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of the prevalent neoliberal economics, focusing specifically on the efficiency of competition, the profit motive, and private property. In each case, I will question how they improve efficiency and thus what efficiency is in such economic thought . Subsequently I will critique that view by adding a moral constraint to show that efficiency solely in terms of markets and financial profit alone does not benefit society generally, but rather promotes an increased wealth for a minority, often at the expense of the majority. With the moral constraints I propose, this new definition of profit will therefore lead to a more just society. The Right to Life Much of the following argument is based on an important assumption, that the right to property is secondary to the right to life. Life precedes property, for no-one can own property without first owning their life. Though property rights are often considered to have developed out of the need to hold personal possessions , to consume that necessary to sustain life, the permanent right to an exact possession in modern law has evolved, often superseding the right to life, as later shown. What follows from this is a new definition of profit. Throughout I will contrast the monetary definition of profit with a long-term social profit based around economics working for people rather than people working for economics. This new form of profit is based on the above assumption and suggests that efficiency isn t just of monetary value, but must account for the inalienable right to life of each person. This difference is pivotal in understanding the inefficiency of the profit motive, competition and private property, as although it may be possible to bring about greater nominal wealth, it is inefficient, according to measures of inalienable rights, to concentrate wealth in the hands of a minority: this social definition of profit, then, is the practical application of the right to life superseding property. Profit and the Profit Motive Perhaps the most popularized argument for the free-market is that while the capitalist intends only his own gain... he is... led by an invisible hand to promote an end which was no part of his intention (Smith, 1976, p.477). It is, however, also important to note Smith s concern for the capitalist s greed, as All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind. (Smith, 1976, p.437) Though considered the founder of modern economics, Smith noted the threat of an unchecked and individualistic profit motive, arguing that markets do not always correct themselves; some control is necessary to protect the market from monopolies and other vested interests.
Many liberals consider self-interest as rational or part of human nature. Since, in the formulaic statistical approach of micro and macro economics, utility is often considered no more than self-interested financial gain, promoting monetary interests over others. With such assumptions of human nature, the inevitability of competition in producing both winners and losers leads those winners to logically strengthen their own position, creating a kind of superstructure perpetuating little but their own success. Thus we have been left with the terminologies of development economics, where we assume underdeveloped , developing and developed countries. The linguistics of such categories shows the normative thought behind it, the assumption that if countries are developed by definition it seems they have nothing to learn. It therefore becomes acceptable, if not a moral duty, to teach less developed countries the art of profit, providing a justification for paternalistic development theories. It is here that John Ruskin notes the effects of such economic principles, writing that profit in economics is a zero sum game: for every buyer, there is a seller; one receives only what another gives. If the art of making money is to take all you can from the buyer perhaps You sold your bread well today: [but] was it to a dying man who gave his last coin for it and will never need bread more...? (Ruskin, 1860, p.44) Thus, a brief history of how such developed countries financed their industrialization usually reveals some form of slavery, colonialism or coercion. Thus, while this means profit becomes the general maxim to Buy in the cheapest market and sell in the dearest , it seems that such financial profit usually comes at a social cost not factored into traditional economic accounting: Charcoal may be cheap among your roof timbers after a fire, and bricks may be cheap in your streets after an earthquake; but fire and earthquake may not therefore be national benefits. ( Ibid, p.44) It is not difficult to see, then, how the art of profit is often the art of exploiting others, and economics without such moral constraint leads to such violations of humanity, to the point at which:
...the pluses, make a very positive and venerable appeara nce in the world, so that everyone is eager to learn the science which produces results so magnificent; whereas the minuses have, on the other hand, a tendency to retire into back streets, and other places of shade, -- or even to get themselves wholly and finally put out of sight in graves: which renders the algebra of this science peculiar, and difficulty legible; a large number of its negative signs being written by the account-keeper in a kind of red ink, which starvation thins, and makes strangely pale, or even quite invisible ink, for the present. (Ibid, p.79)
With such self-interest the capitalist may still, as Smith notes, benefit society. He argues that the farmer, butcher and baker all act in their own self-interest but still provide a service to society, a better organization through the division of labor. Though such externalities do benefit society, Ruskin notes those negative externalities which are often forgotten, products and occupations which damage society, and the majority who suffer due to the
distribution of such goods . Ruskin s hypothesis, then, seems ever more correct the wealthier society becomes; despite increasing wealth, poverty and inequality continue to grow: in 1830, the ratio in average per capita income was three to one, in 1960 sixty to one, and in 1997 seventy-four to one. (Risse, 2005, p.349). Competition Without competition, the profit motive would not be possible. The incentive and practicalities of making money can only exist in some sort of competitive framework. It is important to note, then, that those who finish first in any competition do so only in relation to those who finish second and third respectively. Therefore, in any such competition inequality is an inevitable result. As results are found and winners receive their prize, their position is strengthened and thus their ability to reinvest with greater capital, gain greater market share, or extract more marginal product from employees. In this framework, Ricardo defines the natural rate of wages as that which maintains the laborer, but Ruskin s appeal to morality shows that profit for the capitalist does not mean gain for all. Instead of an invisible hand gently pushing towards the benefit of everyone, such competition leads to an inequality which is much more of a vivid slap in the face for that majority born into poverty. Ruskin thus changes the priorities of economics, noting that Twenty people can gain money for one who can use it; and the vital question, for individual and for nation, is, never how much do they make? but to what purpose do they spend? (Ibid , p.85) Where Ricardo defines the natural rate of wages, Ruskin questions the very purpose of natural ; keeping laborers on subsistence is beneficial from the capitalist s perspective, efficiency and the natural are thus seen from the interests of an elite. If seeing laborers as mere tools in their factory and keeping a multitude in poverty for cheap labor is beneficial, then such wages and conditions are natural according to this view. It makes economic sense, therefore, for even those working in healthcare to test banned drugs on children with falsified documents to support ethical consent, and to make their own product appear more effective by lowering the recommended dose of the control drug to patients, even if this leads to the disablement and death of children (Ahmad , 2001). The entire relationship between capital and labor, then, between those who won the competition and those who have nothing, is based on a power struggle of exploitation. Without balance, on e dominates the other, their interests effectively determining the life of the other. Until each person has an inviolable right to life, such exploitation can only continue. Where such exploitation exists, no inviolable right to life does so. Private Property What follows competitive markets is inequality, but what permits the legality of the extreme inequality today is the institution of private property. Permanent property rights allow one person the legal right to choose to withhold even the means to life. Once we take our first
assumption, however, the right to life is above property rights requiring a more just distribution. Even Nozick s Entitlement Theory, ultimately driven by property rights, acknowledges this priority; a point which when properly expounded erodes property s permanence to agree with our assumption:
an owner s property right in the only island in an area does not allow him to order a castaway from a shipwreck off his island as a trespasser... the theory does not say that owners do not have these rights, but that the rights are overridden to avoid some catastrophe. (Nozick, 1974, p.180)
Consequently, in moderate scarcity should one person not have justly acquired enough property for their own consumption while another has justly acquired more than they can consume, some distribution seems to be required to avoid such catastrophe: the owner s right to deny a person those means of life is overridden because of a greater need. It is this acknowledgement, that need is greater than property, which demands redistribution for the sake of social justice, particularly for those who have been born into poverty cycles and who had no choice in their acquisitions . In this sense, the efficiency of economics is judged by its ability to fulfill those obligations of social justice, rather than being a summary of collective wealth by GDP, PPP or some other average statistical measure. Where the natural rate of anything was defined according to the interests of those capitalists, now natural assumes a moral constraint which must first be fulfilled: once those inalienable rights of man have been satisfied, we can gear economics towards industry. When life precedes property, it becomes logical to conclude that distribution follows need. It is not a far stretch from here to the familiar slogan From each according to his ability, to each according to his need (Marx, 1875): only those who have can provide the resource s, only those with need will receive; anything else is unjust, an inefficient catastrophe . In this vein Proudhon declares Property is robbery! (Proudhon , 1904, p. 3) as it denies what is the right of those who need it. Empirically, therefore, over 24,000 children die daily, simply because they lack the basic necessities 1. The problem is not scarcity, as there is enough food despite a 70% global population increase, as calories per person has increased 17% (FAO, 2002). That the required redistribution cannot legally occur without the consent of the owner is due to the institution of private property. In allowing property to override the right to life, it becomes clear that those with the power to make the decisions a re doing so for their own gain. That the richest seven people in the world have more wealth than the collective GDP of the 41 heavily indebted countries and their 567 million people attests to this inconsistency between the rights to property and the right to life (Shah, 2009). Economics as Morality
Children are defined as those aged below five years old, thus the statistics are greater if children ag ed between five and sixteen are included. Source: You et al
Effectively, the debate is reducible to one thing: purpose; for what purpose are modern economic assumptions established as law? The answer is fairly clear given the historical basis of the evolution of power, that even voting rights, for example, were subject to conditions of property ownership. Competition, private property and the profit motive all serve the interests of a minority who won the competition and thus consolidate their wealth and power. That minority control has continued to an extent whereby the wealthiest 1% of the world s population now own 40% of the world s resources, and the richest 10% own 85% of the world s resources (Davies et al, 2006). Almost all of these are from those developed countries, creating a system of control, whereby entire nations of people are classed as first, second, or third world, according to their respective wealth, where two people from different economic situations are considered alien to each other based on how much money they have. Such definitions show the bankrupt morality of such principles. Perhaps this stems from the evolution of economics as a separate subject. The etymology of economics derives from house , meaning there was no clear distinction made between household management and the economy, or between politics and economics, or between economic theory and moral philosophy. (Holloway, 1992, p.160) When separated from the political realm, as Holloway argues occurred in the transition from the Feuda l to the Capitalist system, the end goal of economics becomes monetary gain. Instead of that transition leading to greater freedom, only greater poverty and inequality have been achieved; as capital and labor became free, masters could search the globe for cheap labor, rather than being tied to any particular serf. Within such extreme inequality, justice, fairness and even the right to life have been lost. But if we remove the partiality of those who establish profit motives for their own ends we are left with the conclusion that all people are equal, that life is worth more than property, and we gain a purpose for wealth beyond the frivolous and useless consumption of scarce resources (Smith, 1976, p.437). With growing poverty and inequality it is surely becoming more and more necessary to challenge these assumptions of neoliberal econo mics to stop, perhaps, the greatest injustice in the history of mankind . If the purpose of economics is in the accumulation of money we have our methods. If, however, we finally see the moral imperatives in repatriating economics with other disciplines we find a new rationality and efficiency. Where we finally accept the inalienable rights of each person we allow ourselves the chance to recreate our world and fashion society in a manner fair for all. The next step in economic evolution is with us: either we continue to reap the benefits of the suffering of so many, or we find those moral imperatives and create our own purpose, to change the course of economics and the lives of millions of people worldwide.
Bibliography Ahmad, K., 2001, Drug company sued over research trial in Nigeria, The Lancet, Volume 358, Issue 9284, p.815 Davies, J., Sandström, S., Shorrocks, A. & Wolff, E., 2006. The World Distribution of Household Wealth, retrieved from: http://www.wider.unu.edu/events/past-events/2006events/en_GB/05-12-2006/, last accessed 15/12/09 at 00:37 Food and Agriculture Organization, International Fund for Agricultural Development, World Food Program, 2002, Reducing Poverty and Hunger, the Critical Role of Financing for Food, Agriculture, and Rural Development. Available at: http://www.fao.org/docrep/003/Y6265e/y6265e00.htm, last accessed 20:04 3/2/2010 Holloway, J., 1992, Crisis, Fetishism and Class Composition, Open Marxism: vol. II. Theory and Practice, London: Pluto Press Marx, K., 1970, Critique of the Gotha Programme , New Ed. Moscow: Progress Publishers, Nozick, R., 1974, Anarchy, State, and Utopia , New York: Basic Books, Inc. Proudhon, P.J., What Is Property?, New York: Cosimo, Inc. 1904 Risse, M. 2005, How Does the Global Order Harm the Poor? , Philosophy and Public Affairs, 33, pp.349-76 Ruskin, J., 2007, Unto This Last, Minneapolis, Minnesota: Filiquarian Publishing Shah, A., Poverty Facts and Stats, 2009: http://www.globalissues.org/article/26/povertyfacts-and-stats, last accessed 20:07 7/2/2010 Smith, A., 1976, An Inquiry into the Nature and Causes of The Wealth of Nations , Chicago: University of Chicago Press World Hunger Education Service, 2009. World Hunger Facts 2009. Retrieved from: http://www.worldhunger.org/articles/Learn/world%20hunger%20facts%202002.htm , last accessed 20:31 7/2/2010 You, D., Wardlow, T., Salama P., and Jones, G., 2009, Levels and trends in under 5-mortality, 1990-2008 , The Lancet, 375, no. 9709 pp.100 -103
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