A Look at the Market
System of Economics
In 1953, Robert L.
Heilbroner published The Worldly Philosophers . Its second chapter
makes plain the changes that had to take place in society in order for the
market system of economics to establish itself. This chapter should be required
reading, for it exhibits not only the false principles upon which the market
system is founded, but the immediate and disastrous consequences it has had on
societyconsequences that continue to plague humanity today.
The market system's
foundation is relatively simple: Mankind is essentially acquisitive, human
beings, when left to their own devices, do what provides them with the
best monetary advantages, and as a result, society is enriched. Not only
are all three clauses of this foundation false, the market system also assumes
the preposterous belief that workers engage in a bargaining process in which
they sell their services to the highest bidder. Very few workers are ever given
the opportunity to engage in such bargaining unless they are unionized, and the
assault on unions has been long going and continuous.
Furthermore, mankind
is not essentially acquisitive (read greedy). Heilbroner writes, "Not only is
the notion of gain for gains sake foreign to a large portion of the world's
population today, but it has been conspicuous by its absence over most of
recorded history." Even anecdotal evidence demonstrates the falsity of this
notion. Certainly human beings seek to acquire things, but only a few
consistently do what is best to maximize their monetary statuses. Most people
adopt ways of earning a living that never display the promise of wealth, and in
fact, it is these people that perform the tasks that make society possible.
Artists, musicians, teachers, policemen, sales clerks, nurses, manual laborers,
maintenance workers, not to mention refuse collectors, are just a few of the
many necessary occupations people engage in without any promise of
wealth.
Up until the
fifteenth century, covetous people were society's outcasts. Just recall what the
Bible claims Jesus said about rich men. And greed was condemned as one of the
seven cardinal sins. So gain, covetousness, and greed were and are not the
primary motivating forces for the vast majority of human beings.
How then did the
market system attain its status? Heilbroner cites three basic changes that took
place over many centuries and culminated in the sixteenth century: the rise of
nation states, the decay of religious spirit, and social changes such as the
founding of towns, the development of roads, and technical progress. And it is
notable that Adam Smith's magnum opus, the bible of the market system, is
entitled The Wealth of Nations.
But a nation's
wealth does not ensure the prosperity of its people, and by the end of the
sixteenth century, Queen Elizabeth lamented that Paupers are everywhere, because
just one century earlier, peasant proprietors tilled their own land and made up
the largest body of independent, free, and prosperous citizens in the world. And
in 1718 the world's first great speculative fraud occurred in France. Fraud and
pauperism are prevalent consequences of the market system even today. The
world's poor are an ever growing problem, the American War on Poverty has died a
slow and painful death, and fraud in the business community has reach epidemic
proportions. And Heilbroner himself writes that "The new philosophy brought with
it a new social problem: how to keep the poor poor." Keeping the poor poor is as
much a consequence of the market system as speculation is.
It is also somewhat
ironical that the market system came into existence in the part of the world
that was then often called Christendom, especially since Christendom considered
greed to be one of the seven deadly sins. This, I suppose, is what Heilbroner is
referring to as the decay of religious spirit. As a matter of fact, the market
system has converted the seven deadly sins into the seven virtues to live by and
has, thereby, contributed greatly to what many feel is the moral decline of
Western civilization.
There is also much
confusion about just exactly the goal of the market system is. Heilbroner writes
that "After the Wealth of Nations, men began to see the world about themselves
in new eyes; they saw how the tasks they did fitted into the whole of society,
and they saw that society as a whole was proceeding at a majestic pace toward a
distant but clearly visible goal."
But this is hyperbole at best. Few people then and even now, even among
trained economists have read The Wealth of Nations cover to cover. And
to those of us who have, it is not obvious that our current political economy
instantiates it. So what is the market systems goal? Is it (1) the nation's
wealth, (2) the individual person's accumulation of wealth, or (3) the expansion
of commerce?
Mercantilism was
also a sixteenth and seventeenth century economic philosophy. It held that gold
and other precious metals was the motivation for and the proper object of all
mundane affairs. But one can take the same statement and replace the words gold
and other precious metals with the word money, and that statement describes
current mercantile activities better that the mercantilist credo does.
That money is the sole motivation for and the proper object of all
mundane affairs describes the market system to a tee.
Supporters of the
market system always champion its contributions to the material welfare of
society, citing these as reason enough for its promotion and expansion. However,
this view holds up only because the positive contributions of the market system
are easy to identify and count, while the deleterious consequences are not, and
so we tend to view them as isolated events. But poverty and fraud are far more
ubiquitous that we like to admit, and if we could sum up their costs and
subtract them from the benefits of the market system, I doubt that the result
would be positive.
Basing
an economic system on the wealth of nations was perhaps natural at the time, but
it was misguided. What the world needs is an economic system based on the
promotion of the prosperity of people. Unfortunately the market system has over
the last three centuries become the new creed, and creeds are hard to
abandon. The market system is now entrenched. It plays into the hands of the unscrupulous
who have used their gains to corrupt the political economy. To devise an
economic system based on the prosperity of people requires the appearance of a
highly moral and courageous individual with both economic knowledge and
political persuasiveness that no one at the moment seems to possess, which is
truly lamentable. But until such an economic system is developed, the vast
majority of human beings will suffer at the hands of the unscrupulous purveyors
of the current market system, and immorality will dominate the lives of people.
(3/30/2005)
In 1953, Robert L. Heilbroner published The Worldly Philosophers . Its second chapter makes plain the changes that had to take place in society in order for the market system of economics to establish itself. This chapter should be required reading, for it exhibits not only the false principles upon which the market system is founded, but the immediate and disastrous consequences it has had on societyconsequences that continue to plague humanity today.
The market system's foundation is relatively simple: Mankind is essentially acquisitive, human beings, when left to their own devices, do what provides them with the best monetary advantages, and as a result, society is enriched. Not only are all three clauses of this foundation false, the market system also assumes the preposterous belief that workers engage in a bargaining process in which they sell their services to the highest bidder. Very few workers are ever given the opportunity to engage in such bargaining unless they are unionized, and the assault on unions has been long going and continuous.
Furthermore, mankind is not essentially acquisitive (read greedy). Heilbroner writes, "Not only is the notion of gain for gains sake foreign to a large portion of the world's population today, but it has been conspicuous by its absence over most of recorded history." Even anecdotal evidence demonstrates the falsity of this notion. Certainly human beings seek to acquire things, but only a few consistently do what is best to maximize their monetary statuses. Most people adopt ways of earning a living that never display the promise of wealth, and in fact, it is these people that perform the tasks that make society possible. Artists, musicians, teachers, policemen, sales clerks, nurses, manual laborers, maintenance workers, not to mention refuse collectors, are just a few of the many necessary occupations people engage in without any promise of wealth.
Up until the fifteenth century, covetous people were society's outcasts. Just recall what the Bible claims Jesus said about rich men. And greed was condemned as one of the seven cardinal sins. So gain, covetousness, and greed were and are not the primary motivating forces for the vast majority of human beings.
How then did the market system attain its status? Heilbroner cites three basic changes that took place over many centuries and culminated in the sixteenth century: the rise of nation states, the decay of religious spirit, and social changes such as the founding of towns, the development of roads, and technical progress. And it is notable that Adam Smith's magnum opus, the bible of the market system, is entitled The Wealth of Nations.
But a nation's wealth does not ensure the prosperity of its people, and by the end of the sixteenth century, Queen Elizabeth lamented that Paupers are everywhere, because just one century earlier, peasant proprietors tilled their own land and made up the largest body of independent, free, and prosperous citizens in the world. And in 1718 the world's first great speculative fraud occurred in France. Fraud and pauperism are prevalent consequences of the market system even today. The world's poor are an ever growing problem, the American War on Poverty has died a slow and painful death, and fraud in the business community has reach epidemic proportions. And Heilbroner himself writes that "The new philosophy brought with it a new social problem: how to keep the poor poor." Keeping the poor poor is as much a consequence of the market system as speculation is.
It is also somewhat ironical that the market system came into existence in the part of the world that was then often called Christendom, especially since Christendom considered greed to be one of the seven deadly sins. This, I suppose, is what Heilbroner is referring to as the decay of religious spirit. As a matter of fact, the market system has converted the seven deadly sins into the seven virtues to live by and has, thereby, contributed greatly to what many feel is the moral decline of Western civilization.
There is also much confusion about just exactly the goal of the market system is. Heilbroner writes that "After the Wealth of Nations, men began to see the world about themselves in new eyes; they saw how the tasks they did fitted into the whole of society, and they saw that society as a whole was proceeding at a majestic pace toward a distant but clearly visible goal." But this is hyperbole at best. Few people then and even now, even among trained economists have read The Wealth of Nations cover to cover. And to those of us who have, it is not obvious that our current political economy instantiates it. So what is the market systems goal? Is it (1) the nation's wealth, (2) the individual person's accumulation of wealth, or (3) the expansion of commerce?
Mercantilism was also a sixteenth and seventeenth century economic philosophy. It held that gold and other precious metals was the motivation for and the proper object of all mundane affairs. But one can take the same statement and replace the words gold and other precious metals with the word money, and that statement describes current mercantile activities better that the mercantilist credo does. That money is the sole motivation for and the proper object of all mundane affairs describes the market system to a tee.
Supporters of the market system always champion its contributions to the material welfare of society, citing these as reason enough for its promotion and expansion. However, this view holds up only because the positive contributions of the market system are easy to identify and count, while the deleterious consequences are not, and so we tend to view them as isolated events. But poverty and fraud are far more ubiquitous that we like to admit, and if we could sum up their costs and subtract them from the benefits of the market system, I doubt that the result would be positive.
Basing an economic system on the wealth of nations was perhaps natural at the time, but it was misguided. What the world needs is an economic system based on the promotion of the prosperity of people. Unfortunately the market system has over the last three centuries become the new creed, and creeds are hard to abandon. The market system is now entrenched. It plays into the hands of the unscrupulous who have used their gains to corrupt the political economy. To devise an economic system based on the prosperity of people requires the appearance of a highly moral and courageous individual with both economic knowledge and political persuasiveness that no one at the moment seems to possess, which is truly lamentable. But until such an economic system is developed, the vast majority of human beings will suffer at the hands of the unscrupulous purveyors of the current market system, and immorality will dominate the lives of people. (3/30/2005)
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