Monday, August 08, 2016

The Paradoxes I Live with

Here is a paradox that I see: There are too many powerful, smart, successful people who declare their love for the Capitalist, Free Market system, and yet, tries to rig its rules to their own advantage every moment. 

Now, a committed socialist may think that this Free Market talk is all rhetoric and no one really likes Free Markets. But, I have not yet reached that level of cynicism. In fact, more confusingly as it may be, those rig the rules think that it is okay to rig the rules as they are only protecting their self-interest. The Invisible Hand would make it alright because all other people are trying to rig the rules as well.

There is indeed a difference between protecting one's self interests within the marketplace and trying to rig the rules. The latter is to abuse the trust without which the invisible hand can not operate. 

Now, I hear that this is why democracy is important, institutions are important. They ensure that the rules are fair. The democratic system ensure that everyone has a voice, and the powerful are challenged from time to time. It allows the markets to work fairly.

But, isn't it a pipedream that the democracy operates outside the economy? The people who wishes the rig the rules of the market, do not solely focus on economics: It is actually all about politics, stupid! 

Looking at this, I know we got the story backwards. Free Markets and Fair Rules were not the state of nature. Rather, life may have been, as Hobbes would have seen, 'nasty, brutish and short'. Free Markets and Fair Rules is an ideal, a civilised state, rather than the default. So it needs work, and constant protection from human nature. 

Now, as you can see, my paradox is deep indeed: We want to create a space for human self-interest to play out without constraints, but to create that space we must reign in human self-interest first. All those political theories, including Hobbes', that we may have had a Social Contract of some kind to preserve the society - and agreed to live by this ever since! It is a really ancient thing, so old that it does not show up as a historical fact, but we all know this must have happened. And, yet, it is perhaps best to see history as a cyclical thing, we tend to go back as often as we go forward, we pull back as we reach the precipice, we work against our societies all the time and regroup just when our 'social contract' breaks down. 

Therefore, the Social Contract may not be a moment in history, but rather a description how we work. It is the Hobbesian Leviathan caught in the interminable Nietzscian cycles of time! Here is a paradox too - decline seems to be a precondition of progress - and the only lesson we may take from this is not that we have a social contract, but have a propensity to enter into social contracts and breaking it too.

Here are two propositions as summary then: One, the Market is not a natural phenomena, but a form of Social Contract. And, two, we enter social contracts consciously, as a guard against decline, and then break it as we start rigging the rules. Yes, the self-interests drive the market, but they also break them. There is no running away from it - such making and breaking is indeed the human condition - and therefore, while some players would always try to rig the rules, all of us must try to protect against it. 






No comments:

Popular Posts

How To Live

"Far better it is to dare mighty things, to win glorious triumphs even though checkered by failure, than to rank with those poor spirits who neither enjoy nor suffer much because they live in the grey twilight that knows neither victory nor defeat."

- Theodore Roosevelt

Last Words

We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time.

- T S Eliot

Creative Commons License

AddThis