The
future will be shaped by many things. Recently, I’ve thought about one of those
things, that the world is getting smaller (WIGS). In the past, WIGS seems to have been a force for a more "social democratic" world, and it may be so also in the future.
WHY?
1
WIGS means that bigger and bigger societies
become more and more integrated. They
become big “families”.
2
“Families”
tend to be pretty (social) democratic.
We
look first at point 1:
HOW
DOES WIGS MAKE SOCIETIES INTO BIG “FAMILIES”?
We
can get goods (including services) from other people in three ways:
* Theft: Take it
* Simple exchange:
Give something to get it
* Gift (or not-so-simple exchange): Be given it
Instead
of “Gift”, the third method can be called family exchange: Family members give each other goods all the time according to (usually informal) rules. In simple exchange, a seller sells a good to a buyer at one point in time. Family exchange is what can happen when several/many people (not just two – the buyer and the seller) exchange many goods (not just one good) at many points in time (not just once). Then the most efficient way to do all this exchange, can be that the persons give and get according to rules – instead of determining a price for every good that is exchanged.
Through
history, technological progress (leading to more trade, travel and electronic
communication) has steadily widened the geographical area, from which we get
our goods. All the three methods above have spread geographically:
*
Theft: The main example of theft between regions/nations, are
wars. The main example of theft within regions/nations, are
dictators/powerful kings using armies to “take” the power. And the sizes
of regions/nations have tended to increase over time, from tribes in e.g. the stone age to small kingdoms to
modern nations.
*
Simple exchange: From local trade to world trade
*
Family: Institutions are in a way like families - members of an
institution give and get according to (formal or informal) rules.
Examples of institutions are families, nations, organizations, firms and
public institutions. Through history, we have got more institutions, more
different types of institutions, bigger institutions, and we give and get more
according to our roles in institutions.
This
development can also be summed up like this:
Through
history, technological development has increased what can be achieved with
exchange. Two consequences:
** Exchange has become
more and more attractive compared with theft. It seems like dictators and
wars more and more have been replaced with democracy (an exchange between the
elected leaders and the population) and trade. So exchange has increased, theft decreased.
**
And exchange has become more like family exchange, and less like simple exchange. This is natural when the amount of exchange increases a lot. The main example is the growth of the public sector, and the increasingly regulated private sector.
In short: WIGS means more family exchange.
We
then look at point 2 mentioned above:
WHY
ARE “FAMILIES” (SOCIAL) DEMOCRATIC?
The movement from theft to simple exchange and then to family exchange, means that power becomes more and more evenly distributed: Theft
serves the interests of just the thief. Simple exchange serves the
interests of just the buyers and sellers (at best, if not one of them is able to exploit the other) – the effects of the business deals on
the rest of society, are (in principle) ignored. But family exchange, that WIGS creates,
tends to serve the interests of all the members of the family:
* It's harder to use violence (i.e. theft) or economic power (i.e. exchange) to exploit "family" members than other people, partly because "family" members can easily communicate with each other, and organize e.g. unions or democratic elections. So in a "family", the interests of the majority will tend to be decisive, not least in the long run.
* This majority will probably want e.g. an adequate social safety net, partly because they know they or their relatives may need it.
THE FUTURE?
In the future, increased family exchange will probably be a force for an even more social democratic world, perhaps especially by making the international community more into a big "family". But other sides of WIGS, like e.g. capital movements and migration, may work the opposite way.
But family exchange at least gives a reason to hope for an even more social democratic world, in e.g. the following two ways:
A) Perhaps it could become a right to have a job – if not an
ordinary job, then a subsidized job in the private or public sector. If
so, high inflation could perhaps be avoided with regulated wage growth. Regulated wage growth is the kind of thing that perhaps can be done when the society is integrated, organized - i.e. a "family".
B) Long ago, people with royal monopolies could charge high
prices. These monopolies disappeared (as a part of the movement from
theft to simple exchange). But companies still don’t have to face
competition from public companies selling ordinary goods as cheap as possible
(i.e. companies earning as little as possible instead of as much as
possible).
Such a public company has been suggested in the health insurance market in the USA. Such public companies could become part of a movement from simple exchange
towards family exchange.
EQUALITY
VERSUS EFFICIENCY?
Usually,
efficiency (the size of the "cake") and equality (how the "cake" is divided between people) are assumed to contradict each other. But an important reason the world has moved in a "social democratic" direction, and may continue to do so, is that this direction often means increased efficiency. The two
possibilities in the future mentioned above, would increase both
equality and efficiency. Also in the historical process
described above, both seem to have increased:
·
** Dictators/powerful kings and wars have tended to create both
inefficiency and inequality (e.g. because powerful kings wasted taxes on
castles and armies). So less theft (of these kinds) has meant more efficiency and more equality.
·
** Simple exchange tends to create inefficiency and inequality simultaneously in
mainly (?) two ways:
o
Weak competition leads to too high prices and too low production. E.g. the disappearance of royal monopolies have reduced this problem (and, as mentioned above, public companies may reduce it even more).
o
Ignoring effects of business deals on the rest of society is, at least in principle, inefficient for the whole society. The ability to ignore such effects probably also usually contributes to inequality, because such effects are more often ignored when the "victims" have little power. So increased regulations of business deals have probably often increased both efficiency and equality.
·
** The higher tax level now than before is often assumed to have reduced
efficiency, mainly (?) because it has reduced incentives. But that’s just
a part of the picture (that may be of little importance) – taxes have been
spent in ways that have increased the efficiency, e.g. by stabilizing business
cycles or financing the welfare state (which is a more efficient way of providing an income than begging and other local solutions).
Conservatism
versus social democracy is often considered to be efficiency versus
equality. The examples above indicate that a more realistic summary may be inefficiency & inequality versus efficiency &
equality.
