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Philadelphia: Jury Nullification and Natural Rights

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In the film “Philadelphia,” Andrew Beckett was actively recruited by the Wyant and Wheeler law firm, one of the most prestigious law firms in Philadelphia. While employed for Wyant and Wheeler, Mr. Beckett contracts HIV and conceals his illness from his employers. Beckett showed great promise and was highly placed in the firm and was even placed at the head of a landmark copyright case whose outcome would have a major impact on the firm’s reputation. During the preparation for this important case, the formal complaint is lost with only minutes before the statute of limitations expires but is found “misplaced” in central filing. The firm used this as a reason to fire Mr. Beckett for incompetence. However, Mr. Beckett claims that his employer discovered that he had HIV, based on the appearance of Karposi’s Sarcoma lesions on his face. Based on this, Mr. Beckett sues the law firm in federal court for discrimination based on a handicap that did not prevent Mr. Beckett from performing the essential functions of his job with or without reasonable accommodation, which if true, would violate Title 42 U.S.C. § 12112. Mr. Beckett and his lawyer, Mr. Miller, used the Supreme Court case, School Board of Nassau County V. Arline (1987) as precedent that contagious diseases may be considered a handicap; however, employers may consider the contagious effects on others in determining the qualification of a person to perform essential functions by consulting the medical judgments of public health officials. The issue of this case is whether, in fact, Wyant and Wheeler law firm fired Andrew Beckett for incompetence or if they fired him due to their knowledge or belief that he had HIV. If the latter is found to be true, Wyant and Wheeler would need to prove that the judgments of public health officials show that Mr. Beckett is no longer qualified to perform essential functions of his job with or without reasonable accommodations.

There are two ways that I could approach this case. The more conventional approach of determining whether existing statutes and laws were adhered to would lead me to agree with the jury in the film Philadelphia, so long as the events took place after the passage of the American with Disabilities Act (ADA) in 1990. The defendants make no claim that Mr. Beckett was no longer qualified to perform the essential functions of his job at the time he was fired and the evidence suggests that their claims of incompetence are either grossly exaggerated or simply false. The events leading up to the firing shows that the firm had the highest confidence in Mr. Beckett and therefore must have had ulterior motives for his dismissal. The reason I specify the events of the case needed to place after to 1990 is because the ADA was not in existence prior to 1990 and its predecessor the Rehabilitation Act of 1973, used in the School Board of Nassau County V. Arline (1987) case, only applied to programs that received federal assistance and not to private companies. So again, if Mr. Beckett was fired after the passage of ADA and I strictly followed the letter of the law, then I would rule in favor of Mr. Beckett in agreement with the jurors in the film.

The second approach would lead me to disagree with the jury: jury nullification due to the statutory law usurping natural rights. In an essay titled, “The Rise and Fall of Jury Nullification,” James Ostrowski brings forth evidence, by citing the founding father both before and after the adoption of the Constitution and other legal scholars, that jury nullification was meant to be a part of our justice system. In other words, the jury not only judges the facts of case but also the law the case is based on. He points to John Adams, the Second President of the United States and also a chief justice of Massachusetts, who wrote in 1771:

Juries are taken…from the mass of the people, and no man can be condemned of life or limb or property or reputation without the concurrence of the voice of the people…Whenever a general verdict is found, it assuredly determines both the fact and the law…Should the melancholy case arise that the judges should give their opinions to the jury against…fundamental principles, is a juror obligated to give his verdict generally, according to this direction, or even to find the fact specially, and submit the law to the court? Every man, of any feeling of conscience, will answer, “No.” It is not only his right, but his duty, in that case, to find the verdict according to his own best understanding, judgment, and conscience, though in direct opposition to the direction of the court.

Thomas Jefferson expresses similar sentiments in his “Notes on the State of Virginia,” written between 1781 and 1782:

…if it be of fact, or of fact and law combined, it must be referred to a jury. In the latter case, of a combination of law and fact, it is usual for the jurors to decide the fact, and to refer the law arising on it to the decision of the judges. But this division of the subject lies with their [jurors] discretion only. And if the question relate to any point of public liberty, or if it be one of those in which the judges may be suspected of bias, the jury undertakes to decide both law and fact.

Ostrowski highlights similar statements by Alexander Hamilton, prominent lawyer and founding father, and the first Chief Justice John Jay. However, somewhere along the way modern jurisprudence has been hostile towards the idea of jury nullification and the federal court system has made several rulings against the practice. These rulings have prevented lawyers from advocating jury nullification, allowed judges to give instructions that condemn or claim to ban the practice of jury nullification, and put forth measures to dismiss jurors who intend to use jury nullification if it can be discovered in initial interviews. However, due to the way the jury system is set up, jury nullification can never be completely prohibited and may still be used by jurors informed on the practice.

The reason that I would advocate jury nullification in this case is due to the fact that that every individual has a right to self-ownership and as an extension a right to the fruits of their labor, private property. To compel a person to commit positive acts, such as giving their private property to another person in the form of wages for employment, against their will would be a violation of this right no matter how “ethical” or “necessary” this compulsion may seem. In this case, the “right” of the plaintiff to the defendants private property through continued employment against the will of the employer is a “spurious” right while the defendants right to dispense or utilize his private property according to his own will is a “genuine” right. Murray Rothbard, in “Ethics of Liberty,” explains it this way:

But one vital distinction between a genuine and spurious “right” is that the former requires no positive action by anyone except noninterference. Hence, a right to person and property is not dependent on time, space, of the number or wealth of other people in the society….On the other hand, an asserted right “to a living wage” is a spurious one, since fulfilling it requires positive action on the part of other people, as well as the existence of enough people with a high enough wealth or income to satisfy such a claim. Hence such a “right” cannot be independent of time, place, or the number or condition of other persons in society.

Due to the longstanding precedent, from English Common Law through the founding the United States, for jury nullification and the belief that the American Disability Act, no matter how noble its intentions, violates the fundamental rights of self-ownership and private property, I would advocate for jury nullification. Even though I may find the actions of the defendants reprehensible, if we sacrifice liberties to expedite social justice we will soon find ourselves in tyranny, whether the tyrant be a king or the majority. There are means to protect the victims of such actions consistent with natural rights, such as contracts or ostracization of “unethical” actors from a community; but we cannot compel someone to bestow their property to another individual against their will and still be true to natural rights and liberties.

Demme, Jonathan and Nyswaner, Ron. (1993). Philadelphia. Los Angeles, CA: Tristar Pictures.

Ostrowski, James. (Spring 2001). Journal of Libertarian Studies Vol. 15, no. 2. The Rise and Fall of Jury Nullification. Auburn, AL: Ludwig von Mises Institute.

Rothbard, Murray. (1998). Ethics of Liberty. New York: New York University Press.

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Filed under Law
Nov 5, 2011

A Critique of “The Grapes of Wrath:” Causes of Poverty Then and Now

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The “Grapes of Wrath” is a fictional account inspired by terrible plight of Oklahoma Sharecroppers during the “dust bowl” period that also coincided with America’s “Great Depression.” The actual causes of the circumstances, outside of the natural (drought, wind, crop failure), are barely hinted at in the film which instead presents the bewildered outlook of the tenant farmers who have no idea why the events of the movie are occurring, while implying the culprits are the rich and “well to do”, and also simultaneously presenting government as both co-conspirator and savior. The one-sided nature of the film and its contradictions regarding government are merely symptoms of it being fiction and presenting the image its author, or director, desired and while it is excellent in helping us understand the personal trials of the sharecroppers and highlighted an obvious failure in the system it did not provide clear understanding of what the failure was or why it happened. The best way to understand the hardships of the “Okies” and apply those lessons today, then, is to look at the actual history of that time period. After a brief study of the history it becomes apparent that the events depicted in “The Grapes of Wrath” are the result of ill-conceived government enforced property rights, government distortion of the markets, and corporatism, which can all be applied to current poverty issues. In addition to the causes of poverty that effected the “Okies” today we also have inflationary monetary policy, heavy regulatory burdens for entrepreneurship, and the drastic expansion of the size of the federal government that has led to its ever growing consumption of otherwise productive resources.

Terry Anderson and Peter Hill in “The Not So Wild, Wild West: Property Rights on the Frontier” describe how in the late 1800s, the federal government pursued an aggressive homesteading policy in the west. Advertising “free land” was politically popular and it was a way to quickly secure the nations expanding territory. However, in doing this the federal government ignored privately established property rights negotiated between Indians and ranchers or amongst early settlers of the lands and redistributed arbitrary plot sizes with residency and improvement requirements that were not market based. The result of this was a “race for property rights” that led to both land owners with insufficient capital to successfully use the land, they could only afford the “free land” and not the equipment, seed, etc. to profit from it, and to the landowner-tenant farmer system. Landowners from other regions and around the state of Oklahoma claimed stakes during homesteading land races and then rented the land to tenant farmers. Since the land was “free” and did not constitute the landowner’s primary residence or income he had less incentive in the maintenance or improvement of the land and the tenants often could not afford to make improvements or did not think of the land as their own and thus could not justify extra expenses to improve the landowner’s property.

This is in contrast to the three ways to acquire property according Murray Rothbard in “Man, Economy, and State,” which itself has a firm basis in Lockean principles: The first way that unused land or resources may be converted to private property is through the mixing of an individual’s labor with those natural resources. Second an individuals may voluntary exchange or gift property, that they either gained by mixing their labor with unused natural resources or through previous voluntary exchanges. Third individuals may inherit property from their ancestors that previously acquired the property through mixing their labor with unused natural resources or through voluntary exchange. In this case, either the ranchers who voluntarily exchanged with the Indians with the property or possibly the tenant farmers who mixed their labor, if the land was otherwise not in use, would be the actual property owners. Approaching property rights from this perspective would have prevented arbitrary homesteading by the government, premature settling, misallocation of capital, and increased investment by the eventual settlers of the land due to a sense of ownership. This applies today because much of the accumulation of current wealth began with the unjustified appropriation and redistribution of property rights in ways contrary to these principles that have protected and ensured continued growth of wealth for the few against the rightful claims of the many. Also, eminent domain, zoning, and regulations of “private property” continue to erode our sense of ownership and undermine the benefits of a system based on property rights.

In “The Grapes of Wrath,” a representative from the Shawnee Land and Cattle Co. informs a sharecropper that he has to leave his land. The sharecropper inquires into who has made the decision. The representative informs him that it would be no use to talk to the Company as it is not a person, not that it would matter because it is following orders of the bank which itself is answering to auditors in the East. He also mentions the benefits the landowner will receive in hiring wage earners instead of splitting the crops with tenant farmers. However, the movie does not give the context to all of these aforementioned parts working against the interest of the sharecropper. In article titled, “Boom, Bust, Dust” by Doug French, he explains that from 1917 to 1919 “the government guaranteed $2 per bushel” for wheat to help win World War I. As a result, “the number of acres put into wheat production increased 70 percent…But when the war ended, the price collapse…The debts incurred to buy equipment and property still had to be paid…But farmers could only sell the wheat for half of what it cost to produce…if they could find buyers at all.” This distortion in the market created by war and government price intervention led to an artificial boom in the wheat industry followed by a disastrous bust that left farmers and landowners with debt they could not repay and many lost their property. Government further distorted the markets with legislation such as the Agricultural Adjustment Acts of 1933 and 1938 and the Soil Conservation and Domestic Allotment Act of 1935. They allowed landowners to receive federal dollars for not growing on their land in order to lower supply and raise prices of crops. The landowners were supposed to provide a percentage of these funds to the tenant farmers but instead found it in their interest to hire wage earners and kick the tenant farmers from the property so they could receive all federal funds and the full yield of the crop. This legislation probably explains much of the beginning of “The Grapes of Wrath” and why the farmers were being removed from the property.

Government distortion of the markets is a very big player in modern poverty as well. The whole boom-bust cycle is the result of the Federal Reserve Fractional Banking system that allows for continuous credit expansion. The most obvious recent catastrophe this has caused is the Housing Crisis. The quasi-public Fannie mae and Freddie mac corporations guaranteeing home loans severely distorted the markets, as well as legislation that provided incentives to make sub-prime mortgages. The subsidies and hard push towards ethanol in 2007 that pushed the price of corn from “$2 per bushel in January 2005 to over $6” in 2008. (Boom, Bust, Dust) This also resulted in a world wide food shortage as farmers shifted their resources towards the guaranteed money, corn, and sold it for fuel instead of food.

Another prevalent them throughout “The Grapes of Wrath” was law enforcement working on behalf of corporations to ensure their profits and snuff out any “agitators.” However, many confuse this with being a symptom of capitalism when it is truly the nature of corporatism. A system can no longer be called capitalism and a market can no longer be called free when coercion, which government usually maintains a monopoly on, is used to choose winners and losers. The direct coercion to achieve desired ends for favored groups, classes, or companies is only the most obvious form of corporatism. The plethora of regulations, advertised as reigning in corporations, actually remove their competition as small business and individual entrepreneurs can not afford to comply, leaving only the large corporations as the only ones who can afford to do business. This is still very much the nature of our current economic system and that is why people’s distrust or criticisms of capitalism are misplaced since the government has used their monopoly on coercion to influence the market since the very beginning.

Finally, in addition to the causes of poverty for the “Okies” in the late 1930s there are additional factors causing poverty today. The federal government has instituted a much more interventionist monetary policy where during recessions they intentionally create inflation through lower interest rates and printing money. This increases prices at the worst time, when there is high unemployment. Their hope is to lower the real wages of workers while maintaining the same or higher nominal wages, in other words keep the dollar amount the same but make the dollar worth less so they are actually getting paid less with the illusion they are getting paid the same. Also, since the early 1900s government spending has gone from less than 10 percent of GDP to 35-40 percent of GDP over the last 30 years. (USgovernmentspending.com) As the government consumes more of the nation’s resources there is less left to grow the economy.

1. Anderson, Terry L. (2004). “The Not So Wild, Wild West: Property Rights on the Frontier.” Stanford, California: Stanford University Press
2. French, Doug. Mises Daily Article, April 07, 2008. “Boom, Bust, Dust.” http://mises.org/daily/3181. Accessed on 16 October 2011.
3. Rothbard, Murray N. (2004). “Man, Economy, and State, Third Edition, Scholar’s Edition.” Auburn, Alabama: Ludwig von Mises Institute.
4. Usgovernmentspending.com. “Spending as a Percent of GDP from 1900-2010.” http://www.usgovernmentspending.com/downchart_gs.php?year=1900_2010&units=p&title=Spending%20as%20percent%20of%20GDP. Accessed on 16 October 2011.

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Filed under Economics, Politics
Oct 16, 2011

Keynesian v Austrian View of the Business Cycle

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Following World War I and during the Great Depression, John Maynard Keynes, often referred to as the “father of Modern Macroeconomics,” put forward a monetarist theory that claimed that government should take action, by controlling interest rates, to stabilize price levels. For example, the government’s central bank should “lower interest rates when prices tend to rise and raise them [interest rates] when prices tend to fall.”1 This is still the practice of the Federal Reserve to this day. As unemployment continued in the west up until World War II, Keynes expanded his theory to include government intervention to stimulate aggregate demand, a combination of “consumption, investment, and government spending,”2 by providing incentives for spending, investing, and higher wages while trying to create disincentives for saving or lowering wage rates. The theory also encouraged deficit spending in times of crisis since it would be the most direct way for government to quickly boost aggregate demand and revive the economy. These ideas were adopted by most Western governments from the 30s until the 60s when stagflation, high inflation and high unemployment, appeared to disprove the core of Keynes interventionary tactics. During this time the Austrian School of Economics, primarily Ludwig von Mises and F. A. Hayek repudiated the theories of Keynes, as well as Chicago School economist Milton Friedman. They ideas of the Austrians to some degree and the Chicago School influence the American government from the 80s all the way until our latest recession when both President George W. Bush, President Barack Obama and the Federal Reserve have re-instituted Keynesian ideas of deficit spending, intentional inflation by lowering interest rates and printing money, and trying to absorb unemployment in the public sector. However, similar to the 70s, we seem to again be facing stagflation as the dollar is continuously weakened and unemployment remains high. This has led to increased support for austerity measures in the United States, a more free market approach.

Macroeconomic theory could be considered a self-fulfilling prophecy. As policy shaped and applied to “aggregates” the repercussions will also be felt by the “aggregate.” However, in reality the aggregate, or any other amorphous entity, does not act, only individuals act. In “America’s Great Depression” by Murray Rothbard he explains that “this view holds that business cycles and depressions stem from disturbances generated in the market by monetary intervention. The monetary theory holds that money and credit-expansion, launched by the banking system, causes booms and busts.”3 Rothbard further explains that is absurd to assume that all entrepreneurs simultaneously make the same decisions leading to booms and busts that extend to all industries and areas of the economy, he says, “in the purely free and unhampered market, there will be no cluster of errors, since trained entrepreneurs will not all make errors at the same time…In considering general movements in business, then, it is immediately evident that such movements must be transmitted through the general medium of exchange—money. Money forges the connecting link between all economic activities. If one price goes up and another down, we may conclude that demand has shifted from one industry to another; but if all prices move up or down together, some change must have occurred in the monetary sphere.”4

Further, Keynes in the introduction to “The General Theory of Employment, Interest, and Money,” makes the strong claim that “classical” or free market economic theory only applies in special cases while his own theory, which he boldly labels “general,” applies generally in all cases.5 However, throughout history the ideas of Keynes and his advocacy for strong government intervention only gain real support during times of crisis. It is during times of recession, depression, or natural disasters, such as the dust bowl that affected the “Okies,” famously portrayed in “The Grapes of Wrath.” The plight of those most affected by such disasters always tug at the heart strings of their fellow countrymen, and rightly so. However, our emotional response and desire to help those in need should not be used to justify a “general” theory. Those who suffered the most in “The Grapes of Wrath” were not suffering due to capitalism or greed, though the case can be made when the circumstances are created in a work of fiction, but were due to an “act of God” that made previous resources and land quickly lose their value and created a shift in labor that was difficult to absorb by the market due to abrupt and unpredictable nature of the disaster.


1. The Concise Encyclopedia of Economics. John Maynard Keynes. http://www.econlib.org/library/Enc/bios/Keynes.html. Accessed on 15 October 2011.
2. Ibid.
3. Rothbard, Murray. (2005). America’s Great Depression Fifth Edition. Auburn, Alabama: Ludwig von Mises Institute. pp. xxxvii
4. Ibid. pp. 6-9
5. Keynes, John M. (1997). The General Theory of Employment, Interest, and Money. Amherst, New York: Promethius Books. pp. 3

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Filed under Economics
Oct 15, 2011

Self Survey Fall 2011 Part 1

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Click on a topic to expand a summary of my stance on it.

  • When approaching philosophical problems I prefer the method employed by the Austrian School of Economics, which is to start with “simple and evident axioms” and “deduce step by step” the various logical implications of those axioms. (Murray Rothbard, Man, Economy, and State) This approach is in opposition to empiricism, or applying the methodology of the natural sciences to the understanding of human action. This is primarily due to the fact that the factors determining human action are too complex or are simply not able to be isolated and true control/variable groups can not be created as they are in laboratories. (For further information check out the Introduction to the 5th edition of “Americas’ Great Depression by Murray Rothbard.) I will attempt to clarify what I believe to be axioms, or self-evident truths, throughout this survey.

    The second part of my philosophical approach is the recognition of the limits of human reason. The limited nature of man’s ability to reason, the fallibility of man’s senses and his inability to fully observe and experience the world around him, or his obvious shortcomings in processing and retaining an infinite volume of information that is available should be acknowledged and humble our observations on the nature of man, in general, or even ourselves. By acknowledging this limitation I accept that it is possible, even probable, that I will fall prey to logical fallacies, make theoretical leaps without due justification, give in to bias or prejudice, improperly categorize experiences or phenomenon within my logical framework, or to put it simply….make mistakes. However, this also further justifies beginning philosophical inquiry with “simple and evident” truths to best avoid mistakes in the infancy of our thoughts. Also, it gives weight to “common sense,” traditions, and culture even when they are not fully understood by individual actors. I will explain this more in a later section.

  • The foundation of my philosophy is the belief that all things must be considered at an individual level. This contradicts theorists who rely on “general will” or the idea that amorphous entities such as “society” and “the state” can be analyzed separate from the individuals that compose them. Also, individualism is built on the axioms of free will, the inseparability of the will from the individual, and self-ownership and all of the logical implications that follow.

    • The level of debate over the concept of free will baffles me. The alternative to humans having free will is that we are equal to robots, programmed to perform certain actions based on the inputs provided to us. Every choice we make every day confirms that we have free will unless we make a deliberate effort to deny it. I am constantly aware of my consciousness, and thus my free will and being, so long as I am awake. Denying this seems like an exercise of philosophical futility and is pursued primarily by those who were able to see the “Emperor’s new clothes” or in more malicious cases by those peddling sheer intellectual dishonesty in order to advance their cause (the scoundrels who sold the Emperor the new clothes.)

    • This is concept is the key to libertarian ethics and natural law theory and simply states that each individual has 100 percent self-ownership over his own person, to include body, mind, and spirit. This may seem less than self-evident since there is a history of slavery, indentured service, and many examples of people acting “against their will.” However, if we stick to the simple and evident truths of self-ownership then these can be explained as submitting to the will of another due to coercion, but the individual’s person never leaves their ownership unless they are dead as body, mind, and spirit are inalienable from each other otherwise. Murray Rothbard demonstrates the fallacies of the alternatives to 100 percent self-ownership in “Ethics of Liberty,” as either “the ‘communist’ one of Universal and Equal Other-ownership, or Partial Ownership of One Group by Another—a system of rule by one class over another.” (Ethics of Liberty, Interpersonal Relations: Ownership and Aggression.)

    • (Just trying to impress myself with big words) The opposite of an individualistic approach to philosophical or sociological problems is to attribute human characteristics to entities that are composed of groups of individuals abstractly. For example, attributing goals, actions, and beliefs to society, the state, or the general will as opposed to the individuals who actually took the actions or hold those beliefs. I refer to these entities as amorphous, a term used mostly in science to mean: “having no definite form;” “shapeless;” “being without definite character or nature,” because everyone discussing any of these entities will define them their own way to match their ideas or philosophy and this is possible because they have no definitive nature of their own. This makes them dangerous in philosophical reasoning because they can be “formed,” as a potters clay, to justify or match almost any conclusion or agenda. Ludwig von Mises said the following: “All rational action is in the first place individual action. Only the individual thinks. Only the individual reasons. Only the individual acts.”

  • My journey into politics and philosophy actually began with economics. I came across an article on school vouchers that made an interesting argument that I had never considered (I had not considered much of anything at this point) and it cited Milton Friedman as on of the pioneers in the voucher movement. I was intrigued by the idea and decided to study it further so I picked up both “Capitalism and Freedom” and “Free to Choose” by Milton Friedman, both had sections on education to include advocacy of vouchers. However, I was introduced to a whole plethora of new ideas in those books, most questioning the efficiency of government and making convincing “empirical” arguments as to why those inefficiencies exist and sometime offering convincing solutions to those problems. Most importantly it put capitalism and free markets in a positive light and I wanted to know more. Next I discovered a documentary called Commanding Heights that also seemed to put a positive spin on capitalism, mostly from Milton Friedman, but it introduced a school of thought that claimed even Milton Friedman and the Chicago School were not free market enough…the Austrian School headed by Ludwig von Mises and claimed by F.A. Hayek. Hayek’s name came up again as a source of counsel to Ronald Reagan and Margaret Thatcher who both recognized the flaws of Keynesian economics and wanted to take their respective countries on new paths. This led me to Hayek’s “Constitution of Liberty” which acted as a nice bridge between the Chicago School and the Austrian School due to the fact that it was more friendly towards the idea of the need for a state, which I was not ready to let go of yet. “Constitution of Liberty” opened new doors in mind and allowed me a whole new world view and made me a real pupil of the Austrian School. As a pupil of this lesser known school of economics I felt compelled to study Ludwig von Mise’s “Human Action” which demonstrated a very logical method of approaching philosophical and economic problems and introduced me to “praxeology,” the study of human action, of which he deemed economics part of. After “Human Action” I began reading material provided by the Ludwig von Mises Institute on their website (mises.org) and came to learn that Murray Rothbard wrote a book meant to be used as a college text book to teach the ideas of Mises in a more accessible way so I began to study “Man, Economy, and State,” which ended up being an economic treatise in and of itself. I found Rothbard much easier to follow and tended to agree with his analysis in the few areas where he differed from his mentor, von Mises. I have continued to study the Austrian School and the writings of the many scholars linked to it. Following are some of the key ideas that I have taken away but I encourage anyone who is interested to check out “Man, Economy, and State” for the fullest understanding.

    • “Human action is defined simply as purposeful behavior…The purpose of a man’s act is his end; the desire to achieve this end is the man’s motive for instituting the action…All human beings act by virtue of their existence and their nature as human beings. We could not conceive of human beings who do not act purposefully, who have no ends in view that they desire and attempt to attain.” (Man, Economy, and State, The Concept of Action) “The first truth to be discovered about human action is that it can be undertaken only by individual ‘actors.’” (Man, Economy, and State, First Implications of the Concept)

    • “With reference to any given act, the environment external to the individual may be divided into two parts: those elements which he believes he cannot control and must leave unchanged, and those which he can alter (or rather, thinks he can alter) to arrive at his ends. The former may be termed the general conditions of action; the latter, the means used…[A]ll means are scarce, i.e., limited with respect to the ends that they could possibly serve,” so “the necessity for a choice among ends arises” and “action takes place by choosing which ends shall be satisfied by the employment of means.” (Man, Economy, and State, First implications of the Concept) Further as it applies to time: “All human life must take place in time” and “a man’s time is always scarce.” (Man, Economy, and State, First implications of the Concept) In other words, you can only achieve so many ends in a certain amount of time and time always marches forwards so that every second that passes is irretrievable making them scarce.

    • “A fundamental and constant truth about human action is that man prefers his end to be achieved in the shortest possible time…This is the universal fact of time preference…Time enters into human action not only in relation to the waiting time in production, but also in the length of time in which the consumer’s good will satisfy the wants of the consumer,” this is known as the “duration of serviceableness.” (Man, Economy, and State, Further Implications: Time) In short, man wants his in the shortest time and wants them to last the longest time.

    • Often in economics or in common usage value is used almost interchangeably with price or refers specifically to monetary value. However, value in its most basic form refers simply to the perceived gain (psychic gain) that an individual expects. “In order for any measurement to be possible, there must be an eternally fixed and objectively given unit with which other units may be compared. There is no such objective unit in the field of human valuation. The individual must determine subjectively for himself whether he is better or worse off as a result of any change.” (Man, Economy, and State, Further Implications: Ends and Values) Price on the other hand is a market mechanism that helps match the psychic value of the consumer to the [monetary] value of the producer or laborer.

      • “All action is an attempt to exchange a less satisfactory state of affairs for a more satisfactory one…The psychic gain (or profit) and loss cannot be measured in terms of units, but the actor always knows whether he has experienced psychic profit or psychic loss as a result of an action-exchange.” Of important note, “leisure is a consumer’s good,” or an end that is valued in and of itself. (Man, Economy, and State, Factors of Production: Labor versus Leisure) Consequently, “people work only when they value the return of labor higher than the decrease in satisfaction brought about by the curtailment of leisure.” (Ludwig von Mises, Human Action)

      • “Human actors value means strictly in accordance with their valuation of the ends they believe the means can serve.” (Man, Economy, and State, Further Implications: Ends and Values) “Each physical unit of a means (direct or indirect) that enters into human action is valued separately. Thus, the actor is interested in evaluating only those units of means that enter, or that he considers will enter, into his concrete action. Actors choose between, and evaluate, not ‘coal’ or ‘butter’ in general, but specific units of coal or butter. For example, “if one pound of butter was considered by the actor as of better quality than another pound of butter” then, “in that case, the two “butters” are really different goods from the point of view of the actor and will be evaluated differently.” (Man, Economy, and State, The Law of Marginal Utility)

      • The “process of valuation according to the specific units involved provides the solution for the famous ‘value paradox’ which puzzled writers for centuries. The question was: How can men value bread less than platinum, when ‘bread’ is obviously more useful than ‘platinum?’ The answer is that acting man does not evaluate the goods open to him by abstract classes, but in terms of the specific units available. He does not wonder whether ‘bread-in-general’ is more or less valuable to him than ‘platinum-in-general,’ but whether, given the present available stock of bread and platinum, a ‘loaf [unit] of bread’ is more or less valuable to him than ‘an ounce [unit] of platinum.’ That, in most cases, men prefer the latter is no longer surprising…Thus, for all human actions, as the quantity of the supply (stock) of a good increases, the utility (value) of each additional unit decreases…[This] is the law of marginal utility, sometimes known as the law of diminishing marginal utility.” (Man, Economy, and State, The Law of Marginal Utility)

    • If self-ownership is the foundation of libertarian ethics and natural law then property rights are the corner stone. They are the most direct logical step from self-ownership. Again, I turn to Murray Rothbard in “Man, Economy, and State” to offer the best explanation of property rights, which has a firm basis in Lockean principles:

      On the free, unhampered market, a man can acquire property in scarce goods as follows: (1) In the first place, each man has ownership over his own self, over his will and actions, and the manner in which he will exert his own labor. (2) He acquires scarce nature-given factors either by appropriating hitherto un­used factors for his own use or by receiving them as a gift from someone else, who in the last analysis must have appropriated them as hitherto unused factors. (3) He acquires capital goods or consumers’ goods either by mixing his own labor with nature­-given factors to produce them or by receiving them as a gift from someone else. As in the previous case, gifts must eventually re­solve themselves into some actor’s production of the goods by the use of his own labor. Clearly, it will be nature-given factors, cap­ital goods, and durable consumers’ goods that are likely to be handed down through gifts, since nondurable consumers’ goods will probably be quickly consumed. (4) He may exchange any type of factor (labor service, nature-given factor, capital good, consumers’ good) for any type of factor. It is clear that gifts and exchanges as a source of property must eventually be resolved into: self-ownership, appropriation of unused nature-given fac­tors, and production of capital and consumers’ goods, as the ulti­mate sources of acquiring property in a free economic system. In order for the giving or exchanging of goods to take place, they must first be obtained by individual actors in one of these ways. The logical sequence of events is therefore: A man owns himself; he appropriates unused nature-given factors for his own­ership; he uses these factors to produce capital goods and con­sumers’ goods which become his own; he uses up the consumers’ goods and/or gives them and the capital goods away to others; he exchanges some of these goods for other goods that had come to be owned in the same way by others. These are the meth­ods of acquiring goods that obtain on the free market, and they include all but the method of violent or other invasive expropri­ation of the property of others. (Man, Economy, and State, Types of Interpersonal Action: Voluntary Exchange and the Contractual Society)

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Sep 6, 2011

“Measuring” the Welfare State: The Dangers of Econometrics in Determining Policy

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In a 2003 article in the Journal called Social Forces, titled “Public Employment, Welfare Transfers, and Economic Well-Being across Local Populations: Does a Lean and Mean Government Benefit the Masses?,” Linda Lobao and Gregory Hooks set out to answer the question presented in the title of their article. They set out to examine whether “a larger public sector and more generous social welfare transfers help or harm local populations,” (519) and they use the US county level to examine statistics and make their case. They compare the decades 1970 – 1980 and 1980 – 1990 since these are two decades that are recognized as Keynesian, big government, and Post-Keynesian, minimalist government, respectively. Observing the impacts of the policies of these two decades, they argue, should provide empirical evidence as to which is most successful in promoting the “economic well-being of local populations.” However, as is always the case with econometrics and observing complex human interaction with statistical abstraction, causal factors for the trends observed are not established a priori and even the slight correlations that may be perceived in the presented data are not really strong enough to make a judgment, pro or con, regarding the authors arguments.

The authors present two schools of thought regarding public employment, welfare transfers, and size of government: the “neoliberal school, whose inspiration is neo-classical economics and liberal political philosophy, contends that where the state offers citizens minimalist social protection from [engages in minimalist intervention against] private market forces, economic development flourishes and general incomes will be higher;” the “Marxist…radical political economy schools,” interject “that in regions and periods where the state was more interventionist on behalf of citizens, incomes were higher and income inequality lower.” (520) The authors’ “neoliberal school” closely reflect the “liberal” welfare regime (they do not argue that this school seeks to abolish the welfare state just minimize it) as described by Esping-Andersen, who attributes include: “a limited array of governmental obligations, generally modest social benefit levels, strict criteria for eligibility, a preference for targeting public money very narrowly to the “needy” rather than the citizenry at large, and active encouragement of market solutions” for achieving economic well-being. (Hicks and Esping-Andersen, 2005, 512) The competing view presented by the authors fits Esping-Andersen’s “Institutional” Welfare State “by defining the scope of public welfare responsibilities extremely broadly, by giving high priority to social equality and redistribution, by actively attempting to secure citizen’s welfare ‘from cradle to grave,’ and by striving toward universalism in coverage and eligibility. (512)

The authors, very competently, present the neoliberal argument that “private market mechanisms, even when imperfect perform better than state planning. Government [intervention] inherently distorts competitive market processes operating among populations; the market interference is at best ineffective, and at worst counterproductive.” (523) They present four reasons that neoliberals say cause the negative effects of the welfare state: reduces labor supply by employing citizens in government or by allowing them to choose leisure over work due to welfare transfers; perverts business incentives by rewarding certain businesses or by increasing the cost of business by bidding up labor costs or raising costs through other egalitarian regulations; misallocates resources “toward undeserving and under performing populations,” regions, and businesses; and finally by pitting the interests of the poor, receivers of redistributive and egalitarian policies, and the non-poor, the providers of the resources that are being redistributed. (524-526) The consequences will be lower overall income, the atrophy of cultural and familial relationships, and an ever growing state that becomes more and more unchallengeable as dependency on it grows.

When presenting the contrary schools argument, Lobao and Hooks put forward very little effort to contradict the neoliberal schools arguments a priori. They a make a few ad hoc pleas, without much evidence or reasoning, that the conclusions of the neoliberal school are misguided but they mostly argue that the goals of the radical political economy schools are simply different: equality of outcomes through redistribution and increased overall income. (527-528)

The authors then set out to statistically show through econometrics how effectively the policies of both schools achieve the welfare state goal of reducing inequality and the shared goal of increasing overall income, the neoliberal is satisfied if all classes or individuals increase their wealth and do not concern themselves if certain groups or individuals gain wealth at a faster rate, thus increasing inequality while also increasing overall income. The authors focus their study on the county level econometrics of aggregate population since both schools have both done extensive research that “extrapolate[d] from national trends to anticipate sub-national shifts” in income and inequality. (528) The authors go into great detail on their methods of viewing the data, weighting variables, and testing hypothesis in an honest and rigorous effort to validate their analysis.

The authors analysis of the data indicates that in “counties with greater federal employment and where income transfers better cover the needy population…[there is] significantly higher median family income. Higher AFDC (Aid to Family with Dependent Children) benefits and a larger public adminstrative sector have no significant relationship to median family income. Only state/local government employment is significantly related to lower family income.” (537) The authors also found that “the state’s effect on income growth and redistribution showed no strong differences between Keynesian and post-Keynesian decades.” (538)

The Weakness in Lobao and Hooks’ Argument and in Econometrics in General

In the introduction to the first edition of his book, “America’s Great Depression,” Murray Rothbard describes the inherent flaws of econometrics:

“…economic theories cannot be “tested” by historical or statistical fact. These historical facts are complex and cannot, like the controlled and isolable physical facts of the scientific laboratory, be used to test theory. There are always many causal factors impinging on each other to form historical facts. Only causal theories a priori to these facts can be used to isolate and identify causal strands.” (xxxviii)

In other words, due to the complexity of society and human interaction the facts of given events, and especially the facts of general periods in history, cannot be isolated to test for causal relationships. Instead causal theory must be developed by tracing the logical connections from axiomatic principles, or self-evident truths. Also, due to the complexity of historical fact, the statistics that numerically represent these facts can be interpreted many ways and manipulated, sometime unintentionally or through neglect, to present an inaccurate picture, usually biased towards whatever the presenter is advocating. Many of these pitfalls, or techniques, can be quickly perused or understood from Darrell Huff’s, “How to Lie with Statistics.” Huff and others note that biased sampling, using the best looking average (mean, median, mode, and several other techniques exist), excluding relevant data (intentionally or because its existence is unknown), the correlation vs causation and post hoc fallacies(“b” comes after “a:, therefore “a” must cause “b”), incomparable or vague measures, etc. will lead to faulty analysis and unfortunately encountering some of the aforementioned problems to some degree is inevitable in all statistics. Rothbard goes on to explain how policy formulation plays out when based on econometrics:

“Suppose a theory asserts that a certain policy will cure a depression. The government, obedient to the theory, puts the policy in effect. The depression is not cured. The critics and advocates of the theory now leap to the fore with interpretations. The critics say that failure proves the theory incorrect. The advocates say that the government erred in not pursuing the theory boldly enough, and that what is needed is stronger measures in the same direction. Now the point is that empirically there is no possible way of deciding between them. Where is the empirical “test” to resolve the debate? How can government rationally decide upon its next step? Clearly, the only possible way of resolving the issue is in the realm of pure theory—by examining the conflicting premises and chains of reasoning.” (xxxix-xl)

In the case of the data presented by Lobao and Hooks, proponents of the neoliberal school could argue that neoliberal policies were not taken far enough and that is why they did not to have much, if any, impact on overall income growth, and they would have plenty of their own statistics to back it up. For example, Tax levels, as a percent of GDP, was unchanged in the 80s compared to the 70s (Even though the income tax was reduced, social insurance taxes were increased).(www.usgovernmentrevenue.com) Federal spending actually increased from 18-20 percent of GDP in the 70s to 21-23 percent in the 80s. (www.usgovernmentspending.com) Comparatively low prime interest rates for most of the 1970s and record high prime interest rates through the first half of the 1980s could also explain the expansion and contraction of the US economy during these time periods. Economic lag of decisions made in the previous decade, such as the dissolution of the Bretton-Woods agreement, which was the dollars last attachment to the gold standard, and a many many more reasons could be provided to explain overall income or even wage inequality differences between the two sampled decades. The authors themselves declare in their conclusion that there is “no strong differences between Keynesian and post-Keynesian decades.” (538) If there is no strong difference between decades, that seems to invalidate the rest of their analysis that one policy performed better than the other based on comparing the supposedly representative decades.

Policy regarding the welfare state is best considered by elaborating on the “basic axiom of the ‘right to self-ownership,’” which “asserts the absolute right of each man, by virtue of his (or her) being a human being, to ‘own’ his or her own body…[and] since each individual must think, learn, value, and choose his or her ends and means in order to survive and flourish, the right to self-ownership gives man the right to perform these vital activities without being hampered and restricted by coercive molestation. (Rothbard, 2006, 33-34) The next logical step is that if man owns himself, to include his will and his physical body, then he must own his labor which is their result. Further, once his labor is used to transform unclaimed, or unused, resources found in nature, the product is now also owned by that individual. This is the same idea expressed by English philosopher John Locke, who was a main source of inspiration for the founding fathers of the United States:

“…every man has property in his own person….the labour of his body and the work of his hands…are properly his. Whatsoever, then, he removes out of the state that nature hath provided and left it in, he hath mixed his labour with it, and joined it to something that is his own, and thereby makes it property.” (Locke, 1948, 17-18)

If the above principles regarding “self-ownership” and basic property rights are accepted as true then there are only three ways to acquire property ethically. 1) Mix one’s labor with resources in their natural state. 2) Inheritance or gift, absent coercion. 3)Free exchange between consenting parties. Any other method would violate the basic axiom of self-ownership and the logical extensions of that axiom. The welfare state is the understood not as an answer of “Who gets what from government?” but instead as an answer to “Who gets what from whom through the coercive proxy known as government?” Government has to violate the self-ownership principle, and therefore either partially or wholly enslave individuals, in order to confiscate and then redistribute their property. This makes the welfare state and all other forms of coercion unethical simply to their assault on the natural right of self-ownership.

Works Cited

Lobao, Linda. (2003). Public Employment, Welfare Transfers, and Economic Well-Being across Local Populations: Does a Lean and Mean Government Benefit the Masses?. Social Forces, 82(2), 519-556.

Locke, John. (1948). An Essay Concerning the True Original Extent and End of Civil Government. In E. Barker (Ed.), Social Contract (17-18). New York: Oxford University Press.

Hicks, Alexander & Esping-Andersen, Gosta. (2005). Regimes and Contention. In T.A. Janoski, A.M.
Hicks, & M.A. Schwartz (Eds.), Handbook of Political Sociology: States, Civil Societies, and Globalization (509-525). Cambridge, UK: Cambridge University Press.

Huff, Darrell. (1993). How to Lie with Statistics. New York: Norton and Company, Inc.

Rothbard, Murray N. (2005). America’s Great Depression. (5th ed.) Auburn, Alabama: Ludwig von Mises Institute.

Rothbad, Murray N. (2006). For a New Liberty: The Libertarian Manifesto (2nd Ed.) Auburn, Alabama: Ludwig von Mises Institute.

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Apr 29, 2011

Immigration Policy and Private Property

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In an article titled, “The Politics of Immigration and National Integration,” Thomas Janoski and Fengjuan Wang declare that due to recent trends, such as the exit of the baby boomers from the work force, economic hardships, and globalization, the politics of immigration is moving from being a background issue for most people to an “explosive issue” that “will be a cauldron of emotion and wills for the next half century.” (630) They also set out to “provide a complex explanation of immigration and naturalization laws” that explains the both the points of view of sender and receiver nations, as well as the support and opposition towards immigration that has almost always crossed party lines. (653) However, it is more likely that universal principles that apply to all human action, immigration / emigration are not exceptions, will be able to bring further clarity to these theories and will also lead to an ethical understanding of how best to address the issue of immigration. The foundation of true liberty is private property, that stems from the right of self-ownership, and it is also the ethical response to immigration and even though this theory will be shown to not be complex in nature, the required paradigm shift from government’s desire to control and people’s dependence on government control will be quite difficult to accomplish.

Janoski and Wang describe how both support and opposition to immigration, in the receiving country, is bi-partisan and bridges interest groups that are normally at odds. Supporters of expanded immigration policy has usually been made up of “largely Democratic ‘cosmopolitans’ who wanted an expansion of citizenship,” that would likely lead to an expanded voter base; and also, “’free market expansionists’ who were more interested in easing labor shortages.” (631) The opposition has been traditionally made up of labor and welfare state advocates, both groups tend to be largely Democratic, who seek to restrict immigration in order to protect the jobs and benefits of existing citizens against competition from immigrants who are usually eligible and possess the appropriate skills to compete with those most dependent on these policies. The other traditional opposition group has been cultural conservatives who wish to preserve the existing culture and limit the influence of “outsiders” on policy or society as a whole. Janoski and Wang then describe four types of politics that decide immigration policy in a receiving country based on how diffuse the costs and/or benefits are: interest group politics, clientelist politics, entrepreneurial politics, and majoritarian politics. However, the overarching theory of cost-benefit analysis is sufficient to provide the causal factors for both support and opposition to immigration. Those who support immigration seek to expand immigration in order to expand their political or member base; lower labor costs; or perceive it is as a means to some other subjective goal. Opposition wishes to protect the status quo or existing citizens, or they also see further expansion of immigration as a threat to their subjective goals. Immigrants themselves perceive that exchanging their current situation for a situation in which they are pressured to assimilate and forced to interact with foreign cultures and people will beneficial in achieving their individual goals. Sending nations support emigration so long as the perceive potential gain from remittances or the return of a more experienced work force; and they oppose emigration when it erodes their revenue base or is subversive in nature.

Since all sides are seeking their own economic benefit, according to what they value most, they are all justified in either their support or opposition. The problem then becomes how can there be an overarching policy that addresses all of their just concerns? The answer is you can’t and if you try you will be arbitrarily choosing winners and losers in the debate and coercing one side to “accept” the views of another group. The most ethical response then is to not have a centralized or overarching policy but many policies based on the preferences of individuals or ideologically homogenous communities and private property as explained by Hans-Hermann Hoppe in, “Democracy—The God that Failed:”

“All land is privately owned, including streets, rivers, airports, harbors, and so on. With respect to some pieces of land, the property title may be unrestricted; that is, the owner is permitted to do with his property whatever he pleases as long as he does not physically damage the property owned by others. With respect to to other territories, the property title may be more or less severely restricted. As is currently the case in some housing developments, the owner may be bound by contractual limitations on what he can do with his property (voluntary zoning), which might include residential versus commercial use, no buildings more than four stories high, [or even as far as] no sale to Jews, Germans, Catholics, homosexuals, Haitians, families with or without children, or smokers for example.

Clearly, under this scenario no such thing as freedom of immigration exists. Rather, many independent private property owners have the freedom to admit or exclude others from their own property in accordance with their own unrestricted or restricted property titles.” (2007, 139)

The end result would be that all groups could pursue their economic interests and values simultaneously and while some communities may have restrictive limitations that are repulsive to the mainstream, the result will be self-segregation of people who hold those repulsive views into their own communities. Also, those communities that have the most successful immigration policies will be imitated by other communities seeking prosperity until the majority of communities strike the most optimal balance in immigration policy.

Works Cited:

Janoski, Thomas A. & Wang, Fengjuan. (2005). Regimes and Contention. In T.A. Janoski, A.M. Hicks, & M.A. Schwartz (Eds.), Handbook of Political Sociology: States, Civil Societies, and Globalization (630-654). Cambridge, UK: Cambridge University Press.

Hoppe, Hans-Hermann. (2007). Democracy—The God that Failed: The Economics and Politics of Monarchy, Democracy, and Natural Order. New Brunswick, New Jersey: Transaction Publishers.

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Apr 29, 2011

On Bureaucracy: Mises Versus Weber

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When people think of government, specifically democratic government, they think of politicians or elected officials. They imagine representatives whose power is temporary and can be influenced by possibility of losing popular support and elections. However, “bureaucracy is the largest part of any government if measured by the number of people engaged or by fund expended” and is defined as “the totality of government offices or bureaus that constitute the permanent government of a state.” (Oszlak, 2005, 488-489) Elected officials and policy makers, for the most part, legislate or dictate goals, that ideally reflect the goals of the people they represent, but bureaucracy is the means through which those goals are pursued. The regulations, actions, and compulsion necessary to achieve the tasks and goals of policy makers emanate from bureaucracy. In other words, policy makers create an outline of action and bureaucracy is the source of the content and substance that is the state. Since bureaucracy is, by nature, “more permanent…than politician” it “makes the politician…more subject to bureaucracy” instead of the more common assumption of the bureaucracy being subject to the politician. (Anderson, 2004, 8-9) While the literature and theory on bureaucracy is disproportionately less, relative to its size and influence, compared to other components of the state, two major theorists have provided needed insight into this monumental, but intellectually neglected, institution: Max Weber, in “Economy and Society”, and Ludwig von Mises, in “Bureaucracy.”

Weber and Mises each approach bureaucracy from very different angles which, not coincidentally, leads them to starkly different observations and conclusions regarding the nature of bureaucracy and its impact on society. For Weber, his theories on bureaucracies are part of a “purely formal and typological discussion.” (Weber, 991) He describes the traits of the “ideal type” of bureaucracy as “arranged in a clearly defined hierarchy of offices;…compelled by the impersonal duties of their office; units and positions are arranged in a chain of command; …functions are clearly specified in writing, so there is specialization of task and a specified sphere of competence; and the bureaucrats behavior is subject to systematic control.” (Oszlak, 2005, 489) However, Weber focused much less on the cause of bureaucracies or the reasons they deviated from his ideal type, nor did he explain the axiomatic principles from which his ideal type was derived from. Instead he relies on historical relativism and a general institutional perspective that is biased towards “collective phenomena” as opposed to individual action in determining causal factors to describe bureaucracy, which he already accepts as both “inevitable” and “indestructible”, in abstractions of reality, whose generic nature and basis in flawed perception make the discovery of core “truths” impossible (Anderson, 2004, 6-9). Instead the observations are simply used as a means for predicting outcomes and do not attempt to answer “Why?”

Mises, on the other hand, relies on axiomatic principles to explain his theory of bureaucracy. The first principle is the “axiom of human action,” which can be described “simply as purposeful behavior” and is inherent to human beings “by virtue of their existence and their nature;” further human action “can be undertaken only by individual actors.” (Rothbard, 2004, 1-2) The second principle applicable here is the “Law of Marginal Utility,” which states that “things are valued as means in accordance with their ability to attain ends valued as more or less urgent.” (Rothbard, 2004, 21) For Mises, both bureaucratic action and non-bureaucratic action are undertaken by individuals with purpose toward some end, the difference, then, is that bureaucracy seeks ends without consideration for profit and non-bureaucratic institutions actions are profit driven. This concrete definition would apply to many if not all of the same institutions described by Weber and others as being a bureaucracy, but it also has the added advantage specificity and clearly separated categories to prevent overlap or contradictions in the conclusions that can be drawn from it. This definition applies to government, business, charity or any institution that takes actions without consideration for profit or to the degree in which their decisions are not made based on profit. In other words, the less an institution considers profit the more bureaucratic it becomes and vice versa.

In modern society not seeking “profit” is often viewed as altruistic or positive but this usually stems from a misunderstanding of “value” and the only way to translate “values” to “actors” providing goods or services to the public. As stated in the “Law of Marginal Utility” earlier, goods and services do not have inherent value but are only worth as much as the ends they to be used in attaining for according to the urgency of each individual. The only way for individuals, who all value things differently, to communicate these values to the producers of goods and services, so that capital resources are used efficiently to produce the most aggregate value, is monetarily or terms of exchange. This causes a problem for bureaucracies, as they do not consider profits, since they are not able to form computations of the value of the goods and services they provide and therefore, have to rely on the “guesses” of bureaucrats in the use of their resources, which will inevitably lead misallocation.

Both Weber and Mises viewed bureaucracy as destructive to society, Mises more definitively so. They both also foresaw the continued expansion of bureaucracy. Mises believed this expansion was due to the “interventionist”nature of State bureaucracy that forces institutions that were once profit seeking to adapt in order to “guard itself from destruction” by “incur[ring] all sorts of expenditures for matters not related to business” and act according to regulations imposed by government bureaucracy that force “production and consumption to develop along lines different from those prescribed by an unhampered market.” (Anderson, 2004, 12-14) The continued expansion of bureaucracy and regulations will reduce innovation and creativity, they will be replaced with compliance and obedience, and destroy the lines of communication between consumer and producer; as well as lead to massive waste through misallocation of resources.

Anderson, William P. (2004) Mises Versus Weber on Bureaucracy and Sociological Method. Journal of Libertarian Studies 18 (1) 1-29

Oszlak, Oscar. (2005). Regimes and Contention. In T.A. Janoski, A.M. Hicks, & M.A. Schwartz (Eds.), Handbook of Political Sociology: States, Civil Societies, and Globalization (482-505). Cambridge, UK: Cambridge University Press.

Rothbard, Murray N. (2004) Man, Economy, and State with Power and Market. (Scholar’s ed.) Auburn, Alabama: Ludwig von Mises Institute

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Filed under Philosophy, Politics
Apr 13, 2011

American Government: True or Perverse According to Aristotle?

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Its been over 2000 years since Aristotle provided his insights into all areas of philosophy, including politics, and yet many of his observations are still useful today. One concept that still has value is that of “true forms of government” and perversions of those forms. Aristotle explained that “true forms of government…are those in which the one, or the few, or the many , govern with a view to the common interest; but governments which rule with a view to the private interest, whether of the one, or of the few, or of the many, are perversions.” (Tilly, 2005:424). He also provided three examples of true forms of government and their perverse forms: Monarchy is the rule of one for the common good and tyranny is the perverse form where the king or dictator seeks his own interest to the detriment to the common interests; Aristocracy is the rule of rich benefactors of society while oligarchy is rule by rich exploiters of their lessers; the final example is Constitutional government is the rule of the masses through established law, again for the common good and the perversion, according to Aristotle, is democracy where the masses live parasitic lives exploiting the rich whom they outnumber and replacing established law with arbitrary decrees. (Tilly, 2005: 424) Another category not included by Aristotle that follow the rule by one, few, or many and perversion based on pursuit of common or contra common interests could be voluntary society, the rule by none with members seeking the mutual benefit of one another through market based exchange, and its perversion lawlessness, a dog eat dog world where each member seeks to gain through the coercion of his neighbors. Even with this fourth category this form of categorization is to simple to capture all of the complexities and subtleties of government types, mechanisms, and their various perversions, nor does it seem to recognize the various degrees of perversion between the “true form” and the perverse form. Also, it does not address the major controversy of discerning what is in the “common interest” or who decides what is in the common interest. There are very few, if any, issues that will have unanimous agreement and so each decision pursuing one goal over another will be against some part of the common, and yet they will be obliged to follow regardless due to the nature of the state as being a monopoly of coercive power over the geographic area they reside in.

When applying these categories to modern American government, it is necessary to create another category not mentioned earlier. Aristotle mainly addressed government of direct rule, either by one, few, or many, but America is not ruled directly but through representatives. The power holders are not in the polity, per se, but use proxies to exercise their will. The true form of this government would be representative constitutional government, where the representatives act in the, so called, common interest within strict limits of established law and the perversion is corporatism, where the representatives’ actions are detrimental to the public in order to gain favor or wealth from organized interest groups or from wealthy individuals or businesses. Currently, it would seem that American government is closest to this perverse form, corporatism. The masses have very little political participation, usually limited to a portion voting once every 2-4 years, with not further recourse or actions available to them for the remaining duration of time. However, organized interest groups and wealthy members are able to lobby and influence the polity at will and they find ways to use state coercion against the masses and each other to gain a perceived advantage, as opposed to seeking mutually beneficial means to achieve advantage, though perhaps slower or lesser than what is possible to achieve by exploiting others through the state.

The very nature of any state is to move towards its perverse form of government. All of the precautions taken during its formation such as federalism, written constitution, division of powers, etc. are simply recognition of this natural degradation and are meant to act as resistance to slow the inevitable process. The only way for this process to be “reset” is for the government to become intolerable to the people, causing them to revolt and re-establish a new state so that the process can begin again. This again was recognized in the formation of the United States, Thomas Jefferson wrote in the Declaration of Independence, “whenever any form of government becomes destructive of these ends, it is the right of the people to alter or abolish it, and to institute new government…” The only possible category that can avoid this cycle is that of the voluntary society. So long as all individuals are able to leave and/or form new government-like institutions, then each institution will be forced to act in the common interest since its members will leave, since there is no monopoly or arbitrary exertion of coercion based on geographic boundaries, if the perceived costs of being a “citizen” or member of that institution ever exceed the benefits. All members will be voluntary and their consent to the authority of their chosen institution will be explicit, as opposed to the “implied consent” that existing governments claim to have.

 

Tilly, C. (2005). Regimes and Contention. In T.A. Janoski, A.M. Hicks, & M.A. Schwartz (Eds.), Handbook of Political Sociology: States, Civil Societies, and Globalization (423-440). Cambridge, UK: Cambridge University Press.

Its been over 2000 years since Aristotle provided his insights into all areas of philosophy, including politics, and yet many of his observations are still useful today. One concept that still has value is that of “true forms of government” and perversions of those forms. Aristotle explained that “true forms of government…are those in which the one, or the few, or the many , govern with a view to the common interest; but governments which rule with a view to the private interest, whether of the one, or of the few, or of the many, are perversions.” (Tilly, 2005:424). He also provided three examples of true forms of government and their perverse forms: Monarchy is the rule of one for the common good and tyranny is the perverse form where the king or dictator seeks his own interest to the detriment to the common interests; Aristocracy is the rule of rich benefactors of society while oligarchy is rule by rich exploiters of their lessers; the final example is Constitutional government is the rule of the masses through established law, again for the common good and the perversion, according to Aristotle, is democracy where the masses live parasitic lives exploiting the rich whom they outnumber and replacing established law with arbitrary decrees. (Tilly, 2005: 424) Another category not included by Aristotle that follow the rule by one, few, or many and perversion based on pursuit of common or contra common interests could be voluntary society, the rule by none with members seeking the mutual benefit of one another through market based exchange, and its perversion lawlessness, a dog eat dog world where each member seeks to gain through the coercion of his neighbors. Even with this fourth category this form of categorization is to simple to capture all of the complexities and subtleties of government types, mechanisms, and their various perversions, nor does it seem to recognize the various degrees of perversion between the “true form” and the perverse form. Also, it does not address the major controversy of discerning what is in the “common interest” or who decides what is in the common interest. There are very few, if any, issues that will have unanimous agreement and so each decision pursuing one goal over another will be against some part of the common, and yet they will be obliged to follow regardless due to the nature of the state as being a monopoly of coercive power over the geographic area they reside in.

 

When applying these categories to modern American government, it is necessary to create another category not mentioned earlier. Aristotle mainly addressed government of direct rule, either by one, few, or many, but America is not ruled directly but through representatives. The power holders are not in the polity, per se, but use proxies to exercise their will. The true form of this government would be representative constitutional government, where the representatives act in the, so called, common interest within strict limits of established law and the perversion is corporatism, where the representatives’ actions are detrimental to the public in order to gain favor or wealth from organized interest groups or from wealthy individuals or businesses. Currently, it would seem that American government is closest to this perverse form, corporatism. The masses have very little political participation, usually limited to a portion voting once every 2-4 years, with not further recourse or actions available to them for the remaining duration of time. However, organized interest groups and wealthy members are able to lobby and influence the polity at will and they find ways to use state coercion against the masses and each other to gain a perceived advantage, as opposed to seeking mutually beneficial means to achieve advantage, though perhaps slower or lesser than what is possible to achieve by exploiting others through the state.

 

The very nature of any state is to move towards its perverse form of government. All of the precautions taken during its formation such as federalism, written constitution, division of powers, etc. are simply recognition of this natural degradation and are meant to act as resistance to slow the inevitable process. The only way for this process to be “reset” is for the government to become intolerable to the people, causing them to revolt and re-establish a new state so that the process can begin again. This again was recognized in the formation of the United States, Thomas Jefferson wrote in the Declaration of Independence, “whenever any form of government becomes destructive of these ends, it is the right of the people to alter or abolish it, and to institute new government…” The only possible category that can avoid this cycle is that of the voluntary society. So long as all individuals are able to leave and/or form new government-like institutions, then each institution will be forced to act in the common interest since its members will leave, since there is no monopoly or arbitrary exertion of coercion based on geographic boundaries, if the perceived costs of being a “citizen” or member of that institution ever exceed the benefits. All members will be voluntary and their consent to the authority of their chosen institution will be explicit, as opposed to the “implied consent” that existing governments claim to have.

 

Tilly, C. (2005). Regimes and Contention. In T.A. Janoski, A.M. Hicks, & M.A. Schwartz (Eds.), Handbook of Political Sociology: States, Civil Societies, and Globalization (423-440). Cambridge, UK: Cambridge University Press.

Its been over 2000 years since Aristotle provided his insights into all areas of philosophy, including politics, and yet many of his observations are still useful today. One concept that still has value is that of “true forms of government” and perversions of those forms. Aristotle explained that “true forms of government…are those in which the one, or the few, or the many , govern with a view to the common interest; but governments which rule with a view to the private interest, whether of the one, or of the few, or of the many, are perversions.” (Tilly, 2005:424). He also provided three examples of true forms of government and their perverse forms: Monarchy is the rule of one for the common good and tyranny is the perverse form where the king or dictator seeks his own interest to the detriment to the common interests; Aristocracy is the rule of rich benefactors of society while oligarchy is rule by rich exploiters of their lessers; the final example is Constitutional government is the rule of the masses through established law, again for the common good and the perversion, according to Aristotle, is democracy where the masses live parasitic lives exploiting the rich whom they outnumber and replacing established law with arbitrary decrees. (Tilly, 2005: 424) Another category not included by Aristotle that follow the rule by one, few, or many and perversion based on pursuit of common or contra common interests could be voluntary society, the rule by none with members seeking the mutual benefit of one another through market based exchange, and its perversion lawlessness, a dog eat dog world where each member seeks to gain through the coercion of his neighbors. Even with this fourth category this form of categorization is to simple to capture all of the complexities and subtleties of government types, mechanisms, and their various perversions, nor does it seem to recognize the various degrees of perversion between the “true form” and the perverse form. Also, it does not address the major controversy of discerning what is in the “common interest” or who decides what is in the common interest. There are very few, if any, issues that will have unanimous agreement and so each decision pursuing one goal over another will be against some part of the common, and yet they will be obliged to follow regardless due to the nature of the state as being a monopoly of coercive power over the geographic area they reside in.

 

When applying these categories to modern American government, it is necessary to create another category not mentioned earlier. Aristotle mainly addressed government of direct rule, either by one, few, or many, but America is not ruled directly but through representatives. The power holders are not in the polity, per se, but use proxies to exercise their will. The true form of this government would be representative constitutional government, where the representatives act in the, so called, common interest within strict limits of established law and the perversion is corporatism, where the representatives’ actions are detrimental to the public in order to gain favor or wealth from organized interest groups or from wealthy individuals or businesses. Currently, it would seem that American government is closest to this perverse form, corporatism. The masses have very little political participation, usually limited to a portion voting once every 2-4 years, with not further recourse or actions available to them for the remaining duration of time. However, organized interest groups and wealthy members are able to lobby and influence the polity at will and they find ways to use state coercion against the masses and each other to gain a perceived advantage, as opposed to seeking mutually beneficial means to achieve advantage, though perhaps slower or lesser than what is possible to achieve by exploiting others through the state.

 

The very nature of any state is to move towards its perverse form of government. All of the precautions taken during its formation such as federalism, written constitution, division of powers, etc. are simply recognition of this natural degradation and are meant to act as resistance to slow the inevitable process. The only way for this process to be “reset” is for the government to become intolerable to the people, causing them to revolt and re-establish a new state so that the process can begin again. This again was recognized in the formation of the United States, Thomas Jefferson wrote in the Declaration of Independence, “whenever any form of government becomes destructive of these ends, it is the right of the people to alter or abolish it, and to institute new government…” The only possible category that can avoid this cycle is that of the voluntary society. So long as all individuals are able to leave and/or form new government-like institutions, then each institution will be forced to act in the common interest since its members will leave, since there is no monopoly or arbitrary exertion of coercion based on geographic boundaries, if the perceived costs of being a “citizen” or member of that institution ever exceed the benefits. All members will be voluntary and their consent to the authority of their chosen institution will be explicit, as opposed to the “implied consent” that existing governments claim to have.

 

Tilly, C. (2005). Regimes and Contention. In T.A. Janoski, A.M. Hicks, & M.A. Schwartz (Eds.), Handbook of Political Sociology: States, Civil Societies, and Globalization (423-440). Cambridge, UK: Cambridge University Press.

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Filed under Philosophy, Politics
Apr 6, 2011

Resources of Power: Fear, Love, and Dependency/ Machiavelli’s Prince and Modern Politics

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Throughout chapters XV and XVII of “The Prince” by Machiavelli, it becomes apparent that power is the goal, to include increasing and maintaining power, as opposed to a means to achieve other goals.  Also, it is necessary to view “the prince” as power incarnate, so that what ever benefits the prince benefits the pursuit of power and vice versa.  This helps to make sense of troubling “principles” advocated by Machiavelli, such as the prince “need not make himself uneasy at incurring reproach for those vices without which the state can only be saved with difficulty, for if everything is considered carefully, it will be found that something which looks like virtue, if followed, would be his ruin; whilst something else, which looks like vice, yet followed brings him security and prosperity.”  (Machiavelli, Chptr. 15)  If power is the only true goal for the prince then it would follow that anything that advanced that goal would be virtuous and that other moral guidelines or cultural views would be moot, and adhering to them would, according to this view, be considered a vice to the degree that they detracted from the goal of increasing or maintaining power.  In chapter XVII of “The Prince”, Machiavelli continues with another principle, that should be troubling for those not in power, that it “is much safer to be feared than loved” since “men loving according to their own will and fearing according to that of the prince” it would be wise for a prince to “establish himself on that which is in his own control” and not rely on that which is in the control of others.  The only limit Machiavelli puts on the prince in regard to using fear to establish his is power, is to “avoid hatred” as that may make “the prince” intolerable and lead to his ouster.

Piven and Cloward, in their essay “Rule Making, Rule Breaking, and Power”, tend to classify power as a means to achieving and individual’s or group’s goals through a series of “zero-sum” contests.  They cite Max Weber’s definition: “power is understood as ‘the chance of a man or a number of men to realize their own will in a social action even against the resistance of others who are participating in the action” (Janoski, 2005, 35) and that of R.H. Tawney: ( power may be defined as the capacity of an individual, or group of individual, to modify the conduct of other individuals or groups in the manner which he desires, and to prevent his own conduct being modified in the manner in which he does not.” (Janoski, 2005, 35)  Their view of power posits that most, if not all, human interaction involves one dominant party who exploits the dependency of another party, or uses force as their source of power, in order to gain at their expense.  The authors seem to conclude, as a result of this view, that seeking power to exercise over those who have much few resources to exert influence through “social interdependence” is a vice, or social harm and that power should be diffused so that the degree that one party gains at the expense of another party is minimized as much as possible.  However, this is not to say that individuals or groups who did not wish to act socially responsible could not use Machiavelli’s principles to gain power and increase their exploiter status, it just is not the position advocated by Piven and Cloward.

When Machiavelli wrote “The Prince,” it was with monarchy in mind.  The advent of the modern state, new tools and resources of power have been developed and some of the principles found in “The Prince” have become outdated.  However, several tactics advocated by Machiavelli have been modified and carried over to the modern state.  One of the primary differences, though, is that politicians are not power incarnate since they are mere “caretakers” of the state and the expanse of its sovereignty.  Whereas the King was the state, politicians are seen as representatives, sent to enact their constituent’s wills through the state, or as employees of the state.  This “caretaker” position drastically reduces the incentive to seek “absolute power” or power as a goal in and of itself.  Since politicians are only temporarily in power and can not, necessarily, pass power that they gain to their heirs, they are more focused on using resources of power, or “political capital” accumulated by their predecessors or during their temporary terms to achieve more immediate goals that can increase their actual wealth or that of their heirs.  This divergence from the goal of “the Prince” will definitely have an impact on the strategies they pursue, as they will be more short term and consist of utilizing, or spending power, as opposed to building and maintaining it.

The state, itself, is seen as a more ambiguous and anonymous phenomenon that is supposedly created by the “collective consciousness” or “general will” of the people.  However, as Austrian economist, Ludwig von Mises wrote in his book, “Socialism:”

“All rational action is in the first place individual action. Only the individual thinks. Only the individual reasons. Only the individual acts.”
The modern state has achieved the illusion of dichotomy, being divided into one part consisting of some metaphysical representation of the “general will,” the State, and the other of individuals in the employ of the State , and thus theoretically subordinated to the “general will,” politicians and the bureaucracy.  However, as with anything supernatural or based on superstition, closer examination reveals that there is no real evidence of its existence, no actions that can be directly attributed to it, without use of its supposed proxies, no boundaries the demarcate where its existence begins or ends, or any other measure of reality that can be applied to it.  Instead, objective observation, reveals that the masses are still subjected to the coercive power held by a few elite individuals, who when the curtains are pulled back, like in the Wizard of Oz, are normal men acting in their own self-interest.

This illusion of a dichotomous state allows politicians and the bureaucracy to more easily achieve the ideal means to power, according to Machiavelli, fear and love simultaneously.  The ruling elite, presenting themselves as representatives of the masses, can gain the love of the people by advocating for favors on their behalf, while their losses and necessary fear can be attributed to the State.  This phenomenon is apparent in most polls where the American Public, usually, approves of their own Congressman but holds Congress itself in the lowest regard.  They view the system as working against them, and every favor achieved by their representative as being wrestled from the tight jaws of the fearful State on their behalf.  If the public ever realized that the individuals and the State are one and the same the illusion would crumble.

The members of the State are also to achieve both love and fear through dependency, or the threat of withdrawing “love.”  Authoritarian parenting uses this technique to control children.  Children are made to believe that their parents’ love is conditional and can be lost if they do or do not act a certain way.  This method of control tends to be more effective at controlling behavior than fear of corporal punishment or overt reward/punishment schemes.  The State has realized the potential of utilizing this technique on its populations and so attempts to increase dependency and remove competitors of services it provides so that the threat of losing government services has that much more impact on controlling its citizens.  This also fits with Piven and Cloward’s theory of interdependence as a power resource, where the State attempts to raise the dependence of other parties while at the same time reducing its dependence on them so that it can more effectively exploit them with little resistance.

The reason for all the manipulation and illusion to maintain and increase power is because the ruling elite realize that their power truly comes from the people they rule and the legitimacy they grant them and that if the masses realized this, if they are not controlled by sufficient fear or love of the current power holders, they could take that power back at any time.  French philosopher, Etienne de la Boetie, in “The Politics of Obedience: The Discourse of Voluntary Servitude”, explained it best:

He who thus domineers over [you]…has indeed nothing more than the power that you confer upon him to destroy you. Where has he acquired enough eyes to spy upon you, if you do not provide them yourselves?  How can he have so many arms to beat you with, if he does not borrow them from you?  The feet that trample down your cities, where does he get them if they are not your own?  How does he have any power over you except through you? How would he dare assail you if had no cooperation from you?…..you weaken yourselves in order to make him the stronger and mightier to hold you in check. (1975, 52)

While Machiavelli’s principles may have been meant for monarchs, the techniques chosen by the modern holders of power should be no less unsettling and if Piven and Cloward are correct that the exercise of power leads to “zero-sum” contests with one party as the exploiter and the other the exploited, then we should recognize that the State is, or strives to be, always the exploiter and we should not give it a pass or make an exception for it in our agreed upon principles and ideas.

Works Cited:
Boetie, E. (1975). The Politics of Obedience: The Discourse of Voluntary Servitude. New York: Free Life Editions.
Machiavelli, N. (1916). The Prince. The Macmillan Company.
Mises, L. (1982). Socialism: An Economic and Sociological Analysis. Indianapolis, IN: Liberty Fund Inc.
Piven,F.F., & Cloward, R.A. (2005). Rule Making, Rule Breaking, and Power. In T.A. Janoski, A.M. Hicks, & M.A. Schwartz (Eds.), Handbook of Political Sociology: States, Civil Societies, and Globalization (33-53). Cambridge, UK: Cambridge University Press.

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Apr 2, 2011

Corporate Power and Democracy

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Since the American Revolution, Democracy has become the dominant political system in Western and large capitalist societies.  The driving factor is that democratic governments are thought to derive their legitimacy from popular sovereignty, as opposed to divine sovereignty.  However, the states and their people recognized the impracticality of actual direct democracy and opted instead for republicanism, or representative government.  Since this form of governance is still based in popular sovereignty and the theoretical rule “of,” “by,” and “for” the people, it is still often referred to as “democracy.”  As democracy has been observed over time, political scientists have redefined it”as a system whereby elites competed for the votes of a largely passive electorate.”  This position became known as “elite pluralism,” and its success rests on the idea that “as long as one group of elites was without power, its members could appeal to the public to replace the incumbents with those presumably more favorable to their interests.” (Mizruchi and Bey, 2005,311)  Since the success of this type of democracy requires competition, or division, of the elites, many detractors of democracy in capitalist states claim that the elites are, in fact, unified due to “common interests in maintaining their privileges” as well as “common socialization experiences (including attendance at elite prep schools and universities), common membership in social clubs and policy-making organizations, and social and kinship ties.” (Mizruchi and Bey, 2005,311)  Many also believe that these unifying traits are not only shared by the political elites, that are symptomatic of representative democracy, but also in the capitalist class.  If this were to be proved the case, then the elites meet the full requirements for a group to be powerful, “resources and unity,” and would threaten the effectiveness or success of democracy.  The extent that this threat, based on the possible causes and perceived “degree of business unity” the topic of four contemporary theories regarding corporate power and democracy, highlighted by Mark S. Mizruchi and Deborah M. Bey and discussed below. (Mizruchi and Bey, 2005,312)

The “Elite Theory,” by G. William Domhoff, posited “that a power elite, drawn from the social upper class, corporate leaders, and officials of policy-making organizations, collectively dominates American politics,” and that all of the unifying traits mentioned earlier are, in fact, present.  However, despite many revisions and the sophistication in Domhoff’s theories, he points to actions by the state that are opposed by business and those that they advocate as both being in the interest of business, and neither, according to Domhoff, detract from the “view that the elite perpetually dominates” and “thus raises questions about nonfalsifiability” and the overall legitimacy of this theory.(Mizruchi and Bey, 2005, 323)

The next two theories are best understood in the context of the “Berle and Means Thesis,” which basically states that “because of the large and increasing size of corporations, and because of the consequent difficulty of maintaining substantial family holdings in individual firms, stock holdings in large U.S. corporations gradually dispersed.  The consequence of this dispersal…was the usurpation..of power by the firm’s managers.  These managers…were viewed as a self-perpetuating oligarchy, unaccountable to the owners who had elected them.” (Mizruchi and Bey, 2005, 312)  With this in mind, Michael Useem, found that since the “largest single block of stockholders by the 1990s was not individuals,…but institutional investors,” they were the dominant power holders in business.(Mizruchi and Bey, 2005, 324)  Useem, however, made no claim to their unity and so his theory mostly contradicts that the managers are unaccountable, at least in recent decades, due to the influence of institutional investors.  The third theory, proposed by Gerald Davis, also attempts to negate the Berle and Means thesis by claiming that it makes no difference if a corporation is owner or manager run since they both must conform to “pressure from an amorphous, but no less real, source,” the “capital market.” (Mizruchi and Bey, 2005, 324-325)  The elites are “compelled to vow allegiance to ‘shareholder value’” and their “structures and policies are driven by anticipations of their economic consequences.” (Mizruchi and Bey, 2005, 325)  However, while Davis tries to use this observation to show a unity of purpose and political domination by the anonymous members of the “capital market,” but the very nature of this group, where no individuals, elite or otherwise, or their interests can be specified indicates that Davis’s theory simply creates a generalization so broad that almost anyone could be a part of it.  If that is the case, then the dispersal and division of interests that would exist in the “capital market” would actually be a boon to democracy if they were the truly the dominating force.

The fourth theory is conceptually different than the previous theories due to its international scale.  “Several scholars have suggested that with the increasing globalization of economic activity” and “the extent to which corporations have the ability to move capital outside their borders” giving “them leverage over their host states…national governments have lost the ability to regulate their own business communities.” (Mizruchi and Bey, 2005, 329)  This would certainly appear to diminish the power of national governments, but it does not necessarily mean an increase in corporate power, or the general business community, since that would still require unity in effort, which faces all of the difficulties present in the earlier theories.

I would like to close with my theory on corporate power and politics.  The first part explains why corporate interests seem to be advanced, overall, in spite of real conflicting interests within the corporate community. The state holds a monopoly over “legal” coercion and this is its only real service it has to offer on the marketplace.  The “passive electorate” is not as concerned, or as dependent a customer, of government coercion; whereas, corporations are interested in using state coercion to prevent or reduce competition and to advance its interests.  So overall, the government responds to the market for coercion, acting in the interests of various corporate entities who are most able to afford it, in means of resources and influence to protect the political elites’ privileges.  This does not require unity from the various corporate interests and the inconsistency of the policies enforced through state coercion seem to support that there is no need for unity from the corporate community in order for the state to act generally in their favor.  This on its own is destructive to society and damaging to the democratic ideal but does not cause a complete collapse of they system because of the lack of unity.  However, this trend may very likely lead to the second part of this theory which will lead to the collapse of democracy.  As the state continues to use coercion to choose the “winners” and “losers”, whether among the corporate community or between the corporate community and the rest of the electorate, there will be fewer and fewer parties competing or seeking the state’s coercive service.  Common sense dictates that it is easier for a few to coalesce, than the many, and so this increased centralization of both political and corporate elites will make it much more likely that complete unity, and the destruction of democracy will occur.

Mizruchi, M.S., & Bey, D.M. (2005). Rule Making, Rule Breaking, and Power. In T.A. Janoski, A.M. Hicks, & M.A. Schwartz (Eds.), Handbook of Political Sociology: States, Civil Societies, and Globalization (310-330). Cambridge, UK: Cambridge University Press.

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Filed under Economics, Philosophy, Politics
Mar 30, 2011

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