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Kinds of Economies

There have been four kinds of economies.  What are they?  Which is the best?

Not all goods are limited or scarce; in fact, the most valuable good, namely, realization of Being, is inexhaustible.

The economic goods, though, are not unlimited. With respect to them, an economy answers the question, “Who gets what?”

All our successful prehistoric ancestors lived off the land. They gathered and hunted. They later figured out how to fish. The hunter-gatherer economy is one of the four kinds of economies and the one with, by far, the greatest temporal duration.

The question of distributive justice is: “Who should get what?” Ideally, what is the fairest or best way for economic goods to be distributed?

A hunter-gatherer economy can seem very unfair to the young, the old, the ill, the weak, and the foolish. Those who are physically or mentally challenged have a very difficult time surviving, not to mention reproducing, without the assistance of others. Those who are physically, mentally, and socially challenged have little or no chance at surviving.

The second of the four kinds of economies didn’t emerge until the First Agricultural Revolution about 12,000 years ago. The domestication of certain plants and animals made farming possible. Humans no longer had to wander about in bands on perpetual camping trips.

This enabled larger as well as settled populations. The emergence of towns and cities requires cooperation and specialization (the division of tasks or laboring activities). This set the stage for the emergence of written languages and higher culture. Inevitably, too, this led to greater economic inequality.

These kinds of economies are traditional. How do occupations get distributed? On the basis of tradition. With respect to males, if your father was a farmer or a physician or a soldier, you were expected to become a farmer or a physician or a soldier.

Obviously, there can be a serious difficulty here: just because my father was a physician, for example, that doesn’t mean that I should be a physician. Perhaps I lack the intellectual ability or the temperament for it. Perhaps I’d be much more economically useful to others if I were a farmer or a soldier.

Still, traditional kinds of economies worked. They did get limited goods (such as water and food) distributed.

With respect to the question of distributive justice, it might seem obvious that there must be a better way.

It may shock you to learn that some modern thinkers have advocated a return to traditional kinds of economies! This should give us pause.

For example, Mohandas Gandhi was an important statesman and moralist in the first half of the twentieth century. (He died in my lifetime.) Starting with its economic foundations, he advocated a thorough critique of modern civilization: “modern civilization . . . is a civilization only in name.” [All quotes from Gandhi are from The Penguin Gandhi Reader.] Why?

“We notice that the mind is a restless bird; the more it gets the more it wants, and still remains unsatisfied. The more we indulge our passions, the more unbridled they become. Our ancestors, therefore, set a limit to our indulgences. They saw that happiness was largely a mental condition . . . They saw that our real happiness and health consisted in a proper use of our hands and feet. . . They were, therefore, satisfied with small villages.”

He wants everyone to do manual labor. (This is similar to Zen Buddhism.) Why? “[E]ach child is prepared for the profession indicated by heredity, environment . . . no time would be lost in fruitless experimentation, there would be no soul-killing competition . . . no struggle for existence.” Minimal economic necessities are all that are required for living well. His economic prescriptions are based on his Hindu understanding of human nature.

This is a critical, profound point that is often missed when intellectuals today talk and write about kinds of economies: every coherent economic view or theory must be grounded on a view of human nature. How often do the talking heads on television discuss the nature of being human? This demonstrates their superficiality.

Gandhi thinks that traditional kinds of economies are worthy of emulation. He may be wrong, but, if so, he’s wrong because his view of human nature is wrong. Since his view of human nature is not obviously wrong, his critique is worthy of serious consideration.

The third of the four kinds of economies is a command economy. In former historical times, it was an economy run by a king or dictator. If he saw an economic need (for example, for more soldiers), he would command that more people become soldiers. There are many possible command kinds of economies.

Today, command economies are more likely to be run by the state. They are socialistic because the means of production are owned by the state in the service of the people. The justification for this arrangement and obvious loss of economic liberty for individuals is that socialism is supposed to be fairer than allowing the means of production to be owned by private, privileged individuals.

Karl Marx argued that socialistic kinds of economies end the exploitation inherent in the fourth of the kinds of economies, namely, the market economy.

Marx understood what everyone understands: market economies are the best kinds of economies for the stimulation of goods and services ever devised. Their foundation is the theoretically free market, which is based on economic competition (warfare). Economic demands are satisfied by those who most effectively and efficiently satisfy that demand.

Why, then, did Marx argue against market kinds of economies? He argued that the freedom so valued by their defenders is only a delusion, that, in fact, people in them (both laborers and those who own the means of production) are economic slaves.

What’s most interesting to me about Marx’s critique is not this economic side of it. He did argue that the owners of the means of production were forced to exploit those who worked for them or they would fail to make a profit and go out of business. He thought that economic fairness could be assured by a socialist command economy. However, he also thought that that wasn’t good enough.

It doesn’t matter if you give a slave a fair wage in accordance with his useful or productive work: he is still a slave. “A forcing up of wages . . . would therefore be nothing but better payment for the slave.” [All quotations from Marx are from The Marx-Engles Reader.] Merely ensuring economic fairness would not by itself enable people to live well.

After capitalism had produced ample goods for everyone and after socialism had eliminated economic inequality, Marx thought there would still be critical work to do. The unnatural greediness and avarice fostered by market economies and socialist command economies must then be extirpated. According to them, “it is use that determines a thing’s value.” This means that “You must make everything that is yours saleable, i.e, useful,” which is a moral travesty that leads to all kinds of alienation or estrangement.  It poisons everything from making objects to interpersonal relationships (including sex).  Why?

“As individuals express their life, so they are. What they are, therefore, coincides with their production, both with what they produce and with how they produce. The nature of individuals thus depends on the material conditions determining their production.” We need to let go of our deeply rooted attachment to private property. It is unworthy of us and undermines the quality of our lives. It’s in this sense that market kinds of economies ultimately alienate human beings from their own nature.

Like Gandhi’s critique, Marx’s critique depends upon a certain view of human nature. Since human beings are able to create freely, for Marx they are much more than mere cogs in an economic system. Doesn’t it strike you as odd that someone could live well merely by spending life selling cars or real estate or making advertisements or shoes or profitable investments?

Like Nietzsche’s, his is essentially an aesthetic view of human nature. “Conscious life-activity directly distinguishes man from animal life-activity . . . man produces even when he is free from physical need . . . man knows how to produce in accordance with the standard of every species, and knows how to apply everywhere the inherent standard to the object. Man therefore also forms things in accordance with the laws of beauty.”

Of course, in our culture today, there are many fanatics attached to the claim that we ought to have a market economy. There are many Republicans who think this way, particularly right-wing Republicans. Their attachment to it comes from attachment to a certain view of human nature, a view that not one in ten thousand of them could argue for or defend articulately. Most seem wholly ignorant of the alternatives. Almost none seem to be philosophers. (Of course, some who argued for market kinds of economies were philosophers, for example, Adam Smith and John Locke.)

Congress is divided and deadlocked because citizens are divided and deadlocked. Fanaticism ultimately leads to violence. The only genuine way out is to let go of fanatical attachment to views, which requires living examined lives.

A good way to begin is to examine critically the views about human nature advocated by philosophers like Gandhi and Marx. Obviously, they both cannot be right! Furthermore, there are at least ten different views of human nature worthy of serious consideration.

The good news is that the examination need not be all mere thinking. Since we are all humans, we all have direct experience of human nature. Seriously examining our own experience is the way out of political gridlock as well as the way out of being stuck with less than wholly satisfactory kinds of economies.

As always, if you know someone who might benefit from reading this, please pass it along.

Related posts: Realize Being, Exploitation on the Job, and Alienation on the Job.

Recommended resources:  The Penguin Gandhi Reader (R. Mukherjee, ed.), The Marx-Engles Reader (R. C. Tucker, ed., 2nd ed), and Stevenson and Haberman’s Ten Theories of Human Nature.




Posted in financial well-being


Mark Keicher - posted on 30/07/2012 3:54 pm

I’m still applauding!!

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