Thursday, May 24, 2012

407: The Utopia of the Free Market - Jeremy Bentham

Economics as an academic discipline, or even as a concept, was not possible in traditional societies, based as they were on either tradition or authoritarian rule.  

Not until the market system came into existence did “economics” make any sense, since until that time land, labor, and capital had no modern meanings. 

With Adam Smith we got a theoretical basis: Society is a group of people, where everybody is born with his or her own set of skills and acts based on self-interest. 


These skills are used to gain an income. The more skillful you are the higher your income can become.

Everybody is absolutely free to do with his income as he pleases. Any attempt to order the individual to spend his money on well defined targets is an infringement on personal freedom.

This means that every institution in society should be contract based. Those who pay for it, will benefit from it. 

Nobody is obliged to pay. Such an obligation is regarded as TAKING money from a free person and spending it against his will on issues he doesn't agree to.

A free market helps to select those who are good at different enterprises and those who are not. Any attempt to interfere with this process will disrupt the market.

Or… summarized…Amen  to liberalism ^_^ 

Adam Smith (1723 - 1790) believed in a virtuous self-interest which results in invisible cooperation. The whole system is based on a specific belief in the nature of man. What drives a man: self-interest and in the negative sense, the vice of greed.

This self-interest will automatically contribute to the public benefit, if you let it have its way in the free market. And here we run into the paradox of the free market.

For what we call the free market is nowadays controlled by tons of regulations. For example, in Europe we have this famous "Brussels speaks".

 Just think of the enormous agricultural subsidies, which prevents developing countries to compete in our market.  Free market… ???

The paradox is that there has emerged a whole "monitoring industry". Only in the Netherlands there is paid more than 800 million Euro a year on monitoring, inspection and enforcement.

The philosophy of Jeremy Bentham (1748 - 1832) and his ethics of utilitarianism fits perfectly with the economic approach of neoliberalism. 

The homo economics with his rational choice mode was already a basic part of his philosophy. The same model as you find in the works of Ayn Rand.

"Nature has placed mankind under the governance of two sovereign masters, pain and pleasure. It is for them alone to point out what we ought to do, as well as to determine what we shall do. 

On the one hand the standard of right and wrong, on the other the chain of causes and effects, are fastened to their throne. 

They govern us in all we do, in all we say, in all we think…"
— Jeremy Bentham , The Principles of Morals and Legislation (1789) Ch I, p 1"

Initially Bentham invented even a special pain/pleasure calculus, so that it was possible to evaluate the amount of pleasure and pain. 

Later he replaced the calculus  by money as criterium. But this method could only be used by fully rational persons.

Here we encounter the black side of almost every ideology. The Utopia of the Free Market is based on the assumption that our self-interest eventually will work for the public welfare, because our rational dealing with demand and supply.

But we are not just that perfect rationally acting being. We are not just that homo economics and Bentham had his own ideas about that observation. In 1791 he published a small booklet "The Panopticum" 

The Panopticon is a type of institutional building designed by Bentham. The concept of the design is to allow an observer to observe (-opticon) all (pan-) inmates of an institution without them being able to tell whether or not they are being watched.

Bentham conceived the basic plan as being equally applicable to hospitals, schools, poorhouses, daycares, and madhouses, but he devoted most of his efforts to developing a design for a Panopticon prison, and it is his prison which is most widely understood by the term.

It was invoked by Michel Foucault  in "Surveiller et Punir (Discipline and Punish)" (1975)) as metaphor for modern "disciplinary" societies and their pervasive inclination to observe and normalise.

Just look around you, just as Bentham assumed, day after day we have to be disciplined to be(come) true believers in the free market and the invisible hand that guides us all.

That such a campaign was needed and apparently now still remains necessary, lets see clearly that man is more, was more, and wants to be more than a  rational homo economicus.


The Discussion

[13:28] herman Bergson: Thank you.....
[13:28] Qwark Allen: ::::::::: * E * X * C * E * L * L * E * N * T  * ::::::::::
[13:28] herman Bergson: The floor is yours..^_^
[13:28] Clerisse Beeswing: strange
[13:28] Merlin (merlin.saxondale): I didn't know that stuff about Bentham....
[13:28] Debbie Dee (framdor): Very interesting - thanks prof.
[13:29] .: Beertje :. (beertje.beaumont): this looks like Big brother is watching you...
[13:29] Merlin (merlin.saxondale): But utilitarianism seems a good thing to me
[13:29] herman Bergson: Yes merlin it was till 1975 and foucault's publication...
[13:29] Debbie Dee (framdor): I would like to read more on Benthams calculus
[13:29] Clerisse Beeswing: sound like that movie with jim curry
[13:30] herman Bergson: That is only fun Debbie....
[13:30] Bejiita Imako: interesting thing for sure
[13:30] herman Bergson: the formula was...
[13:31] Debbie Dee (framdor): A calculus of pleasure and pain ?
[13:31] Merlin (merlin.saxondale): I doubt if its maths
[13:31] herman Bergson: Intensity X Duration X %Closeness X%Certainty
[13:31] Merlin (merlin.saxondale): oh .. .sort-of maths then :P
[13:31] Debbie Dee (framdor): Probably some math...
[13:31] herman Bergson: complete nonsense
[13:31] Clerisse Beeswing: sounds like it
[13:32] Merlin (merlin.saxondale): Still not calculus as I know it
[13:32] herman Bergson: later he changed it into money...
[13:32] Bejiita Imako: x = times?
[13:32] Mick Nerido: we all tend to do what will give us pleasure and avoid pain...
[13:32] Debbie Dee (framdor): lol - not calculus at all.
[13:32] herman Bergson: You mean propositional calculus??
[13:32] herman Bergson: first order logic?
[13:33] Merlin (merlin.saxondale): Differential and Integral.. as in Newton
[13:33] herman Bergson: no no...it was calculating a value...
[13:33] Debbie Dee (framdor): No. I was referring to your lecture.
[13:33] Qwark Allen: omg
[13:33] herman Bergson: way over my head Merlin ^_^
[13:33] Merlin (merlin.saxondale): ok :)
[13:33] Bejiita Imako: saved the formula will try to make one in visual c++
[13:33] Bejiita Imako: hehë
[13:33] Bejiita Imako: asa fun thing
[13:33] Qwark Allen: nice bej
[13:33] Bejiita Imako:
[13:33] Debbie Dee (framdor): wtg bej lol
[13:34] Merlin (merlin.saxondale): we're going off-topic again
[13:34] Clerisse Beeswing: lost me at calculus
[13:34] herman Bergson: Bentham ended up with saying that if that pleasure is worth 5 pounds and that pleasure is worth 5 pound then they are equal pleasures
[13:34] Femtasia Rexen: haha
[13:34] herman Bergson: Ye Merlin...
[13:34] herman Bergson: for the most important topic today is...
[13:34] Merlin (merlin.saxondale): Well the health service do calculations like that now
[13:34] Qwark Allen: ehhehehe
[13:35] Qwark Allen: ehehhe
[13:35] Qwark Allen: to much
[13:35] Clerisse Beeswing: I believe that too
[13:35] herman Bergson: that every ideology seems to need some (re)education program for the population...
[13:35] herman Bergson: and Betham was close to that idea...
[13:35] Clerisse Beeswing: if this many people had this many disease will leave this many people
[13:35] Merlin (merlin.saxondale): Oh yes Herman.. .We are ALWAYS learning... (not) :P
[13:35] herman Bergson: we ahve te be educated to be rational self-intersted human beings...
[13:36] Debbie Dee (framdor): It is almost like someone picks a policy, and makes people follow it. How is this "free"?
[13:36] Bejiita Imako: hmm indeed
[13:36] Bejiita Imako: in a way
[13:36] herman Bergson: Yes Debbie....
[13:36] Clerisse Beeswing: in a way indeed. someone do turn polices around
[13:36] herman Bergson: at the roots of that policy is a view of man....
[13:36] Qwark Allen: somehow that his ideas doesn't seem from a free mind / market point of view
[13:37] Qwark Allen: everything was kind of controlled to what he believe should be the way
[13:37] herman Bergson: and liberalism and neoliberalism and Objectivism have such a view...
[13:37] Bejiita Imako: but from his own views and interests
[13:37] herman Bergson: Well Qwark...
[13:37] herman Bergson: the point is...
[13:37] herman Bergson: where DO our ideas about society come from???
[13:38] Clerisse Beeswing: people higher up then me
[13:38] Debbie Dee (framdor): from leaders who distill them from the zeitgeist,
[13:38] herman Bergson: What we know is the relation between Money and power...
[13:38] herman Bergson: No Debbie I don't believe that...
[13:38] Debbie Dee (framdor): ok
[13:38] herman Bergson: I still believe in the greedy individual...
[13:38] herman Bergson: greed of money and greed of power
[13:39] Femtasia Rexen nods
[13:39] Clerisse Beeswing: true
[13:39] herman Bergson: but the real question is....
[13:39] herman Bergson: Why are we greedy (by nature) and can't we share equally???
[13:39] Femtasia Rexen: we are all afraid
[13:39] Femtasia Rexen: haha
[13:39] Clerisse Beeswing: true fem
[13:39] Merlin (merlin.saxondale): Well there is Death to consider
[13:40] herman Bergson: Yes....terror is a good weapon of the greedy...
[13:40] Debbie Dee (framdor): Good question. maybe because we are stuck in a body isolated from others, and feel our own fear and pain so vividly
[13:40] Qwark Allen: i understand his point of view, but i see a future society based on those ideas, with people dressing light blue clothing, and other dark blue
[13:40] Bejiita Imako: hmm interesting question herman indeed
[13:40] Merlin (merlin.saxondale): Building riches against poverty in old age etc
[13:40] Femtasia Rexen: and dying before we get there
[13:40] Femtasia Rexen: so someone else gets the money
[13:40] Merlin (merlin.saxondale): Sometimes yes Fem
[13:40] Bejiita Imako: even though people have they still want more and more and more for themselves at the cost of others
[13:41] herman Bergson: Yes Qwark..I know what you are point ing at...
[13:41] herman Bergson: but communism isn't a solution at al...
[13:41] Clerisse Beeswing: has we grow so does our mind and want
[13:41] Merlin (merlin.saxondale): Oh Clerisse?
[13:41] herman Bergson: there you too see a system of first (re)education the population...
[13:42] herman Bergson: Yes Clerisse we have to grow wiser...
[13:42] Debbie Dee (framdor): The destruction of the commons caused by greed should make us want to be more fair.
[13:42] Clerisse Beeswing: yes I guess the more we learn we will see good to bad and learn
[13:42] herman Bergson: Yes Debbie.....
[13:42] .: Beertje :. (beertje.beaumont): it's still the survival of the fittest
[13:43] Debbie Dee (framdor): I guess we are a lot less intelligent than we think ;)
[13:43] .: Beertje :. (beertje.beaumont): oh yes Debbie..so true
[13:43] herman Bergson: I have thought about that myself Debbie :-)
[13:43] Bejiita Imako: yes
[13:43] herman Bergson: Quite an intelligent remark ^_*
[13:43] Debbie Dee (framdor): he he
[13:43] Bejiita Imako: the prob is the greedy ones don't care at all about the others just for themselves
[13:44] Bejiita Imako: even if all people around suffered they wouldn't care
[13:44] Clerisse Beeswing: true
[13:44] Bejiita Imako: thats why it looks like this in the world
[13:44] herman Bergson: Yes Bejiita....that is the sick observation indeed
[13:44] Bejiita Imako: yes :(
[13:45] Clerisse Beeswing: but that is why there is people who think on their own who can help the greedy understand
[13:45] Debbie Dee (framdor): Why are we speaking about them? we all participate willingly.
[13:45] herman Bergson: No Debbie....the situation is so complex....
[13:46] herman Bergson: What understanding do we have of the operations of the financial markets?
[13:46] Clerisse Beeswing: any talk about money brings out the best and worst in some
[13:46] herman Bergson: Yet they manipulate our governments, banks etc
[13:46] Debbie Dee (framdor): None, but we can see destruction of the commons clearly.
[13:46] herman Bergson: yes we can indeed Debbie...
[13:47] Merlin (merlin.saxondale): Can you clarify Commons Debbie?
[13:47] Merlin (merlin.saxondale): Common land etc?
[13:47] herman Bergson: Let me try first Merlin...
[13:47] Debbie Dee (framdor): Commons was well covered by herman earlier.
[13:47] Merlin (merlin.saxondale): ok
[13:47] Qwark Allen: the name should be changed from free market, to manipulated market by the greedy
[13:47] Bejiita Imako: yes
[13:47] herman Bergson: The basic idea of commons is in my opinion 'solidarity' and 'sharing' the resources of this planet
[13:47] Bejiita Imako: thats the true name for it for sure
[13:48] herman Bergson: correct me if I am wrong Debbie
[13:48] Bejiita Imako: all speeding in the wrong direction
[13:48] Qwark Allen: yes :-)
[13:48] Debbie Dee (framdor): Good explanation herman.
[13:48] herman Bergson: thank you Debbie...
[13:48] Bejiita Imako: yes
[13:48] herman Bergson: From there we can go on then...
[13:48] Bejiita Imako: thats how i define commons too as "the commin stuff "
[13:49] herman Bergson: What Debbie means by commons , means, that we are loosing that
[13:49] Bejiita Imako: that now the greedy ones want for themselves without sharing
[13:49] herman Bergson: all is part of the greed of individuals...
[13:49] herman Bergson: oh...to give you an example....
[13:49] herman Bergson: in the newpaper of today....
[13:49] herman Bergson: WHO OWNS THE SEA????
[13:50] Debbie Dee (framdor): lol - good question - we do.
[13:50] Bejiita Imako: eeeh Own the sea? thats insane
[13:50] Qwark Allen: the fishies?
[13:50] Bejiita Imako: well some people try to own the moon now
[13:50] herman Bergson: Well..Chine , Japan and the Phillipines are fighting over enormous areas of sea...
[13:50] Qwark Allen: yes, cause of natural resources there
[13:50] Clerisse Beeswing: europe too
[13:51] herman Bergson: they draw their borders ..well...with a ruler I guess on the map and say...this is mine...
[13:51] Debbie Dee (framdor): But the sea is earth, and we all live here - it is OUR COMMON sea
[13:51] herman Bergson: reason....there is oil there
[13:51] herman Bergson: but WHO OWNS THIS EARTH....???
[13:51] herman Bergson: not us...
[13:51] herman Bergson: but look what they are doing...
[13:51] herman Bergson: reason...
[13:51] Qwark Allen: for me, the same ones that rule the markets
[13:51] herman Bergson: profit..
[13:51] herman Bergson: greed
[13:51] herman Bergson: self enrichment...
[13:52] Debbie Dee (framdor): we all do, even the poor. or no - one.
[13:52] Bejiita Imako: some think they can own the universe i think
[13:52] Bejiita Imako: haha
[13:52] Qwark Allen: how many of you don`t have a TV home?
[13:52] Qwark Allen: seems i`m the only one then
[13:52] Qwark Allen: °͜° l ☺ ☻ ☺ l °͜°
[13:52] Qwark Allen: lol
[13:52] Femtasia Rexen: me too
[13:52] herman Bergson: I wished everyone on this earth had one at his home Qwark..
[13:52] Merlin (merlin.saxondale): Me... sort-of
[13:52] herman Bergson: and internet
[13:52] Debbie Dee (framdor): lol qwark
[13:52] Clerisse Beeswing: me too everyone should have one
[13:53] Qwark Allen: internet is a gd thing, TV not so sure
[13:53] Clerisse Beeswing: internet and tv are almost the same qwark
[13:53] herman Bergson: Those are the new channels to democracy on a globalscale
[13:53] Qwark Allen: look at those countries, where there is no free will or choice
[13:53] Merlin (merlin.saxondale): no no Clerisse
[13:53] herman Bergson: like Adam Smith already said...
[13:53] Qwark Allen: only government propaganda
[13:53] Debbie Dee (framdor): I would choose the internet over tv. better choice of programs ;)
[13:53] Bejiita Imako: i have computer connected to home theatre system really smooth but a bit clicking back and forth now
[13:53] herman Bergson: quitessentail is EDUCATION
[13:54] Bejiita Imako: watching eurovision semi at same time
[13:54] Clerisse Beeswing: hmm okay gotta think about it
[13:54] bergfrau Apfelbaum: ***** APPPPPPPLLLLAAAUUUSSSSEEEEEEE***********
[13:54] herman Bergson: Ok..I think you are educated enough for today...
[13:54] Qwark Allen: ::::::::: * E * X * C * E * L * L * E * N * T  * ::::::::::
[13:54] Qwark Allen: ¸¸.´ ¯¨.¸¸`**   **´ ¸¸.¨¯` H E R MA N ´ ¯¨.¸¸`**   **´ ¸¸.¨¯`
[13:54] Qwark Allen: thank you
[13:54] Bejiita Imako: YAY! (yay!)
[13:54] bergfrau Apfelbaum: very interesting!! herman & class
[13:54] herman Bergson: Thank you all for your participation....
[13:54] Clerisse Beeswing: thank you professor
[13:54] bergfrau Apfelbaum:I possess only ONE mountain :-) --> in SL
[13:55] Bejiita Imako: awesome and interesting
[13:55] Femtasia Rexen: very interesting, thank you
[13:55] Bejiita Imako:
[13:55] bergfrau Apfelbaum: smile
[13:55] herman Bergson: class dismissed...^_^
[13:55] Qwark Allen: as usual herman
[13:55] Qwark Allen: :-)))
[13:55] .: Beertje :. (beertje.beaumont): thank you Herman:)
[13:55] Mick Nerido: thanks herman, sorry i fell asleep...
[13:55] Qwark Allen: thank you
[13:55] Fred123 Aiten: many thanks herman
[13:55] Debbie Dee (framdor): awesome thanks Prof Herman ;)

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