How Bucky Trumps Marx
Hello Prof. Richard Epstein,
My thanks once again for your response:
"As to Buckminster, that is a point that was made by Marx in the 1844 essays on alienation of man from the means of production. I have to say that there are some people for whom it is true, but for most the question is really one of the division of labor. I don't like to menace others by working with my hands. And others like to run busineses, and still others to do other things. Let the division of labor sort us out and the level of frustration will fall under control."
RAE
And, thanks for the reference to your Cato piece (and nice picture!). I found most promising your comment that,
"...efforts to stop political action won’t do much good unless and until the rules of the game are so altered such that politicians have little to sell or little to threaten."
This is precisely the critical reason why we need income guarantees, which have the effect of changing the rules of the game to liberate the population from the control of the those who control capital, thereby returning politicians to the genuine work of making governing decisions, not deciding who gets what (which is the job of the market economy), while allowing individuals to make the important choices about their lives without economic coercion.
Such a statement can only make sense in light of the incredible difference ... the chasm ... separating the thinking of Karl Marx in 1844 and Buckminster Fuller in 1963. Marx was speculating on the possibilities of an industrial process in its infancy, while Fuller reports scientifically on the results, on the real impact industrialization and technical development through three World Wars has had on human development and the global economy.
Marx may well have intuited the crucial issue that would face humanity when industrialization had advanced 150 years, but this doesn't make Fuller a Marxist. Fuller has simply reported that industrialization, the application of science to economic production, has succeeded so incredibly, that our real problem is that people cannot conceive of how different the economics has become. (For example, the only division of labor that has any meaning for the future is between human and machine, but of course, this is merely to state a conclusion, not the proof, which Fuller has provided, for example, in _Critical Path_ or _Grunch of Giants_).
An example Fuller gives of the impact of science upon our understanding of the world is the fact that when he was a young man, astronomers discovered the first galaxy. By the 60s, over 200 billion galaxys had been discovered. Human know-how has advanced comparably in every field where science operates, especially where real benefits accrue to those funding the science, i.e., industry.
If Bucky is credible, then what we are dealing with in the recent financial collapse is not a short-term policy debacle, but the emergence of the consequences of systemic failure ... the failure of our economic system to handle the transition from Newton's static world-view to Einstein's "everything's in motion" relativity. Or, what's more relevant to the economy, the transition from a world of scarcity born of human ignorance of how nature's world works, to a world of abundance created by ever increasing human know-how using the finite resources of the planet with ever increasing efficiency, so that material and energy resources available to humans is now approximately unlimited.
The important point here is that when Karl Marx in 1844 speculated on the possibility of industrialized mankind reaching the point where it would be possible "to make the world work for everyone", those speculations were hazy visions 150 years thence. Today, that point in human evolution was crossed 40 years ago! How many people realize this??? More importantly, what are the consequences of people not coming to this realization? Fuller emphasized that science-guided industry has been operating full throttle in the approximately 100% invisible realm of Einsteinian physics, while most humans still operate under Newton's rules, thinking that the sun "rises and sets" and apples fall "down" (while in REALITY the sun is periodically eclipsed by the earth rotating on its axis, and apples fall "in" toward the center of earth's mass, because there is no "up" or "down" in Universe).
This is how Fuller speaks, but his point hasn't been appreciated. The roughly 10 million who have lost their income from work since the beginning of the economic meltdown in 2008 want their jobs back. But where do jobs come from? If they come from business & industry, then they are grudgingly created, because labor is a cost of doing business, and business attempts to minimize costs and maximize profit, and with increasingly affordable automation, human-labor isn't cost effective. On the other hand, if jobs are created by government, then how efficient is the bureaucratic process of creating jobs ... not to mention fairness of job creation, and the potential for corruption when politicians are empowered to choose which industries get funds for job creation, and which bureaucracies get to manage the jobs, say, in education or the postal service?
In other words, it's too much to ask for a job. If the government is to be responsible for ensuring that jobs are available, then it is much more efficient for government to directly supply incomes and leave the work to be done by those who can do it most efficiently, the industrialized corporations.
Which brings us to the key to the puzzle. The corporations can only be successful in a market economy if they can operate at a sufficiently large scale to realize the benefits of mass production. (Fuller describes the process by which the hundreds of automobile manufacturers at the beginning of last century were reduced to the small handful which survived by realizing that at least 135,000 cars had to be produced and sold in order to capitalize on the economies of scale necessary to provide an sufficiently affordable vehicle.) In short, corporate industry needs lots of consumers to succeed. It can't do without the consumers, but it can do without the workers, because it can automate the work, but it cannot automate the purchasing of its products. The government, however, can make sure that everyone has a certain amount of purchasing power. And this is the most efficient way for government to "intervene" in the economic system, by regulating aggregate purchasing power, not employment. Moreover, since a Guaranteed Income program can be designed to offer the same options to everyone, it meets the criteria that "government should do nothing for anyone that it is not willing to do for everone." You simply choose your own tax bracket each year: either (1) pay a flat 25% on your income, or (2) pay a flat 50% tax on any income you have other than a $2,000/month guaranteed income, i.e., a negative income-tax payment, also called a tax credit.
But now for the ultimate irony. This solution is so exquisitely efficient, because it absolutely minimizes the role of government. No more bureaucracies to administer the Health, Education & Welfare of the society ... all done with simple, automated transfers of funds. No further entitlement programs, other than the Guaranteed Income, set not to perpetuate poverty, but to make sure that everyone has at least the "average" US income, with funds for discretionary spending, providing markets for corporate production. The poor benefit directly. Those currently on assistance or entitlement from the government all do better under the Guaranteed Income, allowing for the dismantling of Social Security, Welfare, Disability Insurance, Unemployment Insurance, Student Loans, etc. The millions of displaced former bureaucrats and ancillary workers all have the cushion of an "average" income until they find or create work for themselves in the marketplace. And finally, the entrepreneurs, the professionals, and anyone with annual earnings over $100,000 all get the benefit of a flat tax rate at 25%. The corporations are not eligible for income guarantees, and their flat tax rate might be set slightly higher, say 30%, but they and their shareholders all realize the benefit of having every citizen empowered with discretionary funds.
In short, it is a win/win situation for all (except for those who insist on reaping the windfall profits of corruption, and they should be in jail anyway). Approximately everyone benefits from this solution. So why is no one talking about it? Because of a concept called Moral Hazard. Because with Newtonian logic people have become convinced that poverty results from people making bad choices, and that society must allow those people to suffer the consequences of their mistakes in order to learn from them and so "improve their characters". And the irony is that, in a display of true heroism, Secretary of the Treasury Henry Paulson & Fed Chairman Ben Bernanke just proved that Moral Hazard, in the context of global economics, does not apply.
Suddenly a Guaranteed Income is possible.
My thanks once again for your response:
"As to Buckminster, that is a point that was made by Marx in the 1844 essays on alienation of man from the means of production. I have to say that there are some people for whom it is true, but for most the question is really one of the division of labor. I don't like to menace others by working with my hands. And others like to run busineses, and still others to do other things. Let the division of labor sort us out and the level of frustration will fall under control."
RAE
And, thanks for the reference to your Cato piece (and nice picture!). I found most promising your comment that,
"...efforts to stop political action won’t do much good unless and until the rules of the game are so altered such that politicians have little to sell or little to threaten."
This is precisely the critical reason why we need income guarantees, which have the effect of changing the rules of the game to liberate the population from the control of the those who control capital, thereby returning politicians to the genuine work of making governing decisions, not deciding who gets what (which is the job of the market economy), while allowing individuals to make the important choices about their lives without economic coercion.
Such a statement can only make sense in light of the incredible difference ... the chasm ... separating the thinking of Karl Marx in 1844 and Buckminster Fuller in 1963. Marx was speculating on the possibilities of an industrial process in its infancy, while Fuller reports scientifically on the results, on the real impact industrialization and technical development through three World Wars has had on human development and the global economy.
Marx may well have intuited the crucial issue that would face humanity when industrialization had advanced 150 years, but this doesn't make Fuller a Marxist. Fuller has simply reported that industrialization, the application of science to economic production, has succeeded so incredibly, that our real problem is that people cannot conceive of how different the economics has become. (For example, the only division of labor that has any meaning for the future is between human and machine, but of course, this is merely to state a conclusion, not the proof, which Fuller has provided, for example, in _Critical Path_ or _Grunch of Giants_).
An example Fuller gives of the impact of science upon our understanding of the world is the fact that when he was a young man, astronomers discovered the first galaxy. By the 60s, over 200 billion galaxys had been discovered. Human know-how has advanced comparably in every field where science operates, especially where real benefits accrue to those funding the science, i.e., industry.
If Bucky is credible, then what we are dealing with in the recent financial collapse is not a short-term policy debacle, but the emergence of the consequences of systemic failure ... the failure of our economic system to handle the transition from Newton's static world-view to Einstein's "everything's in motion" relativity. Or, what's more relevant to the economy, the transition from a world of scarcity born of human ignorance of how nature's world works, to a world of abundance created by ever increasing human know-how using the finite resources of the planet with ever increasing efficiency, so that material and energy resources available to humans is now approximately unlimited.
The important point here is that when Karl Marx in 1844 speculated on the possibility of industrialized mankind reaching the point where it would be possible "to make the world work for everyone", those speculations were hazy visions 150 years thence. Today, that point in human evolution was crossed 40 years ago! How many people realize this??? More importantly, what are the consequences of people not coming to this realization? Fuller emphasized that science-guided industry has been operating full throttle in the approximately 100% invisible realm of Einsteinian physics, while most humans still operate under Newton's rules, thinking that the sun "rises and sets" and apples fall "down" (while in REALITY the sun is periodically eclipsed by the earth rotating on its axis, and apples fall "in" toward the center of earth's mass, because there is no "up" or "down" in Universe).
This is how Fuller speaks, but his point hasn't been appreciated. The roughly 10 million who have lost their income from work since the beginning of the economic meltdown in 2008 want their jobs back. But where do jobs come from? If they come from business & industry, then they are grudgingly created, because labor is a cost of doing business, and business attempts to minimize costs and maximize profit, and with increasingly affordable automation, human-labor isn't cost effective. On the other hand, if jobs are created by government, then how efficient is the bureaucratic process of creating jobs ... not to mention fairness of job creation, and the potential for corruption when politicians are empowered to choose which industries get funds for job creation, and which bureaucracies get to manage the jobs, say, in education or the postal service?
In other words, it's too much to ask for a job. If the government is to be responsible for ensuring that jobs are available, then it is much more efficient for government to directly supply incomes and leave the work to be done by those who can do it most efficiently, the industrialized corporations.
Which brings us to the key to the puzzle. The corporations can only be successful in a market economy if they can operate at a sufficiently large scale to realize the benefits of mass production. (Fuller describes the process by which the hundreds of automobile manufacturers at the beginning of last century were reduced to the small handful which survived by realizing that at least 135,000 cars had to be produced and sold in order to capitalize on the economies of scale necessary to provide an sufficiently affordable vehicle.) In short, corporate industry needs lots of consumers to succeed. It can't do without the consumers, but it can do without the workers, because it can automate the work, but it cannot automate the purchasing of its products. The government, however, can make sure that everyone has a certain amount of purchasing power. And this is the most efficient way for government to "intervene" in the economic system, by regulating aggregate purchasing power, not employment. Moreover, since a Guaranteed Income program can be designed to offer the same options to everyone, it meets the criteria that "government should do nothing for anyone that it is not willing to do for everone." You simply choose your own tax bracket each year: either (1) pay a flat 25% on your income, or (2) pay a flat 50% tax on any income you have other than a $2,000/month guaranteed income, i.e., a negative income-tax payment, also called a tax credit.
But now for the ultimate irony. This solution is so exquisitely efficient, because it absolutely minimizes the role of government. No more bureaucracies to administer the Health, Education & Welfare of the society ... all done with simple, automated transfers of funds. No further entitlement programs, other than the Guaranteed Income, set not to perpetuate poverty, but to make sure that everyone has at least the "average" US income, with funds for discretionary spending, providing markets for corporate production. The poor benefit directly. Those currently on assistance or entitlement from the government all do better under the Guaranteed Income, allowing for the dismantling of Social Security, Welfare, Disability Insurance, Unemployment Insurance, Student Loans, etc. The millions of displaced former bureaucrats and ancillary workers all have the cushion of an "average" income until they find or create work for themselves in the marketplace. And finally, the entrepreneurs, the professionals, and anyone with annual earnings over $100,000 all get the benefit of a flat tax rate at 25%. The corporations are not eligible for income guarantees, and their flat tax rate might be set slightly higher, say 30%, but they and their shareholders all realize the benefit of having every citizen empowered with discretionary funds.
In short, it is a win/win situation for all (except for those who insist on reaping the windfall profits of corruption, and they should be in jail anyway). Approximately everyone benefits from this solution. So why is no one talking about it? Because of a concept called Moral Hazard. Because with Newtonian logic people have become convinced that poverty results from people making bad choices, and that society must allow those people to suffer the consequences of their mistakes in order to learn from them and so "improve their characters". And the irony is that, in a display of true heroism, Secretary of the Treasury Henry Paulson & Fed Chairman Ben Bernanke just proved that Moral Hazard, in the context of global economics, does not apply.
Suddenly a Guaranteed Income is possible.
posted by Loren Of Lorien | 2:05 AM
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