The Fairness Principle

We are always changing our systems. Every new law changes something. Why do we make these changes? The easy answer is to make things better. Better for whom? Ideally better for everyone. But often the changes made are designed, consciously or not, to make things better for some individuals or for some class or classes of people with no consideration as to what the change does for the system as a whole, and no consideration as to whether there are any benefits for everyone else.

We need a new principle to be used when designing and considering changes to our economic and political systems. This principle should be something like: No change should benefit one group at the expense of everyone else or at the expense of other individuals or groups. This principle should be applied especially to the production and fair distribution of the human necessities. We can call this the Fairness Principle.

The human necessities are those goods and services every person needs to develop fully as a human person. Specifically these are: Food, clothing, shelter, education, health care, opportunities to associate with, cooperate with, work with other people, maximal individual freedom consistent with the well-being of others, and non-violence. And this production and fair distribution of these human necessities must be done within the constraints of the earth’s limited resources and the preservation of the natural world.

If there are many people whose basic human needs are not satisfied, then these people cannot contribute as much to the production of the goods and services we all need. We want a just system. We don’t want a system where there are a lot of freeloaders — people who get the benefits of cooperative work but who don’t do their fair share. This is one side of justice. The other side of justice is that the system must assure that those who work have all the resources they need to do the work they do. This is why we want every person to have the human necessities.

The principle that no changes to our system should be made which favors particular individuals or groups over others is a kind of Fairness Principle. Why should we accept this principle? Because it seems unfair to change our system so that it takes away (or does not provide) goods and services from some people to give them to other people. This is more unfair if the goods and services taken away are human necessities. Then those whose necessities have been decreased become less able to contribute to the whole and the system works less well and everyone may be affected. If it is not human necessities that are taken away, then maybe it does not matter. So fairness in the distribution of human necessities is what matters most.

There could be rather immediate benefits if the above fairness principle were applied to the crafting of new laws. We can imagine a constitution where it would be required that laws conform to the fairness principle. Then courts could review laws and void them on the grounds of unfairness with respect to human necessities. Or maybe the courts or some new institution (maybe a part of the legislation system) would analyze and say yes or no to proposed new laws.

So special interest legislation could be reduced greatly. There already is some rule that is aimed at preventing legislation naming a specific individual, corporation, locality as the beneficiary of a law. Our legislators go around this rule by adding enough conditions so that only the desired individual or corporation or location qualifies for the benefit. But clearly the legislators could decide not to allow such fakery. The legislators already make all kinds of rules for themselves that the laws they write must conform to.

We all know our legislators are not going to make these changes any time soon. But don’t dismiss the idea just because it will not be implemented soon. I am exploring how things could be, not how they are likely to be next month or next year.

Many people recognize that our legislators have been bought and paid for by the rich, the 1%. Legislators write and pass legislation favoring those who contribute to their campaigns, their party, or who do favors for their family and friends. It is proposed that if we could only “get money out of politics” we would solve this problem, get our democracy back, and then start making the progressive changes we all want. It is more complicated than that. There has to be a revolution not only in the minds of the voters but also in the minds of those who are supposed to be our representatives.

What kind of different ideas must our legislators acquire? One idea is the Fairness Principle.

How can we help them change their minds so they make new laws to change our systems to systems that are better for everybody? For now we must continue thinking, researching, and writing.

 

 

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Abandon all economic theories

Economic theories often claim to be about the way things are, as if they were objective scientific theories about the real world of human group behaviors —  as if they were about how we actually produce and distribute goods and services. But some of these theories have another element to them. And that element is: how things should be.

How can we distinguish whether a theory is a description of how things actually are, how our systems actually work as objectively observed and scientifically verified, and when a theory is attempting to say how things should work? When is a theory attempting to describe what people actually do versus what they should do?

It seems that most economic and political theories (and it is impossible to separate the two) have a lot of “should”s in them. Few if any have no “should”s.

Governments exist. Many of the “should”s have to do with the role of governments in our systems. How much should governments be involved in economics? Some people (some capitalists) say governments should have no role or a minimal role; some people (some communists) say governments should make all or most economic decisions. Clearly both extremes do not describe how any actual systems actually work. Governments always have some role. They make and enforce laws which constrain human behavior. Stop on red, go on green, be careful on yellow. And enforce contracts. And no government can make all economic decisions. Governments don’t know enough and they can’t possibly manage everything. They don’t have enough information and even if they did, they wouldn’t know how to put it all together and use it. So many of the “should”s are about the roles of governments.

Every law is a “should”. If a law were not a “should” then it would be a description of actual behavior and it would not need to be enforced.

Many “should”s are about individual behavior. Traffic laws, for example are about individual behavior. Most individual behavior occurs with or in groups of other people — in families, clans, tribes, towns, cities, clubs, associations, partnerships, corporations, states, nations. Many of the “should”s are about these groups, these human organizations.

“Should”s are not only laws. Customs and habits that most people (in some group) follow most of the time are also “should”s. Human life is full of “should”s.

Some “should”s take the form of: You should behave according to theory X because if everyone behaved as specified in theory X, then good thing Y will happen. Classic capitalists said that if everyone would pursue his own rational self-interest, then the resulting system would be the best for everyone. If everyone is greedy, then the resulting system will be best for everyone. Classic communists said that if you let the central government make plans for all the types and amounts of goods and services to be produced in some period of time, and if everyone follows the plan, then this will result in a good and efficient system that will be best for everyone. If everyone just works and obeys orders, everyone will be taken care of, it will be the best for everyone. Note that in both cases “best” is not clearly spelled out and there was no proof, no valid argument, that the “best” could be actually attained. Note also that in both systems many people were and are left out — their situations became worse.

There are many reasons why any preplanned social system for the production and distribution of goods and services will not work as expected. The main reason is we cannot predict the future at least in detail. And human behavior changes. Technology changes. Cultures change. Nature intervenes. Accidents and disasters happen.   

So we cannot dream up an ideal system with specified roles and rules for governments, corporations, organizations in general, and individuals, and claim that if every organization and individual behaves as specified (everybody and every organization always follows the specified rules), then the result will be the best for everyone. We can’t even claim it will be good for everyone, or for sure better than some other system. There is no such thing as perfection in such matters.

We cannot get 100% compliance with any set of rules and laws. At present huge numbers of laws are ignored by individuals and corporations and are not enforced by governments. So any such predesigned system would have to be built with the assumption of less than 100% compliance. And since nothing stays the same, since culture, technology, nature, and human nature are always changing, always evolving, any preplanned and highly specified system will not continue indefinitely to produce the same results it once may have produced.

So any system we might contemplate implementing must not be too highly constrained. It must have mechanisms to allow it to co-evolve with evolving nature, human technology, human nature, and culture in general.

In a sense we already have some of this co-evolution. Not so much in our theories (which are often presented as static, highly specified, and unchangeable), but in our practice. We are constantly changing our laws regarding our economic and political systems. The goals, purposes of the new laws are often to benefit or favor certain individuals and groups but not everyone. Sometimes the purpose of a new law is to make our practice (our operational system) conform better to one of our simple theories such as capitalism, communism, socialism, libertarianism, “the Austrian school”, Keynes, or the theories of any particular economist. But often, behind such a purpose is the more basic goal to benefit some individual or group.

We need something else beyond these simple, highly specified, over-constrained systems as the goals for our system changes, as our law changes. We don’t need any more theories like those listed. They are all simple-minded, limited, and do not (or would not) work very well for most people. Each may work well for a subset, some class or classes of people, the rich or the powerful, but often make things worse for most people.

We need a simple, clear, direct goal for our system changes, our law changes: We should design our system changes, our law changes to our economic and political systems, so that to the best of our abilities, the resulting system is better for everyone. We must eliminate the middle men — the simple-minded theories (which are mostly fake covers for benefiting the few at the expense of everyone else) — and we must aim clearly and directly at the goal of changes that benefit everybody.

Clearly since we will have no theory to guide us (and even if we did, it wouldn’t help), and we cannot predict the future in detail, we will have to use trial and error, which is the scientific method. That means we make our best estimate, our best guess, as to what to change. Then change it and look at the result. Check whether it made things better for almost everybody. (We must not get hung up on seeking perfection in every single step. Perfection is an illusion.) If the change made things better for a large enough number of people (and not just a few individuals or classes) then keep that changed law. If the change only benefited a few individuals or classes, then reverse that change and try something else. Trial and error. There really is no other way.

When I say abandon all the above theories I mean abandon them as exclusive overriding dogmatic systems. There surely is important knowledge about how human organizations work and can work, both internally and in cooperation with other organizations (for example maybe money, markets, property, contracts, laws, incentives, technologies, education, safety, redundancies, etc.) and this knowledge should be the basis for our best estimates and best guesses when changing our systems to make them better for everyone. In any case we must start with whatever we have now. No system as complex and interconnected as the present world system can be “overthrown” and a new one built from nothing.

Finally I want to spell out in more detail what the goals of our world economic and political systems should be: The goal should be to change our systems step by step as above into systems that provide almost all human beings with the human necessities which are: sufficient water, food, clothes, shelter, education, health care, opportunity to work with others to contribute to the welfare of everyone, maximal liberty consistent with the welfare of others, nonviolence — and all this consistent with the earth’s limited resources and consistent with preserving the natural world from further degradation and destruction.

We cannot know now if it is possible to reach such a goal. Nor can we know now that it is impossible to reach such a goal. To find the answer, we must try. We can measure how close we are to each of these sub-goals. This is something economists can do since they can stop wasting their time generating grand theories. Surely great progress can be made. Reaching the goal is not the main thing. The main thing is to keep moving our economic and political systems toward these goals. Let’s have a directed evolution. That will be a real revolution.

 

Voting and Influence in a Cooperation

We might say that the earliest social unit was the mother and child. Next would be mother, child, and father. Or maybe we should say that the earliest social unit was the mother and father, since at least chronologically these two had to cooperate to produce a child. What matters is the different examples of cooperation. In some cases cooperation is required by biology. Mother and father must cooperate. Then later mother and child must cooperate. Both cooperations must occur if the child is to survive. It might seem that mother-child is not an example of cooperation because of the great inequality, because of the helplessness of the newborn baby. But it is nonetheless cooperation. The mother must do certain things — feed the baby, keep it warm, safe from the weather. But the baby must do certain things too. It responds to and mimics facial expressions and sounds produced by the mother. It interacts with its mother to learn language and other behaviors. So this is indeed cooperation. Is it one person, one vote? Well, what are the votes here? The mother could vote “No” and walk away, and the baby will die. The baby might be defective in some way and not be able to make and maintain eye contact with the mother in which case if the baby survives it will be socially defective, with little or no language, little or no ability to communicate with other people. In the main form of voting in a cooperation — saying yes or no to an incoming chunk of information — accepting or rejecting the incoming communication, both mother and baby do it. As the mother teaches the child the facial expressions and bodily movements and sounds and words of the language, both say yes and no to the expressions of the other, to the information being offered by the other. This is the process of teaching and learning. So in this sense each has an equal vote. But even in this simple group consisting of two people it seems to make sense to say that the mother is a leader and the child is a follower because there seems to be much more information going from the mother to the child than from the child to the mother. In the beginning of the interaction, the cooperation, the mother has all the information (language, etc.) and after some time the child has acquired a lot of it. This characterizes the leader-follower relation as one of information flow from leader to follower. Now of course information flows back from followers to leaders, but the idea is that more information flows from leaders to followers than vice versa. And this information which flows from leaders to followers influences or directs the followers’ behavior — this information is accepted by the follower, it becomes part of the follower’s operational information.

So from the beginning already human cooperating groups will have had leaders and followers. This is not surprising since family and clan groups have people of many different ages, experience, and knowledge levels. And how could it be any other way since the groups we have in mind here must have the older members passing on the essential group information to the younger members if the group is to continue to exist as old members die off. These kinds of leader-follower relations are educational relations.

Are there other kinds of leader-follower relations in cooperating groups besides educational ones? Surely yes. What are some examples? Consider a group of men hunting animals to kill for food. Leadership might float depending on circumstances. The man who first see an animal they might go after, or the man who is closest to it might momentarily be transmitting much more information to the others than they are transmitting to him. So he is a momentary leader. Consider an individual in a group who discovers a new food (or anything useful to the group). She might be a leader for a while. Consider someone who more often than other members discovers new things. She might have more influence than other members of the group, not only with respect to the things she discovers, but in other respects as well —  she becomes a more permanent leader.

Now, as we know, cooperation is a more or less thing. It is extremely unlikely to be 100% (perfect cooperation, whatever that might be), and if it would seem to be 100% for some period of time, it will deteriorate sooner or later. This is so for several reasons. 1)  The goals of the group are not 100% understood and agreed on by all the members; 2) Communication has errors — the speaker may make a mistake in converting what she wants to say into what she actually says; her words may be distorted in transmission; and the listener may misunderstand what he hears; 3) The motivation of members varies with time.

Consider number 1) above. If the goals for the group as understood and accepted by all the members are similar enough, no big problem. On the other hand, big differences bring big problems. If some members of the group also have a personal goal of benefiting personally from the activities of the group (similar to the agency problem), then cooperation toward the groups goals, or at least the attainment of those goals may be diminished, compromised. Everybody has personal goals. Among these are having the human necessities to survive and develop oneself. The reason for cooperating in the first place was that by working together the members thought they could reach some common goals that would benefit them all. The ideal of a cooperating group then would seem to be to separate out, to keep aside, the personal goals of the individual members from the group goals. But, do you see the contradiction here? Each individual member must have a personal goal of working together with the other members toward the group goals. How to resolve this? It seems the analysis so far isn’t enough. We need to dig deeper.

Since each individual member of a cooperating group must have the goal of working together for the group goals, the personal goals of the individual members — if we want an effective group — must be consistent with the group goals, at least in the sense that if a member is working for one or more of her personal goals, that should not work against, it should not diminish or subtract from the effort or attainment of the group goals.

In other words, if cooperation is to be reasonably effective, personal individual goals and group goals must be compatible, consistent, coordinated, integrated. Is this possible? Yes, of course this is possible. This is proved possible by the fact that reasonable and quite effective cooperation has occurred in the past in every human culture and it is occurring now almost everywhere we look. We almost always do things with other people. We are hardly ever alone.

Clearly we can separate work toward our personal goals from work toward our group goals by time slicing. Example: You work for a corporation. Let’s say you work from 8 am until noon, have lunch at noon until 1 pm, and then go back to work for the corporation from 1 pm until 5 pm. Then you are working for the group goals from 8 am till noon, you are working toward your personal goal of surviving from noon until 1 pm, etc. Time slicing is not by any means the only way to integrate your personal goals and group goals so as to not diminish the attainment of either your personal goals or your group goals. It is often the case that working toward your group goals helps you attain your personal goals as for example when you are paid with money to work in a corporation and you can use that  money to buy some of your human necessities like food. Working towards your goals of having enough human necessities (think of food, clothing, education, health) can help with the attainment of your group goals (think of a job). Actually you must have enough of the human necessities or you will not be able to work toward group goals such as in a job, or any other cooperative activity. If you are starving, if your health (physical or mental) is very poor, if you don’t know enough, you can’t contribute very much to almost any cooperating group.

So individual people most often can and do have compatible individual and group goals. And the individual members’ continuous voting — saying yes or no, accepting or rejecting suggestions from others in the process of working toward the group goals most often works well to steer the group toward the attainment of the group’s goals. This democratic process, this process of group members voting about their individual actions and the group’s actions and methods and sub-goals is how group thinking works. It mimics individual thinking. It can be better than individual thinking for the obvious reason that there are multiple minds working on the problem. It is most definitely parallel processing.

But it — this cooperative thinking and democratic processing — sometimes goes wrong. When and how does it go wrong? What are the conditions? What helps it go right? 

OK, enough for today. Here are a few other questions I would like to address.

What are some recent changes in the evolution of our cooperation?

Is it always a “one person, one vote” system? And what does this mean?

There will almost always be some individuals whose vote — whose words and actions have greater influence on other members of the group than some other members. There will almost always be leaders and followers. So how do we avoid leaders who are self aggrandizing at the expense of the group? And how do we avoid lazy followers or “freeloaders”.

What about the agency problem — the problem of members of an organization (for example a corporation) who take resources out of an organization way out of proportion to their contributions through for example pay or theft or fraud?

Why No Theory?

Why do we want to construct a new economic system outside the framework of any grand economic theory. There are several reasons. First two of the grand economic theories — Capitalism and Communism have already been tried and each failed. Each failed to provide a just distribution of the human necessities. Secondly, all these grand theories are built upon some conception of a fixed human nature. Human nature is not fixed. We are not genetically determined. Human behavior depends on culture as much as it depends on genetics. Human behavior, and thus human nature, is variable over cultures. If a grand theory, based on some assumptions of a fixed human nature, were a true description of human economic behavior, then every culture would have that same economic system. They clearly do not. So any grand theory based on assumptions of a fixed human nature cannot be a true description, an accurate model, of any economy.

So, not only are the individual grand theories wrong, but the whole framework on which they are based — a fixed human nature — is wrong. For example capitalism is based on an assumption that humans base all their economic decisions on a kind of greed — always trying to maximize their individual welfare, their individual utility. There are huge numbers of people in the world today who think this way, or try to. For them almost every decision is about money. But not everybody does this. And even those who think they can make economic decisions this way in many cases they do not. In many cases they are not greedy — they actually want to be generous, be helpful toward other people, and often they do want to avoid harming other people. So the fundamental premise about human nature even for those who believe that everyone is greedy, or should be greedy, is wrong. Beyond this people cannot behave, in many, many situations as the theory postulates. The theory of maximizing your individual utility — called utility theory — is impossible to actually follow in many circumstances. In many situations we do not know, we cannot calculate what our individual utility is. So we surely can’t maximize it. It has been well-known that utility theory is impossible in practice for more than 150 years. Some of the contradictions and absurdities of utility theory have been demonstrated experimentally and described in Daniel Kahneman’s book “Thinking, Fast and Slow”.

Furthermore these theories are not clear as to what their goals are. Each theory presumably describes a complex of human behaviors, human interactions, human communication pathways — a system — that results in the production and distribution of goods and services by people for people. The theories were created on the assumption that the system already existed (at least for capitalism) and it was the job of the theory to describe the already existing system accurately, even scientifically, and/or mathematically, so that the theory could make accurate predictions. The idea of a goal or purpose of the system didn’t even come up. It was just assumed that there was one, and only one, system existing that had to be described, characterized, modeled, mathematisized, etc. It was not as if anyone had a choice. It was in a kind of afterthought that Adam Smith added the idea that in the capitalist system he described an “invisible hand” would ensure that the results of the operation of this system would be good for everybody. Well, they weren’t and they aren’t.

In reality the goals, the purpose of the capitalistic system is to allow and encourage all individuals to try to get as much money, property, and influence as they possibly can for themselves with almost no concern for what happens to anyone else. This is the main goal of the capitalist systems, their real purpose.

Well, now we know there is not just one such system. There are many variations of capitalism. Every capitalist country has its own version with some socialism mixed in. Communism came and went in less than one hundred years. And of course capitalism has evolved as all human institutions do. The theory has not kept up with the real evolving systems because, for one thing, it was wrong in the first place. It is so quaint to talk about shoemakers and bakers and a pin factory when there are corporations larger than countries and collateralized debt obligations squared.

Our economic and political systems evolve. We change them with every new law adopted. We change them almost every day. Why do we change our laws so much? Right now it is often done to accommodate special interests — to give tax breaks, reduce regulation, give special favors to individuals and corporations who contribute large amounts of money to political parties and candidates. So we change our laws to give favors to a limited class of people — mostly the 1%. Sometimes a law will be passed that has the goal of providing some benefits to some larger class such as the poor, or the middle class, or in very rare cases laws may be passed with the goal of making the whole system work better for everyone. Sometimes laws are passed with the goal of making the system better conform to some economic theory. So we change the system in ways that are haphazard, quasi-random, biased toward helping special groups (especially now to helping the rich get richer and the poor and middle class, the 99%, get poorer).

So what is the obvious change we need? We need to change the goals of all our system changes, of all the new laws we propose and pass. Every law should have the goal of moving our system in the direction of providing a just distribution of human necessities to all people.

It should not matter what such a system is called. To try to categorize the new systems into one or another of the dying grand theories is a waste of time and energy, and worse it just leads to confusion and needless arguments. (See for example the recent discussions about Libertarianism at Naked Capitalism.) If the new systems build on bits and pieces, old ideas, from some of the old grand theories, that’s fine as long as they move our systems toward the just distribution goals.

This is the non-violent revolution we want. First accept and spread the goal of a just distribution of human necessities. Then use the goal to constrain changes to our systems so that all changes move us toward the goal. Since this is trial and error, we don’t know how long it will take, and of course the “error” part means sometimes when we implement a change, it will move us farther from our goal, or it will have unintended negative consequences, and so we will have to reverse that change. This is surely no worse than what we do now. For example the repeal of Glass-Steagall — which allowed banks to gamble with depositors’ money — should probably be reversed.

The changes we make now are generally not consistent with our goal. They are not consistent with each other either. They often cause waste of human and natural resources. They make things worse. Our evolution is just drifting. We don’t know what we are doing. We don’t know where we are headed. We don’t have any purpose except mostly self  aggrandizement.

We can create economic and political systems that move us, step by step, non-violently towards our just distribution goals. But first we must throw out all the dead and dying grand economic theories.