Tuesday, April 10, 2012

395: The Utopia of the Free Market - Gross National Happiness

In a previous lecture I already remarked that many people think, that the free market is an objective process.

Nobody seems to be responsible for the ideology and the Utopia behind it. There is not such a thing like "The Communist Manifesto" (1848).

I have shown you that this is a mistake. "Atlas Shrugged" (1957) by Ayn Rand is the Capitalist Manifesto, the perfect expression of the utopian ideas, on which capitalism and free market thinking is based.

On a UN- conference a few weeks ago Prime Minister Thinley of Buthan, a small state in the Himalayas between India and China, said the following:

" The economic model, that uses the Gross National Product as the standard, that pursues unlimited growth on a planet with limited resources has become absurd. (…) It is the cause of our irresponsible, immoral and self-destructive actions."

For that reason the government in Buthan has stopped assessing the quality of life and general wealth and welfare by the Gross National Product. It now uses the Gross National Happiness.

The assessment of Gross National Happiness (GNH) was designed in an attempt to define an indicator

that measures quality of life or social progress in more holistic and psychological terms than only the economic indicator of Gross National Product (GNP).

Gross National Product (GNP) is the market value of all products and services produced in one year by labour and property supplied by the residents of a country.

Unlike Gross Domestic Product (GDP), now in us by the US, which defines production based on the geographical location of production, GNP allocates production based on ownership.

So, it seems possible to do politics, not obsessed by percentages of economic growth, but by defining a standard of happiness of your inhabitants as leading principle.

And then here we are with our belief in the Free Market as if it were a law of nature. What is really questionable, is,

that the processes of the Free Market are controlled by the homo economicus, who is mainly after his self-interest using rational choices.

There is this peculiar conviction, that the human being is a rational being. Of course, some of our actions are based on rationality, where Rand would say that this means the use of logic only.

But what we call economy, is always embedded in a total of religious and cultural structures. Nowhere you find a stand-alone system of rational economic choices and calculations, which are independent of social relations.

Every economic phenomenon - production, distribution, market, pricing, exchange, etc. - can only be understood within its own context.

Nowhere we find a general, universal and abstract economic logic, which can be applied to all these features alike in different societies.

The currently recognized version of the Seven Capital Sins are usually given as wrath, greed, sloth, pride, lust, envy, and gluttony.

Our current economic system even stimulates at least two of them in the homo economicus: greed and envy.
-- I also want car and at least bigger than the one of my neighbor. --

This possessive and jealous individualism has become a characteristic of our free market culture, decorated with an "every man for himself" attitude.

Is this a logical consequence of economic relations? What are the basics of economics and , from a historical perspective, has it always (necessarily) been this way? We still have to cover a lot of ground, I'd say.

The Discussion

[13:19] herman Bergson: Thank you... ㋡
[13:19] Merlin (merlin.saxondale): I have some sympathy for the free market being a law of nature, e.g. consider Auctions.
[13:19] Mick Nerido: There is a consumer confidence index that measures how optomistic or pesimistic people are...
[13:19] herman Bergson: Don't misunderstand me.....
[13:20] herman Bergson: I do not look for a moral judgement on the Free Market...
[13:20] herman Bergson: In a philosophical sense I just want to know what it really IS....
[13:20] herman Bergson: and so far I have shown that it is a situation driven by utopian ideas and expectations
[13:21] Lizzy Pleides: what is the motivating force for the market Herman? doesn't envy and greed play an important role?
[13:21] herman Bergson: the free market in NOT self regulating as for instance Greenspan thought
[13:22] Bhelle Alacrity: Could I ask the Professor a question?
[13:22] herman Bergson: Yes Lizzy....that is what is at stake here..if you take into account the financial crises
[13:22] herman Bergson: Sure Bhelle
[13:22] Bhelle Alacrity: If you for example want to get a knife sharpened
[13:22] Lizzy Pleides: people seem to confound happiness with richness
[13:22] Bhelle Alacrity: How should the orice for that be set ?
[13:23] herman Bergson: Could you ask your question without using a metaphore Bhelle?
[13:23] Bhelle Alacrity: There must be some mechanism
[13:23] Mick Nerido: Think of the free market as two prize fighters without a refferie!
[13:23] herman Bergson: I dont know what an orice is
[13:24] Bhelle Alacrity: What would it be without a market place
[13:24] herman Bergson: yes mick....
[13:24] Merlin (merlin.saxondale): price?
[13:24] herman Bergson: Again ...don't misunderstand me...
[13:24] Bhelle Alacrity: For example what did they do in the Soviet Union to set the price for sharpening a knife
[13:24] Bhelle Alacrity: Wonders
[13:24] herman Bergson: I do not judge the phenomenon of the free market as good or bad....
[13:25] herman Bergson: that is completely uninteresting...
[13:25] Merlin (merlin.saxondale): Don't you think that an auction is a good example of things finding their proper value?
[13:25] herman Bergson: Complex question Merlin.....
[13:25] Merlin (merlin.saxondale): hmm
[13:25] herman Bergson: Just be patient with me for a moment....
[13:25] herman Bergson: There are a lot of issues here...
[13:26] herman Bergson: To begin with ...the concept of 'just price'
[13:26] Debbie Dee (framdor): Value is badly represented at auctions - there is no reference to cost to society
[13:26] herman Bergson: I'll get to that in coming lectures
[13:26] Gemma Allen (gemma.cleanslate): economics is such a complicated thing to understand ...
[13:26] herman Bergson: Then there is the relation between resources and property....
[13:27] herman Bergson: Who owns the water of the sea.....
[13:27] herman Bergson: How can you own a piece of land...?
[13:27] herman Bergson: Then there is the issue of labor...
[13:27] herman Bergson: labor invested in making a product
[13:27] Gemma Allen (gemma.cleanslate): that was the native american belief
[13:27] Merlin (merlin.saxondale): Land is a good example there
[13:27] Gemma Allen (gemma.cleanslate): cannot really own the land
[13:28] Mick Nerido: the concept of private property did not always exist...
[13:28] Merlin (merlin.saxondale): Like if you bought all the land of a country would you be its ruler?
[13:28] Merlin (merlin.saxondale): No
[13:28] Mick Nerido: the king gave it to his supporters
[13:29] herman Bergson: then take the biblical idea that we are just stewards of this earth....
[13:30] herman Bergson: What I want to say is that in a next lecture I'll like to investigate the concept of economics.
[13:30] Bhelle Alacrity: Professor
[13:30] herman Bergson: what are the basic concepts of economics...
[13:30] herman Bergson: Bhelle...go ahead
[13:30] Gemma Allen (gemma.cleanslate): oh good!!!!!
[13:30] Bhelle Alacrity: I'm sure you'll excuse me when I say that I think I own a piece of land
[13:31] Gemma Allen (gemma.cleanslate): ♥ LOL ♥
[13:31] Bhelle Alacrity: maybe I'm mistaken?
[13:31] Gemma Allen (gemma.cleanslate): nopeyoudo
[13:31] herman Bergson: No...of course you can own land....
[13:31] Bhelle Alacrity: I see
[13:31] Merlin (merlin.saxondale): Seems a bit like land ownership in SL.
[13:31] Bhelle Alacrity: Confused
[13:31] herman Bergson: it means that you have property rights on it which others have not on that land....
[13:31] Mick Nerido: you own what the government recognizes you own
[13:31] herman Bergson: You can plant there your crop...for instance
[13:32] Merlin (merlin.saxondale): Yeah I like that explanation
[13:32] Debbie Dee (framdor): And leave it to your kids
[13:32] Merlin (merlin.saxondale): You cant keep the cops out though
[13:32] Mick Nerido: There are also mineral rights on land...
[13:32] Annie Brightstar (anniebrightstar): I think humans are territorial; as are many other species
[13:32] herman Bergson: John Locke said that you can only own so much land as you can work on....if I am not mistaken...
[13:33] herman Bergson: A cute idea..but relative...
[13:33] :: Beertje :: (beertje.beaumont): by hand of with machines?
[13:33] Merlin (merlin.saxondale): yes, and perhaps with workers too
[13:33] Debbie Dee (framdor): Or with capital-- better question
[13:33] herman Bergson: I have seen fields with 14 combiners in a line harvesting the wheat
[13:34] Merlin (merlin.saxondale): I think Locke was flawed there
[13:34] Mick Nerido: you can own only as much land as how much land tax you can afford
[13:34] herman Bergson: taxes is another chapter Mick....
[13:35] Mick Nerido: it means the gov really owns the land!
[13:35] Bhelle Alacrity: Professor?
[13:35] herman Bergson: So plz.....we really need some more time then our 30 to 50 minutes to deal with all the issues you bring up now ^_^
[13:35] Gemma Allen (gemma.cleanslate): no i think not
[13:35] Merlin (merlin.saxondale): We dont have land tax in UK
[13:35] Debbie Dee (framdor): Or in south africa
[13:35] Lizzy Pleides: lucky you!
[13:36] Gemma Allen (gemma.cleanslate): taxes for example will take care of a road so you can get to the land
[13:36] herman Bergson: We have....
[13:36] Gemma Allen (gemma.cleanslate): or protection for the land
[13:36] herman Bergson: Yes Gemma...
[13:36] Gemma Allen (gemma.cleanslate): or fire fighters
[13:36] Gemma Allen (gemma.cleanslate): etc
[13:36] Bhelle Alacrity: Professor you said that there was no manifesto like the Communist Manifesto
[13:36] Merlin (merlin.saxondale): But, the cost of access is not proportional to the size of the land
[13:36] herman Bergson: yes I did
[13:37] Bhelle Alacrity: I wonder what you think of Hayeks' "Road to Serfdom"
[13:37] Bhelle Alacrity: It seem to have some of the qualities of a manifesto
[13:37] herman Bergson: yes that is one....the Manifesto I mentioned was "Atlas Shrugged" by Ayn Rand
[13:37] herman Bergson: a milllion bestseller in the US
[13:38] herman Bergson: I recently read about the book Bhelle....
[13:38] Annie Brightstar (anniebrightstar): Were she still alive I suspect Ayn might rewrite some of it.
[13:38] herman Bergson: Hayek is a supporter of the free market
[13:39] herman Bergson: Interesting remark Annie....
[13:39] herman Bergson: yes I would love to have heard her opinion about the current situation
[13:39] herman Bergson: But she died in 1982
[13:40] herman Bergson: Well..tons of issues still to deal with.....
[13:40] herman Bergson: So, you may expect a lot more lectures...
[13:40] Gemma Allen (gemma.cleanslate): ♥ LOL ♥
[13:40] Mick Nerido: Thank you Professor
[13:40] Gemma Allen (gemma.cleanslate): ♥ Thank Youuuuuuuuuu!! ♥
[13:40] Debbie Dee (framdor): Yay.
[13:40] herman Bergson: I thank you for your inspiring discussion...
[13:41] herman Bergson: Class dismissed ㋡
[13:41] Debbie Dee (framdor): thanks herma
[13:41] Gemma Allen (gemma.cleanslate): Bye, Bye ㋡
[13:41] Gemma Allen (gemma.cleanslate): for now
[13:41] Lizzy Pleides: Thank youu!
[13:41] :: Beertje :: (beertje.beaumont): thank you Herman
[13:41] Lizzy Pleides: A wonderful Easter for you all!
[13:41] herman Bergson: Tank you Lizzy...
[13:41] herman Bergson: You too..
[13:41] Debbie Dee (framdor): Oh yes..... May the bunny come with many eggs :)
[13:41] Lizzy Pleides: Thank you:-)
[13:41] Annie Brightstar (anniebrightstar): It would be interesting for the class to write down their idea of a utopian world and then we could all compare notes
[13:42] Lizzy Pleides: yes debbie!
[13:42] Annie Brightstar (anniebrightstar): Please excuse me I have a disco waiting :)
[13:42] Merlin (merlin.saxondale): Bye Herman, Mick, and girls hehe
[13:42] herman Bergson: laughs...
[13:42] herman Bergson: Ok Annie...
[13:42] Debbie Dee (framdor): Bye merlin
[13:42] Annie Brightstar (anniebrightstar): Thanks again Herman
[13:42] Bhelle Alacrity: Oh dear'
[13:42] :: Beertje :: (beertje.beaumont): homework Annie?
[13:42] herman Bergson: My pleasure Annie
[13:43] Bhelle Alacrity: I wish I was still a girl
[13:43] herman Bergson: Your idea is nice Debbie
[13:43] Debbie Dee (framdor): see you next week
[13:43] herman Bergson: but really difficult
[13:43] Debbie Dee (framdor): oh Thank you herman
[13:43] Bhelle Alacrity: Bye everybody
[13:44] Debbie Dee (framdor): bye belle, lizzy and herman
[13:44] herman Bergson: Most op the time a utopia story is a book of not less than 250 pages ㋡
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