I was struck recently by the first of six cutting edge ideas noted in a recent brief posting on a Scientific American RSS feed.  Muhammed Yunus, the Bangladeshi economist who started the now global micro-lending movement, has a new business idea he is pitching to a few global companies: altruistic products.

http://www.scientificamerican.com/blog/post.cfm?id=walls-to-fall-6-ideas-that-push-the-2009-11-26

Doubtless much can and will be said about this, but I find the idea intriguing and encouraging, at least initially.  In my reading of Adam Smith, the late 18th century Scottish moral philosopher whose ideas are part of the basis of our modern economic system, as an Enlightenment thinker he thought that unseen forces (the “invisible hand”, or “Providence”) within the rational order of the cosmos would balance the selfish actions inherent in individual merchant’s actions, and thus markets, producing the common good despite the lack of intent to do so by market participants.

In so doing Smith basically blessed selfish action: live selfishly, and Providence will balance it out; you don’t need to be your brother’s keeper.  In other words, one need not actively pursue what it means to fulfill the second greatest commandment in order for it to be fulfilled.  How very convenient indeed.

What Smith seemed to fail to foresee were the imbalances introduced into the market by asymmetry in contractual power (as an individual user just try to re-negotiate the license on any large software company’s products) or information asymmetry (those with specialized knowledge of particulars always have an advantage over those without), over time leading to deeply embedded power inequalities and inefficiencies in the market.

Over two centuries selfishly oriented markets have resulted in massive imbalances in the distribution of wealth.  Smith was not worried about that; he was more concerned about the equal distribution of happiness.  In my view his optimistic vision has a very mixed result.  I live in the up side results; by the accident of where I was born, I have had access to education and resources such as capital, a generally favorable political and legal system, health care, etc.  For the poorest of the poor around the world, those without access to the most basic elements of survival, they have very little to no access to these starting points and very little, if any, hope of breaking out of their hand-to-mouth existence.

Will Yunus’s efforts offer some of these people the basics they need to survive and begin to flourish?  I hope so.  My real hope is that those up and down the org charts in those companies who work with Yunus will be genuinely touched by the plight of those they assist with these selfless products and will themselves be changed in the process.  Perhaps others will follow suit, jealous of the attention and good PR the others seem to be receiving; may they be changed as well!  Ecclesiastes 4:4 still accurately describes the business motivations of most.

Along related lines of meta-economics, or the ethical basis on which an economic system is built, I highly recommend my English translations of Italian philosopher of economics Luigino Bruni’s proposal to (re-)introduce agapic thinking into economics, as well as Italian philosopher of law and political science Carlo Lottieri’s analysis of the modernist reduction of the other.

My translation of Luigino Bruni’s brief paper What the Economic Crisis Teaches Us is online.

Money, Greed, and God: Why Capitalism Is the Solution and Not the Problem

http://www.heritage.org/Press/Events/ev050609a.cfm

From the above web site: “The church is bombarded with two competing messages about money and capitalism. The first message is that wealth is bad and causes much of the world’s suffering; the second is that wealth is good and God wants you to prosper and be rich.”

A friend sent me this; I have not had time to listen to the presentation itself so cannot comment on that.  However, snipping this bit of text from the event’s web page for brief comment, there are two foci in the above: wealth and self. This seems a misfocus; the 2nd greatest command is about the relation of self and other, not about self to wealth. With the self-other relationship as primary, I wonder if much of the rest won’t balance itself.

The following is by Italian philosopher of law and political science Carlo Lottieri, 22:26 into the fourth edited segment of a two day closed door conference of Italian economists called “The Invisible Hand” held 16-17 October 2008 on the theme of the current financial crisis; this is the close of Lottieri’s argument for federalist reform. The transcribed original text follows my translation, as well as links to the four edited sessions broadcast by RAI3 in the Percorsi series. The translation is mine, and any errors are solely mine. Interpolated additions are enclosed in square brackets [].

…and so I close my presentation with what I hold to be in reality the most authentic reasons for market federalism, which are neither juridical, institutional nor economic. It seems to me that an order that undoes political violence (which is the objective of the logic of the market,) and that affirms a horizon in which natural and individual rights are preserved (an order of liberty which is based on the respect of the other, and therefore a free economy which is freed from constant political interference,) all this in my view cannot even be imagined without a culture of solidarity that recognizes the transcendency of the other.

If we have had, and in part we have had some space for the market, it is after all because we have developed a certain idea of the personhood of the other which has resulted in the impossibility of the manipulation of society, which is in every way in contrast with the logic of libertarianism. In short, only if the sanctity of power, so to speak, is dissolved by the sanctity of the visage, to use the image of Emmanuel Lévinas, is it possible to check the complete availability of society, the goods of others, etc. [for exploitation] and therefore, the “thingness,” so to speak, of the human being that characterizes the modern state.

In my judgment the right of property, which is at the heart of classic libertarian theory and which libertarianism preserves, tells us that there exists something that is totally beyond us, which is beyond our [right to] control, now and always. On the contrary, with modernity property has become simply a legal attribute (consider what has happened with the codified reduction in rights simply by the will of the those in political power) and which is therefore something absolutely modifiable, alterable, and in the extreme, even cancellable.

The dissolution of property and therefore of the market, and I would also say of the federalist logic that is so tightly connected to the market, is entirely one with the expansion of power which has long nutured a totalitarian prerogative, a prerogative that sometimes succeeds in satisfying, which at other times must repress, and in any case is always ready to rise up [to assert itself], clearly primarily when defenses are weakest, therefore especially in times of crisis.

It is clear that in crises that power can expand itself with great ease, and individual liberties can be overlooked, cancelled, and so forth. In these days we live exactly in such risk. I do not believe that there has ever been in history such a massive despoliation as the one enacted by the US government with the stock market [rescue] plan. Every American family–a populace of three hundred million inhabitants–has seen a withdrawal, because in one way or the other the money will come from the families, of around ten thousand dollars.

That is a monstrous figure, a robbery that is without equal in human history. I truly believe that the state is making a power play in these situations, in this specific case a policy (which I would have difficulty defining as other than Keynesian, which is exactly whan Greenspan carried out) which inundated the world with dollars (we all know how many dollars the Chinese possess, for example,) which affixed the cost of money artificially low, thus which encouraged every sort of bad investment.

When money costs little it is easy for someone to borrow that does not have well-laid plans, which can even be loaned, for example, for housing to people that realistically have no possibility of repayment. The same interventionism which caused this crisis is now naturally switching to saving the world by fixing market prices, multiplying regulations, nationalizing banks, implementing rescue missions for bankers, etc. It is clear (permit me this remark) that “the occasion makes the politician,” and this is an occasion, due to the crisis, of ravenous exploitation.

I believe ultimately that there is fragility in a western civilization that does not recognize in the other, in his property, in his material presence (because property is presence within social relations) a limit to the unlimited will [to dominate] that all of us would want to express. In some way hubris is the desire to have no limits before oneself that expresses itself as a general [exertion of] will in lust for power, but this is possible because the other, in one way or the other, is negated. Thus it is probably from here that one would need to begin if one desires to construct a bulwark in the preservation of liberty, and above all if one wants to think that a federalist reform might represent all this.

Session One

Session Two

Session Three

Session Four

Testo originale trascritto da me: 22:26 “…e vengo qui alla chiusura del mio intervento, su quello che ritengo essere in realtà le ragioni più autentiche del federalismo del mercato, che non sono né di tipo giuridico-istituzionale, né di tipo economico, perchè il mio parere è un ordine che dissolva la violenza dell’ottico politico è questo in realtà, l’obbiettivo della logica del mercato, e affermi un’orizzonte in cui i diritti naturali e singoli siano tutelati, un’ordine di libertà che è basato sul rispetto dell’altro, e quindi un’economia libera che sia francata delle costanti interferenze della politica — bene, tutto questo al mio parere non potrà mai neppure essere immaginato senza il consolidarsi di una cultura che riconosca la trascendenza dell’altro.

23:12 Se noi abbiamo avuto, e in parte abbiamo avuto nella storia occidentale un qualche spazio mercato, è perchè in fondo abbiamo sviluppato una certa idea della persona dell’altro, che ha reso impossibile quella manipolazione della società che è del tutto in contrasto con la logica liberale. Insomma, solo se la sacralità del potere, per così dire, viene dissolta dalla santità del volto, per usare l’immagine di Emmanuel Lévinas, è possibile che si inizii a porre un freno di fronte alla disponibilità e quindi, usiamo questo termine, alla “cosità” dell’essere umano che invece caratterizza la modernità statuale, la piena disponibilità della società degli uomini, dei loro beni, eccetera.

23:54 Nella sua essenza a mio giudizio il diritto di proprietà, che è al cuore della teoria liberale classica e della tutela libertaria, ci dice che esiste qualcosa che è assolutamente al di là di noi, che è fuori del nostro controllo, ora e sempre. Vice-versa, con la modernità, la proprietà è divenuta un semplice attributo legale, pensate a cos’è successo con la codificazione, con la riduzione del diritto a semplice volontà del centro politico, e quindi qualcosa di assolutamente modificabile, alterabile, al limite anche cancellabile.

La dissoluzione della proprietà e quindi del mercato, e quindi io direi della stessa logica federale che è così strettamente connesso al mercato, questa dissoluzione della proprietà è tutt’uno con l’espansione di un potere che da tempo comunque nutre un’avvocazione totalitaria, un’avocazione che talvolta riesce a soddisfare, che altre volte deve reprimere, e che comunque è sempre pronta di emergere, sopratutto evidentemente quando le difese sono più deboli, e quindi specialmente quando abbiamo situazioni di crisi. È chiaro che nelle crisi che il potere può espandersi con grande facilità e, come dire, le libertà individuali possone essere dimenticate, cancellate, e così via.

25:13 In queste ore viviamo esattamente tali rischi. Non credo che nella storia si sia mai vista una così massiccia spogliazione, quale quella decisa dal centro politico statiunitense, con il piano borso. Ogni famiglia americana, ed è un popolo di trecento miglioni di abitanti, ha visto sottratti, perchè in un modo o nell’altro da lì questi soldi verranno, cioè dalle famiglie, circa dieci mila dollari. È una cifra davvero mostruosa, una rapina che è senza ugali nella storia umana. Veramente credo che lo stato tira forza in queste situazioni, nel caso specifico una politica (che difficilmente potrei definire se non come Keynesiana, quale quella che è stata appunto condotta da Greenspan) [che] ha innondato il mondo di dollari (tutti sappiamo come dire quanti dollari posseggono ad esempio i cinesi,) ha affissato un costo del denaro artificiosamente basso, ha favorito ogni genere di “malinvestment”, cioè di cattivi investimenti.

Quando il denaro costa poco, è facile che possa essere chiesto anche da chi non ha grandi progetti, e che possa essere usato per dare ad esempio abitazione a persone che non hanno poi realisticamente la possibilità di ripagarlo. Quello stesso interventismo che al mio parere ha causato il disastro ora naturalmente si cambia da salvare il mondo, bloccando i mercati, moltiplicando i regolamenti, nazionalizzando le banche, operando salvataggi dei banchieri, ecc. È chiaro che l’occasione, per così dire lasciatemi questa battuta, fa l’uomo politico, e questa dalla crisi è un’occasione ghiotta.

26:42 Ma in fondo credo che c’è la fragilità d’una civiltà occidentale che non riconosce nell’altro, nella sua proprietà, nella sua presenza materiale, perchè la proprietà è questa all’interno delle relazioni sociali, un possibile limite di fronte alla volontà tendenzialmente illimitata che ogni uomo vorebbe esprimere. In qualche modo la ubris è il desiderio di non avere confini di fronte a sé che si veste da volontà generale per concupiscienza verso il potere, ma questo è possibile perchè l’altro, in un modo o nell’altro, viene negato. E allora da qui probabilmente che si deve muovere se si vuole davvero costruire, come dire, qualche paratia a tutela della libertà, e sopratutto se si vuole pensare che una riforma in senso federale possa davvero rappresentare tutto questo.

In the September 2008 issue of The Costco Connection (Vol. 23, No.9), the members magazine of the Costco warehouse chain, the cover story is on William Wang, the CEO of Vizio, a flat panel digital television manufacturer.  On the facing page of the opening of the story, on page 25, there is a full page photo of Wang with a brief profile of Vizio.  There is a single quote by Wang as well, and that is what caught my attention:

The biggest measurement we have is how many customers love us.  To achieve that, the product must be good, and it must be affordable.

In the light of Luigino Bruni’s “Common Good and Economics” the above quote gives a tiny indication of just how much markets, when considered as the dominant human relationship, can distort human relationships.  When we characterize commercial relationships as “love” or “loving”, we profoundly miss the richness of human love, particularly selfless agapic love, substituting in its place an extraordinarily fickle ersatz commodity.

A friend sent me this a couple of days ago:

“The Austrians Were Right” by Ron Paul

I’ve recently run across the Austrians a bit while listening to some podcasts on RAI3 from an economic conference held by Italian economists a couple of weeks ago in Italy.  Most of these guys are not of the Austrian school, but in a little research on the ideas I’ve run across the Austrians a bit.  It looks like interesting stuff.

One of the Italian economists, Leonardo Becchetti, described his idea of the market as a cartoon that he has in mind (no one has ever done it).  In it a little guy named Market (Mercato) is being beaten up by two big brutes named Oligopoly (Oligopolio) and Informational Asymmetry (Asymmetria Informativa), while an intellectual observing the scene cries “Laissez faire!”

What I cannot understand is how a totally free market avoids exactly the cartoon scenario described by Becchetti.  In other words, who/what insures a reasonably level playing field, when every tendency is otherwise?  After all, Adam Smith has blessed selfish action for the last two hundred years, so market players are free to gain what advantage they can, however they can; one need not think at all about the other.  A few of my outstanding questions follow.

First, how does a system prevent the emergence of a few powerful players that non only dominate but control the markets — not the regulators of a system, but the system itself?  A free market by definition would seem to preclude the sort of regulation that would oversee the level playing field.

Second, not just informational asymmetry is a problem, but comprehensional asymmetry; in general a populace will not and cannot have either the comprehension or information to understand what market players are trying to put over on them to gain competitive advantage.

Third, how does one preclude industry influencing or outright regulating government to its own advantage, as happened in the CFMA and similar examples?

A fourth point, as much an observation as a question, is that there seems to be a new economic field called “behavioral economics” which considers psychology as well as a pure mathematical approach to economics.  This is emerging to try and factor in that in some cases people do not act in their own best interest,
abundantly clear in the current economic squeeze.  When do markets fail for reasons other than economic?

Recently I heard a podcast from the program “Uomini e Profeti“, or “Men and Prophets” from the Italian national radio. The program was entitled “Hunger and Thirst”, an interview by Gabriella Caramore of Luigino Bruni, a professor of economics in Milano, regarding the recent sharp increases in world food prices. I was quite engaged by the themes he discussed, centered around the “wounds of the market” (“le ferite del mercato.”) I quickly found his web site, which is in both Italian and English; several of his works are available in English.

With further research I found a paper with the intriguing title “Bene Comune ed Economia“, or “Common Good and Economics.” I found it interesting enough that I requested his permission to translate the paper, which he graciously gave. My translation of the paper is available from the Common Good and Economics link in the “Pages” area in the sidebar.