Econ2002

#economics #ownership Econ2002

Divorcing ownership from control or management is usually bad. Socialism tends to do exactly that, communism being worse: 'the people' own the factors of production, but control is vested in an elite or nomenklatura.

Every group needs a leader, so even if the controlling elite is a committee, execution of committee wishes will default to a chief. This usually gives rise to some kind of dictatorship, quite distant from the people or putative owners.

Examples range from the Israeli Kibbutzim (smaller and infused with religious purpose) to the Soviet Republics of the old Soviet Union (materialist, secular and hostile to religion). In the latter the local Soviets (socialist committees) had the job of enforcing the will, usually a five-year plan, of the central Supreme Soviet in Moscow. The Nomenklatura, mostly in the Supreme Soviet, with some in the provinces, drove nice cars (if one can call a Zil nice) and lived in fancy mansions, far removed from the status of the putative owners of that old Russian version of communism. The poor 'owners' were lucky if they could afford a flat apartment with public transportation. A Zil or Lada was usually unaffordable for them.

It is far better to have private property in competitive free markets. Ownership and control are usually closely bound. Feedback from customers is usually quick and intense. If one owner or business becomes lazy or corrupt, others quickly enter the markets to compete.

Social Darwinism or 'dog eat dog' capitalism can be avoided by just enforcement of anti-trust laws, with an active welfare safety net for workers who are unable to compete.

Since our US Civil War we have had so much government centralization and intrusion into free markets, with much overregulation, that it is often a wonder the markets still work. Less regulation coupled with vigorous enforcement of key laws and regulations promoting free competition are sorely needed.

#math #logic A note on the logic of production:

Factors of production at best form a well-ordered set. At worst they should form a lattice. At the zeroth level of the lattice (the leaves of the tree) is the vector or sequence of initial prices, p(i). Without free markets, values of p(i) are usually an educated guess or a political decision. The marxist labor theory of value would calculate p(i) by writing equations based on labor and commodity prices. But in absence of a free market, the latter would also have to be set by a central committee or dictatorship.

Suppose we try to avoid tyrannical price-setting by 'resetting' the economy. That is, arbitrarily define a space or topos of all production lattices, identify their homomorphisms, write p(i) type descriptions for each, a kind of kernel for the lattice morphisms. Does each morphism and its kernel in the topos form an exact sequence? Is completeness provable? Initial pricing is still a problem, even with a minimal number of production morphisms.

Similar reasoning may apply to a topos of transactions. What are kernels and adjoints? What are the p(i)'s for labor and exchange services?

Socialist and communist thinking puts entirely too much faith in mathematical and statistical central planning. As such it is subject to limitations from modern mathematical logic, including incompleteness as well as frequent inconsistency. Using concepts and terminology from modern category theory helps illuminate the weak marxist and materialist presuppositions and assumptions.

#religion #philosophy #Bible A Note About Envy:

Modern socialists often try to construct an 'envy free' model of the economy, as a closed input-output system with extensionality dominating any consideration of intensions. The model is said to be envy free when an equal distribution of economic products for all parties can be deduced or calculated.

One problem with this is that an equal distribution may sometimes be 'fair,' but it is not envy free. Envy is an attitude or intension. Even if my share of something is equal to yours, I can still covet your share, unjustly of course. One classic example is from King David in the Bible, who had everything including health, money, intelligence and power. Still he envied his friend Uriah and coveted his wife Bathsheba (2 Samuel 11). We all know how that turned out!

I have heard some say recently that 'King David had a problem with women.' I think it is more accurate to say that he had an envy problem. That is certainly how the Prophet Nathan interpreted it in 2 Samuel 12. Note that among the covenant people of that time, Nathan could 'tell truth to power' without getting killed for it! I can't imagine a prophet like Nathan surviving a similar encounter with, say, Nebuchadnezzar or, God forbid, Julius Caesar.

One lesson for us is that in economics 'tough love' against envy is needed more than mathematical 'political correctness.' Envy and covetousness are attitudes, and a really envious person will never be content with anything. Impartial enforcement of criminal laws in a free market context is far better at controlling envy than any kind of central planning or over-regulation.

Milton Friedman educates Bernie Sanders about economics and regulation in this short composite video.