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Re: NAFTA, Capitalism and Alternatives, VII
To: IN%"mexico94@profmexis.dgsca.unam.mx"
Subj: Capitalism and alternatives debate.
Dear friends:
About the ongoing debate about capitalism, marxism, EZLN, etc, etc, etc..
IMHO Harry Cleaver has some of his facts wrong. I say this with regret
because he really seems to have tought the entire thing out. Unfortunately,
wrong facts in---wrong theories and conclussions. On some of those items,
which I will list and discuss below, I know the facts because of personal
experience on some others I will have to rely on what I learned from readings
and other instructional activities.
1) What the hell is capitalism?
This definition is at the core of the debate. Capitalism is used as a curse
word. The images it conjures is that of decrepit, pasty old men lending money
at usurious rates, or a fat cat living off the backs of workers (like a union
leader I may add). A basic tenet is that capitalism exists because the
burgouis are able to create a system based on "contrived scarcity" to direct
the flow of surplus that labor creates towards themselves. A corollary to this
tenet is that only labor adds value and creates wealth. The example, is that
any commodity's worth comes to it because of the amount of labor embodied in
it. For example the profit that goes to the manufacturer of a chair is
actually surplus cheated from labor. The chair is nothing but wood and metal,
which are worth only to the extent that somebody produced or mined it. These
raw materials --which by the time they arrive to the factory have already the
labor of the miner, the woodsman, and the transportist embodied in it--are
transformed by machines that were themselves produced using labor and by
workers that add even more labor to it. According to Marxist theory, the
capitalist through the institutions he has deviced, is able to pay workers
only their survival and reproduction cost and appropriates the difference
(the surplus).
The problem with this theory, based on the Ricardian concept of rent, is that
it does not acknowledge the issue of real scarcity (supply relative to
demand). And thus water in the desert is expensive not because of how
expensive it is to bring it there, but because its relative scarcity makes it
suitable to use only for the most rewarding purpose.
A second and most fundamental flaw, is that labor is not a homogenous product
and that labor by acquiring expertise and specialization becomes capital
(albeit human capital). Thus workers themselves are the capitalists. For
instance the skills (capital) embodied in an engineer or physician may be
worth more than a factory machine which is owned by the "capitalist".
In modern "capitalist" societies about 75% of GNP goes to pay for labor.
Which helps explain why education leads to a better distribution of income.
Why, education is capital itself! It has been noted that as societies
increase their educational level, equality increases. I hate to compare
countries, but among Latin American countries those with higher literacy
rates are those with less unequal distribution of income (check it out).
In the capitalistic country "per excellence" the Good Old USA, the richest
guys are people that had nothing but an idea when they started. Check it out,
Bill "The King of Nerds" Gates -nothing but ideas, knowledge, and
ambition-, Sam Walton (Wal-MArt)-Nothing but a concept and ambition-,
Milliken the JUnk Bond king-who used a mathematical approach to risk and
investing that made him very rich- also knowledge and drive. Not to say that
all the wealthy derived wealth from their own human capital,some like the
Kennedys or the Rockefellers inherited their wealth, but among the rich new
money vastly surpasses old money. And again, the average worker has a decent
income, not because of unions I shall add, or minimun wage laws but because
they posses Human Capital (a result of education and on the job training).
In a nutshell capitalism is a system that frees the individual to pursue
happiness based on his free will and his ability and willingness to accumulate
capital with a minimum of friction. At the expense of repeating myself,
capital accumulation may mean money savings or increased education. Capital
is what gives value to labor (human, financial, or physical). By friction I
mean losses in freedom or capital necessary to conduct and carry out one's
own pursuit of happiness. For instance, a traffic light restricts my freedom
but is necessary for the harmonious conduction of traffic.
Does capitalism exist? NO, NO, and NO. It has never existed. It is an utopian
state. There are societies with more or less elements of it, but fully, 100%
unadulterated capitalism does exist nor has it ever.
2) Why is Harry Cleaver so disparaging of Economics?
Frankly, I do not know for sure. But from what I read in his postings, he
does not know much about it. Which is quite surprising as his address is at
the Department of Economics, U. Of Texas, Austin (A university that in
years past had a great "Institutionalist" faculty).
Economics, from what little I know, is based on a very simple argument
-individuals will not consume or do whatever pleases them if the costs to
them exceed the pleasure or profit derived from such consumption or activity.
or put another way, before you do something you consider first how much you
like it and compare it to what you sacrifice to do it.
This is very reasonable --asides by making three axiomatic assumptions: more
of a good is prefered to less, the more you have of a good the less you need
more of it, and if you prefer A over B and B over C then you prefer A over
C-- and can be proven mathematically (the highest degree of proof).
Serious Economic science --and little if any macroeconomics can be classified
as such-- says nothing about exploitation or inequality. It theoretically
argues that when markets are perfectly competitive output is maximized
(Pareto optimality -any other allocation of resources produces a lower
output). Economic science does not argue how ouput should be measured,
conceivably equality as defined by some measure could be one of the outputs
to be optimized. Furthermore, the THEOREM OF SECOND BEST shows that when
markets are even so slightly imperfect Pareto optimality is not necessarily
achieved by following the standard marginal principles.
So Harry, when you say aboout economics that its structure and its content
have been intellectually and practically inseparable from which it is an
expression, tell us why.
In Econ 101 students are taught that a product is not only the physical
aspects of it but it embodies also meaning and symbolism. That's why cars are
advertised as more than just transportation. So when you boldly, and without
base I may add, say that "in capitalism food is just another product, produced
by another process of production....In Chiapas... the basic foodstuff, corn,
has traditionally had far more complex connotations...The "productivity" of
corn production IS NOT MEASURABLE BY ECONOMIC MEASURES, NOR BY ANY SIMPLE
QUANTITATIVE YARDSTICKS, you show your ignorance in Economics. Any thing can
be measured in terms of opportunity cost. Tell me what you are willing to
give up for it and I will tell you how much it is worth.
Anybody knows that things posess qualities such as beauty, metaphysical
properties, etc. that are hard to quantify, nonetheless what you are willing
to exchange for it is its worth to you. If peasants in Chiapas are willing to
forego the cultivation of an alternative crop, or the maintenance of the
forest, and a government PRONASOL bribe, and Miss MExico,then corn is worth
all of that to them, at least. So please do not say about economics that it
can not quantify.
3. What does Harry know about Ejidos, collective farming, and private
agriculture in MExico?
NOTHING. PURE KNEE JERK.
This point I will debate in a later posting as this is running too long. But
Harry, let me ask: How you been a farmer? Have you actually lived in an
Ejido? Do you even know the meaning and history of the word? Did you do
extension work among peasants during the height of the Green Revolution? I
mean by reading your posting one could assume you had.
And by the way stop romanticizing about the so called Zapatistas, when the
dust settles it will be shown that this "struggle" as well as the
Ruta100 conflict were just moves, dangerous moves in a game of
politics between governing cadres. Read John Crosse's postings for a very
illustrative account of how politics is done in Mexico.
Horacio Soberon