Yesterday afternoon I replied to Joseph Marohl’s post about the profit motive. FSK says I should stop wasting my time “debating with idiots.” I’m not so quick to brand people; perhaps my “idiot detector” is more finely calibrated than his, or perhaps I just like to give people the benefit of the doubt. There was in this case, something in Marohl’s post that resonated with me, in spite of the fact that I agreed with very little of what he had written. In any event, I also left my concluding question as a comment for Marohl, which began a brief but thorough and civil discussion the culmination of which was my offer to loan him my copy of Wilhelm Roepke’s A Humane Economy.
I did want to respond further to some of his comments, so read on if you will:
But I don’t yet understand how the profit motive can continue its promise of higher and higher returns, given the exhaustibility of the natural world and the satiability of human nature.
I think what he means is the insatiability of human nature. Every generation has its naysayers, those who believe that the end of humanity is nigh. And every generation prior to the present has been wrong in this regard. According to the historical record, the only vector that rivals human desire, is human ingenuity. This is not to say that mankind could never destroy itself — of course this is possible, but like Marlowe’s Dr. Faustus, salvation is possible until the bitter end.
Yes, a previous comment that I left suggested that human desires are boundless, yet it is competition for scarce (exhaustible, so-to-speak) limited resources, and the varying subjective values individuals ascribe to the myriad resources at their disposal, that gives rise to “profit.” Consider: why do you buy your bread from the baker, your cutlets from the butcher, and your candles from the candle-maker, rather than make them on your own? Is it not because you profit from the transaction, if even in the simplest of terms, by not having to bake your own bread, or breed, slaughter, and package your own meats, dip your own wicks?
Surely, you recognize a benefit from the division of labor in a relatively free economy. This is “profit”.
Also, the profit motive, if defined purely in capitalist (not spiritual, affective, or humanitarian) terms, while doing some good, perhaps even a great deal of good for individuals and groups, does not appear (to me, anyway) to have served the common good.
Assuming through the context ouf our brief discourse, the colloquial definition of “capitalism,” to be sure, there is a great deal wrong with it. This much is certain, and I would be among the first to object to the status quo. Has General Motors served “the greater good”? How about Citigroup? AIG? Bear Stearns? The list is endless, yet the answer is the same. In the short- to medium-run, these entities which are for the most part oligopolies, have provided a concentrated benefit to a select group of fortunate insiders, who may have been stockholders, executives, or perhaps assembly-line workers, depending on the specifics.
When I talk about profit, I mean “profit” in it’s purest sense — not in a “capitalist” sense, but in a truly freed market sense. Profit is a realized economic gain (it need not be monetary) which is the consequence of alleviating some amount of human suffering, discomfort, or inconvenience. In other words, providing more-or-less, for the “greater good.”
This is not profit. This is rent-seeking.
Throughout the decades, these organizations have succeeded at suckling the government’s teat in order to extract their own benefits, at the expense of everyone else. In addition to bleeding the rest of us through higher prices, taxes, tariffs and other restrictions on trade, this is a process which has wrought irrevocable damage to the nation’s economic foundation.
Several generations of people grew up believing that there would always be a good-paying Union job for them at General Motors or Ford or Chrysler: no need to try hard in school, no need to apply oneself, no need to become something more — take that gig at the stamping plant, put in your 25 or 30, and if you’re lucky and you play your cards right, you can retire with two houses and three cars. More recently, the best and brightest at Universities were looking to score big with a job in finance or banking.
So many exhaustible resources went down the drain at these companies, because the union got its way, or the stockholders got their way, or the bankers got their way, and not merely the material resources of land and capital goods, factories and assembly lines, by far the largest misallocation was the misallocation of human capital: several generations who contributed to “the common good” far less than they were capable, far less than they would have, if only the incentives hadn’t been so distroted.
Dogmatic? In a sense, perhaps. But no moreso than the belief that mortal humans, when entrusted with nearly omnipotent power over others, will not abuse same as they have in every time and place before us.
The greater monuments of our civilization and culture–from Notre Dame cathedral (constructed over a span of 182 years – just try to fly a 182-year building plan with stockholders today–even for a building that will outlast the average Vegas hotel-casino by several centuries) to American democracy (still under construction 233 years after its inception)–were built on the altruistic or visionary expenditure and risk of vast fortunes with (as far as I can tell) no foreseeable or substantive capital returns.
Although I appreciate the cathedral at Nôtre Dame (much less so than Sacre Cœur, from which the view of Paris at nightfall in June is unrivaled), and the pyramids at Gaza, both as eternal monuments to the capabilities of human ingenuity and labor, I’m under no delusions as to how they came to be built.
Yes, these are magnificent structures, but at what cost were these monuments to human bondage constructed? What did future generations forfeit in exchange? In the end, despite their aesthetics, despite their longevity, they’re just one more big god damned building, and the fact of the matter when taken objectively, is that throughout the millenia, the sum of these epic monuments and thousands of others long since destroyed, have not in-fact added anything substantial to the “greater good.” There was a very real opportunity cost.
I’d urge caution when cherry-picking examples of “civilization.” The great Egyptian pyramids were neither a product of altruism, of humanity, of benevolence: they are the product of a sociopathic delusion, that a man can be a god, melded with the wonders of feudalism and/or outright slavery. The monuments of our civilization, like the cathedral at Nôtre Dame are the product not of altruism, but of the nearly omnipotent power wielded by the Roman Catholic church in the middle ages. Their “capital returns” are called tithing in some cases, and taxes or tribute in another. One needn’t worry about capital returns, when he’s spending other people’s money, and breaking other people’s backs.
Marohl concludes with his greatest concern, which is the preservation of culture…
At this point in our nation’s history, my greater concern is the culture, not the economy.
But culture can’t be divorced from its economy. Again, I’d like to reiterate, that I don’t mean “economy” in any vulgar sense, I don’t mean “Wall Street” or “The City”, rather I mean “economy” in the classical sense: human action. I agree with Marohl’s earlier rant: I don’t believe it’s true that General Motors seals the fate of the nation, and I agree with his earlier comment that this widely-held belief was likely never true.
But what is true, is this: as goes the economy, so goes the culture.