Economics – Rational Standard https://rationalstandard.com Free political commentary for the dissenting South African Fri, 22 Sep 2017 13:38:49 +0000 en-GB hourly 1 https://wordpress.org/?v=4.8.2 https://i2.wp.com/rationalstandard.com/wp-content/uploads/2012/01/cropped-RS-Logo.png?fit=32%2C32&ssl=1 Economics – Rational Standard https://rationalstandard.com 32 32 94510741 Dispelling the Fearmongering Myths Surrounding the Right to Freedom of Association https://rationalstandard.com/dispelling-fearmongering-myths-surrounding-right-freedom-association/ https://rationalstandard.com/dispelling-fearmongering-myths-surrounding-right-freedom-association/#comments Wed, 20 Sep 2017 20:15:37 +0000 https://rationalstandard.com/?p=6428 Written by: Jacques Jonker Every single individual has the inherent right to associate with whomever they want for whatever reason they deem fit. The right to freedom of association entails by necessity the right to differentiate and discriminate against people in your own personal sphere. It is the flagship of individual freedom.  Unfortunately, people do […]

The post Dispelling the Fearmongering Myths Surrounding the Right to Freedom of Association appeared first on Rational Standard.

]]>
Written by: Jacques Jonker

Every single individual has the inherent right to associate with whomever they want for whatever reason they deem fit.

The right to freedom of association entails by necessity the right to differentiate and discriminate against people in your own personal sphere. It is the flagship of individual freedom.  Unfortunately, people do not acknowledge and value individual liberties, until it is their own which is under threat.

To anyone with access to a smartphone and bit of data, the heated debate surrounding a baker in Colorado who refused to bake a cake for a gay couple’s wedding is not news.

The Masterpiece Cake Shop is owned and run by a certain Mr Jack Phillips, who in July 2012 refused to bake a cake for Charlie Craig and David Mullins on the basis that it is in opposition to his religious views. As expected, virtue-signallers on the left pounced on Phillips’ apparent ‘unjustifiable’ discrimination against a gay couple. Apparently, anyone that upsets gay people must be dealt with swiftly by the state. How dare a person decline to render a service to someone based on their religious conscience?

There are a couple of things that need to pointed out.

Firstly, Phillips had to make a choice between extra monies for his business, and his conscience. He chose the latter.

What he did not do, is make a choice between money and the opportunity to degrade homosexuals because he has some phobia of them. A phobia is defined as an irrational fear or hatred of someone or something. Declining to associate with someone on the basis of religious conscience is not a phobia.

Is it bigoted? Perhaps, but we are all bigoted in some way and we have the God-given right to be bigoted. Nobody has the inherent right to force others to accept them as they are; they only have the right to their own freedom.

Secondly, leftists seem to thrive on the false narrative that forced association is acceptable, but forced segregation is not.

Neither of these things are acceptable.

It would, however, be naïve of us to be shocked about the leftist outrage at the Cakegate scandal. Virtue-signalling is nothing new in the world of political correctness. It is therefore necessary that we dispel some common myths surrounding the right to freedom of association; myths that are construed for the sole purpose of fearmongering and to spare ‘muh feelings’.

Myth 1: If businesses don’t have to associate with people, it will lead to marginalisation.

This is simply not true.

Businesses are concerned with turning a profit. A business that discriminates left and right against, say, black folks, gay folks or folks with abnormal unibrows, is simply not going to be as competitive as a business that does not.

It is up to the owner of said business to decide whether or not he or she is willing to make the trade-off between more profit and discriminating against whomever for whatever reason imaginable.

In an economic sense, it would be suicide and at the end of the day it is the discriminating businesses that will be marginalised.

Myth 2: In sparsely-populated areas, the effects of discrimination would be felt more severely as there aren’t more options available to consumers.

If a business voluntarily decides to alienate a market segment, it automatically creates a window of opportunity for new businesses (colloquially known as a ‘gap’ in the market).

This obviously begs the question: What if people don’t have the necessary resources to fill the gap in the market?

This is the very reason economists emphasise economic growth: It would allocate more resources to the people who need them. But what is economic growth really if you could just let the state steal people’s money and spend it on frivolous things such as war and “welfare”?

The blame rests squarely on the shoulders of government, who keeps on printing away people’s purchasing power, thus destroying their chances of being able to provide for their own economic welfare.

Myth 3: Since the economy in South Africa is controlled mostly by white folk, it would be dangerous to give them even more power to discriminate.

You know what would be dangerous, and immensely stupid? For a business to alienate 90% of citizens and thus destroy their market share and possible growth. It makes no sense to do that.

Those businesses that don’t care about committing economic suicide would simply not survive and be forced to shut down. Which is what the politically correct wants to happen to them, no?  Another win for free market mechanisms.

Myth 4: If businesses could discriminate and survive in pre-1994 South Africa, they’d be able to do so again.

To equate the economic environment of Apartheid South Africa to contemporary South Africa is a false equivalency at best.

Lest we forget that the reason the white segment of the population was able to acquire and hold on to so much wealth was because of the discriminatory policies of government. Businesses could afford to alienate non-whites because the government made sure that there was minimal competition that could oust them.

It had nothing to do with the free market. It had everything to do with an authoritarian state manipulating free market mechanisms to the detriment of innocent people.

Myth 5: Giving businesses free reign to discriminate would mean that institutions such as hospitals would be able to refuse medical assistance to some.

Another blatant lie by the virtue-signalling cult so prevalent among the millennial left.

It is no secret (to those who do their research) that in the South African context there is a logical exception to the rule that the law does not impose a duty of positive conduct on people to help others: When a person has certain exceptional abilities that puts them in a unique position to provide much-needed specialised care to people (e.g. medical doctors), that person bears a duty to act in situations in which an “ordinary” person wouldn’t be able to, and thus wouldn’t have to.

It would amount to gross negligence and, quite possibly, criminal liability if a whole building full of doctors and nurses refused to help someone whose head is hanging by a thread.

The common law elements of the law of delict as well as criminal law already deals with such matters. Mind you, I have never come across people who have studied for a little bit more than a decade in order to be able to help people, who would simply let someone die because his tattoo of Jesus offends them.

Myth 6: Businesses provide a service to people, and it is people’s inherent right to have access to those services.

What’s quite amusing here is that there are numerous not-for-profit organisations set up around the world to specifically cater to certain demographics. But the moment an organisation’s status is ‘for-profit’, they are exempted from the right to provide a product or service to whomever they want.

The hypocrisy is mindboggling to say the least. All persons, natural or juristic, should be able to associate with whomever they want.

It is clear to the sane and the rational that there is false narrative perpetuated by the modern left that the freedom to associate with whomever you want will lead society down a cliff. It is pure fantasy construed to fearmonger people so as to make them gullible enough that they would fall for such claptrap.

For a society to be truly free, the people should be able to associate and segregate themselves without an external element of force involved.

Author: Jacques Jonker is a scholar of law and commerce at the North-West University, Potchefstroom.

The post Dispelling the Fearmongering Myths Surrounding the Right to Freedom of Association appeared first on Rational Standard.

]]>
https://rationalstandard.com/dispelling-fearmongering-myths-surrounding-right-freedom-association/feed/ 2 6428
It’s Time to Sell South Africa’s State-Owned Enterprises https://rationalstandard.com/time-sell-south-africas-state-owned-enterprises/ https://rationalstandard.com/time-sell-south-africas-state-owned-enterprises/#comments Tue, 19 Sep 2017 21:45:03 +0000 https://rationalstandard.com/?p=6426 Government is unwilling to privatise state-owned enterprises (SOEs) because it believes that owning these companies gives government, and South Africa by extension, a strategic advantage. In other words, government thinks that by owning these companies it can achieve some predetermined goal that would otherwise be unachievable. That is simply not true. I could put that […]

The post It’s Time to Sell South Africa’s State-Owned Enterprises appeared first on Rational Standard.

]]>
Government is unwilling to privatise state-owned enterprises (SOEs) because it believes that owning these companies gives government, and South Africa by extension, a strategic advantage.

In other words, government thinks that by owning these companies it can achieve some predetermined goal that would otherwise be unachievable.

That is simply not true. I could put that in stronger terms, but I do not discuss bovine digestion in polite company.

Firstly, by taking as a starting point the goal of improving the quality of life of each person and freeing their potential (as in the preamble of the Constitution) and how this might be interpreted by a socialist-leaning government, it is clear that owning companies that require billions in extra tax revenue taken from productive citizens does not improve anyone’s quality of life. These companies have consistently displayed a lack of improvement; and this money could be better spent on education, healthcare, and the various welfare cash grants etc. Only the quality of life of people like Dudu Myeni, Anoj Singh and various associates of Jacob Zuma is improved, but I don’t think the writers of the Constitution only had them in mind.

‘Ah’, you say, ‘they clearly said strategic and therefore we must judge this improvement over a longer time period.’

Okay; let’s do that.

If we consider that SOEs are likely to precipitate future tax increases, we see that the only way we can construe this refusal to sell non-performing assets as being strategic is if the companies in question somehow add more money to the pockets of South Africans than would be taken by these tax increases. There are two ways these companies could do this in the future: Either directly through the profit they generate and government distributes to citizens, or indirectly by making such brilliant investments that more value is generated and the economy grows faster than it would have otherwise.

The first scenario can be dismissed immediately. If SOEs were going to turn a profit in the future under economic conditions as yet unknown, what’s stopping them from doing so in the present with conditions that are much better understood? What new thinking has the government suddenly developed that they had no access to in the past? In doing the cost-benefit analysis in terms of the metric we’re using, what case have they demonstrated for the aforementioned risk of tax increases being outweighed by the expected value of future profits? If government had new ideas, we would know about them because of the oversight mechanisms of the Constitution and our government’s inability to keep secrets.

I think it’s safe to assume that government has no new ideas for making these companies profitable enough that we should be expecting profits to outweigh what they have already cost us, never mind what they’re going to cost us tomorrow.

What about the second scenario?

Is it possible that, even though these companies are unlikely to be profitable anytime soon, they’ll somehow still add value to the economy through the investments they make or, alternatively, the operations they undertake? Making good enough investments to add value to the economy requires the same ability to interpret market information that profitability requires, so if you can’t become profitable yourself (they have profitability as one of their stated goals) on what basis would you be able to make profit for others?

Maybe the operations these companies undertake represent a public good?

Even though they won’t positively affect SA’s economic performance through their investments, they might do so by providing goods or services to the South African economy that no one else is willing or able to provide and which in the absence of these state-owned enterprises would represent an added cost to the economy far outweighing the cost of taxing us to prop them up.

Again, this is untrue.

Let’s take Eskom, for instance. If Eskom is the only company willing and able to provide affordable electricity to the SA economy, why does government insist on maintaining their monopoly? As for price, when we had load shedding, being sold electricity at a price higher than the Eskom/NERSA price would surely have been worth it for some people, instead of having no electricity?

The truth is that when it comes to state-owned enterprises, government is showing every sign of what’s called the sunk cost fallacy. They made a political decision to keep pouring money into these companies and, because selling them now would require admitting their mistake, they double down on failures instead, even if it contradicts their own objectives (which I don’t agree with).

Prepare to be stuck with these lemons, barring a massive attack of voter common sense in the near future.

The post It’s Time to Sell South Africa’s State-Owned Enterprises appeared first on Rational Standard.

]]>
https://rationalstandard.com/time-sell-south-africas-state-owned-enterprises/feed/ 2 6426
Competition in the Market: All Sides Are Usually Winners https://rationalstandard.com/competition-market-all-sides-winners/ https://rationalstandard.com/competition-market-all-sides-winners/#comments Fri, 15 Sep 2017 22:00:00 +0000 https://rationalstandard.com/?p=6281 Two Kinds of Competition The word ‘competition’ is used to describe two different things, and while they are not unconnected they are so dissimilar that confusion between them leads to very serious misunderstanding. What makes matters worse is that the form of competition which is most prominent in the consciousness of the average person is […]

The post Competition in the Market: All Sides Are Usually Winners appeared first on Rational Standard.

]]>
Two Kinds of Competition

The word ‘competition’ is used to describe two different things, and while they are not unconnected they are so dissimilar that confusion between them leads to very serious misunderstanding. What makes matters worse is that the form of competition which is most prominent in the consciousness of the average person is not the form which is most important in the real world.

The word competition comes from two Latin words meaning ‘seeking together’, and refers to the situation when a number of people are trying to gain possession of the same thing, or of similar things. What it does not specify is whether there is only one thing so that of all those who are trying to gain it only one can succeed, or whether there are many so that many or even all of those seeking may gain them, but probably not to the same extent. These are the two kinds of competition.

First Type: Winners and Losers

When people talk about ‘holding a competition’ they are normally thinking of an arrangement where there will be one (or a few prizes), for which people will compete. There will be a winner, or a few winners, and the rest will be losers. Competitive sport, which plays a large role in the lives of most people as spectators and followers if not as participants, is always organised on this basis. Games are always about winning or losing, and in addition to the fact that each individual game has a winner and a loser (such games as races, many losers), there are often further elaborate arrangements to produce an ‘overall winner’ or champion – leagues in football and similar games, championships in boxing and golf.

It is worth noting in passing that the arrangements of the leagues and championships is highly artificial. There are in no sense genuine attempts to find out who is best (which is probably a meaningless concept anyway). Their purpose is to produce a winner or a champion and they have to produce one, even if, eventually they have to spin a coin to do so. The point is well illustrated by the refusal of some football leagues to accept drawn matches. Instead, a drawn match is ‘decided’ by a series of increasingly arbitrary procedures, like set shooting at goal.

From the fact that all games have winners it is a small step to believing that the purpose of playing games is to win them. This is dubious. The purpose of most competitions was originally to encourage people to participate in an activity which would benefit them in some way. The Ancient Greeks regarded athletics as a vital part of military training. Its purpose was to strengthen all the participants, not just the winners, and the competitions and the prizes were simply a means to induce people to take part and to do their best.

The idea that games were played for their own sake and not to win was strongly held in some quarters until quite recently, but the thing which has destroyed it is the overwhelming predominance of spectator sports played by professionals. The spectators want their team to win. For them (and they are the huge majority) winning is everything and the professional players have no option but to go along with this attitude. They are paid extra if they win. In games like golf and tennis the prizes for champions are enormous. They are professionals and they are actually playing for money, but the rewards are structured so that they are playing to win.

From this came two ideas which are almost universally held today: ‘Competition is about winning’ and ‘Where there is competition there are winners and losers’. In fact this is only true of the one kind of competition, hardly at all of the other.

Most of the ‘games’ kind of competition is artificial. Special rules are carefully crafted to throw up an unambiguous winner. In real life, outside of sport, there are few such situations. For one thing there are not unambiguous winners. The various pop-singers (or for that matter, concert pianists, or architects, or surgeons) in the world are in competition with each other, but who is the winner? If one asked a group of thoroughly knowledgeable people who is the greatest singer alive today, it is most unlikely that they would agree. There would be dozens of candidates, each with their supporters. And even if they did agree, another group would not agree with them. Real life situations do not throw up champions. Neither, of course, in any real sense, do games. A particular team wins the soccer league this year because the league is structured so that somebody has to win but somebody else will probably win next year.

Second Type: Everyone is Usually a Winner

The competition which is part of a capitalist economy and the competition which was identified by Darwin and his followers as forming part of the basis of evolution has very little in common with the games-type competition.

There are, indeed, some examples of competition which resemble the ‘games-type’ outside the sphere of games. One is the competitive examination when only a limited number of candidates will succeed irrespective of how well they all do. This is like a game with a limited number of prizes and, like a game, it is a situation which has been structured artificially. Another is competition for promotion in a hierarchical organisation. There are always fewer promotion posts than people who can be promoted, so that we have the case of many people competing for few ‘prizes’.

Particular situations can arise which look very much like a game or race. Several identified people are in line for a particular promotion; only one will get it; but even in these cases we are seldom looking at a simple case of winners and losers because those who lose in the one instance have other alternatives. It is not at all uncommon to hear someone say that the best thing that ever happened to him was to miss some promotion because it led him to change his direction in a way which turned out to be more to his advantage. It is only when people are locked into a hierarchy and cannot change their jobs, like in the Mediaeval church or a Communist Party, that such competition is truly internecine.

Such situations are in any case relatively rare. The type of ‘capitalist’ competition which takes place not only throughout human society but throughout animate nature, is something quite different. Let us take as our example a particularly obvious and well-known example of capitalist competition: a retailer operating in a reasonably free market. We can consider later whether his case is indeed typical. The first thing that we notice is that the shopkeeper does not spend his days confronting his competitors or indeed dealing with them in any way. He spends his days dealing with his customers, with his employees if he has any, and with his suppliers, that is to say, with people with whom he co-operates. What he actually does in order to compete is to try and improve the quality of his co-operation – essentially to serve his customers better.

His competitors are not a defined group, like an opposing football team. He may have a competitor next door, but he may not. He may be the only shop of his kind in his particular shopping centre but he is still in competition with others, all over the town and even beyond, possibly with others kinds of suppliers, like mail-order houses. Also, to a vague but real extent, he is in competition with people who sell quite different things. This is not a major factor in the life of a grocer, though it is not quite absent, but a seller of jewelry is likely to be very conscious that he is competing with the seller of sports cars and with the seller of overseas package-tours.

The Vastness and Decentralisation of Market Competition

The fact that ‘the competition’ is a vast and vague mix of different kinds of people, in different places and doing different things, many of whom the retailer does not know personally, and of some of whose existence he may be unaware, is a most important reason why competition seldom issues in overt hostility or conflict (though it can do, as we know from the taxi wars). In the vast majority of cases there can be no question of trying to destroy the competition and indeed of engaging in any kind of active conflict with them because they are too numerous and too largely unknown. In fact, our retailer seldom meets his competitors, and if he does it will not be for the purpose of competing but for the purpose of co-operating as in a chamber of commerce.

Normally, attempts to destroy competitors make no sense because more will simply arise in their place. Grocer’s shops do not buy out the competitor across the street because if they do somebody else will come in. The idea of destroying the competition can only arise in one of two situations. The one is where the number of competitors is artificially limited so that if a certain number are eliminated no more can come in. This was the situation created by the old Liquor Act in South Africa. In a certain area only a limited number of licences were allowed. If you could acquire all of them you eliminated all obvious competition . You had not in fact eliminated all competition. Liquor is in competition with non-alcoholic drinks and with other ways of spending money and people can go to distant places to buy liquor, but you have eliminated enough competition to give yourself a major benefit.

Role of the Law

The other situation where the elimination of competition makes sense is one of lawlessness, where a group of people hope to be able, by violence, both to drive out all existing competition and to prevent any new competition from arising. This policy was followed on a large scale by the European maritime powers in the sixteenth and seventeenth centuries when first the Spanish and Portuguese and later also the Dutch and the British tried to establish monopolies of trade in particular areas and to keep out all competition by violence. The policy did not succeed and led to constant warfare, which in its turn led to the establishment of the rules which govern international trade today.

Among human beings for competition to be a peaceful process requires law but when law is present competition does not (as its critics allege) give rise to a society dominated by internecine conflict. People do not compete by trying to destroy each other; they compete by trying to serve their customers better.

The biological competition to which Darwin and his followers drew attention turns out to be very closely, analogous, not, oddly enough, to human conflict but to human competition under law. How this comes about is very interesting. The Victorians tended to see natural selection in terms of a sort of World Heavyweight Boxing Championship in which all animals fought each other to the death, until only the ‘fittest’ was left, but we now know that this is scarcely ever so. Animals very seldom fights members of their own species to the death. Territorial and mating conflict tends to take place either simply by posturing (as among birds) or by ritualised fighting in which little damage is done (as among horned animals).

Nature is ‘red in tooth and claw’ not in terms of competition but in terms of predation. Animals prey on other animals at a huge advantage so that the risk taken by the predator is negligible. Cats catch mice. (What can a mouse do to a cat?) Several lions together set on a buck, and usually a sick one at that. The difference between human beings and all other animals is that the humans can sometimes, by innovation in weapons, tactics or organisation, put themselves in a position to defeat others at a cost acceptable to themselves. Other animals cannot do this; they have to meet their own kind on a basis of equality, and a fight to the death on a basis of equality is a mug’s game, as was so well illustrated in the battle of the Somme.

So biological competition resembles human competition under law, with the principle that the better part of valour is discretion, universally followed by animals other than human beings fulfilling the role of the rule of law. There is constant conflict between predator and prey, but competitors seldom come into conflict, and indeed, just as in the human situation, often do not see each other or even know of each other’s existence. Snakes and cats both prey on mice and cats are more efficient predators than snakes. If cats arrive in an area where there has previously been only snakes, the snakes will find that there are fewer mice and their own numbers may decline, but they will probably never set eyes on the cats.

The Impact of Innovation and Change

Most of the time, in both the human and the animal situation, competition is essentially in equilibrium. Competition sets a minimum standard of efficiency which everybody has to meet, and everybody does meet it. It is in times of rapid change, and especially of adversity that competition becomes fierce and potentially internecine. It is important to remember that these situations are exceptional.

Spectacular innovation is a common occurrence in human affairs but very rare in nature because of the slowness of evolution. It can happen, though. When dogs were introduced into Australia (presumably by the first human inhabitants), their superior efficiency as predators led to the extinction of most of the indigenous Australian predators (but not, interestingly, of any of the prey species, which the dogs actually ate). In the same way the invention of the spinning jenny led to the extinction of the spinning wheel. There is a vital difference, however. It was the spinning wheel, not those who used it, that perished. A wolverine could not convert itself into a dog but a woman who earned her living by spinning on a wheel could, and many of them did become workers in a mechanised cotton mill. In wild nature innovation can indeed be catastrophic to some species but among human beings not. In human affairs it is processes, machinery or institutions that become extinct. People learn and adapt.

The other situation where competition becomes fierce and sometimes ugly, is where the external environment changes for the worse and a situation which was formerly in equilibrium is suddenly no longer. The market has contracted, the habitat has become smaller, the weather has changed for the worse, and there is less food than before.

There is a very important point to be noted here. Eugene Marais (the famous Afrikaans poet), in The Soul of the Ape, criticises the conventional view of the evolutionist of his time that the ‘struggle for survival’ is essentially a competitive struggle. The great enemy, as he points out, is inanimate nature, which will kill any living thing which is not able to cope with its challenges. The ‘unfit’ may be so – totally irrespective of any competition. If the climate becomes suddenly much colder some species and some individuals will not be able to survive. Those who were already suited to a colder climate and those that had the capacity to adapt, will survive – the others not. This is not a question of competition. Those who perished would have done so even if those who survived had not existed.

In the same way, by no means all failures in business can be attributed to competition. Many happen because the people concerned simply did not have all of what was required, lacking either material resources or skill or relying on innovations which failed or seeking to seize an opportunity which did not exist. Where successful innovation is highly desired and highly rewarded, unsuccessful attempts at innovation are bound to happen.

Government Intervention in Competition

Having noted all these things, we cannot deny that situations do arise where competition can become very ugly indeed, in situations of catastrophe, like an earthquake, a rare and therefore unforeseeable flood or drought, or a total war. In such situations it is normal for governments to attempt to suspend the process of competition, by such extraordinary means as rationing and price control as well as more indirect measures such as allowing manufacturers to form cartels in order to reduce the severity of competition among themselves.

Few would deny that in situations of true emergency some such measures may be justified but there can be little doubt that in the real world such measures have done far more harm than good because they have tended to be continued after the emergency has passed, and to be applied in situations which were not true catastrophes.

The essence of a catastrophe is that it could not reasonably have been foreseen, and that it will pass. If either of these conditions is not present, suspension of competition is entirely destructive. Where a misfortune was foreseeable, like a ‘normal’ drought or flood, it is most inexpedient that those who foresaw it and took precautions should be punished and those who did not should be rewarded, which is what happens if the impact of the misfortune is to be shared equally. If this is done, it will simply ensure that people do not exercise foresight. This was very much the effect of ‘drought relief measures’ in South African agriculture which led farmers to plant more and more maize in sub-marginal areas where there was little likelihood of getting enough rainfall. Similarly, to compensate people who build on land which is known to be subject to regular flooding is simply to encourage others to do likewise.

When the change is not a passing catastrophe but signals the beginning of a new state of affairs which is likely to continue for the foreseeable future, interference with competition is particularly undesirable. We have noted that the great advantage that human beings have over other animals in facing change is their superior ability to adapt, and the competitive process is a powerful incentive to adapt. Where adaptation is needed the last thing that should be done is to punish those who do adapt and reward those who do not. History, right up to the present, is littered with cases where the effect of government intervention has been to postpone a necessary and inevitable change and in consequence, to make the final adjustment both more drastic and more damaging than it needed to be, like attempting to dam a river and eventually causing a flood when the dam bursts.

Incentive Effect of Competition

The general point is that competition is the most powerful incentive to people to do things right, to be efficient, to render good service, and also to exercise foresight and to make necessary adaptations to changing circumstances. We can live with the suspension of competition for a short time though even then a price has to be paid, but in the long term the price exacted by any interference with competition is itself disastrous.

The incentive effect of competition is, of course, the one point that the two kinds of competition have in common. Competition certainly makes rugby players play harder and runners run faster. That, as we have noted, was what it was originally for. Today it is very far from clear what it is for. If winning is the only thing, what is the point of winning? Why play rugby or run marathons in order to win when you can just as well spin coins? In spite of everything that is said to the contrary, it is difficult to escape the idea that games really are played for their own sake and not to win, although people certainly do care about winning.

Conclusion

To conclude, let us sum up the differences between ‘games-type’ competition and ‘real world’ competition.

1. In games type competition the competitors are face to face, sometimes in actual conflict (as in boxing or rugby), always in direct contact. In real world competition one is only marginally aware of the competition. One is face to face with those with whom one co-operates.

2. Games are about competition and the purpose is to win. Business, or life in general, is not about competition and the purpose is not to win. Competition is part of the overall environment in which we pursue our actual goals – simply to live, to earn a living, to do a good job, perhaps to be famous as an outstanding practitioner of one’s art, but even that is not truly a competitive motive. Beethoven and Mozart were alive at the same time but were they in competition? Would either one be any less famous if the other had not lived?

3. In games those who do not win are losers. In competition there do not have to be losers. Some may fail irrespective of competition, some may fail as a result of competition but the great majority simply ‘hold their own’, meeting the standard that competition sets, being neither outstanding successes nor failures.

Finally we should notice that the idea dear to the sentimental Victorian socialists, like Galsworthy, that the poor are the ‘losers’ in capitalist competition, is hardly ever true. Typically in a developing society, the poor are newcomers who have come from a situation where they were even worse off (in Victorian England and contemporary South Africa, from the countryside to the towns, in modern America, from Mexico or Asia) in order to better themselves, making use of the opportunity which the prosperity of others creates for them. In the contemporary first world the poor are typically people who have been excluded by institutions the very purpose of which is to prevent them from competing (like minimum wages). So far from being the victims of competition, they are the victims of its absence.

Disclaimer: This essay was extracted from O’Dowd’s 1999 occasional paper, “Liberal Reflections”, for the Free Market Foundation. The essay’s name was changed from the original “The Two Kinds of Competition” and the headings were inserted by Rational Standard editors.

The post Competition in the Market: All Sides Are Usually Winners appeared first on Rational Standard.

]]>
https://rationalstandard.com/competition-market-all-sides-winners/feed/ 1 6281
Freedom of Movement and Communication is Crucial for Progress https://rationalstandard.com/freedom-movement-communication-crucial-progress/ https://rationalstandard.com/freedom-movement-communication-crucial-progress/#respond Wed, 13 Sep 2017 22:01:11 +0000 https://rationalstandard.com/?p=6252 Periods of Creativity Nobody who has even a slight acquaintance with world history can have failed to be struck by the occurrence of periods of extraordinary creativity in a few places and for quite short times, which have made greater contributions to human progress than the whole of the rest of the world put together. […]

The post Freedom of Movement and Communication is Crucial for Progress appeared first on Rational Standard.

]]>
Periods of Creativity

Nobody who has even a slight acquaintance with world history can have failed to be struck by the occurrence of periods of extraordinary creativity in a few places and for quite short times, which have made greater contributions to human progress than the whole of the rest of the world put together. It does not matter what aspect of human life you are studying; whether it is literature, or philosophy for fine art or science or technology. We find not only that there are such periods, but that the periods are the same. They are creative not only in one or two fields but in every field of human endeavour that existed at the time.

These periods of outstanding creativity are quite few. There is the classical period of China, the time of Confucius and Mencius, and the other Chinese Sages. At about the same time, there is classical Greece, the age of Aeschyius and Euripides, Plato, Socrates, Aristotle, Herodotus and Thucydides, Phidias and Praxiteles. The next period is less well known since most of its art and literature had perished and the only well known names associated with it are Archimedes and Euclid. It is the period of the kingdoms ruled by the successors of Alexander the Great, especially Egypt, centred on Alexandra, and Syria, centred on Antioch and forming part of the same world, the independent Greek cities of Sicily and Southern Italy, especially Syracuse. To appreciate the importance of this period we have to compare the level of general sophistication, both philosophical and technical, reflected in classical Latin literature with that of “golden age” Greek literature from four hundred years earlier.

We have to wait a long time for the next period which happened in the Middle East around 1000 AD in the Arab kingdoms, especially those centred on Baghdad and Cairo. Out of these came remarkable advances in science and mathematics and in architecture. The well-known Moorish architecture of Spain is an offshoot of this. After this, and in some ways directly derived from it, comes the flowering of Renaissance Italy, Michelangelo and Leonardo Da Vinci, Petrarch and Boccaccio, Machiavelli and Galileo.

After this we are approaching modern times in which creativity becomes both more widespread and more continuous, but we can still see a disproportionate amount in Holland in the seventeenth century, in Britain all the way from Shakespeare times to the end of the nineteenth century, and in the United States from the mid-nineteenth century to the present day.

We may also note that right through from the Middle Ages to present day Western Europe as a whole, while not equalling the special periods, was creative in a way in which the Roman Empire, the later Chinese Empires and the Byzantine Empire were not.

Correlation Between Freedom and Creativity

How are we to account for all this? From the sixteenth century onwards it is not difficult to detect the correlation between creativity and (relative) freedom. Though very far from free in the modern sense, the England of Shakespeare’s time, and the Republic of the Netherlands of the same period were not merely the freest countries in the world at the time, they were among the freest that there had ever been. As the seventeenth century went on Britain (now including Scotland) became freer, while the Netherlands, locked in a desperate fight for survival, first with Spain and then with France, became less so. The degree of creativity, especially in philosophy and science, moved accordingly.

Do we find a similar correlation in earlier times? At first sight, the answer to this question is no. None of the states involved in any of the earlier outbursts of creativity upheld individual freedom in principle; even for the members of the upper class. Republics were not necessarily better than monarchies in this respect. Socrates was put to death in the Republic of Athens (by popular vote) for teaching unacceptable ideas, and about sixteen hundred years later Dante driven out of the Republic of Florence and sentenced to death in absentia. But freedom does not have to be accepted in principle to exist in practice. It can exist because those charged with repression are half-hearted, or lazy or cannot agree among themselves. This was more or less the position in Elizabethan England.

Were the periods of unusual creativity also periods of unusual freedom, and if so, how did this come about? I think that the answer to the first question is “yes” and the answer to the second can be found. I gained the clue to this problem in a book describing the society of China under the Tang Dynasty that was one of the high points of Chinese civilisation around 1000 AD. The writer says that the people of the educated class at this time looked back to the time of Confucius as a golden age, forgetting that it was in fact a time of anarchy known as “The Period of the Warring States”, when China proper (that is excluding Tibet, Manchuria and Sechuan) was divided into five separate kingdoms, often at war with each other.

Now we see it, “The Period of the Warring States” would be a very fair description of fifth century Greece. If we started with the assumption that Greece ought to have been under a single government (as the later Chinese assumed about China), it could also be called a time of anarchy. Greece was divided into not five, but dozens of separate states which were often at war with each other. Renaissance Italy is the same story, with at least six major states, and some smaller ones, independent and sometimes at war. The Eastern Mediterranean after Alexander the Great was the same again. There were three major, and several minor, kingdoms all ruled by Macedonians, often at war with each other. The great period of the Arab world saw almost the very same kingdoms, now ruled by Arabs, independent and sometimes at war.

This is not to argue that what leads to creativity is warfare. The periods which we are considering were not exceptionally warlike, it is merely that in them people who might have been expected to be on the same side in war were sometimes fighting each other. There are plenty of examples of states devoted to war, and for a time very successful at it, which were not creative at all.

The great empires have often produced remarkable architecture and works of art, made possible by the accumulation of wealth brought about by conquest but they have never been noted for originality, least of all originality of thought. One can cite the Roman Empire after Augustus, China under the Tangs and the Mings, Spain in its period of greatness, and Byzantium over a thousand years.

Ease of Exit (and Entry)

The thing that the periods which we are considering had in common was not that there was a lot of war going on; indeed it is not clear that there was more war than at other times. It is that in each case, China, Greece, the Macedonian kingdoms, the Arab world, Italy, there were a number of independent states with the same language and the same culture, with the consequence that it was an easy matter for educated people (and others too) to move from one to another. When Socrates was sentenced to death in Athens, he could, if he so wished, and was probably expected to go into exile, which meant moving all of thirty miles to another city where they spoke the same language, had the same culture, and where he was known. When Dante was driven out of Florence, he went to live in Pisa and carried on with his writing. When Michelangelo quarrelled with the Pope in Rome, he went home to Florence and continued with his work. There are references in the Chinese classics to Sages moving from one kingdom to another because they disliked the policies of a particular king.

It is striking how many of these periods of creativity come to an end when “anarchy” was ended and unified government imposed. Particularly obvious, because familiar is the way in which the Roman world started to go downhill from the time of Augustus. The Han Empire in China (which succeeded the Warring State) was powerful and rich, but it was not creative like the time of Confucius and indeed was already looking back to that period as a golden age. The Renaissance in Italy went downhill from the time that Italy was brought under Austrian/Spanish control. The Arab world was destroyed by the Mongols but it did not recover under the unified Turkish Empire.

It is not difficult to see why this was so once we grasp that the precondition for creativity is freedom. When Dante was driven out of Florence he went to Pisa but when the poet Ovid incurred the displeasure of the Emperor Augustus, he was sent to live in the Crimea, just as under the Han or Tang emperors of China, Sages were sent to Hunan, and “dissidents” in both Tsarist and Soviet Russia were sent to Siberia.

By Galileo’s time, the whole of Italy was effectively controlled by Spain. If Galileo had wanted to leave Italy in search of greater freedom, the nearest place where he could have found refuge was Holland where the language, culture and religion were all different from his own. This was a far more formidable undertaking than going from Athens to Corinth or Florence to Pisa, but a lot better than going to the Crimea, Hunan or Siberia. People did move about Western Europe in search of religious or intellectual freedom helped by the use first of Latin and later of French as international languages, whereas in Roman or Chinese Empires there was simply nowhere to go. This no doubt explains the relative creativity of Western Europe as a whole.

We are looking at two things here, although they are closely linked. In the special cases which we have described, the ease of exit which the situation created gave to the people (or at least some of them) a degree of freedom which they could not otherwise have had. Beyond this, it inhibited the rulers’ oppressive impulses for the rulers did not wish to lose their subjects, and on the whole those who could most easily leave were those that they could least spare. Thus additional freedom was also enjoyed by people who did not wish to leave.

It is also possible that there was another factor at work. Because of the ease of movement and communication between these countries, they would have been exceptionally well informed about each other, which would have intensified competition between them and enabled them to learn from each other’s experience in a way which would have been prevented by the imposed uniformity of a large state.

Until the nineteenth century, ease of exit (which of course requires ease of entry somewhere else) does seem to have been the most effective source of freedom. The degree of freedom which is conferred, even in the best circumstances, fell far short of what we expect today and some parts of the population may not have benefited at all; but it was sufficient to make the places where it existed flower above all others in creativity and achievement.

Intellectual Freedom

It is interesting that when we look back in this way, it is intellectual freedom, freedom of ideas which appears to be most important, whereas in our own time we tend to be most impressed by economic freedom. This is a question of time scales. In order to flourish economically, a country needs economic freedom, and for a time it can do without full intellectual freedom, just as long, in fact, as it can base its economic progress on ideas and techniques borrowed from abroad, but in the long run, ideas are the most important. Countries, like Mainland China, that think they can have economic freedom without intellectual freedom will, in the long run, be proved wrong.

Fundamentally, Hegal was right and Marx wrong. Ideas come first as in fact Marx knew or why did he spend his life trying to develop ideas which he hoped would change the world? Even “means of production” are ideas before they are things. Newton’s laws of motion had to come before the Industrial Revolution, just as Einstein had to come before nuclear explosives and space travel.

Freedom is not a luxury that comes at a cost. It is the precondition of all human progress.

Disclaimer: This essay was extracted from O’Dowd’s 1999 occasional paper, “Liberal Reflections”, for the Free Market Foundation. The essay’s name was changed from the original “Freedom is the Precondition of Progress” and the headings were inserted by Rational Standard editors.

The post Freedom of Movement and Communication is Crucial for Progress appeared first on Rational Standard.

]]>
https://rationalstandard.com/freedom-movement-communication-crucial-progress/feed/ 0 6252
The Free Market and the ‘Survival of the Fittest’ https://rationalstandard.com/free-market-survival-fittest/ https://rationalstandard.com/free-market-survival-fittest/#comments Mon, 11 Sep 2017 21:55:00 +0000 https://rationalstandard.com/?p=6256 Biological Darwinism “Social Darwinism” was a doctrine that was popular in the last part of the nineteenth century. It started from a simplified version of the theory of evolution as propounded by Darwin (hence the name) and Wallace, namely that life is a competitive struggle for survival in which the fittest survive and the least […]

The post The Free Market and the ‘Survival of the Fittest’ appeared first on Rational Standard.

]]>
Biological Darwinism

“Social Darwinism” was a doctrine that was popular in the last part of the nineteenth century. It started from a simplified version of the theory of evolution as propounded by Darwin (hence the name) and Wallace, namely that life is a competitive struggle for survival in which the fittest survive and the least fit perish. As the ‘fit’ are superior to the ‘unfit’ and every generation is descended from the ‘fitter’ members of the previous generation, this leads to constant improvement and is indeed the mechanism of progress. The belief in automatic progress as a law of nature was older than Darwin, but Darwinism was considered to have explained how it worked. It was held that it was because life was a competitive struggle in which the fittest survived, that progress was automatic and inevitable.

‘Darwinism’ related to the process of biological evolution and the selection of biologically inherited characteristics. Social Darwinism moved away from this, and that is the main point, but before we get to that, it is worth noting that the simplified version of Darwinism set out above is not quite an accurate reflection of what Darwin said, and is very far from being how we understand evolution today. There are three points.

First of all the fossil record, as we now have it, simply does not reflect the steady progress postulated by Darwinism. Biological change seems to happen sporadically during particular eras when changes are, in terms of geological time, quite rapid, while for very long periods almost no change takes place. This has been called ‘punctuated equilibrium’. Normally, and for very long periods all, or nearly all species are in equilibrium and do not change much, but the record is ‘punctuated’ with occasional eras when very many changes happen quite rapidly.

These findings are not compatible with the idea that the engine of change is competitive struggle or the survival of the fittest, for that is a constant process and would produce the kind of steady change which Darwin himself believed in. It would appear that most of the time ‘the survival of the fittest’ is conservative in its effects, suppressing change, and that the changes are brought about by some extraneous force, most probably change of climate.

This brings us to the second point, one that was made nearly a hundred years ago by Eugene Marais, the Afrikaans poet who was also a remarkable naturalist. The struggle for survival is not only, and perhaps not mainly, competitive. It is also a struggle against a potentially hostile and always merciless inanimate environment. If the environment changes, some survive, some perish, depending not on any competition but on how capable they are of adapting to their new circumstances, in which those less fit before may suddenly be more fit now.

The last point brings us to the third issue – that we are not entitled automatically to call change progress. ‘Progress’ implies that things are getting better, which in its turn implies a norm of quality, and where does that come from? The fittest survive. Fittest for what? Fittest to survive. If the environment in which they had to survive was constant we would at least be able to postulate an ever-improving adaptation to the environment, but if the environment is subject to catastrophic changes, even that does not apply. From time to time a new ball game is initiated, and the process of adaptation has to start again.

Finally we have to note that if survival is our criterion of excellence (and what other criterion can there be if the whole process is driven simply by blind survival?), then the fossil record does not support the view that the latest is always the best. To take one recent finding which illustrates the point: A million years ago the most common species of buck in South Africa was the Impala. Since then more than twenty new species have evolved, more than ten of these have become extinct, and the commonest buck in South Africa is – the Impala!

The Problems of Social Darwinism

These are the problems of biological Darwinism. The problems of Social Darwinism are different. First of all one must be clear that Social Darwinism really did exist. For many years now nobody has upheld it and it has been used as a straw man for the purpose of attacking capitalism, which has been alleged by its enemies to embody Social Darwinism. However, in the nineteenth century there really were Social Darwinists, the most eminent in Britain was Herbert Spencer, who both preached the doctrine and praised capitalism as providing what the doctrine showed to be necessary. This is not the only time in history that capitalism has been gravely damaged by those who thought they were its friends.

The Social Darwinists contended that human society was also an arena for struggle for survival in which the fittest survived, or if it was not, it ought to be. This process, if left to itself, brought about improvement. Insofar as human society was organised to help the unfit to survive, this was wrong and should be stopped as it retarded progress and could, if taken far enough, lead to the deterioration of the human species. Moderate Social Darwinists contented themselves with grumbling that the poor reproduced themselves faster than the rich (which, in fact, seems to suggest that the poor were in fact ‘fitter’ than the rich, but few people took that point), but the extremists, including Herbert Spencer, denounced all forms of provision for the unfortunate whether public or private, socially harmful; according to Herbert Spencer the unsuccessful should die. If they did not die before they reproduced (which was first prize) their children should die too.

According to Spencer, capitalism was the ideal system, provided it was not spoilt by public provisions like the Poor Law (which he denounced) or private charity. It was competitive. The winners become wealthy, the losers become poor, the most complete losers become destitute, and if only silly people would not interfere, would die. This would bring about progress.

Literal-Minded Darwinists’ Preference: Warfare and Killing

We should note in passing that the Social Darwinists had problems with other more literal-minded Darwinists of whom the American novelist Jack London was an example. These people contended that capitalism was a horrible deviation from the proper struggle for survival, which was physical. In a ‘natural’ society constant warfare and killing would select fine, big, strong, physically healthy specimens (like Jack London) whereas capitalism, contrary to nature, brought to prominence weedy specimens like Rockefeller and JP Morgan.

This view is completely self-contradictory. If you want to rely on natural selection, then whatever is, is right. ‘Nature’ has deemed cockroaches, termites and oysters to be very fit indeed because they have survived, almost unchanged, for hundreds of millions of years, which is a great deal more than can be said for homo sapiens. If Rockefeller does better than Jack London, that is how it is. What he has is ‘fitter’ than what Jack London has. If, however, you want to impose your own rational or moral criteria of what is good (London is better than Rockefeller) then you can no longer invoke natural selection. You are asking for an ‘artificial’ society, which is what you are complaining about.

The fact is, of course, that since human beings are intelligent and foresighted there can be no ‘natural’ orders of human society, if by that we mean one in the formation of which human judgement and wishes have played no part. While no human society has ever been entirely constructed as a blue-print planned by a few people, all societies have evolved through the interaction of rational human beings with each other. This is human nature, so this is natural.

Where Herbert Spencer Gets it Right

Herbert Spencer’s position did not suffer from this weakness. He would have had no difficulty with the idea that he was talking about progress in strictly human terms; things getting better in the opinion of those most directly affected. Capitalism is a system where people compete to promote their own self-interest by serving the needs of others. Those who succeed are those who serve the needs of others most successfully, in the opinion of the people who are served. So, as the fittest prevail, the needs of all are served more and more successfully, more and more people get what they want, and that is progress.

So far this analysis is correct, except that the last statement is disputable. It runs into the criticism of those (quite numerous) people who believe that people should not have what they want; they should have what other people say is good for them. The trouble with capitalism, these people say, is that it does give people what they want, so it gives rise to phenomena like pop music and Elvis Presley whereas socialism creates real art, like piles of bricks in the Tate Gallery. There is no ultimate answer to this complaint except to ask, what is it that entitles some people to tell other people what is good for them, who the ‘some people’ are to be, and how are they to be selected? Nobody has ever answered these questions satisfactorily either.

So far, Herbert Spencer’s position is fine, but we now come to the two points on which it is not fine. Built into it are two assumptions which are false, and which render it completely invalid.

The Poor Aren’t ‘Losers’

The first assumption is that the poor, or even the destitute, in a capitalist society represent the losers in competition. This is false. First of all, as we have pointed out in another essay, capitalist competition does not strictly speaking, produce losers. Secondly, normally in a capitalist society the poorest people are in fact newcomers who have come from a worse environment in order to better themselves – in the process showing a considerable degree of ‘fitness’. The recent migrant into Greater Johannesburg from the Northern Province, into Cape Town from the Transkei, into the United States from Mexico, or, in Herbert Spencer’s Britain, into Glasgow from the Highlands of Scotland, is not a loser.

The Fallacy of Collectivist Determinism

The second point is far more fundamental. Darwinism is about the selection of inherited characteristics and for Social Darwinism to have any validity we have to believe that the differences in behaviour which make the difference between success and failure, as between individuals, as between groups, as between nations, depend to an important extent on inherited characteristics. Spencer would have believed this, as did a great many people in his time. It was the belief out of which ideas of racism flowed.

The idea is an old one and has been held by many people in many cultures. People, whether as nations or as parts of a nation, a ‘class’, who are doing particularly well at any time have often, perhaps always liked to assure themselves that their success will last by claiming that they owe it to a fundamental, inherited, biological superiority, so that they are as different from other people as lions are different from jackals, and therefore are sure to prevail. The ancient Greeks had such a belief about themselves, Aristotle saying that all non-Greeks were incapable of the ‘good life’. The ruling orders in the Middle Ages had such a belief about themselves, not as a nation but as a class. The Chinese had such a belief at various times in history, as had many British in the nineteenth century and many Germans in the late nineteenth and early twentieth centuries.

One can readily understand why people wanted to believe such things, but unfortunately for them, and very fortunately for humanity, they were wrong. History is full of the stories of people preening themselves on their inherited superiority to others, who later (not always much later) equalled or surpassed them; the ancient Greeks, conquered first by the “semi-barbarian” Macedonians, then by the wholly barbarian Romans; the Romans who were quite willing to acknowledge the civilisation of the Greeks and Egyptians, and even of the Babylonians and Persians, writing off the Germans (including the ancestors of the English) as irredeemable savages; the Chinese preening themselves on their superiority to both the Europeans and the Japanese; the Europeans sure of their superiority to the Japanese; Japanese and Chinese alike through the centuries, writing off the Koreans as hopelessly stupid and lazy. Perhaps the most remarkable of all was the Englishman in the nineteenth century who said that the United States could never amount to anything because it had been populated by “the defeated classes of the defeated nations of Europe”. The statement was perfectly true. It had been, but that fact did not prevent it from becoming the richest and most powerful country in the world, and also, for a considerable time, the world’s main source of both scientific and technological innovation.

The biological, or racist, interpretation of the source of progress and achievement in human affairs is not tenable. It is simply not supported by the facts. The other great set of facts which contradicts it is all the records of the massive difference in achievement of people of the same ethnic origin (and with the same cultural background) under different social systems; East and West Germany between 1945 and 1990, North and South Korea, the Irish in America and the Irish in Ireland, Indians in Britain (or in South Africa), and Indians in India, and so on and on.

Learning From Others

The only conclusion which is in accordance with the facts is that we are looking not at genetically inherited characteristics but at learnt behaviour, and that all people can learn. This is not to deny that there are big differences between individuals in their ability to invent and innovate, but there is no reason to suppose that such individuals are commoner in some populations than in others. What is true is that such individuals are encouraged and helped in some cultures and persecuted and kept down in others, so that we see invention and innovation flowering in Italy at one time, in Holland at another, then in Britain (especially Scotland), then in Germany, the United States, Japan, then Korea. Where next? But even if some nations did not produce many innovators, they could still learn from others. Germany, the United States and Japan each went through a period when their progress was based mainly on applying the discoveries of others. In fact, each in turn became great discoverers but if they had not they could still have progressed very far.

It is important to remember that even the most innovative and successful nations have learnt far more from other people than they invented for themselves. An American space shot depends on mathematics originated in ancient Babylon and developed in Greece, in the Arab world, in Italy, France, England and Germany. It depends on a system of numerals coming from India via Arabia, and an alphabet from the Lebanon. It could hardly happen without paper, invented in China, where also, explosives and rockets were invented.

Newton said, “If we have seen further than our predecessors it is because we stood on the shoulders of giants”. This is true of all innovators, even the greatest, whether in science, technology, the arts, or anywhere else. The innovator takes a huge mass of already existing knowledge and technique (including such things as mathematics) and makes quite a small addition which opens up a major new possibility.

It follows that the other great thing that is necessary for material progress, apart from a social system that allows, encourages and rewards initiative and innovation, is access to the mass of knowledge that has been generated in the rest of the world. Any nation, or small group of nations which was forced by isolation to invent everything for itself was bound to fall behind those who could draw on the whole world, and this fact is quite sufficient to account for the relative backwardness of Africa South of the Sahara in past history.

Choice

So Herbert Spencer’s Social Darwinism was just wrong. In biological evolution there is nothing that the losers can do. A zebra cannot decide that the answer to its problem is horns, or a bat that what it needs is feathers, but the Mediaeval Europeans could decide that the Arabic numerals (the ones that we use today) were better than their own (the old roman numerals, XII, etc) and adopt them. If they had not done so, modern mathematics and therefore modern science and therefore modern technology could never have developed in Europe. Peter the Great of Russia could and did decide that the way that the Dutch built ships was better than the way the Russians did, and arranged for the Russians to learn ship-building in Holland. The Japanese decided to copy all sorts of things from Europe and America, some of which they later improved on, and so on.

Progress does not require that the unfortunate and unsuccessful should perish. If we want a materialist (as distinct from a humanitarian) reason why the unfortunates should not be allowed to perish, we can find it in saying that everybody can still learn and so come to make a contribution. Capitalists in particular do not want anybody to perish since the more people there are that they can employ (and the healthier these people are) the better is it for them.

Institutions and Ideas Perish, Not People

However, Darwinism does have something to teach us about social and economic progress once we realise that the things that compete and are selected as fit or unfit by competition are not people (people adapt and learn) but institutions, systems and ideas. The socio-economic systems of both the Soviet Union and Yugoslavia were selected out and perished, just like apartheid. The same thing is happening on a small scale all the time and everywhere. Different systems and technologies compete; the better prevail and the less good are abandoned, companies succeed and companies fail, as do products. Competition, both on a large and on a small scale is constantly both providing the incentive for innovation and sorting out the successful innovation from the unsuccessful, providing in fact for the survival of the fittest, that is for those which meet our needs most effectively.

There is something here that we can learn from Spencer. He deplored intervention to prevent the unfit from perishing. He was wrong, not because he had mistaken the connection between competition, selection and progress, but because he had mistaken who and what it is that is competing. It is indeed wrong for governments to intervene, as they constantly do, to prevent the perishing not of ‘unsuccessful’ individuals but of unsuccessful companies, industries and activities. To prop up unsuccessful industries by means of tariff protection or subsidies or by suppressing competition (often the real purpose of nationalisation) is damaging to progress, and while it would be rash to say that these things can never be justified in any circumstances, the presumption is always strongly against them, and when they are done they must be clear and unambiguous temporary measures (nationalisation which in its nature is permanent can never be sensible) aimed at smoothing a process of change, never at preventing it.

Capitalist Consumerism

We must be clear that in the process which we are discussing we are not talking about ‘natural selection’ in the strict sense, that is selection by blind natural forces, which raises the serious question why whatever they produce should be regarded as progress. We are talking about selection by intelligent acting human beings. In capitalist competition people compete to serve the needs of customers, whether by supplying products or by supplying services. The customers decide which of the alternatives offered to them are ‘fit’ and which are not. Progress means that the wishes of people are met more satisfactorily than before, in the opinion of the people themselves.

The competition of social and political systems operates in the same way, though less efficiently because of the constant use of force and fraud to prevent free choice. Nevertheless the systems are ‘offered’ to people to serve their needs, and the people eventually decide whether they are fit or not. The history of the Soviet Union shows that even the most horrendous and sustained use of violence and deceit cannot prevent the process from prevailing eventually.

Don’t Reward Those Who Refuse to Adapt

There is a last point to be made. There is, as we have seen, no objection to caring for the unfortunate, but there is every objection to rewarding those who refuse to adapt. Not only progress but also survival in a world that is constantly changing depends above all on the willingness and ability to adapt. What we need for progress is that the innovators should be free to innovate; that they should have to compete to show that their innovation is worthwhile; that those whose innovations are chosen should reap a reward; and that the mass of people who are not innovators should follow, or imitate the successful innovators. If we want to prevent progress, all we have to do is to take away the reward of the innovators and ‘redistribute’ it to those who prefer not to adapt. Quite a lot of societies in the past have done this and have been fairly successful in preventing progress. Is that what we want to do?

Disclaimer: This essay was extracted from O’Dowd’s 1999 occasional paper, “Liberal Reflections”, for the Free Market Foundation. The essay’s name was changed from the original “The Fallacy of Social Darwinism” and the headings were inserted by Rational Standard editors.

The post The Free Market and the ‘Survival of the Fittest’ appeared first on Rational Standard.

]]>
https://rationalstandard.com/free-market-survival-fittest/feed/ 1 6256
The Lie of Socialist ‘Progressivism’ https://rationalstandard.com/lie-socialist-progressivism/ https://rationalstandard.com/lie-socialist-progressivism/#comments Mon, 04 Sep 2017 22:00:00 +0000 https://rationalstandard.com/?p=6246 Progressivism It is not uncommon even today, to come across organisations of a “leftist complexion” describing themselves as “progressive”, as they always did in the past. We must realise that in today’s world this epithet means nothing more than that the people concerned believe in what they stand for, so that in their opinion, for […]

The post The Lie of Socialist ‘Progressivism’ appeared first on Rational Standard.

]]>
Progressivism

It is not uncommon even today, to come across organisations of a “leftist complexion” describing themselves as “progressive”, as they always did in the past. We must realise that in today’s world this epithet means nothing more than that the people concerned believe in what they stand for, so that in their opinion, for them to prevail would constitute progress. They are, of course, entitled both to hold and to express this opinion, but so is anybody else. Anybody who has a goal which he or she believes in, is, in his or her own opinion, progressive. To Hitler, the holocaust represented great progress towards his goal of a world without Jews.

Until a few years ago, however, the word “progressive” contained a far larger claim. It was rooted in a doctrine which was central to Marxism but which was in fact older than Marx, and was accepted by many people who were not Marxists. The doctrine asserted that the world was set in a predetermined and absolutely inevitable course of change, and that this change was always and automatically for the better. Each stage of history was higher than its predecessor, that is, fundamental and profoundly better so that nobody who had experienced a “higher stage” could ever contemplate returning to a lower one.

Capitalism was one of these stages, higher than everything that had gone before it, and the next stage, higher still, was socialism. Capitalism would be replaced by socialism with the inevitability that a river flows downhill, and could no more go the other way than a river could. According to some people, nothing that anybody could do would make any difference; according to others (including Marx) individual effort could both speed and smooth the process, but could not fundamentally alter it.

It was supposed that we were dealing here with absolute laws of nature, as scientific laws were understood in the nineteenth century, before the uncertainty principle, before relativity, before chaos theory. It was a law like Newton’s law of gravity or Boyles law, that capitalism would be replaced by socialism and the reverse could never happen. Socialism could, of course, be suppressed by force or by interventions from outside, although the result would not last, but that it should be abolished by a massive popular upheaval from within, or should evolve into capitalism in the hands of a powerful and independent government, was as impossible as that water should flow uphill, or that gas should be heated without expanding so that steam engines would no longer work.

Socialism Overthrown

The theory was supposed to have been derived from a study of history and since it was formulated, history has written another chapter. In no fewer than eight socialist countries (if we count the Soviet Union as one) a socialist government has been swept away by an overwhelming popular rising without any external intervention whatever. These were, in fact, the most unanimous popular risings in recorded history. They were bloodless because nobody, but nobody, was prepared to fight for the old regime, which is more than can be said for the French and Russian revolutions.

In its struggle against apartheid, the ANC was never able to call out a demonstration which remotely approached those which took place in Leipzig and Dresden against the communist regime of East Germany. To say this is not to disparage the achievements of the ANC but it is to draw attention to the fact that even apartheid did not arouse in its victims the degree of hatred and anger which was inspired by actually existing socialism in those who experienced it at first hand, the great majority of whom were, of course, members of the working class.

In the meanwhile, in China, without any ostensible change of government, socialism has evolved into the most unbridled laissez-faire capitalism in the world, and indeed, perhaps, that the world has ever seen. Eight socialist governments have been swept away by unanimous popular risings and replaced by fully democratic elected governments which have embraced capitalism, while an unelected socialist government, deriving its purported legitimacy from a socialist revolution, has embraced capitalism in an extreme form.

So apparently, the rivers are flowing uphill all over the world. If something happens, clearly and on a large scale, contrary to what we believe to be the laws of nature, we have to revise our ideas of what those laws are, and so we have to do here. The Marxists’ theory of history has been disapproved by events. It has become untenable and has to be abandoned.

“It Wasn’t Real Socialism!”

Some people have sought to rescue the theory by claiming that that which failed was not “really” socialism. But this line of argument raises the problem that, in that case, socialism is such an obscure and esoteric phenomenon that for seventy years in the world no one knew it when they saw it, or rather, knew what they saw was not it. For seventy years, nobody except Trotsky (after he had been driven into exile but not before) said that what existed in the Soviet Union was not socialism, while a huge consensus of intellectuals around the world hailed it, praised it, lied for it, spied for it and sometimes died for it. If all these people were wrong for all that time, why should we believe them when they say something different now?

Even followers of Trotsky have a problem. Either what existed in Russia under Lenin and Trotsky was socialism or it was not. If it was, then, under Stalin, socialism developed by an internal dynamic into non-socialism. If it was not, why did Trotsky say that it was?

The Ends Do Not Justify the Means

One of the consequences of the collapse of this theory of history that we must particularly note, is that it is no longer possible to claim, in the way that used to be done, that ends justify means. Ends can justify means when the end can be foreseen with confidence. We destroy buildings to prevent the spread of fire, we cut off limbs to save lives, but what if the end cannot be foreseen? It was the Marxist theory of history that purported to give the certainty about the ends of Marxism, and so was claimed to justify any means whatever. That is why it was possible (or, at least, it was claimed that it was possible) to draw a fundamental distinction between the massacres perpetrated by Stalin and the strictly comparable but smaller scale massacres perpetrated by Hitler. Stalin was “progressive”, so that what he did was going to produce heaven-on-Earth eventually, and for this end any means were justified.

Now we know that Stalin’s ends are not going to be attained, ever, or if they are, it will be by quite other means, and Stalin’s crimes will not have made any contribution. If ends cannot be foreseen, they cannot justify means. Nobody would say that you can justify the killing of seventy million people (which is what Lenin and Stalin did) in order that Yeltsin rather than Kerensky should rule Russia, which is what they achieved. In a world where long-term ends cannot be foreseen, we have to be much more careful about means.

‘Progress’ Means ‘Desirability’

Given the spectacular failure of the theory of history that has been intellectually fashionable for over a hundred years, it would be very rash to come up with another one and I am certainly not going to put forward an inverted Marxist claim that the world is “inevitably” marching to liberal capitalism. The fact is that we do not know. We have to recognise as a fact that Marxist socialism was a costly, indeed a catastrophic, failure, and give it up, but that does not mean that we live in the best of all possible worlds or that the future will take care of itself. There is plenty of room for people to work to find new ways of making the world better, provided that they are new, and are not rehashed versions of things that have failed before; and provided that they are put forward with a proper degree of humility.

In this situation, to say that something is “progressive” is simply to say that it is desirable, that there is good reason to believe that it would make life better in the opinion of the people directly affected.

As we no longer believe that progress is automatic and all change is necessarily for the better, we can recognise that in a particular situation it can be progressive to keep things as they are because the only changes that are on the cards are for the worse. It would have been progressive to prevent thalidomide (although it was the latest thing) from coming on the market. It would have been progressive to keep Hitler and Lenin out of power.

In the same way, it can be progressive to bring back the past, if the past was better than the present. In Germany, after the war, it was progressive to revive the federal structure that had been abolished by Hitler. In Russia, at a symbolic level, it was progressive to abolish the red flag and to bring back the old Russian tricolour, which dated back to the Tsar Peter the Great and, on a more practical level, it was very progressive indeed to bring back private property.

The World is Better than it Ever Was

Although we have to avoid grandiose theories and especially to avoid either the belief that progress is automatic or that we can foresee the future with certainty, I believe that, looking back over history, we can see, in broad principle, what progress has consisted in.

Progress is real. The world is a better place than it was a hundred years ago and a much better place than it was a thousand years ago. And when we ask what has made it better, we find two strands that turn out to be closely related. First of all, the world has grown richer which means that it has become possible to produce more wealth with less labour (and also with less of other resources). People, even people in the poorest parts of the third world have command of far more material means than their ancestors had and in consequence they live longer and they live better lives. Of course, the poorest are still very poor, but they are not as poor as the poorest were in the past.

The other strand is freedom. Individual people have become freer, which means that they have a greater ability than their ancestors had to choose for themselves among the options before them. They also have more options. That progress is “the march of freedom” is not a new idea. It has been around, in Europe, since the sixteenth century, and in the nineteenth it was popular not only in Europe and America, but in the rest of the world as well. It was, after all, the seed from which the demand for liberation in the colonial empires grew.

What rendered the idea unfashionable for a time was the Marxists’ (and fascists’) contention that there was a trade-off between individual freedom and economic efficiency, and that people should sacrifice freedom for material well-being (which in order to confuse the issue, Marxists called “real freedom”). Now we know that there is no such trade-off. When the communist regime was overthrown in East Germany in 1988, the people there were as far behind West Germany in material well being as they were in individual freedom.

Freedom is a Prerequisite for Prosperity

The 1999 South African edition of the Economic Freedom of the World sets out the evidence, which is conclusive, that economic freedom is a necessary condition for material prosperity. Looking at history over longer periods, we find that intellectual freedom is every bit as important as economic freedom. Ideas come first, and creative new ideas only arise where there is a reasonable degree of freedom. Throughout history, wherever freedom has been successfully extended (that is extended without causing an intolerable degree of disorder), progress has followed, both economic and cultural. Wherever freedom has been curtailed, this has been followed by decline. Countries that have suppressed freedom for the sake of military strength have lost out, even militarily, because military strength depends on economic strength, which depends on freedom. The Soviet Union is the only most recent of many cases in point. This proviso for extending freedom without creating disorder, is crucial. Creating freedom is more than abolishing restrictions. A free society needs appropriate institutions and attitudes. Freedom has to be built in ways that work.

So, who are the progressives? If we take the view that there is no tenable theory of history then the word “progressive” is virtually meaningless. Applied to a measure, it simply means that the measure is desirable. Applied to a person, it means that we agree with him. If, however, we accept the idea for which there is certainly a good deal to be said that progress is the extension of freedom, then the people who are progressive in principle, the only people, are liberals.

Disclaimer: This essay was extracted from O’Dowd’s 1999 occasional paper, “Liberal Reflections”, for the Free Market Foundation. The essay’s name was changed from the original “Who are the Progressives Now?” and the headings were inserted by Rational Standard editors.

The post The Lie of Socialist ‘Progressivism’ appeared first on Rational Standard.

]]>
https://rationalstandard.com/lie-socialist-progressivism/feed/ 1 6246
Free Market Conservation: Nicholas Babaya (Video) https://rationalstandard.com/free-market-conservation-nicholas-babaya-video/ https://rationalstandard.com/free-market-conservation-nicholas-babaya-video/#respond Thu, 31 Aug 2017 22:05:27 +0000 https://rationalstandard.com/?p=6353 This video is a recording of a talk held at Safreecon 2017, hosted by African Students For Liberty – Cape Town. Nicholas Babaya is a Local Coordinator at African Students For Liberty and a contributor for the Rational Standard. Nicholas discussed the importance of conservation and how a free market is the best chance we […]

The post Free Market Conservation: Nicholas Babaya (Video) appeared first on Rational Standard.

]]>
This video is a recording of a talk held at Safreecon 2017, hosted by African Students For Liberty – Cape Town.

Nicholas Babaya is a Local Coordinator at African Students For Liberty and a contributor for the Rational Standard.

Nicholas discussed the importance of conservation and how a free market is the best chance we have to save our endangered species.

African Students For Liberty: https://www.studentsforliberty.org/af…

AfriForum: https://www.afriforum.co.za/

ETM Macro Advisors: http://etmmacro.com/

The post Free Market Conservation: Nicholas Babaya (Video) appeared first on Rational Standard.

]]>
https://rationalstandard.com/free-market-conservation-nicholas-babaya-video/feed/ 0 6353
Non-Negotiable Principles for Entrepreneurship policies: Garreth Bloor (Video) https://rationalstandard.com/non-negotiable-principles-entrepreneurship-policies-garreth-bloor-video/ https://rationalstandard.com/non-negotiable-principles-entrepreneurship-policies-garreth-bloor-video/#respond Wed, 30 Aug 2017 15:14:04 +0000 https://rationalstandard.com/?p=6332 This video is a recording of a talk held at Safreecon 2017, hosted by African Students For Liberty – Cape Town. Garreth Bloor is an entrepreneur and former DA councillor. Garreth spoke about the essential principles that need to be kept in mind when formulating economic policies. African Students For Liberty: https://www.studentsforliberty.org/af… AfriForum: https://www.afriforum.co.za/ ETM Macro Advisors: http://etmmacro.com/

The post Non-Negotiable Principles for Entrepreneurship policies: Garreth Bloor (Video) appeared first on Rational Standard.

]]>
This video is a recording of a talk held at Safreecon 2017, hosted by African Students For Liberty – Cape Town.

Garreth Bloor is an entrepreneur and former DA councillor.

Garreth spoke about the essential principles that need to be kept in mind when formulating economic policies.

African Students For Liberty: https://www.studentsforliberty.org/af…

AfriForum: https://www.afriforum.co.za/

ETM Macro Advisors: http://etmmacro.com/

The post Non-Negotiable Principles for Entrepreneurship policies: Garreth Bloor (Video) appeared first on Rational Standard.

]]>
https://rationalstandard.com/non-negotiable-principles-entrepreneurship-policies-garreth-bloor-video/feed/ 0 6332
Universal Basic Income: Free Market Welfare – Better than Chained Welfare https://rationalstandard.com/ubi-social-welfare/ https://rationalstandard.com/ubi-social-welfare/#respond Tue, 29 Aug 2017 22:01:45 +0000 https://rationalstandard.com/?p=6064 Universal basic income (UBI) has been a hot topic across the political spectrum with supporters and opponents of the concept on all sides of the political aisle. At first glance, a UBI may seem like another money for nothing welfare scheme, but advocates of free markets and limited government should not just dismiss the idea […]

The post Universal Basic Income: Free Market Welfare – Better than Chained Welfare appeared first on Rational Standard.

]]>
Universal basic income (UBI) has been a hot topic across the political spectrum with supporters and opponents of the concept on all sides of the political aisle.

At first glance, a UBI may seem like another money for nothing welfare scheme, but advocates of free markets and limited government should not just dismiss the idea right off the bat.

A UBI would entail a yearly or monthly amount that is paid to a citizen by the state. The reason many free market advocates support the idea of a UBI is that it shifts power from state bureaucracies to civil society. By putting cash into the hands of individuals, they are able to decide for themselves how to spend their money. Roughly speaking, this replacement social welfare policy cashifies welfare and increases the amount of money able to be spent.

The obvious first objection almost all people will immediately have against a UBI is that many rich and middle-class people do not deserve income from the state because of their existing wealth.

A UBI could as a political compromise, however, have a threshold and means test which has to be met or passed for individuals to receive the payment. Setting conditions on receiving the social welfare support would also go both ways. Individuals could be subject to fulfilling some obligation, whether it is work, training or getting treatment for addictions or illness.

It is also arguably less condescending to trust adult individuals to decide how they wish to spend their money and to not treat the poor like toddlers who do not know any better. While a UBI won’t solve the inherent and ever present problems that plague social welfare, it will go a long way in giving more power to individuals and less to the state.

A UBI would be cheaper to administer, simpler to supply and more transparent than the vast variety of anti-poverty programmes that we, for example, see in South Africa. This is a considerably better system than the current social welfare mishmash that we see all over the world.

A national basic income would hold many free market advantages. Not only does it increase the amount of money that could be freely spent by individuals and possibly protect against a supposed inevitable robot take over, but a UBI would render something like a minimum wage obsolete. In no way does this mean that workers will suddenly be paid way below what they should be, but rather this will see the free market properly and without restraint functioning in terms of salaries.

Just as school vouchers enable and empower learners to decide on their own educational future, a UBI would enable and empower the poor to decide on their own future. By giving each individual the opportunity and freedom to decide on their own economic standard, we further develop the economy. Unlike traditional social welfare that disincentivises individuals from increasing their income, because of the risk of losing social welfare benefits by exceeding certain criteria, a UBI does not threaten the additional income of individuals. A UBI won’t punish any person for seeking income additionally.

We should, however, be cautious that this may seem like a cross-ideological solution.

While some rightly see it as a replacement of a burdensome welfare system, others would rather have it be added to already-existing welfare. A UBI that supplements already-existing welfare promises none of the advantages of a basic individual income and just further pushes social welfare down the spiral it is currently on.

Although many wish that social welfare is scrapped completely, it simply is not politically viable, not only in South Africa but in the world. A UBI presents an opportunity to do away with the current mess that social welfare faces, an opportunity that might even be tempting to those who do not see the failures of social welfare.

The post Universal Basic Income: Free Market Welfare – Better than Chained Welfare appeared first on Rational Standard.

]]>
https://rationalstandard.com/ubi-social-welfare/feed/ 0 6064
South Africa: Failing Economy, Life after the downgrade and a ‘Venezimbabwe’: Russell Lamberti (Video) https://rationalstandard.com/south-africa-failing-economy-life-downgrade-venezimbabwe-russell-lamberti/ https://rationalstandard.com/south-africa-failing-economy-life-downgrade-venezimbabwe-russell-lamberti/#comments Tue, 29 Aug 2017 20:30:20 +0000 https://rationalstandard.com/?p=6265 This video is a recording of a talk held at Safreecon 2017, hosted by African Students For Liberty – Cape Town. Russell Lamberti is a macro-economic analyst at ETM Macro Advisors. He spoke about the state of South Africa, our economic prospective, indicators and how close to collapse we really are. African Students For Liberty: https://www.studentsforliberty.org/af… […]

The post South Africa: Failing Economy, Life after the downgrade and a ‘Venezimbabwe’: Russell Lamberti (Video) appeared first on Rational Standard.

]]>
This video is a recording of a talk held at Safreecon 2017, hosted by African Students For Liberty – Cape Town.

Russell Lamberti is a macro-economic analyst at ETM Macro Advisors.

He spoke about the state of South Africa, our economic prospective, indicators and how close to collapse we really are.

African Students For Liberty: https://www.studentsforliberty.org/af…

AfriForum: https://www.afriforum.co.za/

ETM Macro Advisors: http://etmmacro.com/

The post South Africa: Failing Economy, Life after the downgrade and a ‘Venezimbabwe’: Russell Lamberti (Video) appeared first on Rational Standard.

]]>
https://rationalstandard.com/south-africa-failing-economy-life-downgrade-venezimbabwe-russell-lamberti/feed/ 1 6265