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The Four Principles of Prosperity

2014 January 28
by Ian Welsh

All economic theories are statements about what sort of people we are, or rather, what sort of people we should be. Economics has homo economicus, economic man, the rational utility maximizer who always acts in his or her own interest. We know that humans aren’t rational and we know that we don’t always do what is best for us, or even know what it is, but economics stands, nonetheless.

Economic man is prescriptive: it is about how we believe we should act. In ordinary terms a rational utility maximizer is a greedy, selfish bastard: a functional sociopath. They are concerned with other people’s well-being precisely and only to the extent that that affects their own. That we strive to realize this philosophy in our society is obvious from a perfunctory look at how we run our primary economic institutions: corporations. Our society insists and has put into law that corporations be concerned only with profit and nothing else(x). Our culture celebrates greed, we declare that “greed is good”. We believe that if everyone acts selfishly, for themselves, in freely agreed upon contracts, no matter how unequal the power of the people entering into them “freely”, that maximum well-being will result.

It took a great deal of intellectual labor to make being a greedy selfish bastard intellectually respectable:

To a survival machine, another survival machine (which is not its own child or another close relative) is part of its environment, like a rock or a river or a lump of food. It is something that gets in the way, or something that can be exploited. It differs from a rock or a river in one important respect: it is inclined to hit back. — Richard Dawkins, “The Selfish Gene”, pg 66 (30th ann. edition)

If any civilization is to survive, it is the morality of altruism that men have to reject.
– Ayn Rand(x)

Well first of all, tell me: Is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? What is greed? Of course, none of us are greedy, it’s only the other fellow who’s greedy. The world runs on individuals pursuing their separate interests. — Milton Friedman

And the theory has been put to the test. In Russia after the collapse of the Soviet Union western economists and development experts instituted it as shock therapy and the Russian population collapsed, the life span of Russians dropped, and happiness cratered for over a decade.(x) One of the harshest totalitarian states in history, and people were happier in it than what our free market apostles wrought.

Since the 70s or 80s, in most developed countries we we have been slashing taxes, cutting social benefits, and extolling the benefits of free markets, by which we mean not free markets, but markets which the government does not work to keep either free or fair. The results are in: wages have stagnated, the rich have become the richest rich in world history, exceeding even those of the Gilded Age, and the developed world is in semi-permanent crisis, with Europe a shambles and America unable to produce good jobs and running record deficits. Food prices are soaring, energy prices are through the roof and the Middle East is in flames.

By their fruits you shall judge them and the idea that greedy people operating completely selfishly will lead to everyone being better off has produced its bitter harvest. This is not the first time it has done so. The famous economist of the Great Depression, John Maynard Keynes acidly quipped that “Capitalism is the extraordinary belief that the nastiest of men for the nastiest of motives will somehow work for the benefit of all. “*

The idea is absurd, and it has proved so in practice. The market, even the free market, properly understood, is powerful and prosperity requires it. But allowing unalloyed greed to be the principle that rules us, by which we run our societies, has proved disastrous, not just to our prosperity but to our liberty and to our democracy.

If we want more prosperous societies, which is to say, societies where affluence is widespread, we need to align our private morals and our public ethics. We cannot expect to exalt selfishness and greed and to always put ourselves and the few people we love first, second and last, and expect that miraculously, our worst of motives will lead to the best of results for people we don’t care about. We cannot put functional sociopaths in charge of our economic and political organizations and expect them to produce results which are good for anybody but themselves and the few people they need to keep happy in order to make themselves richer. We can’t expect widespread affluence when we tell ourselves that people are bastards who do, and should, look out only for themselves.

A society which creates widespread affluence must be based on four principles, and must elevate and honor people who embody those four principles.

Fairness. Everyone must be treated equally within the requirements of their needs. This does not mean being treated the same, a child with learning disabilities should not be treated the same as one who is gifted, but both should go to the same school system, and be treated no differently regardless of who their parents are or how much money they have. The wealthy and powerful must use the same institutions as the middle class and the poor for no system will work if it is not in the interests of the rich, powerful and influential that it does so.

Kindness. Instead of asking “What’s in it for me?”, we must ask that oldest of moral questions: “How would I want to be treated if I were them?” Kindness is not weakness, it is a refusal to allow yourself to become an evil person in response to evil. Finland, which treats its prisoners with kindness that astounds Americans, has ex-convicts who re-offend at half the rate of American prisoners(x). As justice must always be tempered with mercy, and mercy always tempered with justice, so kindness must be tempered with fairness. Being kind does not mean being a mark, it means giving people a chance, and treating them first with compassion.

Generosity. Greatness is not measured by what you have taken, by what you have hoarded, or by who dies with the most. It is measured by who has given the most and by who has made the most peoples lives better. The resources we have created are meant to be used; the more we share them, the more we make others lives better and the more they, in turn, can make our lives better. Happier, healthier, more affluent people are better for the economy and more fun besides. Economic cripples, unable to participate fully in society are in no one’s interest. Generosity, combined with the compassion which asks “what do they need?” helps everyone.

Future Oriented. The past gave birth to the present, which midwifes the future. The winners of the past, those who built the past, have their rewards in their time, but cannot be allowed to postpone the future till they can control it. Every society changes, or it dies. Every economic model must be modified in time. The old cannot insist that the world they grew up in is the world their grown children will live in.

These four principles can be embodied both by individuals and societies They are the characteristics of a generous dynamic society, in which everyone contributes, everyone cares and is cared for and everyone works to build the future. And they are not schizophrenic attributes: people can act this way in their individual lives. It is not required that people be kind and loving and generous to their family and friends, but ruthless and greedy in their business or political life.

We’ve given greed and selfishness a fair shot. More than a fair shot. More than a fair shot. We’ve destroyed uncounted lives and driven our own economies to the brink of disaster and then beyond. It is time to stop expecting that acting horribly will lead to good. It hasn’t worked and it won’t work. Instead it is time to try acting generously, kindly, and fairly. It is time for make sure that everyone shares in the wealth our societies are capable of creating. We should do this not just because the vast majority of us will do better, but because it is the right thing to do. It would be one thing if being bastards really did lead to the greater good and was a regrettable evil, but it isn’t. So, having exhausted every other option, perhaps it is time to, with a weary sigh, return to being good, to do unto our neighbors as they would have us do unto them.

It is time to be better people and to reap the rewards of doing so. It is time to correct those who prefer to be greedy, selfish bastards. It is time to return to affluence for all, rather than riches for a few. And it is time to end the rein of the greedy, selfish bastards.


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18 Responses
  1. someofparts permalink
    January 28, 2014

    Speaking of excesses that follow from the worship of self-dealing by the apex sociopaths, get a load of what the U.S. military is doing to the Pacific Ocean -

    http://www.dailykos.com/story/2014/01/27/1272964/-Open-thread-for-night-owls-Japan-bashed-over-dolphin-kill-as-Pentagon-wrecks-ecology-in-Pacific

    Ahab was a piker.

  2. January 28, 2014

    By saying that “allowing unalloyed greed to be the principle that rules us, by which we run our societies, has proved disastrous, not just to our prosperity but to our liberty and to our democracy” the average liberal will assume you are referring to the oligarchs who have corrupted both our economy and our governance, and perhaps you do.

    I would not argue that point but would expand it, as perhaps you intend, to include voters who demand tax cuts and increases in government handouts simultaneously. I would include voters who vote “yes” on every proposition which requires government to spend money and “no” on every proposition that requires them to collect taxes. I would include voters who elect representatives to federal government based on how much federal pork barrel spending that politician can secure in behalf of his locality. I would include voters who vote for politicians based on promises to “keep us safe” by infringing on civil liberties and waging war.

    We have the government, and the economy which stems from it, which we deserve because we elected it and keep reelecting it. People like Ian keep urging us to act differently and we don’t listen.

  3. Elliott permalink
    January 28, 2014

    Yes. well said.

    We can be better people and so be a better society.

  4. January 28, 2014

    Shared, and thanks again for contributing to the leaving-alternative-ideas-lying-around project.

  5. Formerly T-Bear permalink
    January 29, 2014

    Ian, your four ‘principles’ have little to differentiate themselves from four characteristics necessary for making any cohesive group. Not only are they the basis of social cohesion, they also are the foundation of the economic function (not to mention political parties). Your four principles describe the foundation of the simplest group the species has, the family, from which the Roman corporation was developed as a legal fiction that replicated the family. Machiavelli’s advise to elites, both princely and republican, was not to ignore this relationship, or ignore it at their peril; advise that still stands in good stead.

    The corporate metastasis into its present day cancerous form certainly hasn’t regarded such observation, and that will be their weakness and their downfall.

  6. Celsius 233 permalink
    January 29, 2014

    Upon further consideration, I’m questioning the use of the word prosperity. It’s an interesting word and it’s defined in interesting ways, depending on the choice of dictionaries, however, when one looks at the synonyms there are very different implications. Riches and wealth being at the forefront.
    I do know what you are intending, you make that quite clear, but mightn’t there be a better word?
    I’m suggesting sufficiency. Sufficiency is a very important word and concept. It by no means implies poverty or a lack of resources, healthcare, safety, food, shelter, education, laws, or justice.
    What it speaks to is sustainability for all.
    Unfortunately perception is everything; and our shallow society will likely shun sufficiency for prosperity, never understanding the differences.
    Sales and image rule, so marketing will determine outcome.
    I’m glad I’m old; it’s very apparent the paradigm that will lead our near term future.
    Cheers Ian; I love your work and optimism…

  7. January 29, 2014

    Lynn Stout, in the The Shareholder Value Myth, says that this:

    “Our society insists and has put into law that corporations be concerned only with profit and nothing else(x). ” isn’t true. The law part in particular. The idea that corporations exist solely to serve shareholders is a recent, aberrant development. We talked about this here: http://bit.ly/1fmILRi

  8. Ian Welsh permalink*
    January 29, 2014

    The structure of the family is contingent on the society, and changes as the society changes.

    If you put your family above all else, and everyone else does, you’re fucked. The Republic Romans did not idealize the family above all else, despite their patriarchality: their legends are full of fathers who put the Republic first.

    Various other lawyers disagree with Stout. In any case, we say it constantly and pretend we act on it.

  9. Formerly T-Bear permalink
    January 29, 2014

    @ Ian

    Please enlighten. Where in the historical record is an example exist that supports your statement? About the closest might arguably be the ancient Spartans, but that is still highly arguable. I’ll maintain that the family takes many forms, e.g. nuclear or extended, patriarchy or matriarchy, but the family determines the society, not the other way about. In this I think you may be mistaken.

    As for your take on the Romans, your reading is at variance with everything known of their history. Home and sacred hearth were central to Roman life, home and hearth motivated not only the protection of their life but the expansion and aggrandisement of Rome, that went for Patrician and Plebeian alike. Again please indicate some example that supports your contention. Your example of those putting Rome first is a straw-man; every such story involves a person responsible for a position of power or responsibility which overrode their familial relationships, that example isn’t even in the ballpark. You might want to read Sir Henry Sumner Maine’s Ancient Law, ISBN 0-88029-101-X for a good presentation not only of Roman family but the development of Roman law.

  10. Ian Welsh permalink*
    January 29, 2014

    Where in human history are there not examples of the family being determined by the structure of society?

    There are multiple polygamous marriages, multiple polyandrous marriages, there are societies where the children are raised by the uncle, not the father, there are societies where the children are taken from their mothers and put in communal housing, there are extended families that live together, there are nuclear families socieities. There are families where the father has nothing to do with raising the children. There is at least one known full matriarchal society, in which the men fought on distant fronteirs and the women owned everything.

    Anthro goes into this in great detail Children must be bred and raised, but how people organize themselves for that is VERY flexible, and is based largely on the needs of society: the family does not determine the society, the society determines the family. The Spartans needed a warrior caste to keep the helots down, and the Helots were largest part of their population.

    The Spartan military caste died because of concentration of wealth: the material circumstances required for their existence went away. Every generation fewer and fewer families were actually wealth enough to afford the lifestyle, so they stopped living it. (Zulus did something similiar. Lodge societies are VERY common anthropologically: most primitive societies had/have men’s and women’s houses.)

    Within living memory the Chinese have gone from extended families generally living in the same domicile to nuclear families. Americans went through the same process earlier without a government mandate. Nuclear families as the main social unit are contingent, as is every other arrangement.

    Men and women must have sex, children must be raised, the rest is based on economic necessity.

    I am familiar with Roman law and society. You have a source of stories of ordinary Romans and not those who were powerful? The Stories of Republican virtue tell you what people exalted: they exalted doing one’s duty, even if that meant putting their children to death for a crime, or whatever. The fact that their powerful people would do that is exactly the point. How many Senators or House members had children in the military during the Iraq war?

    I grew up with oldsters who were of the last generation of the British Raj. If you think many of them would not expect their family members to put the empire first and their families second, you are absolutely wrong. My grandfather put his life on the line repeatedly for the Empire, and his family would have been very badly off if he had died, the pension wasn’t that great. The idea of putting his family first was an ethical abomination to him. “England expects every man to do his duty” didn’t mean “put your family first”, despite being quite patriarchal. He started off as an ordinary cop, and he rose to police chief in Calcutta during the last years of the Raj.

    Consider the type of man the British promoted: one day some protestors wanted to tear down the British flag. He stood on the narrow stairs to the flag and told them that they could do it: but they had to go through him. They backed down. He went home, ate supper, never mentioned it. My grandmother only found out from others.

    This is COMMON in functional societies which emphasize honor and duty, and putting those above personal concerns.

  11. Formerly T-Bear permalink
    January 29, 2014

    Nothing you have provided shows your assertion: “The structure of the family is contingent on the society, …”. Your second paragraph rather shows the form of family affects the society that is built upon that particular family structure, other societies not having that family structure do NOT resemble the society that does, unless you turn fact and logic on their head. Only your Chinese example arguably shows the influence of external forces upon the size of family but then so would an extended famine, the structure of the family still remained almost identical to that structure previous to Chinese population policy, so not much of a handle you have there. Mobility and economic factors effected the diminishment of the extended family in North America, allowing the increase in nuclear family population (and economic as much as social environment saw the increase of single parent families thereafter). In all, your assertion is straw-man still.

    I still suggest you reading the Sumner Maine book. He wrote extensively on comparative jurisprudence, a subject he established. He takes a profound look at Roman family, society and jurisprudence. Your 7th paragraph confounds and confuses and results in jumbled garbage. Your following paragraphs are anecdotal and create a froth that supports your assertion not in the least. In history many individuals have made honourable decisions and done ethical things and behaved with integrity, that still has no bearing upon the general or universal, to apply one on the other is erroneous. Starting from erroneous assumptions leads nowhere, your comment above that was responded to was full of erroneous assumptions. Now that is pointed out, I am retiring from this discussion, do as you will.

  12. Ian Welsh permalink*
    January 29, 2014

    No, you did not make your points. In fact you just made my points. Mobility affects the family structure, as does prosperity Mobility is required by the structure of jobs.

    You’ve pointed out nothing. And you’re clearly not familiar with the anthropological literature.

  13. Formerly T-Bear permalink
    January 29, 2014

    You will convince me to consider your assertion when you can demonstrate that ‘society’ is a priori to family. You have not done so, so far. The reverse is fact.

    Clearly I am unable to carry on a discussion of what goes on in your head, your words are adrift of their meaning, your assertions are non-sense. We have nothing in common here and continuing this is fruitless.

  14. Formerly T-Bear permalink
    January 29, 2014

    Addendum:

    Not to mention counterproductive.

  15. hvd permalink
    January 29, 2014

    Re: the discussion between Ian and Formerly T-Bear

    Because humans are social animals depending for the survival of the young on the various family units elaborated by Ian that are reciprocally part of the social structure the argument over which comes first is truly pointless. They support and reinforce one another. They form a loop. A successful mating strategy works in the human context when it creates a type of family that interacts appropriately with the greater, supporting society. This is evident in other mammal communities and have been the subject of numerous studies. Jared Diamond’s “Why is Sex Fun,” is a particularly cogent discussion of this reciprocity. Our lineage goes back long before Rome, our dependencies can be seen as well in our earliest progenitors and in the remarkable varieties of societies and successful mating strategies that persist to this day.

  16. jcapan permalink
    January 29, 2014

    “This is COMMON in functional societies which emphasize honor and duty, and putting those above personal concerns.”

    Yes, but you’d agree about the family man’s misgivings, right, Ian? Nostalgia about honor, duty and stiff upper lips during the halcyon days of empire notw/standing, some of us are a touch reluctant to sacrifice ourselves for the enrichment of elites. For your union, your local commune, the booming protest movement, perhaps, but for your flag and sovereign… Or perhaps I’m reading you too literally–you mean instances when nationalism isn’t misdirected by vile parasites?

  17. Rangoo78 permalink
    February 3, 2014

    “The market, even the free market, properly understood, is powerful and prosperity requires it.”
    Could you explain the contradiction between this statement and your persuasive contention that we were better off as hunter gatherers?

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