81. What's So Special About Land?

Note: This post is the eighty-first in a series about government and commercial ethics. Click here for the full listing of the series. The first post in the series has more detail on the book 'Systems of Survival' by Jane Jacobs which inspired this series.

In 'Systems of Survival' Jane Jacobs describes what all the occupations that subscribe to the Guardian syndrome have in common:

"It finally struck me. They're all concerned with some aspects of territorial responsibilities. The condition is the work of protecting, acquiring, exploiting , administering or controlling territories.

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Not territory in the abstract. ... Real concrete territory. I suppose we might call this the territorial syndrome. Taken as a whole, it also describes the classic heroic virtues and values."

But this raises the question, what is so special about land, that organizations dedicated to managing it have an entirely different ethical system from commercial organizations?

One thing that differentiates land from the other things we buy and sell is that, as any real estate agent will tell you, they aren't making any more land.

I touched on this earlier, back in this post about how humans were 'cowboys on a spaceship'

Given a finite commodity, all the values in the commercial syndrome which relate to maximization of production aren't particularly useful - in fact they can be counter-productive depending on what purpose they are directed to.

So if you can't make any more land, the only question becomes how to divide the land that does exist. Note that this is a zero-sum game, unlike the positive sum commercial world.

In this zero sum world, gains will come at the expense of someone else's loss and, leaving aside the possibility of mutual enemies for the moment, there is no benefit from working together with someone else, just like how, in the zero sum game of chess, there is nothing to be gained by trying to work with your opponent and little to be gained via trade.

But it's not just that land is finite, there's also the fact that, even without much industry from man being applied, land is quite valuable. At the very least, it keeps one from drowning. Most land can also be used to provide other plants and animals, and sometimes valuable minerals as well.

So with the land being so valuable, and with it being near impossible to make more, whoever holds land will likely be able to make a profit on that ownership simply by renting it out to whoever needs to use it. Economists have a term for when you can make an excess profit because others are unable to compete with you (you can only ever have one piece of land in the same place) and that term is 'rent' or 'economic rent' . Of course the fact the word used is 'rent' reflects the fact that land ownership is typically the most common way in which such an excess is earned.

But why not simply have a market for land, and have people pay whatever price they think the land is worth? The obvious problem, of course, is that someone might decide that it is cheaper to simply take the land, rather than buy it. You can't really hide land or move it somewhere, so once someone decides to take it, it's fight or flight. And as Machiavelli said, 'there is no proportion between one who is armed and one who is unarmed.' But an arms race in which everyone strives to be better armed than everyone else is unproductive because being the 'most powerful' is a relative term. This takes us back to Hobbes, who explained why we needed a single organization in charge of the land that was so powerful, nobody could contest it.

So land is finite, valuable, and can be taken by force, all of which combine to necessitate having someone to defend it.

But maybe that defence service itself could operate according to commercial principles. People could simply hire someone to protect their property. There's no need to abandon the market just because we need to buy some defensive help, right?

There are a few problems with this approach. One is that in conflict there are economies of scale, such that there is a benefit to having a larger force for hire, which means that those groups which are able to form a single united bloc will have an advantage vs. their neighbours. Another problem is that conflict is quite dangerous and history shows that forces working for money have historically performed poorly when matched up against forces that were working for some other 'higher' purpose and thus had a higher morale or willingness to die for the cause. Another problem is how can you prevent the people you hired to protect you from simply turning on you and putting themselves in as dictator over you. Finally, what do you do if someone makes the people defending you a better offer?


Another factor to consider is that network externalities mean that when constructing something that spans territory via a network design, it is efficient to only build one. For example, to build two road networks that don't connect would be highly inefficient. Similarly, most areas only have one water system, one electricity grid and so on. So organizations that span land with a network type structure tend to be monopolies. Some historians speculate that the reason Egypt was one of the first places to develop a centralized government was because constructing an irrigation system is the sort of network based monopoly that works best when organized by one central entity. Whereas competition leads to gains for society in most markets, when it comes to building territorial networks, competition just leads to inefficiency, so an organization that can control an area of a certain scale has an advantage over smaller entities.

Finally, the dynamics of conflict generally work out so that a single contiguous piece of land is more defensible than scattered territories. This is partly due to the network effects described above, and partly due to economies of scale in combat and an increased need to divide one's forces if one is defending multiple pieces of land that are not connected. Of course, this is subject to changes from technology and with the rise of the British Navy, for example, England was able to build a far flung empire of places whose only connection was that they bordered the sea. This dynamic lends itself to territories being made up of a contiguous piece of land governed by a single entity.


So, to summarize, because land is both finite and valuable, it serves as a source of (economic) rent, or profit that can be achieved without work. This unworked for profit is sought after by many, leading to violent conflict. Any particular group can maximize the rent it earns from land when it can minimize destructive conflict within the group and maximize the effectiveness of conflict with enemies in order to expand the amount of land it controls. The economies of scale in combat and the natural monopoly nature of networks lead to groups coalescing into contiguous land blocs for defensive and efficiency purposes.

77. Resolution

Note: This post is the seventy-seventh in a series about government and commercial ethics. Click here for the full listing of the series. The first post in the series has more detail on the book 'Systems of Survival' by Jane Jacobs which inspired this series.

I suppose that the start of a year is always a good time to stop and assess your current status. Up until now in this series, I've mostly just been fishing around, following links, trying to get my head around various concepts and so on.

In 'Systems of Survival' there's a point where one of the characters in the book has finished explaining about how she discovered the two systems when another character goes to his bookshelf, pulls down Plato's 'Republic' and explains how Plato was covering much the same ground 2,000 years ago. Reading between the lines, it seems that Jacobs was well into her work when she came across the Plato reference and felt silly that she hadn't looked there in the first place for inspiration. So what I've been trying to do here is to make sure I'm at least faintly familiar with what various people have had to say on this topic over the years, before revealing my ignorance in too much detail.

This next year will see more posts along this same theme, covering off different books and concepts, but I do find that I'm starting to see fewer new ideas and more repeats in what I encounter. As the series moves along, the time will come for more posts that attempt to try and pull some of the various threads together.

In order to make progress analyzing the syndromes identified by Jane Jacobs, I suspect that it will become necessary to try and formalize some of the precepts that make up the syndromes. For example, how can we define what it it means to 'Be Exclusive'? Based on what I've encountered in the series so far, it seems like game theory may well be the best medium in which to try and more precisely pin down the meaning of some of these precepts, although I'm certainly far from optimistic about how successful my attempt will be.

Maybe 'being exclusive' means simply placing no value on someone else's preferences, if they don't happen to be part of your 'in' group – or maybe it means reversing the sign on the preferences so that what is bad for someone outside the group is good in your mind. We shall see.

A final step, which I may or may not get to, would be to follow in the footsteps of people such as Brian Skyrms and Robert Axelrod and actually try and build a simulated environment in which agents possessing various ethical values interact and evolve over time. This environment might then provide clues as to how and why certain precepts or ethical values function and evolve over time.

But that's just a faint gleam in a far-off corner of the sky at this point; To be honest, I'm not really sure how the series will continue to play out this year. Most of the main concepts have (I think) been introduced by now, but there remain many interesting economic/political/philosophical books and viewpoints to consider and I'm not sure I've really made much actual progress in understanding how and why the syndromes work. But it's been an interesting (for me, anyways!) path so far, so I plan to continue onwards.

38. Commercial Syndrome Revisited

Note: This post is the thirty-eighth in a series. Click here for the full listing of the series.

This post is a little different from the ones that have come before. Rather than describing a particular concept or book, this post returns to the original purpose of the series - probing into the nature of the two ethical 'syndromes' identified by Jane Jacobs in her book 'Systems of Survival'

This post looks in more detail at the commercial syndrome, trying to apply some of what we have covered in the previous 37 posts in the series. My thoughts on this are still pretty jumbled and that's likely to be reflected in this post, but nevertheless, here goes.

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As a starting point, I've taken the list of ethics in the commercial syndrome, per Jacobs, and grouped them as follows:

Group 1

Shun force
Come to voluntary agreements
Respect contracts
Be honest

Group 2

Be optimistic
Be thrifty
Be open to inventiveness and novelty
Use initiative and enterprise
Invest for productive purposes
Be efficient
Collaborate easily with strangers and aliens
Be industrious
Dissent for the sake of the task
Compete

Group 3

Promote comfort and convenience

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The commercial syndrome describes the economy of trade or exchange, and the first group are the ethics that serve to ensure that any trades that take place are beneficial to both sides (i.e. win-win / pareto-efficient).

They correspond to the constantly repeated concern about 'force and fraud' that I've encountered in book after book. For example, these are the values that David Gauthier wrestled with while trying to figure out which ethical values might be needed in perfectly competitive market. Basically, they are mechanisms to ensure that trade doesn't result in any negative 'internalities.' (if externalities are an effect of a transaction on someone not party to the transaction, then an effect on someone who is part of the transaction must be an internality)

Where these first 4 ethics are respected, people will develop trust that will allow them to greatly increase the number of transactions they participate in, by reducing transaction costs. Think back to the ridiculous transaction cost of the trade between Mal and Patience that I described here.

Note that these ethics require the setting aside of short term self-interest, although it remains an area of controversy whether the short term self-interest is set aside in return for a greater long run self-interest (i.e. enlightened self-interest), or if it is set aside out of concern for the other party to the trade or for the benefit of society.

We can think of the first block as representing the 'moral conditions of economic efficiency' to use Schultz's phrase. Without these moral values, trade will fail to achieve efficient outcomes. Although they may not be necessary in a perfectly competitive market, in almost any at-all realistic conception of a market, they are necessary. For example, if all trades could be conducted without placing goods at risk of theft or seizure, then there would be no need for an ethical value abjuring the use of force. But it is difficult to exchange goods without placing them within reach of seizure by the person you are trading with or other thieves.

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The second group is a set of ethics relating to maximizing the number of trades made over time. We might refer to these as the 'moral conditions of economic maximization'

Thrift privileges savings over consumption and provides the means for productive investment. Initiative and enterprise as well as Inventiveness and novelty create opportunities for productive investment. Productive investment is only productive if it generates sufficient opportunities for profitable exchange. Efficiency and Industriousness serve the maximization of opportunities of exchange for a given investment. Collaboration with strangers and aliens allows for the greatest possible range of trading partners. Dissent for the sake of the task privileges maximization of trade opportunities over obedience. Optimism encourages people to take the risk of innovation and investment. etc.

It seems reasonable that these two blocks of ethics should be linked in a syndrome since if the trades follow the first block of ethics so that they are beneficial on net, why wouldn't you want to make as many as possible?

But this is exactly the question which an economist might raise: why would you need ethics in order to maximize trade? – why wouldn't people *want* to make as many beneficial win-win trades as possible? Aren't people just self-interested maximizers out to make as big a pile of money as possible? Taking Gauthier's view of ethics as an impartial restraint on behaviour, to the extent that 'natural' human behaviour corresponds with the behaviour needed to maximize trade, then no ethics would be necessary.

However, as we'll see as we go through the list of ethics in this group, there are a few disconnects between human nature and 'homo economicus'.

If we think back to Weber's example showing how capitalist enterprise might disrupt a stable market, we see that the drive to compete and to innovate and to use initiative and enterprise generally comes from putting self-interest ahead of the group interest, and therefore runs contrary to much ethical teaching.

When a company cuts its prices, or improves its products, or invents new ones these actions are not beneficial to everyone, they have a harmful effect on the other companies in their industry. In fact, cutting prices can be harmful to the company itself when its competitors follow suit, and a cozy profitable cartel degenerates into a cut-throat competitive market. In the more extreme case, new inventions often cause old industries to disappear entirely in the process known as 'Creative Destruction'.

As I discussed earlier, in most areas of human activity, cooperation is considered a good thing and the motto is 'United we stand, divided we fall.' But the ethics of 'compete' and 'innovate' and 'show initiative and enterprise' all reflect the commercial world where cooperation is considered 'collusion' and the motto is 'United we stand, then we go to jail for anti-trust violations.'


Moving on, if you think back to the article by Steven Pinker that I linked to, he listed 5 areas where researchers had identified fundamental human areas of morality. One of these was community, so you can see how an ethic of 'Collaboration with strangers and aliens' might be required to overcome this element of human nature.

Another area mentioned by Pinker was authority. So 'Dissent for the sake of the task' is required as an ethic to overcome the natural respect for authority we have.

Note that something that both 'Collaboration with strangers' and 'Dissent for the sake of the task' have in common with 'Compete' and 'Innovate' and 'Show Initiative' is that they all tend to undermine any attempt at monopoly or monopoly-like behaviour by a group of people (i.e. cooperation/collusion). This is most obvious in the case of compete, but note how if a community was attempting to successfully boycott another community or group, this would require near or total unanimity. If all the movie theaters refuse to allow black people to buy a ticket then they all remain even. But this mass refusal creates a possible profit for any theater willing to break the ban. An ethic of 'collaborating easily with strangers and aliens' will serve to undermine any attempt at monopoly or restraint of trade along these lines.

Similarly, the creation of new financial institutions not regulated as banks allowed people to get around the monopolistic behaviour of the banks who had historically presented a united front in refusing to lend large sums of money to subprime borrowers for the purpose of buying houses, even though any one of them could have made large profits (in the short term at least) by making such loans.

The need for an ethic to support 'Industriousness' seems obvious enough. People are 'lazy' (i.e. less industrious than is optimal for the production of as many trade-able goods as possible) by nature, so any ethic that makes people work longer or harder would support increased trade.

Along with 'Industriousness', 'Efficiency' must counter natural laziness, and they both are only positive ethics in an environment in which no limit on growth is needed or in one where some other force is imposing a limit on growth. What I mean is that, when it comes to an activity which is primarily about taking (as opposed to trading) - think fishing or logging - a combination of industriousness and efficiency will leave you with barren hillsides and lifeless seas. For most of human existence, we got much of our sustenance by taking from nature, so industriousness and efficiency were potentially dangerous values. But for areas of trade where limits on growth are not needed in the same way (e.g. computer hardware development) industriousness and efficiency can be a formidable force.


'Thrift' and 'Investing for productive purposes' both must counter the natural bias towards short term thinking that people have. Thrift means postponing consumption, as does investing for productive purposes. What is the ratio of people who struggle with procrastination vs. people who struggle because they are always getting hard things over with quickly? This ties in with the concept of hyperbolic discounting, discussed earlier.


Optimism runs counter to what seems a natural human tendency toward fatalism and risk aversion. Many aspects of human life (particularly in earlier days) are non-linear in the sense that getting twice your daily intake of food is merely a nice bonus whereas getting half your daily intake of food means death. This leads to a sensible tendency towards risk aversion in many situations. However, risk aversion works against the spirit of innovation and risk taking that is central to capitalist development, so optimism and openness to inventiveness and novelty are needed as ethical values to help overcome this.

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Note that while competition is a spur to the second block of ethics (if you don't innovate, the competition will, if you won't sell to Myanmar, your competition will), it has a more mixed relationship with the first block of ethics. Competition helps to ensure that trades are truly voluntary in the sense that if a company is behaving dishonestly or not respecting contracts, you can punish them by moving to their competitor, whereas, if the company has a monopoly, your options are limited. But, on the other hand, companies can be driven to dishonest behaviour, to not respecting contracts, to the use of force (against unions, for example) by competitive pressures. Another way of looking at the first block of ethics is to see it as a set of restrictions on the domain of competition.

In a simple exchange, self-interest, group interest and social interest are in alignment (if the first group of ethics is adhered to), but in a capitalist market, there is a conflict between self-interest and group interest and the second group of ethics is the ethics for promoting the interest of the self at the expense of the group. The project of Adam Smith and many that came after was to demonstrate that despite this conflict with the group interest, there is nonetheless a benefit to the social interest that justifies this 'selfish' behaviour. And that although cooperation is helpful in most areas of human endeavour, cooperation (collusion) between market competitors carries a social cost.


I think this distinction is why the force of the first group of ethics is much stronger than the force of the second group. The moral condemnation of a country that invades another to seize it's oilfields is stronger than the moral condemnation of a group of oil producing countries that work together (i.e. collude) to keep the price of oil high.

So on the one hand, the commercial syndrome is simple. (Ethical) Rules to make sure trades are beneficial, and rules to ensure you make as many trades as possible. But
notice how ethically complex the commercial syndrome is at the same time. On the one hand, you have a block of (economic) efficiency ethics whose purpose is to prevent you from pursuing your short term self interest in ways that are harmful to society (force and fraud). On the other hand, you have a block of ethics whose purpose is to encourage you to pursue your short term self-interest, in ways that may be harmful to yourself (in the longer term) and are certainly harmful to your competitors, but which yield a net benefit to society. The common element, as stated by David Hume, is what is useful (beneficial) to society as a whole.

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Finally, we have 'Promote comfort and convenience.' Reading about 'industriousness' and 'thrift' and 'innovation' and 'efficiency', you might start to wonder, what is the point of all this. Why accumulate money if you never plan to put it to any good use other than making more money? As modest as it sounds, 'Promoting comfort and convenience' is the goal of the commercial syndrome.

Weber alluded to this in recognizing that a modest, yet comfortable home was one of the things that even the ascetic Protestant groups he described recognized as being a reward for keeping the capitalist faith of thrift and so on. Any fantasy novel reader will recognize that while a medieval castle in invariably grand but damp and drafty, the home of a merchant is almost invariably less opulent but comfortable and cozy (excluding evil merchants, of course). The question is why?

I think the answer lies in the distinction between positional goods and non-positional goods. As discussed earlier, the pursuit of positional goods is a zero sum game since any gain is offset by a negative externality to those who did not gain. The whole goal of the commercial syndrome is to play a non zero-sum game. But it only works when the profits generated by the system are used to support non-positional (non status related) human goals.

It does us no good to generate massive wealth if we spend that wealth building houses larger than our neighbour's, that we then leave half empty because we don't need all that space. It does us no good if we spend half our lives trying to get an academic degree with more letters than the next guy so we can beat them out for a job we only needed a year or two of post secondary education to do competently.

But if instead that money goes towards central heating, to improved medical care, to cars that have airbags, to high speed rail lines and so on, then we are making progress with our wealth in making life more comfortable and convenient for ourselves.

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One thing worth keeping in mind is that the list of commercial ethics was constructed to contain only those elements that differ from the guardian syndrome, so to some extent what we see here is an echo of the ethical requirements of guardian work. i.e. If industriousness was also helpful in guardian work, then it wouldn't be on the list, so the presence of industriousness reflects as much the lack of need for industriousness in guardian work as it does the need for it in commercial work.

This means that in order to better understand the commercial syndrome, we will need to go into more detail on the guardian syndrome (and vice-versa) and then we will need to consider the two syndromes together as an interlinked system.

One problem with this post is that the analysis is largely static. But the ethical syndromes can only, in my opinion, be truly understood as dynamic systems where some of the important effects of the ethics can only be seen as time passes. For example, market competition creates a process of 'natural selection.' For another example, force and fraud produce two conflicting effects: the benefits to the perpetrators giving them greater size and influence (bad money drives out good) and the reaction from other participants (shunning of fraudsters, punishment from guardians, emigration from a corrupt area, etc.)

To truly understand the syndromes will require a fully functioning dynamic model of both syndromes and their interaction to show how they can develop and be stable (or not) over time. Some of this work is already underway, and I plan to cover some of it in future posts, but for the next few posts, I'll likely shift focus a little bit from what has mainly been static analysis of the commercial syndrome to a static analysis of the guardian syndrome. One step at a time.

34. The Bourgeois Virtues

Note: This post is the thirty-fourth in a series. Click here for the full listing of the series.

The Bourgeois Virtues, by Deirdre McCloskey is a wide-ranging, 500+ page book, and in this post I'm just going to pick out a few points that I found interesting and/or relevant to the current exercise.

McCloskey has a couple of main points:

1) Ethics cannot be reduced to a single measure of goodness or utility or simple self-interest that would allow a one-dimensional analysis to be carried out. Instead, McCloskey believe there are seven primary virtues: 4 pagan virtues (Courage, Temperance, Prudence and Justice) and 3 Christian virtues (Love, Faith and Hope). Like primary colours, these 7 can be mixed to form the other virtues. For example, honesty is said by McCloskey to be a combination of courage, justice and faith.

2) The Bourgeois way of life (i.e. commercial life) is neither amoral nor immoral. Instead it has its own characteristic set of virtues. McCloskey defines these as equivalent to the same seven virtues mentioned earlier:

Prudence (to trade rather than invade)
Temperance (to save and accumulate and to resist the temptation to cheat)
Justice (to value people for what they can do rather than what they are)
Courage (to venture on new ways of business, to overcome the fear of change, to resits despair and pessimism)
Love (to care for employees and partners and colleagues)
Faith (to honour one's community of business)
Hope (to imagine a better machine)

To be honest, it feels a bit like the seven virtues are being stretched to meet other notions here. It seems a bit like saying nothing at all to say that the Bourgeois virtues are the same as the virtues that exist in the rest of life as if there were no difference in the virtues of a businessman or a knight or samurai warrior, as if there was never a difference between the commercial culture of the Northern United States and the feudal culture of the South.

Comparing McCloskey's description of the commercial ethics to Jacobs' list of commercial ethics...

Shun Force
Come to Voluntary Agreements
Be Honest
Colllaborate easily with strangers and aliens
Compete
Respect Contracts
Use Initiative and Enterprise
Be Open to Inventiveness and Novelty
Be Efficient
Promote Comfort and Convenience
Dissent for the sake of the task
Invest for Productive Purposes
Be industrious
Be Thrifty
Be Optimistic

.. there is general agreement between Jacobs list and the descriptions of the uses of the seven virtues in McCloskey's description. One exception is that McCloskey says that faith, to sustain traditions of commerce is a commercial virtue, but it seems unhelpful to say that innovation and respect for tradition are both commercial virtues.

One interesting component of the book is that because McCloskey is a believer in a system of more than one virtue, she includes a number of lists of virtues compiled by herself and others.

A few of the lists of virtues are the following:

On page 348, McCloskey present a list of virtues splint into 4 classes: Aristocrat / Peasant / Bourgeois / Priest

On page 408, there is a list of 'Prudence/Profane' and 'Solidarity/Sacred' variables where the 'P' list corresponds to what we might call more practical notions and the 'S' list is more 'romantic' notions.

Finally, on page 431, there is a list taken from Irene van Staveren which splits the world into 3 spheres of ethical values: Freedom, Justice and Care

Picking out just a few elements from the complete description of the spheres provided:

The Freedom list is the domain of the market, with a primary virtue of 'prudence', and values relate to the 'individual', others are perceived as 'anonymous', rewards are 'extrinsic' and the relation to others is 'competing'

The Justice list is the domain of the state, with a primary virtue of 'propriety/justice', values relate to the 'public', others are perceived as 'equal/unequal', rewards are 'collective' and the relation to others is 'dependent'

The Care list is the domain of the 'care economy' with a primary virtue of 'benevolence/love', values relate to 'relationships', others are perceived as 'different', rewards are 'intrinsic' and the relation to others is 'interdependent'.

The spheres correspond to 'agora', 'polis' and 'oikos' in the Greek, and 'Liberté', Egalité', 'Fraternité' in French.

It's an intriguing classification system, suggesting possible avenues of inquiry into underlying sources of these differences between the spheres. I might have to add Staveren's , 'Caring for Economics' to the long list of books I still need to read as part of this series...

Anyway, I realize this isn't a great summary, but in some ways the whole point of McCloskey's rambling, meandering, 500+ page book is that virtue is not something to be easily summarized, so perhaps my lack of a concise summary is unsurprising. I guess you can read the book for yourself¹.

What I took from the book is that other people who have studied virtues long and hard have come to some broadly similar conclusions as Jacobs regarding what belongs in the commercial set of ethics and what belongs outside, although the analysis here is not as clear as Jacobs', and certain other concepts such as the corruption caused by mixing ethics from different systems are missing.

For example, on page 296, McCloskey suggests that honesty, as the master commercial virtue has replaced honour which was the master virtue under an aristocratic system. It doesn't occur that the two virtues might co-exist in their respective areas of appropriateness, and what has changed is not what is virtuous behaviour but the type of activity that is most prevalent among those writing books about virtues.



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¹Although if you do read it I recommend skipping the first hundred pages or two and a number of later sections where McCloskey endlessly attempts to explain why Bourgeois is not a synonym for evil, relying mostly on the sort of simplistic 'markets trump communism', 'level 2 beats level 1' kind of argument that I discussed back here.

1. Systems of Survival

I've decided to start a series of somewhat different posts than the standard recent fare here at CAtO. The general goal is to talk about ethics and the role of government and markets in society.

The first few posts will be summaries (not reviews, summaries) of various books I've read that I figure have something relevant to say on the topic. I won't summarize everything in the books, just those elements I found to be relevant. Later on, assuming that my attention span doesn't run out, I might get around to actually trying to pull some of the different threads together and start applying them to various issues that affect us here in Canada. Or not, we'll see how it goes.

To differentiate the posts in this series from the standard 'That Politician Stinks' and 'That Article Was Stupid' posts we do here, I am going to number them , as I have done with this one. They also will get the 'ethics' tag which would be useful if I ever get around to updating my template for tags.

The first book I want to summarize is one I have referenced on the blog in many past occasions, including here, here, here, here, and here. The book is Jane Jacbos' Systems of Survival.

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Back in 1992, Jane Jacobs wrote a book called, Systems of Survival in which she built on Plato's Republic to argue that humans have two ways of making a living: our traditional one based on control of territory and taking what we need, and one based on trading for what we need. Humans are set in contrast to other species which only rely on taking what they need and do not make use of organized trading activity to make a living.

Each of the two ways of making a living has it's own set of ethics, with ethical trading relying on shunning the use of force, honesty, competition, openness to novelty, invention, collaboration with strangers and a bunch more.

In contrast, ethical territorial (or 'guardian' as Jacobs calls them) activities (such as government) rely on a different set of values including shunning trading, respect for hierarchy and tradition, loyalty and a bunch more.

In Jacobs' view, unethical behavior inevitably arises when values which are ethical in one way of making a living are used in the other way. i.e. When the two ethical systems are mixed together. An example she gives is organized crime, where the mixture of legitimate commercial activity with activities that normally only a government is allowed to perform (such as use of force) leads to a 'monstrous hybrid' of the two ethical systems.


The two syndromes contain the following sets of ethics:
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Commercial Moral Syndrome:

Shun Force
Come to Voluntary Agreements
Be Honest
Colllaborate easily with strangers and aliens
Compete
Respect Contracts
Use Initiative and Enterprise
Be Open to Inventiveness and Novelty
Be Efficient
Promote Comfort and Convenience
Dissent for the sake of the task
Invest for Productive Purposes
Be industrious
Be Thrifty
Be Optimistic


Guardian Moral Syndrome:

Shun trading
Exert Prowess
Be Obedient and Disciplined
Adhere to Tradition
Respect Hierarchy
Be Loyal
Take Vengeance
Deceive for the sake of the task
Make rich use of leisure
Be Ostentatious
Dispense Largesse
Be exclusive
Show Fortitude
Be Fatalistic
Treasure Honour

I've covered the main elements of the book, but here are a few other tidbits:

1) Jacobs talks about how historical societies often developed Caste systems which separated the two types of activities. Medieval Europe had feudalism with a guardian class that shunned trade. India still has a caste system with trade and commercial activity belonging to a lower class. Japan had the samurai warrior class with its guardian ethics as a separate class from the commercial class.

By way of contrast, the Bible talks of the Jewish people switching back and forth between the two syndromes as en entire people as necessary during their Exodus.

Although our society does not have a formal caste system, nonetheless many people exhibit certain 'casts of minds' where their thinking hews more to one of the two syndromes.

2)Jacobs identifies Plato's Republic, which was to divided into a guardian class and a commercial class as the original expression of this idea, and suggests that Plato's definition of injustice (one man doing the work of someone from another profession) was meant to reflect the intractable corruption that results when the two syndromes are mixed together.

3) Jacobs identifies two anomalous professions with respect to the ethical syndromes: Law and Agriculture

Law is anomalous because the profession sometimes operates along Guardian lines (courtroom battles) and sometimes operates along Commercial lines (drawing up contracts, wills, etc.). In England, the profession is actually split into Barristers who do the Guardian work and Solicitors, who do the Commercial work.

Agriculture is an anomaly because it is a commercial activity by nature, but because the raw material for agriculture is land, and guardians see guardianship over the land as their primary duty, they have a near irresistible urge to meddle in agriculture that they don't have with respect to other industries.

Books

As Justin at Flash Point Canada says,

"If this doesn't give you a chuckle, nothing will. The "Ten Most Harmful Books of the 19th and 20th Centuries," as selected by several staunch conservatives."

I think my favourite honourable mention is "On Liberty" by J.S. Mill - who knows how much better off the world would be if not for that fearsome work.

In other book news, apparently, I've been 'tagged' by Greg over at Sinister Thoughts, to answer a few questions about me and books. The alternative would be writing something about the latest shenanigans on parliament hill, so I think I'll talk about books as the less grewalling (sorry¹) of the two options.

Number of Books I Own

I've moved over 20 times in the last 10 years or so, so any item I consider purchasing is automatically screened for its impact on my total encumbrance², which tends to keep down my total number of books owned (especially hardcover books). I'd guess that I own around a couple hundred (Note: before any family members protest, this excludes books I own which are sitting somewhere in my parent's house).

Last Book I Bought

'City of Ember' by Jeanne Duprau. Starts well, with an intriguing premise but the ending is rushed and disappointing (not to mention not really an ending).

Last book I read

'Whisper of Glocken' by Carol Kendall. A follow-up to the Newberry Award winning Gammage Cup, it's not quite at the same level but is still a good read.

5 Books That Mean A Lot To Me

1) Systems of Survival - Jane Jacobs

I remember reading in some book (I don't remember which) a discussion of trying to meaningfully analyze the weather. If one looks too closely, trying to analyze individual drops of rain, air molecules etc., analysis is impossible because there is too much data and there are no discernible patterns to it. If you look from too far away, treating the skies around the globe as a single entity, analysis is again impossible since the changes in that one entity will appear random. Only by focussing your attention at the right level, and on the right characteristics, (tracking high and low pressure 'systems' for example) is it possible to extract any meaning or order from the skies.

Similarly, I've spent much of my time reading non-fiction trying to make sense of society and economics and politics by finding some appropriate level of analysis which lies in between the rational economic dream of constructing a tower of axiom-based mathematical knowledge on a foundation of obviously untrue assumptions and the anti rational assertion that there is no systematic analysis of human affairs possible and all we can really do to convey meaning in human affairs is to tell stories.

Jane Jacobs 'Systems of Survival' is one of my favourites because it is one of the few books I know which does in fact convincingly stake out a theory on one such source of meaning. I remember being fascinated by Nietzsche's idea of digging into the roots of why it is humans have the 'ethics' that they do and constructing a 'genealogy of morals' which he talked about in 'Human, All too Human' and how disappointed I was when I bought his later work 'Genealogy of Morals' and it didn't really seem (to me anyway, maybe I missed the point) to answer that question at all. Systems of Survival does attempt to provide a genealogy of our morals and I recommend it highly.

2) Godel Escher Bach by Douglas Hofstadter. I can't possibly hope to summarize this book (although the linked review does a pretty good job) but aside from the content which in itself it amazing, just the way the book is written helped me realize that writing non-fiction imposes a lot fewer artistic limitations on how you write than you might think.

3) Bridge to Terabithia by Katherine Paterson
As you might have been able to guess from my answers to 'last book bought' and 'last book read', I read a fair bit of young adult (or old children) literature. If I was ever to get my act together and write something more substantial than half finished stories and long winded blog posts, it would most likely be in this genre.

I read lots of adult fiction too, but whether it's just because the more innocent writing of children's books has an easier time piercing my cynical shell or just me being emotionally immature, I find that books aimed at a younger audience often have a more powerful impact on me. Case in point is Bridge to Terabithia, a deserving winner of the Newberry Medal for best children's book of 1978 (Paterson won again in 1981 for Jacob Have I Loved which is also a great book). I won't say anything more about the plot, but I really think anyone of any age would do well to read this book.


4) When Corporations Rule the World - David Korten

I talked about this book recently in this post. Aside from being extremely well written and well argued, one of the ways this book changed my thinking was to change my internal definition of species, or if not species, perhaps organism. Previously, I had only considered biological, cellular life forms as active agents in the world (allowing for artificial intelligence via computers of course). But this book made me realize that there are potentially many other active organisms (or organizations if you prefer) out there which act according to their own logic and their own agenda, perhaps somewhat but not entirely under the direction of people.

Now in a sense, this is not that different from the common wisdom that systems take on a life of their own or, as Marshall McLuhan said, that the medium is the message. But it hits home a lot more when you think of a corporation (for example) as an organism which will never die, which holds many of the same rights as people do, which can exist simultaneously all over the world, which can mobilize resources on the scale of a small country (in the case of the biggest corporations), and which lives or dies, not according to the complex set of physical, emotional and spiritual needs which humans have, but through a never-ending single minded drive to earn a return for investors (in order to grow) or at the very least earn enough money to satisfy creditors (in order to avoid dying).

Seeing the corporation as an active agent in its own right: co-existing, relying on and yet at the same time competing with people for the resources necessary for our survival, is seeing things with another dimension added.

5) Voltaire's Bastards - John Ralston Saul

There's lots I don't agree with in this book, including (possibly) the main premise that the world is suffering due to people taking an overly 'rational' approach to things and disregarding other more humanist elements of our decision making process, but there's a ton of stuff packed in here and a lot that seems dead on, from the culture of celebrity, to the climate of secrecy, to the foolishness of economic dogma, to the stubbornness of outdated methods of waging war and on and on. More than anything, this book shook me out of a phase of somewhat ideological thinking and reminded me to take a critical, questioning approach to everything, never trusting that the conventional wisdom could safely be applied in any area of human activity.


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OK, who hasn't been tagged by this yet. How about Trish, Justin, Ainge, Greg (sure his blog is about his baseball pool team not books, but what's blogging if not the freedom to write about whatever you want, whenever you want - and besides, if I recall correctly (which I'm not sure of) he was the one giving me a hard time about liking 'Life of Pi' and not making it more than a quarter of the way into 'A Prayer For Owen Meany' before giving up in boredom) and Andrew Spicer.

Don't worry if you want to dispute the tag, I won't send the meme police after you.



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¹ I'm not really sorry.

² I wonder if using the word encumbrance marks me as either a) someone in the financial/credit industry or b) someone who played Dungeons & Dragons as a kid.

The Trouble With Professional Hockey....

So what's the problem with the NHL these days? The owners and players are all idiots? Perhaps, but it wasn't that long since we were in the same mess with largely different owners, management and players. And not too long since we had similar problems with baseball, and certainly most pro sports have had their share of this type of trouble.

In fact, it seems like pro sports leagues head to a breakdown anytime the owners don't have the players under their thumb. So while it may be tempting to write off the current NHL lockout as Bettman's fault or Goodenow's fault, or collectively the fault of all involved, it seems more logical to look for a systematic explanation of why these problems keep recurring.

If the NHL is a professional league, with the price of everything involved (tickets, merchandise, franchises, etc.) set by market forces, why does the whole thing fall apart if player salaries are also set by market forces?

The problem as I see it, is that a franchise is a business, but whereas the goal of a business is to make money, sports franchises have a dual goal of making money and winning championships. Because teams are not just businesses but represent the 'pride' of a city or an owner, they are willing to pay overly high salaries and take on losses in an effort to win. And whereas in a normal industry, if some of the companies simply had too small a revenue base to compete, they would merge, be taken over or fold, that isn't allowed or considered acceptable in sports leagues.

A salary cap can prevent the problems of owner overspending but it brings with it its own questions. Why should owners of clubs with higher revenues basically be given a license to print money? Doesn't it seem a little artificial to force everyone to be equal? Why should ticket prices and other revenues be set by market forces if the costs (salaries) aren't?

If you're like me, there's a fundamental sense of confusion and conflicting priorities which underlies almost every aspect of the NHL that involves the commercial side of the game. We feel that an owner should make an effort to win and not just try to make as much money as possible. We feel that small market teams should have a fighting chance even though their economics don't justify it. We don't respect a player who leaves for another team because they can pay more money, at least not in comparison to the player who takes less money to stay with the team he likes. We feel that places where people care passionately about the game should have teams over places where people don't really care, even if the disinterested have more money to support a team. The same goes for ticket prices where the wealthy, leave-a-tie-game with-ten-minutes-left corporate seats in the front with the poor but enthusiastic fans in the back row just seems wrong.

All these questions come back to the same issue. On the one hand, hockey is a game which we all instinctively feel should have a certain moral code to it but at the same time hockey is a business and there are certain rules that govern how you run a sensible and ethical business. These two sets of ethics do not match.

Now, if you read my earlier post on corporate subsidies, you have probably already guessed where I am going with this (if so, you may want to skip the next three paragraphs). For those who didn't, here's a recap:

Back in 1992, Jane Jacobs wrote a book called, Systems of Survival in which she built on Plato's Republic to argue that humans have two ways of making a living: our traditional one based on control of territory and a somewhat newer one based on trading. Each of these ways of making a living has it's own set of ethics, with ethical trading relying on shunning the use of force, competing, honesty, openness to novelty, invention, collaboration with strangers and a bunch more.

In contrast, ethical territorial (or 'guardian' as Jacobs calls them) activities (such as government) rely on a different set of values including shunning trading, respect for hierarchy and tradition, loyalty and a bunch more.

In Jacobs' view, unethical behavior inevitably arises when values which are ethical in one way of making a living are used in the other way. i.e. When the two ethical systems are mixed together. An example she gives is organized crime, where the mixture of legitimate commercial activity with activities that normally only a government is allowed to perform (such as use of force) leads to a 'monstrous hybrid' of the two ethical systems.


Now suppose, for the sake of argument, that Jacobs' theory is true. That is, we have a system of ethics based on control of territory and a different, conflicting set of ethics for commercial enterprises. And that we inevitably run into problems when we mix the two.

This raises the question: Is hockey naturally a business which has been corrupted by introducing the ethics of guardian (government/military/territorial) activities or is it naturally a non-commercial enterprise which has been corrupted by the introduction of commercial values.

It seems like a no-brainer to me (but in case you need more info to make your decision I included the full list of ethics for each ethical system from Systems of Survival at the bottom of the post). I would say that from backyards, to minor hockey, to the junior leagues, to the college leagues, and even to the Olympics, hockey clearly shows itself to be naturally successful as a non-commercial enterprise.

And in fact, commentators often point to the purity of non-commercial leagues as a contrast to the impurity of the professional NHL (where people just care about the money).

So from my point of view, the true solution to the NHL's problems is to remove, as much as possible, the commercial aspect of the game. i.e. Make it an amateur league. Good modern examples of thriving amateur leagues would be the collegiate sports systems in North America (especially in the U.S.), the sports leagues for Hurling and Gaelic Football in Ireland (in which each county has a team made up of modestly paid players from that county, or the kids and adult recreational leagues in just about every sport in just about every country around the world.

Imagine for a moment, a league where if you lived in Winnipeg you would have a team made up of players from the Prairies (we'd probably give 'em Northern Ontario too), who would play for the team for their whole careers. If you had a bunch of good players in the same era from your region, you could build a dynasty; if you didn't you might face some lean years. The players would be paid enough not to need to take another job but that would be all. The team would be owned by a public body with any revenue beyond what was needed to run the team either folded into general government revenue, used to support minor sports leagues or just given to charity. The lure of big money would be reduced by keeping ticket prices as low as possible without creating big scalper markets, giving away TV rights in return for a promise to show the games with minimal commercials, and the removal of advertising from the rinks.

Sounds pretty good to me.

Even if we acknowledge that it is unrealistic to ever have that occur with the NHL, I still think it is worth knowing why it is we have the problems we do, and how, in an ideal world, they would be fixed.

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For the record, I tend to sympathize with the players in the current dispute and favour a gradually steepening luxury tax (reaching punitive levels and possibly even a hard cap up around the very highest payrolls) as the best solution (among our shortsighted options) for the current problems. I might have more sympathy with the owner's need for cost certainty if they were willing to adopt revenue certainty as well and give away any revenues beyond a certain amount.

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Commercial Moral Syndrome:

Shun Force
Come to Voluntary Agreements
Be Honest
Colllaborate easily with strangers and aliens
Compete
Respect Contracts
Use Initiative and Enterprise
Be Open to Inventiveness and Novelty
Be Efficient
Promote Comfort and Convenience
Dissent for the sake of the task
Invest for Productive Purposes
Be industrious
Be Thrifty
Be Optimistic

Guardian Moral Syndrome

Shun trading
Exert Prowess
Be Obedient and Disciplined
Adhere to Tradition
Respect Hierarchy
Be Loyal
Take Vengeance
Deceive for the sake of the task
Make rich use of leisure
Be Ostentatious
Dispense Largesse
Be exclusive
Show Fortitude
Be Fatalistic
Treasure Honour

When Competition Goes Bad

Interesting article in the National Post today (that alone is noteworthy!) about corporate welfare.

The article is primarily about a recent court victory by Ralph Nader which argued that state subsidies to lure businesses to set up there were a form of illegal discrimination against other states.

It's a pretty good article and it almost gets right to the heart of the matter when the author (Peter Foster) argues that,

"As Nobel economist James Buchanan noted several years ago, politicians are every bit as self-interested as market actors. The difference is that private actors in free markets do, as Adam Smith pointed out, a "good that is no part of their intention." Political actors invariably do unintentional damage."

Unfortunately, in his haste Foster oversimplifies matters in saying that the private sector always achieves good by following its self-interest while the public sector does the opposite. When private actors dump toxins into our environment for their own benefit, no unintentional good is done. When public actors ensure that police forces are properly trained, staffed and free from corruption this is both in their own self-interest and good for the public as well.

I would argue that private actors achieve an unintentional good not through all their actions, but when they are in competition with each other while public actors do harm when they compete with one another.

Let's look at an example. Suppose Ford wants to open a new auto plant somewhere in North America. Suppose further that whatever state/province the plant moves to will get a total financial benefit (lower unemployment, higher tax revenue etc.) of $100 million. Ford wants to keep its costs as low as possible (which is good for the public) because of its competition with other auto-makers.

Now suppose that Ontario offers Ford $10 million to put the plant there. This is perfectly reasonable since there will be a net benefit to Ontario of $90 million. Seeing this, Alabama offers $50 million, and Ohio then offers $80 million, and so on. In the end, because it can play one jurisdiction against one another, Ford can capture and keep pretty much all of the social benefits of it's new plant.

I am reminded of Jane Jacobs brilliant book, Systems of Survival, in which she builds on Plato's Republic, to argue that humans have two ways of making a living: our traditional one based on control of territory and a somewhat newer one based on trading. Each of these ways of making a living has it's own set of ethics, with ethical trading relying on shunning the use of force, competing, honesty, openness to novelty, invention, collaboration with strangers and a bunch more.

In contrast, ethical territorial activities (such as government) rely on a different set of values including shunning trading, respect for hierarchy and tradition, loyalty and a bunch more.

In Jacobs' view, unethical behavior arises when values which are ethical in one way of making a living are used in the other way. As an example of what happens when governmental organizations adopt commercial tactics she documents a case where a consultant to a police organization recommended introducing market incentives to the force by financially rewarding officers based on how many arrests they made (basically, putting them on commission). As you might expect, the whole thing unravelled amid numerous false and marginal arrests being made. Jacobs could just as well have used governments competing over the location of a new factory as an example of what goes wrong when a commercial value like competition is introduced into a territorial (governmental) system.

In the end, the Post hopes that Nader's actions will end the corporate welfare by appealing directly to the courts to tie the government's hands. Still, I think if they want to provide the subsidies, state and provincial government will find a way to skirt the law (and I'm sure the corporate law troops will only be too happy to help.) The true solution would be to move jurisdiction over subsidies to multinational companies under federal jurisdiction instead of state/provincial. Of course as a global problem (Many companies can build new plants pretty much any where on the globe) it really needs to be dealt with by a global government. A global government wouldn't be in competition with any other jurisdictions and would therefore be able to protect the global public interest, but that may still be a few years off (we're doomed without it, but alas, that's no guarantee it will happen).