Sunday, 29 July 2012

Maths for Rats & Dog Swaps: Why Only Free Markets Work

Rats cannot count. Intelligent as they are (repulsive but maybe that is because they are just that little bit too like us?) this means not alone can they not do maths, they don't know that maths exists. We may have other such unknown unknowables but we can count & as a result, calculate.

Dogs don't swap. Adam Smith pointed out "Man is an animal that makes bargains: no other animal does this - no dog exchanges bones with another". Social relations between dogs are based on power hierarchies & immediate kinship. Our subjective value judgements allow both parties in a trade to walk away better off. We swap & our social relations are governed, not by power but by trade. 

We evolved as modern man not when we choose to create art, that is merely the signifier of our modernity: it was the construction of social groups that allowed time for art to emerge that made us made us truly human. Those social groupings happened because we can calculate & trade. Art was valued so art could be made.

Long chains of trade, each link made up of single win-win subjective value swaps  put beads from the Bay of Biscay in ice age villages in Siberia show that we evolved & survived through trade. Trade cooperation between humans & human groups. was fundamental to the emergence of society. The emergence of commodity money allowed full scope for our calculation ability, prices were & are central to working out future advantage of current actions.

Price is a continual exploration of value: the market never rests, there is no equilibrium outside of economists fantasy examples. Entrepreneurs continually calculate, on the basis of an ever changing price structure, where reward can be extracted. That means goods are produced & traded to supply our needs by all the vast shimmering army of humanity.

Marx & his adherents saw us as stuck between the rat & the dog & their fundamental inability to realise that value is subjective & prices are a common calculation meant that they utterly missed the both the role of the entrepreneur & the role of profit. Profit is the reward of efficient service, not theft. Under capitalism money is earned for giving value, self appointed "fairness" operatives from politicians, motivated by votes to sound compassionate, to left-wing ideologues believe it is their job to steal that money & equalise the rewards between those who give value & those that do not.

Our abilities mean we do not live in a zero sum paradigm: humans, because of our abilities, increase our resources with population. Only in a free market can we use our human capabilities properly, every effort to move from the free market just turns us in to dogs & rats & leads to poverty.

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