Here the two themes of world changing ideas (philosophy and history) come together in a surprising manner.
There is an idea that it is rational to pursue one’s self interest which became a cornerstone in a culture war. It is a strange fact that what was originally almost mystical – ‘light of reason’ – has become a matter of calculation. A coldly rational man is culturally today a person who subjects everything to calculation.
In Adam Smith it is stated that that we rely on the interest of the butcher to supply our meat. This idea that people followed their interest is conceptually quite unclear and this allows much to be concealed.
This idea is not that if act A gives more income than act B I will do act A, but that I should do act A. In common parlance people say if I earn more from act A than act B, if I am rational, I should do A. It is usual in common parlance to blur income, surplus and profit.
But this the crux. In the plantation world, there was a fundamental rule that the surplus arose from minimizing costs paid not costs incurred. Much of the plantation world was one in which the land was depleted of value and so there was a drive for ever to seek new lands. Whereas the feudal system needed to nurture the soil in order to reproduce for the next year, the plantation culture was driven by maximising surpluses. A standard capitalist manufacturing model sought a return on all factors of production. This was obviously a more sustainable model.
This plantation model had many flaws. The drive to reduce costs and increase output could create a crisis of oversupply. In a world of oversupply, prices would fall precipitously, and no amount of cost saving would save the plantation. Under this pressure, the plantation owner may see his brutal enterprise as a charitable organisation. Another problem for the plantation model would be the more it grew the less it created customers. Whereas under Fordism, it was feasible to seek to increase worker’s wages to the level that they could afford to buy the products of the enterprise, under the plantation model the drive to reduce costs meant that markets would inevitably be external to the society. This would also generate a military situation in that the increasingly impoverished population would create a need for a military force whose personnel could not be supplied. In many Caribbean islands this military force was provided by a roaming naval detachment. A plantation model had little space for a ‘middle class’ and often little use for ‘poor whites’.
Quite quickly, the plantation owners became ‘absentee owners’ living in another time zone altogether finding the environment of their surplus production distasteful.
Given the fabulous surplus they were appropriating as their personal wealth, they came to culturally dominate their societies. This pursuit of ‘self-interest’ would become an article of faith, even if it could not be defined. It became the justification for all their conduct.
This system comes into conflict with a nascent ‘manaufacturing capitalist’ model. The final conflict would be triggered by an attempt to extend plantation lands driven by the misuse and exhaustion of existing lands. This plantation model is incompatible with the nascent manufacturing model.
In the end, the plantation model is defeated on the battlefield. However, the proponents of the plantation model engage in a rearguard offensive at the cultural level. The culture and particularly the economics profession becomes dominated by the idea that simple self-interest is the ultimate driver of human activity.
Bear in mind that many manufacturers such as Quaker enterprises in the UK took great efforts to improve the lives of their workers.
Pure self interest as an economic doctrine had to deal with the effects of real life politics and economic uprisings. It could be argued that the political leaders saw the need for compromise and the economists developed new theories to support this particular view in the face of a threat of communism.
If one sees the so-called ’free market’ economists as actual plantation apologists then matters fall into place.
These plantation apologists have adapted to a world where physical violence as a primary source of labour control was deprecated. Physical violence is replaced by ‘free markets’. Free markets impose the violence of unemployment, dispossession and lack of shelter, poor food, poor healthcare etc.
Under ‘free market ‘ ideology, costs are only those items you cannot avoid paying for. Only a government can intervene to force the inclusion of full costs into a market system. A market system can cope adequately with the government imposing full costs onto transactions, but this is hidden under the ideology of ‘free markets’, which claims that the government has no role in markets. Once we can see ‘free markets’ as a legacy of plantation economics, the difference between markets under manufacturing capitalism and ‘free markets’ under plantation economics becomes clear.
In terms of intellectual domination, the role of the concept of ‘rationality’ as the pursuit of mathematically calculated self-interest was crucial and possibly indispensible.
One can see how the rise of ‘free market’ theories and the collapse of the Soviet Union could lead to a triumphalism of ‘rationality’ as a summation of ‘free markets’ and ‘self-interests’.
If one now looks closely, this free market model shares with the old plantation economics the underlying lack of care for all unpaid for inputs and lack of consideration for even clear political implications. Whereas the Quacker enterprises and Fordists enterprises led to general social improvement of the workers, the current neo-liberal free market system reverts to a world where the work force is disposable.
Under plantation economics, wealth reverts to the very top. Almost everyone else is impoverished. If there is an oversupply or the land becomes degraded, plantation economics promotes merely ‘moving on’ to better territory. Under the modern system of plantation economics, any equivalent changes can be responded to by simply moving to another ‘territory’, conceived as geography or technology, as before but this time quoting the globalisation mantra.
Under modern free market economics there is no difference between surplus and profits and if this is applied to financial markets we get rampant abuse. 2008 financial crash exposes the ideological failings of the idea that unpaid costs can be ignored. But in accord with plantation economics, the government is only required to save the plantation owners. The workforce are left to the tender mercies of ‘free markets’. Mortgage lenders are saved but mortgage borrowers are dispossessed.
Under earlier concepts of ‘rationality’ this behaviour would be considered utterly irrational. But the modern concept of ‘rationality’ allows this behaviour to be sanctified. Bad philosphy has consequences.
This takes us to WEB Dubois . At the end of WW2, he reflected that Nazi ideology had been defeated on the European battlefield but had won on the US culturefield. One can say that the plantation ideology had been defeated on the US battlefield but had won on the US culturefield.
(I am still following the rule I mentioned in earliernposts that these are ideas that I have had for 50 years and will be worked out in detail in due course – but the ideas feel as if they are now demanding an outing, a walk in the park.)
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Notes
Note 1:
Interest:
There are immediately serious issues. There is enormous difference between income and profit. Profit requires all relevant costs to be taken into account whether I incurred them or not. I cannot turn a loss into a genuine profit by simply refusing to pay my bills. A surplus differs from a profit in exactly this way.
Let us revisit the butcher. It is obvious that the butcher is a human being like his neighbours. He may in 1776 not wish to serve Irish customers or customers from other parts of the UK. The fact that he would loose income may be countered in several ways. One is if his income is already sufficient for his needs his small loss of trade may be of no consequence to him and not equal to pleasure of an act of discrimination. Secondly, his show of prejudice may reflect the prejudices of his own target customers and win him trade, just as a shop known only to sell to whites mght increase its trade among those with such sympathies. A Jewish customer in Nazi Germany may be well aware that his custom was not desired as may an African American in the old US South.
It is simply not the case and never was that the butcher’s simple self interest was sufficient to utterly determine his behaviour. Adam Smith’s proposal was nonsense from the beginning.
Let us look more closely at the idea behind it. A person should follow his interest seems to make sense but does not. It is often determined that a person’s interest is revealed by his behaviour! Then again how do I determine ’interest’? First, there is a timing issue. Over which period of time do I need to consider matters. Adam Smith and many post Comtean liberals take an almost instantaneous approach. But the moment I put a time horizon into play my ‘interests’ are no longer either clear or in many cases determinable. Once time horizon is put into play the following issues arise: a loss today, T1, may be adjusted by higher profits at T2 and subsequently. Between two persons considering the same trade their time horizon may be significantly different so that for James who expects to retire in 5 years a series of transactions /investments that would payoff in handsomely in 7 years would not make sense but for Andrew who expects to retire in 20 years would be appealing. Another issue of time horizon is economic expectation. ‘A’ may expect economy to grow and B expects a recession. This could affect their decisions but is not a ‘fact’. In reality, any issue of strategy would render this idea nonsense. Unless we introduce ‘ceteris paribus’ clauses surreptitiously or openly we can no longer answer the question: should A take a transaction offered at this instant that will pay him more than another for the same item? One can consider a thousand reason for B to take a lower return starting from opening new markets, rewarding customer loyalty etc.
However, the ideology plays upon the idea that human reason is mere calculation.
Note2
There is an enormous difference between surplus and profit. A surplus arises if, at the end of the transaction and its time period, there is a greater amount of assets than at the beginning. There is no requirement that all costs have been taken into account. A criminal undertaking can easily have accounts prepared showing the surplus or deficit for the year.
Note 3
We have in Note 1 explained the issue arising in defining ‘interest’ but there are others. To whom does the possessive pronoun refer to? Is the butcher only concerned about his personal interest not his family’s? I sell at a lower price to my children’s teacher etc or my wife’s close friends or members of my ‘fraternity’? The ‘my’ in ‘my interest’ is not defined. What costs are taken into account? What if the buyer is also a seller to me elsewhere? What if he is my doctor?