Tuesday, July 3, 2012

Insights and Ruminations on Political Economy

  So continuing on the same theme as the previous post, I realize now that to undertake to relate all the phenomenon of our daily experiences to social laws means that I must undertake to produce a synthesis of political economy.
  Now some people believed that rich people made poor people promise to work until their physical bodies were worn out and they gave up the ghost. The money that was paid to these workers would be disproportionately smaller than the output produced and sold and this is how profits were made. Consequently, poor people would not be able to purchase the produced output and depressions would result. The enraged workers of the world would then revolt and redistribute property on an equal basis with enough property for all to meet their needs.
  But there are problems with this theory. Although I would say that it is consistent with some possible universe, and that the story is a probable enough one, the story needs modifications. (1) The story is not consistent with our daily experience for we know that in modern America income inequality is growing and wages have either stagnated or declined. This implies that people cannot purchase as much output as they used too. Yet real GDP has increased and indeed profits have been growing, for we see that new sectors of the economy have sprouted from seemingly nowhere over the last 30 years; Walmart & Telecommunications of every kind for instance. (2) The poor cannot always make a revolution especially given the assumption that they are oppressed. For it may happen that they become oppressed to such a degree that they will lack the labor power needed to squash the opposing forces of mechanized armies. Only under the conditions where the workers are both poor and not starving-to-the-point-death is a revolution possible. (3) It is not obvious that the workers would want to give equal amounts of property to everyone after they revolt. The reason is because the act of getting all property to be the same for everyone is extremely difficult and what is difficult is improbable. Yet what is not improbable occurs more often, so it seems that the people will not likely choose to equalize property. What makes it so improbable? First, property is heterogeneous and so everyone needs equal amounts of every type of property (or at least everyone needs each different proportion of each types of property to be equal with everyone else's). The second difficulty arises from the fact that the total output of a country must be evenly divisible for the total population; for one cannot have 1.5 cows or bathrooms. This requires mathematical precision and mathematical precision is difficult to attain. Additionally, if total output is either too big or too small for such a division then it follows that some resources must not be used and so, resources cannot be fully optimized. Thirdly, the usefulness of some property is not linearly related to its physical substance, for instance, having a third drop of dye will not add exactly 1/3 more value to something that must have only "this much" dye to take on a specific shade.
   But this latter point creates a doubt, for when people talk about dividing all property equally, then perhaps this is possible if it is interpreted to mean "all property should be so divided such that no one has a practical advantage". And so even if someone had say, 1 more cow than someone else, on a piece of land that can only take 2 cows, then clearly even though there is inequality in society, there will not be practical inequality. However not all property is like this, for some property is mathematically related to its utility at least some time. So I say we must have a better story.

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