Things are a little bit complicated in an economic system, or rather a political-economic system, as the two can only be artificially divided. The political system sets the rules and the economic system implements them.
What is complicated is that the labels we have for various attributes and entities do not discriminate clearly between different functions that are used in a political-economic system. Greed is an excellent example. Greed has the function of motivating people, whether they are wealthy or poor, to do something to gain more rewards, whether it be money in a money economy, or something else in an earlier or possibly a future economy. This motivation leads individuals and collective groups of individuals to accumulate capital. Capital is another good and bad word. Capital is incredibly useful in a society. Capital is used to facilitate the construction of productive facilities, which are still labeled as capital, and infrastructure, such as transportation systems, which are not typically labeled as capital, but which serve the same purpose.
Greed causes motivation, but that motivation can lead to the production of useful items for the society, and a general elevation of living standards, as well as the development of technology of every sort. That motivation can also lead to the development of monopoly control over necessities or desirable items, that allow large accumulations of capital by some small set of individuals which is unrelated to their contribution to society. There are a host of other devices within a society that equally divert production to a small set of individuals; this host of economic devices will continue to be added to as greed propels individuals in that direction. As long as there is greed there will be good from it and there will be bad from it.
Greed is a desire within individuals, and comes with many trappings. Greed might, in one individual, be connected with the construction of productive facilities so strongly that the only method that individual might contemplate for satisfying his or her greed would be the construction of such facilities, which could benefit the entire set of humans in the population, or at least a large subset. Greed might, in another individual, be associated with disparity, and the only methods that would appeal to such an individual would be those which diminish the wealth or income of others and divert such wealth or income to himself or herself, or to the favored target subset of individuals he or she prefers. Here are two extremely distinct results from the same emotion, or rather from emotions labeled as identical through the use of the single word, greed.
It would be somewhat clumsy to create two new words and try to introduce them into the thinking that goes on about political-economic systems. So, it is necessary to fall back on the coupling of adjectives with the common but misunderstood noun, greed. Before that is done, there should be some thought about how many divisions there should be and exactly where the dividing line should be. The division line should be found or constructed according to the uses for the new word phrases. This blog is concerned about seeing if a new economic system can be devised that does not have the failures inherent in other ones which are caused by feedback loops, unappreciated and largely unnoticed.
The principal feedback loop that dominates the later stages of any economic system is the one the large disparity produces: it serves to increase disparity more and more. Excess of wealth leads to a distortion of the political system to allow a larger degree of disparity to be generated. But wealth, as a mechanism for the accumulation of capital that can be used for productive facilities and other infrastructure or facilities that assist in the generation of benefits for the society, comes also with a good part and a bad part.
Thus it is necessary to define just what the political-economic system is supposed to do. There must be some initial goal or task for it, from which other smaller tasks or even word definitions can be derived. Since there is nothing in the universe that gives us it, it has to be chosen by some humans. I’ll try.
Humans evolved to have both sympathy and practicality, both competitiveness and cooperation. Political-economic systems which stress only one element of each of these two pairs fall afoul of the lessons humanity has learned via evolution. Either one of the two in each pair can appear in a simplified political-economic system that will make sense only if the other one is ignored. But ignoring one part of the two pairs leads to a system which has the feedback loops that generate failure eventually. So the task is to create a system which can have both of these aspects, serving as checks and balances on the other one. Some competition is needed to drive up motivation in a cooperative system. Some sympathy is needed in a system which stresses practicality, meaning where only productive elements are supported.
The symbiosis of these two sides, one relating to the distribution of output of the society and the other relating to the spectrum of motivation for increasing or maintaining the rate of output, has to be done in a clever way, one which does not allow gaming of the rules to the detriment of productivity and a just distribution of the outputs. It also cannot interfere with the generation of capital that is necessary for the construction of new facilities and the development of new technology.
Gaming of the system happens in one mode when resources are not utilized as fully as they might be. The typical example is that of productive individuals for whom motivation has failed, and who depend instead on the sympathy aspect of the political-economic system. The other typical example is that of the consumption of the output of society in ways which do not contribute to either the motivation aspect of the society or the capital increase aspect.
The first example has really two parts to it. The label, productive individual, is a snapshot in time, meaning that such an individual could produce useful output for the society. But snapshots in time are misleading. The match of the individual’s abilities to the roles that can employ them in society can change, meaning the individual must somehow be able to adapt to the changes in the society that surrounds him or her. And again, gaming of the system has to be avoided, so that an individual cannot linger in the adaptation stage, meaning learning or training or educating or even healing stage, for longer than necessary.
The other half of the things to be avoided related to the generation of capital, and concurrently, in the avoidance of the destruction of it for no useful-to-society purpose, or for a purpose which is substantially less than could be found by other means. Capital is generated when consumption is reduced below production, and the difference is diverted into the formation of capital. Consumption can be reduced directly at the source of the output, by never diverting it to individuals. A second way is to send it to individuals, but impose a tax upon consumption, diverting that tax to the formation of capital.
This raises the question of what is the desired role of consumption? Is it an item upon which those afflicted with greed can focus, so that disparate consumption is the goal of this subset of society? Is it an item that those afflicted with excessive sympathy can focus, so that consumption by the non-productive and even those gaming the system can be raised? Or is there some middle ground here, related to the middle ground that must be found between sympathy and practicality and cooperation and competition?
Consider, before attempting to devise some complex set of rules to fulfill these goals, what pitfalls might lay ahead. One pitfall is the difficulty of measurement or assessment. How would society measure if an individual is gaming the system, and could be productive but is motivated to not be? The problem with simple measurement tools is that they are always gamed. Always. Creating some sort of test means that those who will take the test will try to figure out the best way to score correctly on the test, at the least amount of effort and with the least effect on the rest of their lives. So measurement has to be done not as a test that can be gamed, but as an ongoing observation. Again, the cost of observations becomes a pitfall, as if societies output is diverted more into the observational process than would be lost to those gaming the measurement, there is only a negative benefit from the imposition of observational programs. Once again, if the goal is to maximize some output of society, some gaming might have to be tolerated.
It seems that the discussion here has set the stage for the concoction of some possible ways to implement a Just Deserts economic system, but the obstacles are formidable. But if they were not formidable, the system would have been obvious to all long ago.
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