Capitalism Isn't Accumulation. Get It?

Because I've been reading around Marxist economics recently I have developed an allergic reaction to the word "accumulation." Marx and his epigones are always using the word in respect of capitalism, as in:

Primitive Accumulation: Marxists say this started with the enclosure of land and the expulsion of the resident population to create a landless proletariat. OK. Good point. Only it wasn't the capitalists that did this but the feudal nobles who, upon being disarmed by the absolute monarchs, kicked the peasants off their land because they couldn't use them as soldiers any more. By the way, Sir James Steuart, quoted by Marx, was a mercantilist who believed in a ban on the export of gold and silver (thus encouraging their "accumulation.")

Capital Accumulation: In Marx's notion (from La Wik), 

capital accumulation is the operation whereby profits are reinvested into the economy, increasing the total quantity of capital. Capital was understood by Marx to be expanding value, that is, in other terms, as a sum of capital, usually expressed in money, that is transformed through human labor into a larger value and extracted as profits.

Do you see the problem here? Marx and his epigones assume that capital accumulation is simply a mechanical or hydraulic operation. You pump your profits back into the economy and it accumulates as more profits. But it's not that simple.

Let us start with the profits from an investment. What should the capitalist do? Should he spend the money on a yacht? Should he reinvest it in his existing business? Should he put the money into creating a new line in his business? Should he start a completely new business? Should he invest the money in stocks and ETFs? If so, which ones? Should he invest the money in government bonds? The point is that his profits from this year do not just "accumulate." They must be spent or invested in a good idea, a good idea that works. To talk about this as "capital accumulation" completely misses the point.

Over-accumulation: According to the Marxists "A crisis of overaccumulation of capital occurs when the rate of profit is greater than the rate of new profitable investment outlets in the economy" and this is what causes capitalism to self-destruct and lead to socialism. I think that what he means here is that opportunities for profitable investment tend to reduce over time, leading to a crisis of capitalism.

Of course, there is a grain of truth in this. A General Motors may grow itself into the biggest automaker in the United States, but then what? What does it do for an encore? What does it do when the profits in auto-manufacturing start to level off and even decline? What does it do when business turns down and it can't afford to pay the above-market wages its workers have come to regard as their birthright? What does it do when the talent of its CEOs and managers reverts to the mean? 

We see this all the time in business. Any big corporation tends to be tuned up to do one thing. And then the world changes. And the corporation drops out of the Dow Jones Industrial Index of 30 top corporations.

OK. Enough about Marx. Let's talk reality, and the reality is that accumulation has nothing to do with the case.

"Intangible Capital:" The naked truth about capitalism is that that it bares the facts of human cooperation. Nothing is guaranteed; nothing works forever; even hard work isn't enough; good luck doesn't go on forever. You must serve the consumers or go broke.

And the biggest fact of all is the fact in the World Bank's study of capital: "Where is the Wealth of Nations?" Guess what: in the advanced nations, 80 percent of "capital" is so-called "intangible capital."

In other words, if you want to understand "wealth," the biggest part of it is not "natural capital," like oil or gold or silver or land. It is not "produced capital," like factories and industrial plants. It is the knowledge and know-how, the "intangible capital" that humans carry around with them between their ears.

Let's create a little table from the World Bank's Appendix 2 on the Per-Capita Wealth of Nations in 2000.

National Capital in $ per Capita

Country	Natural Capital	Produced Capital	Intangible Capital	Total Capital
Iran	$14,105	$3,336	$6,581	$24,023
Ireland	$10,534	$46,542	$273,414	$330,490
United States	$14,752	$79,851	$418,009	$512,612

Yipes. Notice how our three candidate countries all have about the same amount of "natural capital." But that don't mean nothing. Hey, "produced capital" ain't beanbag, but it is still second tier. The only thing that matters is "intangible capital."

So put that in your pipe and smoke it, Chuck old chap. And the same to all you Marxists and lefties and all the ships at sea.

Communism - Table of Contents

Communism: An Analysis

Table of Contents:

1. Communism Week: Europe in the 1840s
   Of course educated youth thought the world was going to hell
   
   
2. Communism Week: Marx's Economic Errors
   Capitalism does not lead to "immiseration" and production for profit is not oppressive
   
   
3. Communism Week: Marx's War on the Bourgeoisie
   Marx thought the bourgeoisie wanted power. But it didn't
   
   
4. Communism Week: The Problem with Political Power
   We would like to soften the terror of the marketplace. But political power is not the way
   
   
5. Communism Week: The Real Revolution of the Modern Age
   Scientists have provided tools for us to deal with the terrors of the universe and the market
   
   
6. Communism Week: My Perfect Plan
   Teach migrants the ways of the city, and teach creatives tolerance towards the bourgeoisie
   
   
7. Real Critical Theory: How About a Critique of Leftism
   You mean my Three Peoples theory, my critique of activism, my Little Darlings notion, etc.?
   
   
8. Whither the Culture War Now?
   We must teach the creatives to be tolerant, and bravely walk the line between Order and Chaos

Whither the Culture War Now?

This week a lot of conservatives are worrying about the culture war, as in, what do we do now? Is "revolution," whatever that means, inevitable?

For David Solway, it is "Desperate Times Call For Desperate Measures." If lefties are hounding conservatives out of the public square then we should defund the universities, put the ACLU, SPLC, and Planned Parenthood out of business, teach the corporations which side their bread is buttered, and crack down on Antifa.

For the alt-right it is a resumption of nationalism, cultural and economic, and understanding that "immigration is invasion."

For Jonah Goldberg this week, it is a pox on both your houses. I tell you, the conservative old guard is in a world of hurt.

Sorry, but I don't believe that the Clunking Fist is the answer. So what do we do?

First, let us realize our big mistake. We thought after the Reagan Revolution and its staggering economic boom, and the End of Communism with the collapse of the Soviet Union, that the battle was won. Obviously, any rational person would agree that the free market and free peoples were the answer. So let's just be nice, as "in victory, magnanimity."  Wrong!

The point is that there is no such thing as "any rational person" and Reason has nothing to do with the case. We are talking about religion here, which I like to back-hand as the search for the meaning of life, the universe, and everything. Everyone has a religion, even people that don't admit it.

My belief is that we humans cannot actually know the meaning of life, the universe, and everything. If we did, there would be no need for life, or anything.  We would just be self-driving cars on the way to Nirvana, courtesy of Google Maps; just sit back and enjoy the ride: in 100 feet, turn right.

In fact, we do not know the meaning of life, the universe and everything, so we make it up. No, wait. Some charismatic individual has a vision; he makes it up into what we call a "religion," and the rest of us go along for the ride.

Here is a brief history of religion.

In the old days humans knew that the whole world was driven by spirits: in the trees, in animals, in charismatic shamans. The way to get on was to propitiate the spirits with bloody sacrifice: corn maidens, first-born sons, and the like, as advised by the shaman.

But then, starting in the Axial Age, religion began to change. The spirits started coalescing into a monotheistic God, he who had created the world for humans to wive and thrive. The good thing for men was that God had sacrificed his Son, so that earthly fathers didn't have to sacrifice their sons; the good thing for women was that God provided the perfect relationship: love God and he would love you right back. But watch it! God ran a divine justice system, so all your bad behavior would have to be paid for in Hell or Purgatory after you died. However, all along, there were plenty of people that believed in the old spirits, but they didn't write books.

But then, starting about 200 years ago, leading lights determined that God Was Dead. They didn't believe that God created the world; they believed that creative people created the world, with science, philosophy, logic, reason, and activism. We humans made the world, and we can make it better. Artists can paint creative visions, writers can create literary visions, activists can implement political visions, and engineers and scientists can create technological visions. But all along there were still plenty of people that believed in the God of divine justice and love, but nobody who was anybody read them or paid any attention to them. And there were still plenty of people that believed in spirits, but they still weren't writing books.

Now I believe that it is utterly ludicrous to imagine that the religious revolution that began about 200 years ago would be resolved by now. That is just not how things work in the human world. What really happens is a chaos of competing visions of the meaning of life, the universe, and everything offered by charismatic neo-shamans to deal with the existential problem that the world has changed. And how.

This means that every one of us needs to be out there pushing our vision of the world and proselytizing all the world over for all we are worth.

One of these movements is characterized by Skip Marley's "Lions."

We are the lions
We are the chosen
We are the movement
This generation
You better know who we are
Who we are

The idea is that there are the chosen -- call them activists -- and then there are the victims. It is the holy calling of the chosen, the activists, to peacefully protest for the victims and liberate and emancipate them and bend the arc of history towards justice. Sometimes peaceful protest is not quite sufficient to get the job done.

Do you notice a little problem with this magnificent vision? There seems to be something missing. What about all the people in the middle, people who are neither chosen lions or helpless victims, people who are just trying to live their lives in the market economy wiving and thriving without being victims or being protest organizers. What about these folks, that we might call "deplorables?"

You can see this problem in the Manifesto of the First Activists, Marx and Engels. In their narrative myth the binary opposition of feudal lords and feudal peasants will be replaced by neo-feudal capitalists and neo-feudal proletarians. Even though the bourgeoisie has created "massive" and "colossal productive forces" it will all end in "immiseration." Back to lords and peasants.

Notice that wherever the adepts of Marx have gained political power they have in fact reduced society to a binary world of nomenklatura and victims, lords and peasants, through their fascist war on the autonomy of the middle class that realizes Mussolini's vision: "All within the state, nothing outside the state, nothing against the state." Imagine!

So what do we do about it?

Thank you senator, I'm glad you asked that.

First of all, we have to understand society not as a binary entity of lords and peasants, or Nietzsche's masters and slaves, but of Three Peoples: the People of the Subordinate Self, workers and peasants; the People of the Responsible Self, middle-class deplorables; and the People of the Creative Self, artists, writers, businessmen and activists. It is kinda reductive, but not as reductive as the left's Activists and Victims.

In my Three Peoples theory, there are, necessarily three religions, one for each of the Three Peoples. I discuss this in "What Gods Do the Three Peoples Believe In." But there is a problem. The religion of the People of the Creative Self believes that the People of the Responsible Self should be ground into the dust because otherwise they will grind the victims into the dust: "Religion and the Three Peoples: The Big Problem." This, I argue, is worse than a crime, it is a blunder.

What is the solution? Perfectly simple. Just as the religion of the People of the Responsible Self requires its believers to relieve the poor, the People of the Subordinate Self, it is high time that the religion of the People of the Creative Self require its believers to be compassionate to the People of the Responsible Self and build their religion of creativity on the shoulders of the religion of responsibility. So, you Activists of the World:

Stop beating up on the People of the Responsible Self! Reform your creative religion so that it is compassionate to the People of the Responsible Self.

Or, to paraphrase Marx:

It is high time that the People of the Responsible Self should openly, in the face of the whole world, publish their views, their aims, their tendencies, and shame the Lions and the Activists, the People of the Creative Self, into a tolerance for the Other.

What is needed are thinkers who can inspire millions and bring the mindless adepts of the Activists to a dead stop in real time. What is needed are politicians to get right into the faces of the lefty hypocrites on Twitter. What is needed is for all of us to think as deeply as we know how, and act as courageously as we dare on the perilous border between Order and Chaos, advertising the astonishing order of our free-economy and its free-association culture, and battling the chaos of the Great Reaction, the belief that you can understand the world best as divided into masters and slaves, as in olden times.

You know: I think this could be great fun.

Real Critical Theory: How About a Critique of Leftism

In a review of Jordan B. Peterson's interview with Cathy Newman on BBC Channel 4, Uri Harris makes a point that drove home with me.

We need a Critical Theory of leftism, he proposes, on the same principle as the left's Critical Theory of the bourgeoisie. Following Marx, the left has conducted a nearly two-century critique of capitalism's claim to universalism.

Critical Theory draws heavily on Karl Marx’s notion of ideology. Because the bourgeoisie controlled the means of production, Marx suggested, they controlled the culture. Consequently, the laws, beliefs, and morality of society reflected the interests of the bourgeoisie. And importantly, people were unaware that this was the case. In other words, capitalism created a situation where the interests of a particular group of people—those who controlled society—were made to appear to be universal truths and values, when in fact they were not.

I think that this is an excellent point. It's all very well for the comfortable middle class to think that everyone should be like them, hard-working, responsible, assuming that the market economy that is so good to the bourgeoisie is also good for, e.g., the working class. The argument at the center of Marxism and now identity politics is that the market economy and "middle-class morality" is not good for the traditionally marginalized, and not good for creative types that want to live a live higher and better than mere responsibility and service. The market exploits the working class and constricts the creative class.

So I say, go for it, lefties. Critique capitalism and the middle class all you like.

But there is this. It turned out that the market economy, that Marx said would "immiserate" the working class, did nothing of the kind. The capitalistic economy, in the event, lifted all boats, and lifted the working class into the middle class. So maybe the claim of universal truth was not far off the mark. Nor was the market economy the enemy of traditionally marginalized groups. There is no doubt that white males have done best with the market economy; but everyone else has benefited too. If you wanted to keep blacks and women down you had to write laws to do so, because the market economy doesn't care who you are, it just cares what you can produce. And there is the bottom line to the market economy, the Great Enrichment. Per-capita income in the capitalist countries has risen by 3,000 percent in the last 200 years.

But now let us do a bit of Critical Theory on the left. Let's call it Real Critical Theory, and let us rephrase Uri Harris's words quoted above.

Real Critical Theory turns Karl Marx’s notion of ideology on its head. The problem is no longer the ideological superstructure of the capitalistic productive forces, but the ideological structure of the educated ruling class that not surprisingly privileges the creative pursuits and the power project of the educated class, from the arts to sexual experimentation to identity politics, as the highest and best form of life. Because the educated class controls the arts, the media, and education, we propose that they unjustly control the culture and marginalize all voices that might oppose their agenda. Consequently, the laws, beliefs, and morality of society reflects the class interests of the educated class. Increasingly, people are becoming profoundly aware that this is the case. In other words, progressivism creates a situation where the interests of a particular group of people—those who control the public square of ideas and approved thought—represent their selfish and unjust class interests as universal truths and values, when in fact they are not.

Of course my entire work and world view are intended as a critique of the left's world view and its selfish and unjust power project.

My reductive Three Peoples theory is intended to show how the educated class, the People of the Creative Self, stand in relation to the other main experiential groups in society, the People of the Responsible Self, and the People of the Subordinate Self, and how their whole project is designed to oppress and exploit the People of the Responsible Self.

My critique of the left's activism culture is intended to show the bankruptcy of activism, always searching for a reason to apply political force and "peaceful protest" to a society that really does not enforce injustice and can be easily persuaded to reduce injustice by the ordinary political process of elections and legislation and a peaceful discussion of the issues.

My notion of "little darlings" is intended to publicize the dead end in store for those that are today's beneficiaries of progressive identity politics. Like the white working class, the educated ruling class may loove you today. But the day will come when the ruling class casts you aside, like wounded soldiers have ever been cast aside by armies on the march.

My "left's errors" is a catalog of the errors and the human misery that left-wing and progressive ideas have caused in the last 200 years. 

My Perfect Plan is a solution to the murrain of leftism, for it proposes solutions to the two main evils of leftism. Against the policy of encouraging pre-urban cultural norms in its little darlings -- first the working class and now women and minorities -- I propose that our society should encourage, by all kind and gentle means, the traditionally marginalized to acquire the middle class culture of individual responsibility that is the key to a productive and meaningful life in the exchange economy and the urban society. Against he left's culture war on the middle class I propose a culture of compassion and tolerance in the People of the Creative Self towards the People of the Responsible Self lately anathematized as "deplorables."

And failing all else, there is always my Communism Week, a blow by blow critique of the left and everything it stands for.

The big thing is this. You can criticize capitalism and the mean and narrow-minded bourgeoisie all you like. But the middle-class culture has produced the Great Enrichment, a 3,000 percent increase in real individual income in the last 200 years. The fact is that leftism, communism, socialism, progressivism has failed every time it was tried. Most tragically it was tried and it failed in Russia, in China, and in India, by educated elites that thought that Marx's ideas were the secret ingredient to the west's dominance. Over a hundred million human deaths later, each of these great nations has realized that the opposite is true. Communism, Marxism, socialism, progressivism is the fastest route to national ruin ever devised by a canting intellectual. Hello Venezuela.

The reason that capitalism has worked is this. It extends the truth of social cooperation one step further. In the old days, animals and humans learned that social cooperation is beneficial, indeed, necessary for successful life on Earth, because it reduces the incidence and crippling costs of violence. In both animal and human society this social cooperation was achieved by a status and hierarchy culture that reduced the incidence of costly and destructive violence substituting force with shows of force. But we moderns have discovered another dimension to social cooperation: private property and the price system. These remarkable inventions allow social cooperation to proceed without the cost and pain of hierarchy systems, but simply through the daily fluctuations of prices in the exchange economy that tell everyone what to do, and more particularly, what not to do. It is the most astonishing discovery ever.

And yet our educated ruling class wants to return to the good old days: a neo-tribalism with identity politics, and neo-feudalism with the welfare state.

What is wrong with these people that a Real Critical Theory that exposes their errors and self-satisfied assumptions won't set right?

Communism Week: My Perfect Plan

To round off Communism Week let's talk about what needs to be done.

We have seen that Marx, for all his knowledge of the classical economists, got his economics wrong, because the dichotomy between use value and exchange value was exploded in the marginal revolution, and because he was wrong that the market economy would subside into a steady state with all the profits and opportunities squeezed out of it.

We have seen that Marx's war on the bourgeoisie was foolish because the bourgeoisie is not that interested in power. You want to help the poor, or the workers, or women or minorities? Sure, the bourgeoisie will grumble about it, but it will always listen to reason.

We have seen that socialism and fascism are best seen as nostalgic movements that want to return to a pre-industrial Garden of Eden, but that goes against the eternal truth that once you have eaten of the Tree of Knowledge you can never go back, not unless you forget what you have learned.

And we have seen that the nature of the market economy and its foundational uncertainty bears an uncanny resemblance to the uncertainties and probabilities at the center of modern physics where daily-life concepts cannot be used as a direct understanding of things in themselves.

So what do we do?

Thank you Senator, I am glad you asked that. As a help to policy professionals I have devised the following Perfect Plan to right the ship of state and steer it in the right direction.

In Part One of my Perfect Plan, I propose that the basic fact of our age is the world-wide migration of people from the country to the city. So the question is: how can we help the migrants learn, first, how to cope with their new life in the city, and then learn to wive and thrive in the city culture and economy with the best of them and become city people?

I have said that the French for city people is bourgeoisie, and that the left has declared war on the bourgeoisie. Obviously this is madness. Instead of enrolling the migrants to the city as soldiers in a war on the bourgeoisie, we should be sending the migrants to cultural appropriation boot camp so the migrants can steal the culture of the bourgeoisie root and branch and learn how to become the bourgeoisie.

We know what not to do. Don't teach the migrants that by joining a union they can stave off the sovereignty of the market. Don't entangle them in the nets of the welfare state which is bound to run out of other peoples' money. Don't subsidize failure and give people lifetime pensions for not working or not marrying. Don't poison them with identity politics and teach them to separate themselves from the majority culture and keep their pre-industrial culture.

So what to do? Teach people the culture of The Road to the Middle Class, which means religion, education, mutual aid, and living under law.

There is a lot to learn about how to become a stick-in-the-mud bourgeois. You need to learn to trust other people; you need to learn how to serve your fellow humans with a useful skill and keep updating it; you need to learn to accept the verdict of the market with a good will. Above all you need to live and let live.

Part Two of my Perfect Plan is even more sensible. It is to institute a culture of tolerance among the People of the Creative Self, the artists and writers and activists that presently rule the the culture of  the world. Right now, artists and writers and activists learn that there is nothing worse than the responsible culture of the bourgeoisie unless it is the racist sexist homophobic culture of the white working class. They learn that the stick-in-the-mud bourgeois is the very thing that is preventing the arc of history from bending towards justice.

Now I accept that the People of the Creative Self are the wonder of the age, that their creative culture is what differentiates us from the animals. But not all of us are ready, willing, and able to ascend the golden staircase to the ethereal heights of the creative culture. Moreover, as in many things, many are called to be creative, but few are chosen. What happens to those that would like to be creative but just can't quite make the grade? The answer is obvious. For those of us without the crown of laurels we must live as ordinary people that go to work, obey the law, and follow the rules. And the Olympian gods that wear the laurel should understand that but for the grace of God they would be ordinary people going to work, obeying the law, and following the rules.

You would think that this notion of tolerance for other people would be a no-brainer, but it obviously isn't, not when a presidential candidate can go around telling her creative-class supporters that half the country is composed of racist sexist homophobic deplorables. But I get where this comes from. In the old days, the creative class felt themselves to be an embattled minority that had to defend each others' backs, although even back in those days there were actresses like Mrs. Patrick Campbell that advised creatives not to frighten the horses in the street. But that is no more. Today the People of the Creative Self can swarm around anyone they don't like and get them fired from their job. They have the power, in other words, to dominate the public square.

This power, I suggest, is a Bad Thing. The whole point of laws and tolerance and live-and-let-live is that it is not a good idea for anyone to so dominate the public square that they can deny it to other people. In fact this sort of power is only warranted in times of genuine emergency, when a nation or a people are threatened with an existential peril. The rest of the time we should all combine to name and shame those people who want to name and shame people that don't agree with them.

Imagine a world that does all it can to teach people how to adopt the culture of the city.

Imagine a world in which people do not try to seize political power so they can give the products of other peoples' work to their political supporters.

Imagine a world in which people did not hang on like grim death to jobs and wages and pensions that cannot be sustained.

Imagine a world in which the educated and cultural elite did not sneer at those less evolved and less fortunate than themselves.

Imagine a world that has escaped from the present deplorable situation still riddled with the exploded ideas of Marx and the Bolshevik Revolution and a naive faith in political power and has moved forward, with the aid of my Perfect Plan, into broad sunlit uplands.

It's easy if you try.

Communism Week: The Real Revolution of the Modern Age

Our age has been a great age of unimaginable novelty and "progress." But it has also been a great age of nostalgia and reaction, the eternal yearning for a lost Garden of Eden. It has seen cultural movements longing for the lost community of the village in socialism, and other movements returning to the old community bonds of blood and land in fascism. Meanwhile most of the rest of us have found refuge in the materialist, mechanical model of the world that rose to majesty in the last millennium and seemed to predict the movement of the heavens: the science of Galileo and Newton.

But even the mechanical world of substance and absolute space and time has fallen by the wayside, and this has precipitated a revolution in thought and deed beyond imagining. For we have now learned that the micro world of the "atom" and the macro world of the "universe" cannot be understood in terms of the familiar world of day-to-day life and the mechanical world of Newton, of ballistics and action and reaction.

Up until yesterday you could understand the flight of a cannon ball or the operation of a heat engine or the forces in a building structure from notions very near to daily life. Even the motions of the planets could be understood in these terms. But in the modern science of quantum mechanics, that undergirds everything from smartphones to laser lighting to electricity, the old concepts of daily life no longer apply. Energy is neither particle nor wave, yet its operations must be understood as a bit of both. The nearer you get to an elementary state the less you can consider things as anything other than a state function of probabilities. This would be intolerable but for the fact that quantum mechanics and its probabilities and uncertainties works, and not only works, but works miracles.

The impossible wonders of the quantum world are happily handled for us by intermediaries, the scientists, technologists, and businessmen that know how to unlock its wonders. They have provided us with interfaces, the light switch and the touch screen, that enable us to use these wondrous gadgets by actions common in daily life: the flip of the switch, the dab of the finger. And so we use the unfathomable world of the quantum state in daily life, even though the quantum world is indescribable and the kid transmitting her latest trivial act to her friends on Instagram knows nothing of its mysteries.

But there is another world that is just as unfathomable and indescribable. It is the world of the modern  economy, and the market economy is just as mysterious and indescribable as the world of the quantum. And yet the modern economy has poured riches unimaginable upon us, in the Great Enrichment of the last 200 years that, in the United States has increased personal income from $4 per person per day to $140 per person per day, all in "real" dollars. You could look it up.

We are all terrified by the implacable power of the market that has given us so much, and so we have deputized political leaders and their henchmen to pummel the market into submission, or at least something less frightening. Needless to say, they have done it very badly, and no wonder. Politics is division and distrust, yet the modern economy requires us all to engage in its global trust network, trusting anyone that can be trusted. Government is force, yet the modern economy requires us to be sensitive to the slightest economic breeze and trim our sails to its vagaries. System and hierarchy are domination, yet the market yields up its power to anyone that can innovate and serve the consumer.

We must accept the obvious. The tools and the culture of politics do not work in the modern market age. The more force, the more division, the more system, the more you get North Korea, or the Soviet Union, or Castro's Cuba, or the wreck of Venezuela. The modern economy and modern society must work on the foundation of what we might call the "market state function," expressed in its prices, and the willing surrender of everyone to its signals. But how do we neutralize the terror of the market, the helplessness we all feel as individual humans before the searing power of the market, and steer people away from the natural instinct to create a personal refuge from the terrors of the market.

Maybe the way to make the market work for all of us right in front of our eyes, in the smartphone and its applications. The cumbersome world of the taxicab is transformed when you create an application, per Uber and Lyft, that connect buyer and seller, resolve the higgling of the market into a simple offer of a price, and regulate all market participants through the operation of the 5-star rating system that enforces the market's culture of trust. The innovation of AirBnB allows individual householders to enter into the hospitality market with the same market reach as any global hotel chain.

Each of these applications includes three crucial features: First is the universal reach, instantly, to anyone with a smartphone and the app. Second is the payment method, integrated into the app, so that payment, and the whole complicated problem of billing and accounts receivable is not an issue. Third is the rating system that leans very hard on everyone to be trustworthy.

I suspect that, where the smartphone "app" is concerned, you ain't seen nothing yet. Its power lies in the way that it reduces the frightening complexity and terror of the marketplace to operations of daily life that anyone can understand and easily accept, the flip of the switch, and the dab of the finger, the shaking of hands.

The role of politics and government is to protect us from existential perils, and one of the existential perils is the terror of the all-powerful marketplace. Unfortunately, as vast human experiments have proved, from plantation slavery to collective agriculture to nationalized industry, politics cannot protect us from the existential peril of the marketplace; it only makes things worse. The most obvious example of this truth is the real live political and economic experiment of the last 65 years in Korea. From a land devastated by civil war we have today a socialist North Korea with a per-capita GDP of about $600 per year, and capitalist South Korea with a per-capita GDP of $27,500 per year. Case closed.

But we can implement interfaces with the marketplace to make it less terrifying. Indeed, we already have. So it only remains for each of us to lead, follow, or get out of the way of this beneficial enrichment, and abandon the false gods of politics as the way to bend the arc of history towards justice.

Because we can tame the terrors of the marketplace, not by the crush of the clunking fist or the divisive tricks of the politician, but by softening the terrors of unfathomable marketplace into the familiar actions of daily life that are programmed into us by human life down the ages.

That is the story of our time: the Double Revolution, in science and society, that is transforming our lives.

The challenge of our time is this: to humanize the terror of the universe and the market into the familiar acts and operations of daily life. And yield up astonishing cooperation and prosperity for every human that believes and practices its protocols.

But how do we do this? I'm glad you asked.

Next up: My Perfect Plan to solve all our problems.

Communism Week: The Problem With Political Power

When a man like President Obama rephrases the hope of Dr. Martin Luther King that the arc of history bends towards justice, he means that only politics can bend the world towards justice.

That is the Great White Hope of the left, that the sorrows of the world can be healed with politics, and specifically, a politics of equality and liberation -- directed of course, by people like us.

Of course this is a misreading of the nature of politics, which is simply to rally the people and unify them against an existential threat, usually represented by the tribe across the river or in the next village.

In the larger communities of the agricultural or industrial era that extends beyond the blood kindred this means that politics involves dividing people: three tribes against two, or two tribes against one.

Simply put: in order to unite people into a cause you must divide them off from something else. This obviously worked well in the hunter-gather age, because then humans were divided into tribes of the kindred and really were in existential peril from the neighboring tribe attempting to invade their land and appropriate its food-bearing potential.

In the agricultural age and especially the industrial age politics has adapted into the imagined tribe of the noble's peasants and followers, and now into the imagined community of the nation state. Still, up until yesterday, the noble or the leader of the nation state ruled a people that lived off the land, the produce of its rich acres. Up until yesterday the world could still be understood in the loyalty to clan and kindred or an imagined clan or kindred: if you belonged your owed loyalty to your clan chieftain or national monarch, and the chieftain or monarch protected you on your land from others that might want to appropriate your land.

Not any more. Instead of the comforts of tribal belonging we have the paradox of individualism. Each of us is no longer primarily the member of a tribe, but a responsible individual that must go out and find, each for himself, a way to work and thrive and this life is no longer manifested in a subordination to a lord of the land, or the boss of a factory, but in subordination to the supply and demand of the market.

This is very new and very frightening. I think this is the most important thing to understand about the modern world and to understand the way that politics and culture and work and play operate today.

I think that the rise of socialism and fascism both represent a deep aching for the imagined security and familiarity of the old equality of the hunter-gatherer village, and the old loyalty of blood, and the old attachment to land. So socialism and communism imagine that the old way yielded a satisfying equality in which everyone belonged and everyone mattered. Fascism -- here used just as a descriptive, not a pejorative -- imagines the comfortable past when everyone belonged to a blood kindred that had lived upon its ancestral lands since time immemorial.

But socialism and fascism are not solutions to the modern problem. The millions of graves give eternal testimony to that.

The modern era offers a different proposition. It merely says that each of us, as individuals, should subordinate ourselves to the needs and the demands of others, in other words, offer our skills and labor on the labor market and accept the decision of the market with grace and good cheer.

Anyone that has ever been "unemployed" or searching for work understands the holy terror of such a situation. How do I know that there are any jobs out there? How do I know what skills are in demand? How can I possibly measure up to the implacable demands of the employers? Everything is uncertain, contingent, and apparently chaotic. And above all, terrifying.

And so we have looked to politicians and activists to protect us from the existential peril of the marketplace. And politicians and activists have offered solutions from the past, in government and political division. But politics and government are clearly not the appropriate means.

We know this because huge and tragic human experiments have been conducted over the last century in attempt to show that politics and government can protect us against the existential terror of the market place. These vast human experiments have proved, from plantation slavery to collective agriculture to nationalized industry, that politics cannot protect us from the existential peril of the marketplace; it only makes things worse.  The most obvious example of this truth is the real live experiment of the last 65 years in Korea. From a land devastated by civil war we have socialist North Korea with a per-capita GDP  of about $600 per year, and capitalist South Korea with a per-capita GDP of about $27,500 per year.

The per-capita GDP of North Korea is below the per-capita GDP of the United States in 1800. The per-capita GDP in South Korea is about the same as the US per-capita GDP in 1994. Case closed.

And things are not so good the lands of "social democracy" where politics and government are used to obtain economic security for the politically connected from the rest of the community that is not so politically connected, and promises of security have been made that cannot be redeemed. The fact is that government and politics do not deliver prosperity and security; they are only tools to defend against existential peril.

Yet, we still need some means to soften the terror of our subordination to the marketplace, because we humans are designed and built to live and wive and thrive in human face-to-face community and not in the cheerless canyons of the market's domain where there seems to be no place where weary can shelter in the shade.

The question is what would work to humanize the terrible power of the marketplace. That is the topic of The Real Revolution of the Modern Age.

Communism Week: Marx's War on the Bourgeoisie

One of the takeaways from The Communist Manifesto of Marx and Engels is the belief that the old feudal order of nobles and peasants would be replaced by a neo-feudal order of capitalists and proletarians. They two would-be revolutionaries leave us in no doubt that the relations of capitalists to proletarians will be a reprise of the relations between nobles and peasants.

In one word, for exploitation, veiled by religious and political illusions, [the bourgeoisie] has substituted naked, shameless, direct, brutal exploitation.

And really, why not? Of course the bourgeoisie would act like any other ruling class that had come into power. It would take advantage of its power, erect ideological ramparts to defend its power, just like every other ruling class down the ages.

But what happened?

What happened is that the bourgeoisie did not take advantage of its power. Having obtained the political power in the middle-class revolutions of the early modern period, it then proceeded to give the vote to the proletarians in their turn, and allowed the proletarians to enact the whole neo-feudal welfare state with benefits and goodies mainly paid for by the bourgeoisie.

But why? Why did the bourgeoisie not bid for total power? And why did the Educated Youth of the 19th century insist that the bourgeoisie would bid for total power?

Let us first deal with the simple issue. All politics is "us" against "them," of course, mobilizing our guys, the good guys, against the evil overloads and exploiters that are planning to take over and conquer us. The genius of Marx and Engels and the left that followed them was to perceive that class politics should be the "us" and "them," the politics of the future. Thus it made perfect sense to argue that the "them" of the new politics were rulers like like the old ones, only these new monsters would step out from the usual veiled apologies for power and substitute "naked, shameless, direct, brutal exploitation" for the usual identification of the ruler with God.

And really, why not? Why wouldn't the bourgeoisie follow in the footsteps of all previous rulers and rule over the proletarians like the feudal lords did over their peasants.

But they didn't. Remarkably, the bourgeoisie was not that interested in power, and it still isn't. It didn't make a bid for total political power, not in the 19th century, and not in the 20th century. Even the great business titans, men like John D. Rockefeller and Andrew Carnegie, men that had established monumental fortunes from cheap oil and cheap steel, did not use their wealth to obtain political power. Instead they retired from business and used their wealth to create modern philanthropy. Today's titans seem to be more interested in eradicating malaria and going to Mars. But why?

In my view this is not from any particular virtue in the business titans, but from the basic nature of business. Business is not about seizing power and forcing people to do your will. It just doesn't work that way. Business is built on trust and reciprocity, coming up with good ideas, serving the consumer and figuring out how to make your employees more productive.

Even the slave plantations, the first instance of large-scale capitalist enterprise, decided that it was better and more profitable to encourage the slaves to grow their own food and use their own initiative, than to use them as mere human machines.

This is a stunning change in human culture, that other people are trustable suppliers and customers rather than dangerous threats to our way of life. In my view it issues from the change from agriculture as the basis of economic life to the present industrial and post-industrial economy. Back in the old days, possession of land was the basis of wealth, and you had to defend your land to the death else someone would come and seize your land and plunder your wealth and leave you to die. Today possession of a great idea is the basis of wealth. Everything else can be bought and sold on the market. It doesn't make any sense to conquer and plunder, because every factory, every business contributes to the whole, and loot and plunder ruptures the normal economic relationships and just reduces the wealth of all.

I forgive Marx and Engels for not seeing this 170 years ago; who knew back then? I do not feel so forgiving towards their modern epigones; they have learned nothing and forgotten nothing.

The fact is that the modern bourgeoisie, the middle-class responsible people that go to work, pay their taxes, and follow the rules, are the salt of the earth, and the people that want to marginalize the middle class are monsters.

Next up: The Problem With Political Power.

Communism Week: Marx's Economic Errors

After the fun of revolutionary politics in the 1840s Karl Marx settled down to write an economic treatise, Capital: a Critique of Political Economy. He took the basics of the classical economists and used it to prove that, indeed, the capitalist economy was horribly oppressive.

Today I am going to look at two of Marx's assertions: first, that capitalism leads to "immiseration" of the working class and the petit-bourgeoisie; second, that wage labor and production for profit are inherently oppressive.

First of all, "immiseration." Marx rightly understood, from the logic of markets, that profits get squeezed out of any industry, and that that the downward pressures on prices in a mature industry would necessarily cause a downward pressure on wages. If there are good profits to be made on capital invested in a particular industry, then everyone will crowd into this "good thing" until the goodness is all squeezed out of it. This is certainly true; it happens again and again as a once bright young industry matures and competition drives prices down. But it is not just the workers and the white-collar workers that suffer. The capital returns go down for the widows and orphans, and so does the remuneration captured by top managers. So Marx is wrong to say that the workers are uniquely immiserated by mature capitalism. Everyone suffers when an industry declines and falls.

Actually, what really happens in a mature industry is that the workers expect to keep their above-market wages, the managers expect to keep their above-market salaries and bonuses, and the stockholders expect to receive their customary dividends. Then one day the whole thing collapses, because too much debt, and everyone is out of a job or out of money.

But Marx was wrong in a bigger sense. Capitalism is an emerging phenomenon that constantly renews itself. Money is constantly looking for new opportunities; ambitious young men are constantly trying out ideas that they hope will become the next big thing; young workers naturally move to where the jobs are to get hired into growing, profitable industries. And, what nobody knew in the 1840s was that with the textile revolution and the railway revolution that had utterly changed the face of Europe, you ain't seen nothing yet. Because the next big thing was oil, then electricity, then automobiles, then electronics, then information.

Marx was also wrong in sneering at wage labor. His analysis was based on the understanding of value developed by the classical economists. They observed that there were two kinds of value: use value and exchange value. Some commodities, like gold, had a high exchange value, but little use value; while other commodities, like labor, were intrinsically useful, but with very low exchange value. Marx boiled this down into contrasting "production for use" against "production for profit." Well, yes, but if you don't make a profit on your production then your production is not very long for this world. For Marx, workers working for wages were basically exploited because they did not receive the full value added in their labor; the employer captured a good part of the "surplus value" added by labor.

True, workers don't capture the full value added. But in taking fixed wages, they are assigning a certain amount of risk away from themselves. Prices for products fluctuate; so if wages are kept steady then someone has to accept the risk that the wages may squeeze profits if product prices go down. The worker getting fixed wages is not necessarily at a disadvantage. Compare a factory worker with a peasant farmer renting land. The peasant has to face the full risk of fluctuating agricultural prices. But the factory worker has assigned to the factory employer the risk of fluctuating product prices. When you accept risk you have the opportunity for big gains -- and big losses.

It is not surprising that Marx got a bunch of things wrong in his Capital. That is the way the world works: two steps forward and one step backward. The problem is that you will read the work of a modern Marxist in vain to find any understanding of how our knowledge about the economy and markets has advanced since Marx wrote his great work.

For instance, the first volume of Capital was published in 1867. But in 1870, the marginal revolution was introduced by Menger in Austria, Jevons in Britain, and Walras in Switzerland. In marginal economics, value is set in the price "at the margin" at the latest sale on the market. That is all. You will look in vain to see marginalism dealt with in the works of the Marxists.

But the spirit of Marx lives on, that workers are especially vulnerable to exploitation; that there is something underhanded about "production for profit;" that there is something virtuous about economic activity outside the profit system in "production for use" and in cooperatives and non-profits.

Why has capitalism gotten such a bad rap over the years? I will try to address that in the last of this series.

Meanwhile stay tuned for Marx's War on the Bourgeoisie.

Communism Week: Europe in the 1840s

This week everyone is marking the centenary of the Bolshevik October Revolution in 1917. So I think it is a good idea to spend a week on this blog reviewing Communism and its sister Socialism. And the place to start, in my view, is Europe in the 1840s.

I propose that it was natural for young heads full of mush, chaps like Karl Marx, son of the leading lawyer in Trier, in Germany just a few kilometers east of the border with Luxembourg, and Friedrich Engels, son of a cotton manufacturer, to think that things were going to hell and needed a complete makeover.

First of all, the end result of the French Revolution, a breakout of the emerging bourgeoisie, was that the kings returned to France, and in the Treaty of Vienna the kings of Europe reorganized things to make life difficult for a post-monarchical world to be born. In Germany, in particular, the spirit of German Liberation of 1806, in which the Kings of Prussia used chaps like Alexander von Humboldt to reorganize education and son-of-a-sergeant Gerhard von Scharnhorst to reorganize the army, died with the reassertion of monarchical power after the defeat of France. Remember, we were supposed to be in a Age of Reason. How come all the reasoning ended up in a return of kings and bishops? If you were a son of the bourgeoisie it looked like all that Enlightenment had been for nothing. Stronger measures were needed.

Then there was the emerging market economy and factory production. It's easy for us to look back at the Great Enrichment, that raised real per-capita income from $1-3 per day in 1800 to $100 per day today, and realize that all the turmoil had a happy ending. But in the early to mid 19th century, it looked chaotic and brutal, and you had ordinary people fighting against it. You had Luddites breaking machines; you had the Scottish Insurrection of 1820; you had Tolpuddle Martyrs being convicted in 1834 of organizing a union and getting transported to Australia. It is not hard to imagine a social and economic disaster coming out of the cotton textile factories and then the railway revolution. Where would it all end?

We now know that the in the first half of the 19th century a new world was aborning, transforming utterly the economy, religion, government, culture. But when you are living through a transformation you do not know the outcome, and all around you people are insisting that the world is going to hell in a handbasket, you tend to think that Something Must Be Done to make us safe. But how?

The new age philosopher Ken Wilber built his system on the work of the developmental psychologists, people like Piaget and Kohlberg and Beck and Cowan. The developmental idea is that humans ascend through different psychological stages both in individual lives and in society as a whole. But when things go wrong, then people instinctively go back down the development ladder to "what worked." That is the best explanation I have heard for fascism. When the mechanistic market economy seemed to fail after World War I, Hitler led the Germans back to blood and soil; the racism of Aryans and the conquest of the East. And the Jews, who exemplified the market economy, were to blame.

So naturally, chaps like Marx and Engels, marinating in all the ideological frenzies of 19th century universities, actually looked back to the good old days of village communitarianism in order to solve the problems of the emerging industrial era. They knew that feudalism was wrong; they prophesied that the market economy would make the bourgeoisie into the new feudal lords. So they wanted to go back a couple of stages to the good old village community of equality. That is what humans do when things seem to be going wrong. They go back to the past.

It is a particular irony that the political-religious movement that saw itself as the acme of the future was actually "reactionary," looking for solutions in the past. Hey, that's the way the world works.

And you could say that Trumpism is a response to the failures of globalism, saying "let's go back to the good old ways of the nation state and Make America Great Again."

Of course Communism and Socialism have been horrible disasters, economically, religiously, culturally, and politically, with 100 million dead over the last century, and billions more subjected to poverty and misery. You could say that it has failed, every time it has been tried. So in the next few days, we shall look at what went wrong, and why:

Marx's Economic Errors

Marx's War on the Bourgeoisie

The Problem with Political Power

The Real Revolution of the Modern Age

My Perfect Plan to solve all our problems.