Wednesday, February 3, 2021

QUORA: 'How is capitalism NOT a zero-sum game?' -- The Mugger vs the Landlord

Recently, I posted an answer to the Quora* question, How is capitalism NOT a zero-sum game? (Also available on my 1/14/21  blog post). Another answer triggered a reply from me.

Pascal Morimacil’s answered:

The basic idea is that if you consider every transaction individually, without looking at anything else, then it kinda seems like both people are better off, since they agree to the trade.

So for example, you pay rent for the right to exist somewhere, and then someone else lets you exist without evicting you. It’s said to be win-win. So, a creation of wealth.

You could analyze a mugging that way, and declare it to be a win-win wealth creating situation.

The victim is paying for the right to exist, and the mugger lets them exist without shooting them. Win-win. If the victim thinks the price is too high, they can just decide not to pay.

You kind of have to ignore the gun, or the threat of eviction

And if you also ignore a lot of other things, like pollution and so on, and rising wealth inequality, well, at some point you are just deciding that money changing hands means things are getting better for everyone.

My reply:

There is no “if you consider every transaction individually, without looking at anything else”: The only way to analyze economics (or any aspect of human affairs) is to begin with the individual, since the individual is the only human entity that exists. The “economy” is an abstraction, subsuming all relevant individual transactions. All other considerations are derivative from individualism. 

And you should never “ignore the gun, or the threat of eviction,” both of which are instances of force. But the corollary is you should not ignore the nature of that force: Is the force aggressive, or defensive? 

From that premise, the analogy is backwards. In the real world, the free-loading renter is the mugger -- that is, the aggressor.

In the legitimate rental transaction, both offer value to the other, and it is a mutually consensual  transaction. No force is involved. The renter pays his money, which represents wealth creation to the landlord, in exchange for living in the rental unit, which is wealth creation to the renter, since each is getting a higher value than he is giving up. It’s win-win, by mutual consent. The mugger, on the other hand, offers nothing of value to his victim, and the victim doesn’t consent, because the mugger is using aggressive force to take his victim’s property. The mugger is actually threatening two of his victim’s values, his life and his money. Holding a gun on someone is not wealth creation. Not killing his victim is not a value. It is the negation of a value, not unlike the whip of a slave master. To call the mugger’s actions wealth creation is absurd and a slap in the face to anyone who has ever done an honest day’s work.

If the renter stops paying rent, for whatever reason (need is not a license to steal), the transaction is no longer win-win, and the renter has a moral obligation to vacate the property (assuming the landlord doesn’t grant him rent-free occupancy). If the renter refuses to vacate, despite not paying his rent, he is demanding someone else’s property without offering any value in return and without his consent. It is theft as much as is the mugging. The renter’s refusal to vacate the rental unit is a form of aggressive force, since the renter is physically preventing the owner from re-renting his property, denying him rental income. Thus, the mugger forcibly taking his victim’s money is in principle no different from the renter occupying the landlord’s property without paying rent. 

The mugging victim is not “paying” for the “right to exist”; i.e., the right to life. The right to life means only the right of self-ownership and self-governance; i.e., to think and act on one’s own judgement, in pursuit of one’s values, by peaceful respectful means: The right to life does not mean the “right” to force others to provide the means of living (“existing” in your terminology). The right to life, like the right to one’s property, is an inalienable right, held equally by everyone--and that includes the right not to be anyone’s slave. The renter is not paying for his “right to exist.” He is paying for the right to a particular housing unit, derived from the mutually agreed obligation to pay rent to use the landlord’s property. The renter’s non-payment forfeits his right to the housing unit. Being evicted does not forfeit his right to exist, or to his life. 

Now let’s say the mugger’s victim manages to flag down a cop, who stops the robbery, apprehends the mugger, and returns the money to the victim. That’s no different from the landlord beginning legal eviction proceedings. Both are acts of self-defense. The government’s only proper purpose is to protect and secure individual rights, including rights to property and free (voluntary, mutually consensual) trade--in effect, to act as the individual’s agent of self-defense. If the landlord gets a court-ordered eviction notice, and the police have to be called to enforce it, that’s no different from a cop coming to the aid of the mugger’s victim. The gun and the eviction are not analogous. The threat of the mugger is aggressive force. The eviction notice is defensive force.

As to the last two points touched upon, wealth inequality is a natural consequence of the varying productive abilities and personal circumstances of human beings, when left equally free to flourish by the justice, political equality, liberty rights, and constitutionalism of capitalism. Productive work and trade, to the extent it is free of aggressive force as it is under capitalism, expands the amount of wealth, as happens with the renter and the landlord. Trade doesn’t merely divide up a fixed quantity of wealth, like what happens between the mugger and his victim.  Under capitalism, wealth inequality is not a proof of zero-sum economics, but a progressive consequence of the win-win nature of capitalism--that an individual’s economic success is tied not to theft but on the diversity of productive ability to create value for others. Those who create the most value for the most people tend to be more wealthy than those who produce less value for fewer people. As long as every transaction is consensual and freely judged by each to be a net gain, it is win-win, not zero-sum. Pollution is a side effect of industry and is resolvable through technological innovation and proper law. History has shown that capitalist economies are much better at alleviating pollution than centrally planned (socialist) economies because technological innovation and proper (rights-protecting) law are features of free markets, not dictatorships. The same freedom of capitalism that facilitates economic progress facilitates solutions to pollution. Today we live in the cleanest ever environment for humans, especially in the U.S., not in spite of but because of the prosperity.

Related Reading:

QUORA: ‘Is capitalism voluntary?’

QUORA: ‘Why has modern capitalism risen in the West?’

QUORA: ‘How do capitalists justify the inequality/high disparity part of a capitalistic society that a socialistic system tends to stop?’

QUORA: 'Can certain forms of capitalism be made to work for the people instead of just the elite?'

QUORA*: ‘Is it fair to claim that capitalism does not create better lives, but simply shifts the suffering somewhere else?’

QUORA: 'Why do people think capitalism is ethical?'

QUORA: ‘Is it fair to say capitalism has killed more people than communism?’

QUORA *: 'How is capitalism good despite the fact that it creates higher and lower classes?'

QUORA: '[W]hy do we ignore all the examples of capitalism failing, like the major divide between the wealthy and the poor in the US?'

QUORA: ‘Given that I live in a capitalist society, how can I avoid having my labor exploited?’

QUORA: "Is having an 'Anarcho-capitalist' society possible?"

* [Quora is a social media website founded by two former Facebook employees. According to Wikipedia:

Quora is a question-and-answer website where questions are created, answered, edited and organized by its community of users. The company was founded in June 2009, and the website was made available to the public on June 21, 2010.[3]Quora aggregates questions and answers to topics. Users can collaborate by editing questions and suggesting edits to other users' answers.[4]

You can also reply to other users’ answers.]

1 comment:

Mike Kevitt said...

I've read Pascal Morimacil's statement as you have quoted, but I've not yet read your response to it in this posting. But, I say, Mr. Morimacil should start over and go back to kindergarten or maybe even nursery school. Now, I'll read your response.