Economics Questions

Re: Anarcho-capitalism dissolving into feudalism?

s burgess — Sat, 22 Sep 2012 12:32:02 GMT

heres a roman history podcast featuring the early beginnings of feudalism at least the beginning of serfdom . http://traffic.libsyn.com/historyofrome/127-_Commanding_The_Economy.mp3

Re: Anarcho-capitalism dissolving into feudalism?

National Acrobat — Fri, 21 Sep 2012 02:24:41 GMT

FlyingAxe:
So, what you're saying is that for market relations to work, certain social conditions must be in place, and those conditions won't just fall from the sky. Fair enough.

But then you say that those conditions must be provided by an "institutional arrangement". Here is the problem as I see it:

1. Institutional arrangements themselves need a set of social conditions in order to work. Why do you assume that those conditions will fall from the sky? As we can see from comparative history, they don't, despite rulers' or founders' (or certain intellectual classes') best intentions. As we all know, USSR Constitution was in many cases identical to the US Constitution. And, the US Constitution of today is in many cases identical to the US Constitution of 1800. Yet, in terms of social arrangements, especially preservation of freedom, the three societies (USSR, US today, and US in 1800) are very different.

I'm not assuming that they fall from the sky. An institutional arrangement does not necessarily mean a formal institutional mechanism, like a constitution. It can mean, as you say below a "form of understanding" which is what I meant when I said institutional arrangement above. Perhaps, institutional structure would have been less confusing.

2. I would say that those precise social conditions you're talking about must already exist in a form of understanding between people of how they want to live. The institutional arrangements are merely a mechanism for solidifying and codifying them. And constitutional republic as it turns out is not a very solid way of doing that. Perhaps a system of independently existing libertarian legal authorities is a better system. Which brings me to my next point:

That's basically what I meant. I think we're in agreement here.

3. In order for markets to function well, you need paper and ink. Does this mean that there should be a centralized monopoly of paper production? Make the same argument for language (a centralized Ministry of Language), etc.

No.

Re: Anarcho-capitalism dissolving into feudalism?

National Acrobat — Fri, 21 Sep 2012 02:13:32 GMT

Autolykos:
No, I don't want you to do that, because that would just be repeating your bare assertions.

What I want you to do is this:

1. Show reasoning and/or evidence that supports your assertion that market relations require a certain parity of status among the actors within the market.

2. Show reasoning and/or evidence that supports your assertion that this certain parity of status is (necessarily) prior to the market itself.

3. Show reasoning and/or evidence that supports your assertion that market processes cannot establish the shared meanings and common understandings (what do you think these are, by the way?) that make market interactions possible in the first place. This requires you to show reasoning and/or evidence that these shared meanings and common understandings (whatever you think they are) make market interactions possible in the first place.

All theories of the market I'm aware of assume that actors within the market are free and equal. If you know of another that does not I'd be interested to see it.

It's pretty straight forward, though. If I don't recognize you as an individual capable of negotiation and trade, but some type of sub species or savage, market relations between us will not be possible. If I believe I am justified in using violence against you to get out of you what I want and have the ability and will to do it I don't see how you can call that a form of market relations.

For historical examples see serfdom, chattel slavery, colonialism, present day relations between states and citizens. Seems fairly uncontroversial to me.

The only part of this I disagree with is the apparent reification of social relations.

You don't have to link to reification, I'm aware of it. I know people on here have a tendency to link to wikipedia articles of terms they're proud of knowing, but really it's not necessary.

How exactly am I reifying social relations?

Would you say that "walking" is a concept that we use to interpret behavior and would not exist whether we created it or not, thus being purely our own invention?

Yes, walking as we understand it would not exist. People may perform the activity we currently call walking, but it would not be understood as walking and therefore it would not exist.

You're still not grasping the distinction, though. Voluntariness and aggression are not physical acts, they are a class of normative interpretation of an act. So you need the concept of an act AND the concept distinguishing between the types of that act based upon some standard. Voluntariness and aggression are not aspects that are inherent to an act. They are a judgement of the act.

I was treating "meaning" and "definition" as synonyms, as I assumed you were. Apparently you're not. But for you to claim that definition and meaning are (necessarily) different things implies that you think there's an objectively correct meaning for everything. In other words, it implies that you think there's a correct way to understand a set of words outside of any particular social context. Can you prove that?

No it doesn't imply that there's an objectively correct meaning for everything. How does that follow?

Re: Anarcho-capitalism dissolving into feudalism?

David B — Thu, 20 Sep 2012 20:20:49 GMT

Another point, biological systems are actually built to handle boom and bust in a robust fashion. Think about how food shortage/abundance works with fat storage in the body. The excess fuel is stored as fat during the abundant phase, and then that fat is released back and consumed as fuel by the body during shortage phases. The problem is we should be underconsuming and thus saving during boom times and then overconsuming the excess that was saved during the bust times... If we can figure out how to sustainably build that type of natural behavior into our emergent social group norms, then such a society would end up dominating the global economy. But what we cannot be doing, (and government is encouraging) is reinforcing the fragile pattern of overconsuming from the start of the boom right through to the bust. They're doing it again, trying to use consumption measures as measures of economic health and recovery. If they'd focus on savings interest rates rising to encourage it, and the liquidation and revaluation of bad assets, we'd see the consumption recover as a symptom of 1) increased wealth accumulation, 2) correction of overvalued asset prices (on paper), and 3) increased investment and production.

Re: Anarcho-capitalism dissolving into feudalism?

David B — Thu, 20 Sep 2012 18:56:29 GMT

FlyingAxe:
David, so why don't huge corporations fail miserably all the time? I.e., why do Microsoft and Apple continue growing? Is it because of governmental protectionism (which obviously would not exist under anarchy)?

I think this is the exact reason.

I think it's impossible to know how Apple, Microsoft, IBM, etc. would be forced to adapt to a truly anarchic market. They are to some extent categorically different than a Boeing or Northrop Grumman who depend almost exclusively on govt. contracts. But the tech companies do have large govt. contracts, and do to differing extents use patent and copyright law to muscle competitors. I'd guess on principle that the larger the organization the more likely that you find internally decentralized and organic processes (I'm in one such company) OR heavy use of government intervention.

There are ways to build healthy and resilient large organizations, but it involves using internal decentralization, organic processes, local autonomy and responsibility, and to some extent compartmentalization. I'm not an expert on such things, but modern business types do think about and work on these issues. If you're not the biggest player, it can be hard to survive and thrive and grow. If you are the biggest player, you sometimes need to do some grand scale soul searching and perhaps an internal organizational reboot. Witness IBM's story through the 1990s.

We've also seen selloffs, IBM sold off the laptop business to become Lenova, Motorola spun off the cell phone division as it's own company, Motorola Mobility.

The problem that the individual faces in this type of business environment, is that there's a level of chaos and uncertainty. Downsizing, plant closings, re-capitalization, acquisition, etc. can really uproot and dislodge people's lives. It can be emotionally devastating. This is understandable and reasonable response. The natural buffer is to have the equivalent of a layer of fat for the lean times. This would be savings or equity for the individual. Unfortunately, we have individuals being discouraged from saving, low interest rates, ridiculous housing lending practices, Social Programs, etc.

But we've forgotten, and are about to relearn, the lessons of our grandparents and great-grandparents who suffered through the Great Depression. I've heard stories about saving tin-foil, and reusing all kinds of junk in odd and interesting ways just to get by. We can do this, but we've forgotten these lessons. Someone else, has an interesting metacycle theory about economic climates called Kondratieff Wave theory. I don't mean to support it here, but in an interview on Capital Account, a proponent made the point, that basically it takes time for the old people who suffered through the last great contraction, to die off, and the lessons they instilled in the first and second generation (savings and thrift) to die off, and now we are the children who didn't have to save, and we're going to spend and party our way right into a bust...

Lots of complex pieces in play. But I try to keep focusing back on simple basic fundamental principles about how healthy systems work. Connect feedback properly. Save and protect enough to mitigate the negative black swans, while remaining sufficiently agile to take advantage of the positive ones.

Re: Anarcho-capitalism dissolving into feudalism?

FlyingAxe — Thu, 20 Sep 2012 17:50:43 GMT

David, so why don't huge corporations fail miserably all the time? I.e., why do Microsoft and Apple continue growing? Is it because of governmental protectionism (which obviously would not exist under anarchy)?

Re: Anarcho-capitalism dissolving into feudalism?

David B — Thu, 20 Sep 2012 17:02:29 GMT

FlyingAxe:

This question was inspired by the threat on Honduras private cities. Perhaps this question has been asked before...

<snip>

So, someone like Nozick may say: at least under minarchism we have a system with self-imposed restrictions from within the society. But under anarcho-capitalism, economies of scale will lead to feudalism, where huge corporations might be absolute rulers over their land and anyone who lives on it, and existing legal system (funded by these corporations) will recognize overlordship of property owners over their tenants.

I am looking for an economic explanation of why this wouldn't happen (or is unlikely to happen).

<snip>

In a paper titled Too Big to Fail, Hidden Risks, and the Fallacy of Large Institutions, Nassim Taleb argues that costs rise disproportianately as the size of an organization rise. He's basically attacking the idea of economies of scale, and too big to fail.

BTW, if you want to see someone who understands how and where to use statistical analysis, it's Taleb.

A couple quotes:

Naive optimization may lead us to believe in economies of scale that ignores the stochastic structure that results from an aggregation of entities, their associated vulnerabilities and their costs. While companies get larger through mergers and industries become concentrated, based on the premises of “economies of scale” ([Pareto [10], Taleb [14]). This does not take into account the effects of an increase of risks resulting from both “dependence” and the latent risks that beset big and small economic entities equally. For example, the risk of blowups –in fact, under any form of loss or error aversion, and concave execution costs, gains from an increase in size should show a steady improvement in performance, punctuated with large and more losses, with a severe increase in negative skewness [7],[ 9].

However, under a nonlinear loss function, increased exposure to rare and latent events may have the effect of raising the costs of aggregation while giving the impression of benefits – since the costs will be borne during rare, but large-impact events. This result is general. It holds not just for economic systems, but for biological, industrial and mechanical ones as well.

Basically, as you get bigger errors in prediction and rising execution costs disproportionately increase exposure and reduce the ability to mitigate losses.

The point being this centralization optimization meme is best kept on a small scale, when you try to execute and integrate in this fashion at larger and larger scales, it becomes suboptimal, it increases catastrophic risk.

So, to bring it back, I suspect one could actually analyze current state entities in these terms. Over centralized organizations including states, and overgrown, bloated and inefficient organizations are choking innovation, production, and growth. Until we end up with a social backlash against these centralization memes, things will get worse.

Luckily the feedback signals will necessarily lead to the downfall of all such empirical (as in empire) social institutions. Unluckily, they're sufficiently large and interdependent that the dissolution/decentralization process may in fact be catastrophic in many places.

Re: Anarcho-capitalism dissolving into feudalism?

FlyingAxe — Thu, 20 Sep 2012 16:31:29 GMT

National Acrobat:

Market relations require a certain parity of status among the actors within the market. That is, they are held to the same, or roughly similar, de facto standards of practice for ownership, trade, various liberties such as speech and association, and enjoy the same legal protections and privileges. All of this is prior to the market itself. Market processes cannot establish the shared meanings and common understandings that make market interactions possible in the first place.

[...]

This equality must be provided for by some institutional arrangement that produces mutual recognition of the appropriate identities and practices.

So, what you're saying is that for market relations to work, certain social conditions must be in place, and those conditions won't just fall from the sky. Fair enough.

But then you say that those conditions must be provided by an "institutional arrangement". Here is the problem as I see it:

1. Institutional arrangements themselves need a set of social conditions in order to work. Why do you assume that those conditions will fall from the sky? As we can see from comparative history, they don't, despite rulers' or founders' (or certain intellectual classes') best intentions. As we all know, USSR Constitution was in many cases identical to the US Constitution. And, the US Constitution of today is in many cases identical to the US Constitution of 1800. Yet, in terms of social arrangements, especially preservation of freedom, the three societies (USSR, US today, and US in 1800) are very different.

2. I would say that those precise social conditions you're talking about must already exist in a form of understanding between people of how they want to live. The institutional arrangements are merely a mechanism for solidifying and codifying them. And constitutional republic as it turns out is not a very solid way of doing that. Perhaps a system of independently existing libertarian legal authorities is a better system. Which brings me to my next point:

3. In order for markets to function well, you need paper and ink. Does this mean that there should be a centralized monopoly of paper production? Make the same argument for language (a centralized Ministry of Language), etc.

Re: Anarcho-capitalism dissolving into feudalism?

Autolykos — Thu, 20 Sep 2012 14:54:38 GMT

National Acrobat:
What exactly do you find difficult to understand? Or do you just want me to restate what I said with more words?

No, I don't want you to do that, because that would just be repeating your bare assertions.

What I want you to do is this:

1. Show reasoning and/or evidence that supports your assertion that market relations require a certain parity of status among the actors within the market.

2. Show reasoning and/or evidence that supports your assertion that this certain parity of status is (necessarily) prior to the market itself.

3. Show reasoning and/or evidence that supports your assertion that market processes cannot establish the shared meanings and common understandings (what do you think these are, by the way?) that make market interactions possible in the first place. This requires you to show reasoning and/or evidence that these shared meanings and common understandings (whatever you think they are) make market interactions possible in the first place.

National Acrobat:
No. I'd say humans are not inherently socially anything. Social relations are constituted in part by our and others' understanding of ourselves and others. And therefore are not inherent but conventional.

The only part of this I disagree with is the apparent reification of social relations.

National Acrobat:
No they do go away. The concept of a rose refers to a physical object that would exist whether human beings created a category by which to understand it or not. Voluntary and aggressive are concepts that we use to interpret behavior and would not exist whether we created them or not. They are purely our own invention. The concept in this case is the thing. Very different from a rose as I'm sure you can see.

Would you say that "walking" is a concept that we use to interpret behavior and would not exist whether we created it or not, thus being purely our own invention?

National Acrobat:
Also, I am not talking about definitions. A definition does not give a social relation form or even a criterion for evaluation. Definition and meaning are different things. A definition is a set of words, while a meaning is understood. Reading a set of words and understanding something is very different. Understanding also requires a practice of some sort as well.

So I would disagree that the arbitrariness of definitions (which in itself I agree with) and meaning-practice are different things.

I was treating "meaning" and "definition" as synonyms, as I assumed you were. Apparently you're not. But for you to claim that definition and meaning are (necessarily) different things implies that you think there's an objectively correct meaning for everything. In other words, it implies that you think there's a correct way to understand a set of words outside of any particular social context. Can you prove that?

Re: Anarcho-capitalism dissolving into feudalism?

Lady Saiga — Thu, 20 Sep 2012 13:51:04 GMT

I would imagine agricultural areas would be prone to feudal type arrangements, but more urban environments wouldn't be very susceptible. I would guess in urban areas you'd see more mafia types. Regardless, the individual members of those arrangements would be free to change their situation in life. Unlike a medieval peasant, the agricultural worker could go get a job elsewhere without asking permission. And if a small business did not care for the protection being provided by the agency they were paying, they'd be free to change agencies at will.

In other words, so what? If feudal arrangements are economically feasible and socially acceptable for their members, they'll arise. If not, they'll dissolve. Either way, there would be no coercion involved so these systems would not be like the ones you see in history books.

Re: Anarcho-capitalism dissolving into feudalism?

National Acrobat — Thu, 20 Sep 2012 13:48:43 GMT

Autolykos:

Perhaps you'd like to offer an explanation for these bare assertions.

What exactly do you find difficult to understand? Or do you just want me to restate what I said with more words?

Would you say that human beings are inherently socially unequal? If so, why? What reasoning and/or evidence do you have to support that claim?

No. I'd say humans are not inherently socially anything. Social relations are constituted in part by our and others' understanding of ourselves and others. And therefore are not inherent but conventional.

I think another way of putting this is that the definitions of "voluntary" and "aggressive" are arbitrary - as are all definitions, inherently. So yes, people are free to disagree with particular (arbitrary) definitions. However, that doesn't mean the underlying concepts go away. A rose by any other name would smell as sweet.

No they do go away. The concept of a rose refers to a physical object that would exist whether human beings created a category by which to understand it or not. Voluntary and aggressive are concepts that we use to interpret behavior and would not exist whether we created them or not. They are purely our own invention. The concept in this case is the thing. Very different from a rose as I'm sure you can see.

Also, I am not talking about definitions. A definition does not give a social relation form or even a criterion for evaluation. Definition and meaning are different things. A definition is a set of words, while a meaning is understood. Reading a set of words and understanding something is very different. Understanding also requires a practice of some sort as well.

So I would disagree that the arbitrariness of definitions (which in itself I agree with) and meaning-practice are different things.

Re: Anarcho-capitalism dissolving into feudalism?

Autolykos — Thu, 20 Sep 2012 13:25:40 GMT

National Acrobat:
Market relations require a certain parity of status among the actors within the market. That is, they are held to the same, or roughly similar, de facto standards of practice for ownership, trade, various liberties such as speech and association, and enjoy the same legal protections and privileges. All of this is prior to the market itself. Market processes cannot establish the shared meanings and common understandings that make market interactions possible in the first place.

Perhaps you'd like to offer an explanation for these bare assertions.

National Acrobat:
The problem that anarcho-capitalism has, and most other liberal theories have, is that it confuses an approximate biological equality for an equality of social-legal status. Human beings are not inherently socially equal. This equality must be provided for by some institutional arrangement that produces mutual recognition of the appropriate identities and practices.

Would you say that human beings are inherently socially unequal? If so, why? What reasoning and/or evidence do you have to support that claim?

National Acrobat:
Anarcho-capitalist theorists, as far as I know, have not proposed a theory of how these prior meaning-practices are established and instead have focused more on the analytic task of devising internally consistent rule systems. Unfortunately the premises of voluntaryism and non-initiation of aggression can be applied to just about any political theory. The voluntariness of an interaction and the aggressive or defensive character of violence are not embedded, objective facts of a particular act, but are theory laden interpretations of behavior that are dependent upon certain understandings of the status of the individuals involved and their legitimate holdings. A different understanding can result in a different interpretation and therefore what constitutes aggression and voluntariness is not constant but dynamic, contingent upon the given meaning-practice of a social group.

I think another way of putting this is that the definitions of "voluntary" and "aggressive" are arbitrary - as are all definitions, inherently. So yes, people are free to disagree with particular (arbitrary) definitions. However, that doesn't mean the underlying concepts go away. A rose by any other name would smell as sweet.

Re: Anarcho-capitalism dissolving into feudalism?

National Acrobat — Thu, 20 Sep 2012 12:44:19 GMT

Market relations require a certain parity of status among the actors within the market. That is, they are held to the same, or roughly similar, de facto standards of practice for ownership, trade, various liberties such as speech and association, and enjoy the same legal protections and privileges. All of this is prior to the market itself. Market processes cannot establish the shared meanings and common understandings that make market interactions possible in the first place.

The problem that anarcho-capitalism has, and most other liberal theories have, is that it confuses an approximate biological equality for an equality of social-legal status. Human beings are not inherently socially equal. This equality must be provided for by some institutional arrangement that produces mutual recognition of the appropriate identities and practices.

Anarcho-capitalist theorists, as far as I know, have not proposed a theory of how these prior meaning-practices are established and instead have focused more on the analytic task of devising internally consistent rule systems. Unfortunately the premises of voluntaryism and non-initiation of aggression can be applied to just about any political theory. The voluntariness of an interaction and the aggressive or defensive character of violence are not embedded, objective facts of a particular act, but are theory laden interpretations of behavior that are dependent upon certain understandings of the status of the individuals involved and their legitimate holdings. A different understanding can result in a different interpretation and therefore what constitutes aggression and voluntariness is not constant but dynamic, contingent upon the given meaning-practice of a social group.

The best that anarcho-capitalist theory has establish as yet is some form of evolutionary competition, which a feudalistic social organization is most definitely a possibility.

Re: Anarcho-capitalism dissolving into feudalism?

gotlucky — Thu, 20 Sep 2012 04:24:52 GMT

Oh I know, I'm just saying I think that some people do watch his videos even when he just inserts them with little comment.

Re: Anarcho-capitalism dissolving into feudalism?

Jargon — Thu, 20 Sep 2012 04:19:15 GMT

@gotlucky - I don't doubt that his videos are well-made and well-watched, nor is it my intention to diminish them.