Wood over at his blog “Wood Faileth” has an article that connects to a thought I’ve had but haven’t known how to introduce. If you’ve read my recent Economics thought-sprint then go read Wood’s article and come back here, then I will try to complete my point. Another helpful pre-reading is my brief series on Public Good.
In my Economics series, I pointed out that when the units used to measure everything is dollars, you lose some nuance when you discuss the value of those things. Price is different from value.
In my Public Good series, I pointed out that Good implies proper order, and proper order implies pointing to God. That which is good is ordered to God; the Public Good is that which orders the public to God. There was a separate distinction though, that public good as it is used colloquially describes those things which society likes. So I will call socially approved things “Public Like” and things which are properly ordered to God “Public Good”.
In Wood’s article, he uses the example of Madison Avenue to point out the silliness of complaining about “Evil Capitalist Greed”. Madison Avenue is hardly the paragon of the social benefits of Capitalism, yet is a striking example of a some kind of order (I make no judgement on whether it is properly ordered or not–just that it reflects some order). People use Madison Avenue as a straw man because they think it is Evil–Wood accurately points out that most people these days hate beauty, and so hate order, and so reject that order; People use Madison Avenue as a straw man because they think it is Capitalist–Wood points out that it is hardly the best example of rampant capitalism available to us.
With that as preamble, we can now dig into some of the meat and potatoes of this article.
The First Law: Markets Are Efficient
A common defense of capitalism you may have heard is that profit motive accomplishes the public good. This is half true: Profit motive accomplishes the “Public Like”. When people say profit motive accomplishes public good, what they mean is that market forces will reward those people who help society, and will punish those people who harm society. Again: this is half true. In evidence, lets look at the fact that people pay money for pornography. The profit motive here is rewarding purveyors of sin. This is not good in any way; but this particular sin is currently not objected to by society, therefore falls within the “Public Like”, and is not prohibited. Profit motive of pornographers thereby advances that which society already approves. The sum of all things which society approves is it’s culture. Therefore profit motive perpetuates the culture in which the profit motive is deployed.
A rejoinder by the capitalist interlocutor may be that Profit Motive has many other benefits as well. Wood’s article points to one: plummeting prices through competition; I will add innovation and technological advancement as another. Profit motive leads to Entrepreneurial problem solving: If you can make money by doing something better, then eventually most people will do things better, until you can’t make any money doing that thing.
In my Economics Sprint, I pointed out that Entrepreneurial problem solving is a way of utilizing available resources to solve problems, and is not necessarily a way of benefitting society. Again: the first pornographer was using available resources (shamelessly sinful individuals) to solve the problem of satisfying demand for autoerotic voyeurism. Entrepreneurship is not inherently aligned with Public Good, but is aligned with monetizing resources in a way which society approves. Competition just means resources can be monetized in a way which is also accessible to society.
This is the first law they teach in economics classes: Markets are efficient, or Markets Work. This is absolutely true, but markets are not clearly defined. One person looking for pornography represents a market. If an entrepreneur thinks he can make money from it, he can enter that market and satisfy that demand. Markets are efficient, but markets are not inherently good.
Mining for Money
An important thing to note here is that Money is itself a resource, and is not a mere unit of measure, is not mere points. In a previous article I disambiguated a things value from its price. This allows us to do two things: Look at all transactions as bartering, and to look at all transactions as exchanges of value instead of exchanges of goods and services for money.
Looking at money as a resources explains a little bit of the American Venture Capital scene these days. There are huge sums of money being thrown around to start-ups, and the reason for this can be seen in my definition of Entrepreneurship: It is a way of utilizing available resources to solve problems. Money is a resource that, in the venture capital world, is abundant. Those who seek venture capital dollars are simply trying to find a problem which that resources can be deployed to address. Because the people who control that resource are members of society, that resource will only be deployed in ventures which align with the “Public Like”.
The reason the axiom “Profit motive = public good” has gone unexamined for so long is because it hints at a fundamental truth without actually arriving at it. Markets seek an equilibrium, and this line of economic thought is predicated on the idea that people make strictly equal exchanges: A given product is sold for the maximum price someone is willing to pay, and that must be no less than the amount it cost to create. The value, expressed in units yap, is always exchanged at a value gain, or a yap profit. The example I used previously was that a Canoe was on sale for $100 and I saw it, wanted it, and bought it. I like canoing, so the Canoe was 5 yap valuable to me, and in order to acquire that 5 yap value, I need only hand over one paper bill, which is only 2 yap valuable to me. The net exchange for me is +3 yap. For the seller, he does not want the canoe anymore, it is 1 yap valuable to him, but with a paper bill he could pay his rent, so the paper bill is 4 yap valuable to him: a net exchange of +3 yap.
This makes logical sense: If the canoe was more valuable to the seller than the money he would get for it, he would not make the exchange. If the money were more valuable to me than the canoe I would get for it, then I would not make the exchange.
However, we cannot stop here and say simply that “Value motive = public good”. The value scenario can still accommodate a person seeking and buying pornography, instead of a canoe. This digression about Value thus is interesting and descriptive but doesn’t change the results of our analysis. We must apply additional steps to arrive at some economic activity which truly implies public good.
Can I Exchange Rai Stones for Public Good?
Public Like can be anything, Public Good can only be that which points to God. The true issue at hand is cultural, and not economic. Can economics be used to wag the dog and change a culture from one that approves of pornography to one that condemns pornography?
Regulation is not the answer, because Laws follow that which a society already believes. Economics can only be leveraged to solve economic problems, and because the Public Like currently includes sin and godlessness, that is a social–and so cultural–problem. Culture can only be changed on generational timescales, and is less of a marketplace and more of a war. One culture must dominate and destroy another in order to replace it. The alternatives are only cultural victory, cultural secession, or cultural death.
So the answer is that there is no economic motive that promotes the public good unless the culture is already aligned to God. The levers for changing culture are to either outwit or outlast the dominant culture: Outwit through conversion, or outlast through having many children.
TL;DR: Profit Motive does not imply public good, therefore have lots of kids.