Thursday, January 7, 2010

The ideological errors of capitalism I - Casino

Moral: Wherein we use the time of the New Year, and the promise of change that is in the air - no matter how slow coming, to consider why capitalism descended to a messy casino in the late 20th and early 21st centuries (and unconscionably exploited Adam Smith and fostered shell games and migrated to inflationary schemes to the detriment of the people).

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The 'Great Thinker' (yeah, Minnesota) contest has a theme this year (Do the wealthy have an obligation to to help the poor?) that motivates a few items which can relate to things economic. One of these is a question: is there a study called philosophy of economics (see it in this course list?)?

Of course, we have those who ponder philosophic issues, use the jargon, and such. There is no organized framework, such as one finds with the philosophies of mathematics and science (oh, Economics is subsumed under that?).

Well, the following discussion, using the 'Great Thinker' question, consists of bullets with topics about the subject. Too, an association with 'capitalistic' ways will be prominent. Each of these bullets will be expanded, in time.
  • Wealthy? - well, definitions include having an abundance, usually. So, consider any type of system, in which there are agents participating in whatever and however that they do so; there can be an accumulation of things by some or all. Easy enough, though the possible systems are uncountable. An easy example would be a game, which is a notion that any human would be familiar with, and making points in the game. Of the set of those in the system, some will gather more than others. Of those on the lessor side, some threshold would determine poorness (next bullet). Yet, one could imagine, with many agents in a system, a range of point accumulations would be the result (Aside: here we could go into a discussion about why any distribution would be more likely Gaussian-ish than uniform-ish). Wealth, in one context, would imply a collection with greater cardinality than that of most of the others. Now, since we're talking things economic, collections of money (or things valued in money) are how points can be counted. We've heard that $1,000,000 is not considered much nowadays (we're limiting this, right now, to the US - also, we can avoid inflation like that being experienced in Zimbabwe). So the $1M is not extreme abundance, though that amount has been attained by only a small percentage of the population. Now, in the sense of capitalism, those on the capital side have generally had the greatest accumulation. Of interest here is that investment has evolved in ways to allow 'capitalistic' gains by anyone, namely through markets. Yet, recent events show that gaming of the system is probably more prominent than any level playing field. Who really knows? That we cannot answer that question is the key to the issues.
  • Poor? -- well, definitions here are the opposite of wealthy and include lack, usually. Again, 'poor' has many connotations, but we'll continue with the economic theme (started last bullet). The poor are everywhere and are of a set whose cardinality far outweighs those who are wealthy. Forgetting, for now, issues of how can that be in 2010, let's limit our view to the US, as those in poverty range are many. Given that the theme is capitalism, how can this be? Well, we mentioned investors as one of the agents. We need to add labor to the mix. Then, we have the consumer (the sink) as the other agent class which can be of wealth or of the poor. In some ideological views, labor is mere commodity (perhaps, even as chattel - of the corporation - the corporation with person-hood, folks) which can denigrate labor in ways that add to poverty. We see that with globalization, the new colonialism (Aside: here we could go into discussions about the motives of positions in the minimum wage debates but will not, for now - Ford's adage about car buyers still stands).
  • Help? -- well, definitions would include things like assistance. We can look at the volunteerism movement, for an example. Here, we have seen both corporate and individual contributions in a wide variety of ways. However, that said, we can note that very seldom has the corporate world provided help, to a need that was thought reasonable by the poorer (read labor) from any moral framework (next bullet). In fact, many maneuvers for not extending 'help' are couched in legal (next bullet) or social (next bullet) terms. That Unions came to be is sufficient evidence (Aside: we could go into labor history and talk issues related to unionization - for now, just note that these can be identified and discussed, later). What other ways are there to discuss help? Very many. That alms, as a concept, is found everywhere (as is the golden rule) tells a lot about how the question ought to be answered, even to the point of the ultimate honor. (Said it before, the best and brightest of finance ought to consider that the Marines, and others, have greater - immeasurably- honor).
  • Obligation? -- well, definitions stress social or legal or moral (interesting order) requirements. If we take moral first, we can get the philosophical issues out of the way by saying that 'big' T, though important, need not come first in the discussion. Ethics (Aside: we will forgo the urge to go on, at length, at how this topic seems to be a talk, and not walk, thing in modern business, for some reason, unfortunately) would be a proper beginning. Though, at some point, we may actually have the culture, that is, the social obligation could come to the fore. Some (see Posner) seem to think that the legal apparatus can lead to better ways. But, no amount of legality can cover the gray areas. Even social norms cannot help here, except in certain circumstances and limited situations.
  • Are the wealthy obligated to help the poor? -- well, given the above bullets, we can get to the question. One way to answer would be to stress the system aspect. As any chain's strength is determined by its weakest link, so too is the system heavily influenced by its least member. 'least' has several possible connotations. The system view implies one answer which would be yes. Actually, this is the social (prior bullet) sense, somewhat. That is, if those who hold the 'wealth' position in the system want it to continue, they ought to help those at the poor end. Now, mind you, we have not talked what type of help, yet. But, given our theme of capitalism's little quirks, globalization, and its very possibility, has confounded the issues. From the legal sense, our first principles would be based upon the notion of a bill of rights. Taking the western culture, if John of England could restrain his royal self, those at the top of the corporate structure, CEOs and others of the ilk, could very well get their heads into a better space. Now, about the moral, we'll address that when the larger picture is covered. Mind you, the answer is 'yes' from any aspect, yet there are plenty of conditions that would say no. For example, Made-off being poor in several important properties required for an adult, ought not expect help (Aside: the whole notion of self-help, and the lessons out of Emerson, comes to the fore here -- what actually was Bernie's motivation?).
For some reason, a question that is well-framed, and timely, has power. Is it not a truism that the first step in solving a problem is knowing what questions to ask?

Examples: why does the head of BofA (and the others) think he is so special? Why do those manipulating (such as golden sacks) the system expect that we would not wise up to their machinations? Why do we even need the financial gamers (Quants, advisors, ...)? Can we learn that undecidable means we are responsible for our future?

Oh, too, too, many. Expect more later.

(Aside: awareness of casino capitalism is not sufficient reason for having aspersions cast: Wait, it's still too early for any Marx-laden label.)

Remarks:

09/21/2011 -- On Wealth and the CEO MVP.

05/25/2011 -- Lemons problem, dark pools, ... Oh, so much to look at!

03/15/2011 -- The M & Ms are apropos.

01/27/2011 -- The chimera shines.

11/22/2010 -- Tranching, under the guise of securitization? Silly games.

04/27/2010 -- Need to add the political set of truths, such as cat and mouse.

03/20/2010 -- The basic problem of capitalism is that the Made-offs are its chief representative.

Modified: 09/21/2011

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