Saturday, January 01, 2011

Deconstructing the Ten "Cannots" of Political Economy

Allen Small offers reproduces the The Ten "Cannots" of Political Economy, created by Rev. William John Henry Boetcker in 1916:
You cannot bring about prosperity by discouraging thrift.
You cannot strengthen the weak by weakening the strong.
You cannot help small men by tearing down big men.
You cannot help the wage earner by tearing down the wage-payer.
You cannot further the brotherhood of mankind by encouraging class hatred.
You cannot help the poor by destroying the rich.
You cannot establish sound security on borrowed money.
You cannot keep out of trouble by spending more than you earn.
You cannot build character and courage by taking away man's initiative.
You cannot help man permanently by doing for them what they could do and should do for themselves.
Sadly, these mottos, accepted as "wisdom" by many, are either trivial or flat-out wrong, revealing an what is at best an extremely naive political philosophy, and at best a dishonest justification for the capitalist ruling class. (Of course, Allen Small — like almost every Libertarian and Randian — is as uncritically dogmatic as any Christian fundamentalist; he serves as a notable counter-example that to be a "true" atheist you must be a skeptic.)

These mottos exhibit a fundamental character of intellectually dishonesty: they are in one sense trivially and obviously true; in another sense they are at best highly controversial and at worst completely wrong. They are phrased so that the reader will assent in the context that they're obviously true, but uncritically universalize them to contexts where they're wrong.

You cannot bring about prosperity by discouraging thrift. In the sense of "thrift" as efficiency, this motto is simply trivial. In the sense of thrift as savings, with prosperity in antithetical sense of present consumption, this motto reveals an ignorance of economics that could be cured by reading the first chapter of any introductory economics textbook. Economics is about trade-offs, what you have to give up to get something else. We must continuously trade off between prosperity (present consumption) and thrift (present savings for future consumption). We must find the right balance between prosperity and thrift. Just as it makes no sense to immediately consume everything we produce with no thought at all for the future, it makes no sense to save everything we produce. In order to achieve a balance, there must be some negative feedback system in place: we need to discourage prosperity when it becomes — in some sense — excessive; we must also discourage thrift when it too becomes excessive.
This motto exists to tell you that you must always save your money so it can be used to the benefit of the capitalist ruling class; heaven forbid you should employ the fruits of the economy for your own comfort and convenience.

You cannot strengthen the weak by weakening the strong. You cannot help small men by tearing down big men. You cannot help the poor by destroying the rich. These mottos are identical in import. They're trivial as a "criticism" of a bullshit straw-man "Harrison Bergeron" egalitarianism, that no one, including Marx, ever considered endorsing. As substantive political principles, they're wrong. Strength and weakness (and big/rich and small/poor) — in a political context — are relative terms. You are "strong" (big) if and only if you can impose your will on the weak; you are "weak" (small) if and only if the strong can impose their will on you. The only way you can strengthen the weak is by weakening the strong. These mottos are only the most thinly disguised justifications for the privilege of any ruling class.

You cannot help the wage earner by tearing down the wage-payer. In the trivial sense, of course we cannot help the wage earner by literally destroying the capitalist industrial infrastructure. But again, in the trivial sense, this motto is directed against a straw man: only the most lunatic fringe of anarchists really favor just destroying industrial civilization, and they're too busy debating whether or not the use of wool unacceptably exploits sheep. In a more substantive sense, "tearing down" can taken to mean "acting against the interests of". And the interests of wage earners and wage payers are inexorably and irremediably in conflict. This conflict is not even a trade-off: in the long term, market forces necessarily push wages to the level of bare survival. In a larger, long-term sense we must eliminate the wage-earner/wage-payer contradiction, which is inherently exploitative.

You cannot further the brotherhood of mankind by encouraging class hatred. Ha! As if the capitalist ruling class had any interest in the "brotherhood of mankind"*! The "brotherhood of mankind" is absolutely incompatible with any kind of class structure. If the capitalist ruling class wishes to itself bring about a classless society, and they have the power to do so, there would be no class hatred. So long as they hold themselves up as a ruling class, inveighing against "class hatred" in the name of the "brotherhood of mankind" is nothing more than rank hypocrisy.

*No, I'm not at all happy with the gendered construction of this ideal, hence it remains in scare quotes for the entire paragraph.

You cannot establish sound security on borrowed money. This motto is not even trivially true in even the most narrow, individual circumstances, as will attest any person who has borrowed money to buy a house, get an education, or build a successful business.

This motto is absolutely incomprehensible to anyone who has studied economics, and it completely contradicts the first "prosperity/thrift" motto. First, all money is debt. If I have a thousand dollars in my bank account, society is indebted to me: I may at any time in the future demand a thousand dollars worth of goods and services from anyone in society, and she is obligated to give them to me; in return, she becomes the lender, and society then owes her a thousand dollars worth of goods and services.

More importantly, all "thrift" (savings) is debt. It doesn't matter if you call it a bank loan, a credit card, a bond, stock ownership or the inflation/deflation of money. What is produced (except for the trivial amount that is physically stored) must be used somehow by someone. If it is not consumed directly, it must be used to build new physical capital to increase future production. The person who forgoes consumption now to allow another to build a factory has at least some demand (although not necessarily the absolute and total demand entailed by capitalism) against the future production of that factory.

This motto is not even coherent in a capitalist economy: every capitalist, both individual capitalists and capitalist corporations constantly borrow money, at interest, from banks and individuals. Our entire industrial civilization is built on debt. Without debt — in some form — there is no investment, no industrial infrastructure, no modern civilization.

You cannot keep out of trouble by spending more than you earn. This motto is very similar to the one above, but it deserves special analysis. First of all, a billion ordinary working people have "stayed out of trouble" even though they have spent more than they have earned. Everyone who has bought a house spent — at the time they purchased the house — more than they earned. They go to work, they make the payments, they stay out of trouble. Everyone who has taken out a student loan to get an education has spent the time, effort, and labor of their professors, the administrators, the staff, and the builders of the physical campus, spends more than they have earned in the rational expectation that they will in the future earn more than they will spend.

In the long-term sense, most debts must be eventually repaid (but the system takes into account that some debts will simply be wasted; we do not (and perhaps cannot or should not) have a perfectly efficient economy), but in the long-term, global sense, it is impossible to spend more than one earns, in the sense of consuming more than is produced at the macroeconomic level.

There is another hidden assumption in this motto, that the wage "earner" actually earns exactly that which the wage payer chooses to pay him, and no more. It's possible (I suppose) that it might happen to be the case that a wage receiver actually does "deserve" (in some vague, metaphysical sense) that which she is paid, but the "laws" of economics most definitely do not guarantee such an outcome, even in the weaker sense that (truly) free markets do more-or-less guarantee that the price of a good or service matches the equilibrium price established by the supply and demand curves. And if by "earn" we mean "personally labor to produce", then it follows trivially that the rentier (capitalist) class does indeed spend more than they individually labor to produce; far from failing to "stay out of trouble", they actually rule the world.

You cannot build character and courage by taking away man's initiative. Again, true in a trivial sense. But what do we mean by "initiative"? Initiative to do what? I most certainly do want to take away "man's initiative" to murder, rape, steal my stuff, or to defraud me. I most certainly do want to take away "man's initiative" to create and maintain exploitative and oppressive economic relations. We want to reward initiative to engage in socially useful activities, and take away initiative to engage in socially destructive activities. What precisely constitutes "socially useful" and "socially destructive" activities is a matter of no small controversy, but cloaking this kind of decision-making under the banner of preserving "initiative" without regard to its ends goes beyond hypocrisy to prevarication.

You cannot help man permanently by doing for them what they could do and should do for themselves. But of course what should people do for themselves? Again, even the most cursory study of economics reveals the importance of trade, of people doing for each other what it is economically unproductive for them to do for themselves. It makes no sense for me to grow my own food, build my own house, design and produce my own computer. I cannot even begin to repay by my own efforts the labor of billions that have created the civilization and culture that I and every other living person now enjoys. Every one of us lives in a web of relationships not just with each other but with those long dead and not yet living. The Libertarian myth of "self-sufficiency" is nothing more than a thinly disguised version of "I've got mine, Jack."

I don't know who I'm more contemptuous of, Republicans or Libertarians. Both seek to maintain relations of exploitation and oppression. Both employ lies and bullshit as egregiously irrational as Christianity. Both end up believing their own lies and bullshit. But to the extent that there are degrees and layers of bullshit, Republican bullshit is at least more direct: Exploitation and oppression are intrinsically good, ordained by natural or divine rule. If the workers are exploited, so what? They deserve to be exploited. If they didn't deserve to be exploited, they would use their "initiative" to become part of the exploiters. There's something especially slimy, however, in the Libertarian effort to cloak exploitation and oppression in the rhetoric of liberty and freedom.


  1. Thanks Larry for deconstructing that guy. I've encountered his writings before and think he's a boob.

  2. Note that the "Ten 'Cannots'" are not Small's own; they've been floating around for quite a while. They were created by Rev. William John Henry Boetcker in 1916.

  3. But yes, Allen Small is indeed a boob.

  4. Hi Larry, Happy New Year!
    Obviously you had a lot of free time this morning and I presented a tempting target for you.
    My New Years list was meant to be a suggestion and a criticism of the economic mess that pervades most Western democracies. Why such a mess? I believe it is because these democracies have followed socialist/marxist/statist ideologies for the past 50 or 60 years to varying degrees. Your retorts to my simplistic "cannots" indicate that you are also bound to these same ideologies. Sure some of the statements are trivial, but in the context of libertarian economic theory the statements are good rules-of-thumb and not meant to be grand pronouncements for the new year. So I'm not going to rebut the mountain you have created out of my molehill.
    Over the years I have found that it is pointless to argue against religion with believers. I wasn't going to convince them, I was just going to anger them and entrench their beliefs. In exactly the same way I find it truly pointless to argue with people who are ideologically convinced that the sun shines out of Karl Marx's ass. I'm not going to convince them or you of anything except that we will agree to disagree. I'm good with that, I know nothing is going to change until that pervading ideology is seen for what it is. I believe in empirical evidence, and my observations show me that statist ideologies don't work and can't work. I expect to be long gone before that happens if it ever happens. The only way it might happen is to change the philosophical underpinnings of our statist society and that means going back to first principles and building a philosophy that is compatible with human nature. The good news is there are some people doing that now. For you and your readers give a listen to Stefan Molyneux at Freedomain Radio. Here is the link to the YouTube page, enjoy:

  5. Deconstructing your post

    We start with unnecessary adjectives that convey your personal opinion, not of any value to the reader.

    thrift is argued as efficient. Ok.
    But have you tried to deduce what is the root cause of having this ? Eg. the absence of a flat tax. The world wants people who are earning more to pay not their fair share but more and more. Taking this as context, the quote is relevant and absolutely deserves to be number 1.

    I nearly died when I read "we need to discourage prosperity when it becomes — in some sense — excessive; we must also discourage thrift when it too becomes excessive"

    WHAT THE HELL ? who decides "in some sense" ?
    A majority vote ?
    Should the Neanderthal have killed off all "Homo sapiens" as they were more clever ?

    WTF ? I just now realize what kind of creature you are.

    1. Wow. The stupidity here is overwhelming.

      1: This blog is about my personal opinion. If you don't want to hear it, don't read it.

      2: The motto does not mention a flat tax, so why should I assume it means that? (That is a rhetorical question.)

      3: Google "inflationary gap macroeconomics".

      Against stupidity / The gods themselves / Contend in vain.

    2. Oh, and you don't like majority vote? Do you not like democracy? Would you prefer a dictatorship? (Again, these are rhetorical questions.)


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