Wednesday, 18 January 2017

A basic economic principle

One of the most fundamental principles of a just economic system (the very mention that an economic system has to be just is enough to label oneself as a Communist these days), is that a persons wealth should be commensurate with what they output into the economy as desirable wealth (ideas, services, products that people actually want).

This is a principle not a law, and therefore should not be applied perfectly but rather approximately, the best that is practical given the circumstances of the day.  Principles applied to humans require transgressions to be allowed on order for them to function.

Wealth takes two basic forms.  Hard illiquid assets which represent past consumption, and liquid assets, which represent future consumption.  The value of these throughout a lifetime which one person enjoys, should be roughly equivalent to a value that they have produced, either through labour, innovation or some other intellectual endeavour.

Many will pick up on this and criticise it as it cannot be done perfectly due to the inability to accurately determine the value of things, but we are talking rough principles, and principles don't have to be implemented perfectly to have validity.  They have validity because they are goals we can orientate ourselves towards.  Arguing that we shouldn't accept this because a perfect accounting is more about attempting to dissuade one from a particular point of view by raising an unanswerable, but also irrelevant and inconsequential, doubt.

If what one consumes, matches approximately what one produces, then we have a fair system.  It's fair because very few people argue that people should be consistently entitled to more than what they produce, or less, except for those at either extreme of the wealth axis where an exception is not only justified, but needed. Of course, being a principle, rather than a law or rigid axiom, allowing people who perhaps are disabled consume more than they produce is one of the allowable transgressions which is needed to make the principle work.  There is after all, no point holding a principle, if that principle means avoidable deaths.  I'll leave it to AnCaps to justify holding principles which knowingly lead to avoidable deaths.

It is telling how many people who support "true" market capitalism don't want to analyse this basic accounting.  Because if we did, it would lend credence to the argument that many (not all, but many) of the worlds richest people didn't produce that astounding level of value.  It would reveal they didn't get their wealth through the simplistic model of buyer-seller interactions but through power, through organised structure and favourable financial machinations.  Those who actually perform serious scholarly study on these issues have found that we are not dealing with a perfect "free market" society, but a geared and gamed system.  And it is reasonable to surmise that those with money and power, are in a better position to game it in their favour, a hypothesis which is supported by any serious study.

It is odd that my personal position that people who have wealth which is far in excess of any measurable economic input they've provided don't deserve it, makes me a Socialist, but so it is.  That is how economically Right Wing we have become.  So far to the Right that actually advocating against the wealthy rigging the system makes one a Communist.  So far to the right, that Hitler is to the Left economically speaking.  In fact, almost all non-Anglosphere "far right" groups are economically to the Left of where we are now, some of which, economically are actually quite Leftist even using an objective basis.

While this isn't a new principle, we should ensure we keep it at the top of our minds when engaging in any debate about economic systems.  Too often people argue the merits or issues of a system, but when arguing about "fairness", people do themselves a disservice by simply stating that wealth inequality isn't a problem, but not bringing up the issue that its not only a problem, but probably not morally and economically justified on a very fundamental level.

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