suggest a process for arriving at the solution to this problem. The process is not mine so I am going to give a little history of how this idea came about and then discuss the solution or more correctly the framework for a solution.

[1]

Both politicians agreed on the spot to support such a plan. However, once they got back to Washington they backed away or did little to support the plan. Of course, it never did go anywhere and





* The Base Realignment and Closure Act of 1990 is one of the most successful pieces of legislation I have seen in my lifetime. Instead of the pork barrel politics of “I’ll save your base if you save mine” a disinterested commission decides what is essential to the efficient maintenance of the armed forces. While this solution is most appropriate for campaign finance reform this format could be used for almost any type of legislative initiative. For instance, congress could appoint a commission and set a dollar amount and time frame for infrastructure repair. Instead of bridges to nowhere, the paying public would get the most critical jobs attended to without a lot or any pork.

Monday, May 15, 2017

Capitalism the game we play; Goverment the referee Part II



"The best government is that which governs least"*
John L. O'Sullivan editor of The Democratic Review

“The best government is that which governs best.”
                        Geoffrey Berg editor of the Food for Thought Blog


The first question that arises in this framework from the previous posts is how close do you want the game to be called. Do you want to “Just let them play.” or do want instant replay on every call?  That is do you want a minimal regulatory environment where it is up to the individual “player” to look out for his or her own interest (freedom to) or do you want a strict regulatory environment where each play is scrutinized to make sure that the game is scrupulously fair (freedom from).

Again, from the previous posts, how you feel about this, generally, starts with your emotional predisposition.  If you are a libertarian your response is “Let ‘em play!” If you are liberal you want to make sure no one is cheating so you want plenty of oversight of the action. Some level of oversight is needed so that the game doesn’t deteriorate into anarchy. On the other hand instant replay on every play would bring the action to a grinding halt.


“Given that you play by the rules, the object of the game is to win.”
                                                                                                            Joel Truman

However, since we are all players, we want to win the game. And since we choose democracy we all have a say in what rules we want, how and by whom we want them made and how we want them enforced. And, while we may be predisposed to one particular end of this continuum, when we are engaged in the game, which we are daily, the specific interaction may move us to a different place on that continuum.


Since we are in the game and we want to win, that can’t help but influence how we want the game to be called.  We may say we want them to call them the way they see them but what we really want is to call them the way we need them. The strike zone is always too small for our pitcher and too big for theirs. They are always charging on offense and blocking on defense. It was the temperature not the ball boy who deflated the footballs (or vice versa depending on who you are rooting for).

When we don’t have much skin in a particular part of the game we are somewhat agnostic if not mildly favorable toward a well-regulated industry.

For instance, most of us are quite comfortable with our highly regulated drug industry. Except for a few die-hard libertarians like Ron Paul, nobody wants to abolish the FDA and leave it to the good intentions of the pharmaceutical industry to give us safe effective medication. We don’t have the time knowledge or expertise to make rational judgments about the safety and effectiveness of medicine. 

On the other hand a pharmaceutical executive will want to loosen the regulatory framework that everyone else is comfortable with because it is impeding his ability to maximize his profits. His argument is that this over regulation is the moral equivalent of too much instant replay. He takes this position not because he is conservative but because it is in his immediate interest.

One can imagine that the “natural” herbalist would chafe at being subjected to the same regulatory environment that the pharmaceutical industry faces. In his game it is “Let us play!” On this particular issue the new age liberal is probably on the same point of the freedom from/freedom to continuum as the buttoned down Republican pharmaceutical executive.

"The best government is that which governs least" is really no government at all and otherwise known as anarchy (A position espoused, I would say somewhat disingenuously, by Thoreau). However, for the rest of us “The best government is that which governs best,” where best is in the eye of the beholder. We all have different views of what is best and what shapes our vision of best are our predispositions and our self-interest.

However, what we all have in common is that we want the game to be fair (Another concept that is in the eye of the beholder) because that is in our self-interest.

So when it comes to our relationship to government I am suggesting we take a look at how our predispositions and self-interest or lack thereof shape our views or blind us to the views of others.

Now we all have opinions on what the rules should be and how they should be enforced. However, we don’t make the rules or enforce them. It would be too cumbersome for us to have direct democracy in anything beyond the size of a small town, ** so we select people to represent us. (Perhaps another form of salutary servitude.)  Selecting the people who represent us is yet another game within the game.  We may select people who see things the way we do or even call them the way we need them.  However, since this is such a crucial part of the game this above all else is where the game should be fair.  It my next post I will take a look at that.
   

* This was paraphrased by Henry David Thoreau in the opening of “Civil Disobedience” as "That government is best which governs least."

** One of my favorite quotes is on this subject.  In Federalist Paper 55, a discussion on the size of the legislature, Hamilton or Madison say, “In all very numerous assemblies, of whatever character composed, passion never fails to wrest the sceptre from reason. Had every Athenian citizen been a Socrates, every Athenian assembly would still have been a mob.”

Monday, May 1, 2017

Capitalism, the game we play; Democracy, the referee



“My job is to try to make it so that every year every team has an equal chance to win the Super Bowl.  The job of every team is quite the opposite.”
 An approximation of a quote attributed to Paul Tagliabue, then commissioner of the NFL

To summarize up to this point:

Economies arise out of the division of labor. The division of labor creates a much more productive economy. It also presents us with make/buy choices.  The more it divides, the more specialized we become, and the more we end up selecting buy over make choices.

Government arises among groups of people with the purpose of protecting property, broadly defined.  Initially, it was intended to protect one’s property from individuals out side one’s own group.  However, with the division of labor threats to property can arise within one’s own group and so rules are set up in the group to protect property in the course of economic transactions. As labor divides and people become more specialized more regulation is required.

As a framework for the relationship of the economy and the government we participate in, I would propose that the economy is the game we play and government makes and enforces the rules.  So what kind of game do we want to play and why do we want to play that particular game?

What should distinguish a democracy from any other form of government is that the object in making and enforcing the rules is, as much as possible, to make the game fair. By fair I mean that that there is equality of opportunity. Fair is certainly in the eye of the beholder and how far we should go to create equality of opportunity varies across the political spectrum but the principle is the same for all of us who accept democracy as the form of government we wish to live under. There are a lot of reasons for this.

To begin with it speaks to our most foundational beliefs. It is why we hold sacred the words that this nation was dedicated to this proposition seven score and 14 years ago.

Democracy by definition is participatory. When people don’t feel the game is fair they are far less likely to participate and more likely to act outside the “rules.” Locke would say they are completely justified to overthrow the state entirely  and then we no longer have a game.

When the game isn’t fair it weakens democracy but it also weakens capitalism.


Capitalism depends on its inherent creative destruction to be self-correcting.  But that creative destruction can be thwarted when one team gets to stay on top. When one team stays on top, we lose the innovation of the rest of the market and the team at the top loses its competitive edge because there is no opposition with which to compete – an opposition which Walter Lippman would define as indispensible.

Moreover, de Tocqueville concerns us with the possibility of creating an aristocracy of the manufacturing class. “ . . . there are every day more men of great opulence and education who devote their wealth and knowledge to manufactures and who seek, by opening large establishments and by a strict division of labor, to meet the fresh demands which are made on all sides. Thus, in proportion as the mass of the nation turns to democracy, that particular class which is engaged in manufactures becomes more aristocratic.”

He ominously notes that, “The territorial aristocracy of former ages was either bound by law, or thought itself bound by usage, to come to the relief of its serving-men and to relieve their distress. But the manufacturing aristocracy of our age first impoverishes and debases the men who serve it and then abandons them to be supported by the charity of the public.”
He finishes by warning, “I am of the opinion, on the whole, that the manufacturing aristocracy which is growing up under our eyes is one of the harshest that ever existed in the world . . .  the friends of democracy should keep their eyes anxiously fixed in this direction; for if ever a permanent inequality of conditions and aristocracy again penetrates into the world, it may be predicted that this is the gate by which they will enter.” 
When an aristocracy is created and we systematically exclude classes of people we diminish the talent pool from which we can derive new and better products and ideas.  Just imagine how impoverished our country would be today if we persisted in the white male dominated culture that was the norm little more than 60 years ago.


Everybody wants to beat the competition, drive the other team from the field, win the Super Bowl every year. It is not in our hearts as capitalists (and we all have that germ of capitalism in our hearts) to want otherwise. But it is toxic to the system, the losers and the winners, if the same team wins year after year.  Just like the NFL needs a commissioner, capitalism needs government to save it from itself, to maintain a level playing field, to optimize the process we call capitalism.

And no form of government is more suited to do this than democracy because equality of opportunity is precisely the object of democracy’s game. And while the relationship between capitalism and democracy isn’t perfect it is at least “more perfect”, and that, at least in this country, was our stated purpose from the outset.

Next time I will start to take a look at why that relationship is less than perfect.









Saturday, April 15, 2017

Capitalism meets Democracy (or at least government) in the 21st century




Since you are reading this on a computer it is safe to say that, as ruggedly independent as you think you may be, you overwhelmingly make buy choices over make choices. As a result you trade your property (time and money) for what for you, you hope, is someone else’s property (time or material goods) that is of at least equal value to you. Since you don’t (nor do any of us) have the means to assess, enforce, (freedom to) the quality of these transactions you are protected by a blizzard of standards and regulations (freedom from) that allow us all to conduct these transactions with piece of mind.

You go out most days and earn your daily bread.  When you actually buy the bread you can be sure that it is the pound of bread you expect it to be because we have a Bureau of Weights and Measures that has long since set a standard we all agree to and accept without question. We can be certain it is the advertised grain and not sawdust because we have an FDA inspection system that oversees both food and medicine so that we can consume these with almost perfect confidence.

When you buy a prescription, that drug has survived a gauntlet of regulatory hurdles, so that your doctor can help you make an informed decision as to the safety and effectiveness of that drug for your condition.  Furthermore, you can be certain that you are getting the amount of the drug that is printed on the label.

Contrast this with the recent experience with the unregulated herbal supplement industry.  In 2015 the New York attorney general reported that several large retail chains were selling health supplements that did not contain any of the supplement (Echinacea, for example) that was supposed to be in it.[1] [2] Whether they work or not an individual is getting cheated out of their property if they are not getting what is labeled on the bottle.

The regulatory environment we live in is far more ubiquitous than this and even effects (intrudes) in our life without transactions. The government has something to say about the air we breath, the water we drink, and the food we eat and it does all these things to our benefit. For those who say government doesn’t do anything for me try breathing the unregulated air of Beijing, or drink the unregulated water of a Mumbai slum, or eat the unregulated food from a Mogadishu street vendor.

In summary up to this point, as labor divides we overwhelmingly make buy choices and surrender to the salutary servitude of the fruits of others’ labor. As we depend more on the goods and services of others, we surrender to the salutary servitude of a massive regulatory system that ensures without us thinking about it (freedom from) that the most basic interactions we have with the world and with the market are fair. I would say that this is a most fundamental characteristic of civilization.



All that said, I can understand where the ultra-libertarian feels that the statement, “The government has something to say about the air we breath.” is positively Orwellian. And as much as the ultra-liberal may cheer the regulatory framework that engulfs us it may be a fundamental part of the discontent we all feel toward the civilization we have been born into. In a future post, I may look more closely at this particular source of discontent. For now I only hope to give a way of looking at the world we live in that may be helpful for you to see where you stand in it.













Sunday, April 2, 2017

Capitalism meets Democracy (or at least government)






Locke envisions governments being formed to protect property.  His examples suggest that these groups form for protection against the people on the other side of the forest or river; but in this day and age what do we mean - Canada?

Yes all nations have standing armies to collectively protect themselves from real or perceived threats from other nations. However, on a day-to-day basis threats to our property are much nearer to home. There is, of course, the threat of common crimes such as assault and robbery for which we trade freedom to (personal retribution) for freedom from (involving the police and the judicial system). However, threats to property which are much more ubiquitous arise from the division of labor. Let us go back to Adam Smith’s bow and arrow maker to see how this might originate.

Let us say that the bow and arrow maker agrees to provide a certain number of arrows to the hunter in return for a specific quantity of venison. Let us then imagine that the meat that the hunter provides is mostly gristle or rancid, or simply less than promised. Or we can imagine on the other hand that the arrows weren’t straight or the heads weren’t sharp, or the feathers fell off.  In either case one or the other lost value of their property in the exchange. Initially, they might resolve the dispute between themselves. However, and especially if the dispute were settled through violence, this throws the individual back to the state where the “enjoyment of it (his freedom) is very uncertain, and constantly exposed to the invasion of others” who happen to be the ones with whom he is most closely associated. In addition to being bad for those involved this defeats the purpose of the group which is to allow the individual to enjoy his freedom from both the threat of violence and the capriciousness of the solution (Might makes right regardless of facts.) Furthermore, since this threatens group cohesiveness it is bad for the integrity of the group and makes it more vulnerable to threats from outside.

One can imagine then that very early on the group recognized a higher authority –tribal elders or a chief – to arbitrate such disagreements and render a decision that the group accepted as an acceptable resolution of the dispute.  Whether such individuals or tribunals rendered fair judgments most, some, or none of the time is irrelevant. These primitive institutions did their job if they minimized intragroup violence and their pronouncements were accepted by the group as binding.

This is my speculation on government’s first step into (interference in) the market place. I acknowledge that neither Smith, Locke, nor I have any appreciable factual knowledge of the governance of pre-historic man. That said throughout history we have evidence of markets that function as Smith said, governments that function with the purpose that Locke said, and the interaction between markets and government that function as I have speculated and that is what we have today. We choose buy (vs. make) and trade our property (time and money) for what we expect is of equal value to us. We depend on government to give us piece of mind (freedom from) that that trade lives up to our expectations.

In my next entry I will bring these ideas into the 21st century to see how markets, government, and their interaction affect us today.