Monday, July 18, 2011

Profit or Society?

I want to talk about the profit motive, because despite being the cornerstone of capitalism it is highly misunderstood. All sorts of proclamations about the profit motive's success as a social and economic model are published in the media daily. Other causes for social and economic conditions are often avoided, and where profit has a clear negative bias, it is generally de-emphasized.

The profit motive is a simple form of the incentive model. Incentives are conditions in a system which reward or punish different kinds of behavior. Profits refer to one subset of incentives: those which resolve in positive or negative changes to net worth. Needless to say, human incentives are more complicated than this, and strictly for-profit business models still need to account for more different changes which may not be clearly linked to positive or negative account balances. But the capitalist system tends toward this model of profit, and incentives processes are typically explained in this way as well.

A One-Dimensional System?

Much more than profit is involved in economic production, coordination and innovation. Human consumption drives production - in a market economy, this translates into consumer purchases, but in primitive societies, precisely the same dynamic exists - it just translates into time spent hunting, gathering or farming. The preservation of public goods and the environment, production and showing of art, and many community activities (such as funerals and education) all serve very distinct human desires. The profit motive does not drive the demand for these goods, but instead mediates it.

Much like the Job Creator's Tragedy, we are dealing with an obfuscation when we hear that profit must mediate production. Job creators, like lords and kings before them, hold key positions of power in the mediation of the production process - a process Marx describes specifically in terms of private property. It is not for want of this that the term "feudalism" can be traced to the Gothic faihu, translated as "property." Private property has not always been considered indispensable - and even today, key institutions are virtually independent of the profit motive.

See No Evil

Nonetheless, the profit-crusade continues. In all the hype over capitalism, evidence to the contrary is washed away in a disincentivization process which stems from the sheer unprofitability of speaking out against the grain - and at that, speaking out against those who own capital and use it for profit. It's an idealist fantasy to think that there will be a free or easy voice to those who see the calamities of capitalism.

But the media do not see it this way. The narrative provided to the American people - despite the clarity of capitalism's hold on our society - is that the news media are driven only by a desire to disseminate the news objectively, perhaps tainted only by a tendency toward outrage, scandal and sensationalism. Lost on this media are the recognition of its own production base - for instance, that up to 3,000 CIA operatives have been involved in "Operation Mockingbird," a deliberate propaganda effort to influence media, sometimes writing news briefs, and influencing members of the media to the highest posts - including Walter Cronkite.

For the same reason, the Congo Free State, one of the biggest genocides of the Industrial Era, must be deemphasized. From 1894 to 1908, while the "rubber boom" was occurring in South America, Belgium's* colonial regime in the Congo was vamping up rubber production to meet demand. Africans were forced to harvest rubber from wild vines which were destroyed in the process, which they lathered on their bodies so that the hardened rubber could be later removed painfully. What's worse - quotas were enforced by death sentences, and the enforcing agents were paid in the magnitude of Congolese hands they could harvest themselves. Estimates vary of the total murdered, but they range from 5 million to 22 million. With totals rivaling those of Nazi Germany and Stalinist Russia, it takes a deliberate whitewashing to cover something like that up.

In Bengal in the late 18th century, the East India Company had sole trading rights over the agriculture. Ignoring their advisers concern about worsening conditions, including drought, the Company demanded that crops be shifted to Opium for trade overseas. Sure enough, drought hit, and in the resulting famine, 10 million died - a third of the population.

These are the most extreme cases, and they make the point forcefully. But the evidence for profit's damage are all around us, and its much more mundane. As Steve Keen remarked on AlJazeera, the bond rating agencies were to blame for the AAA ratings that junk bonds were getting at the height of the crisis - and now, as they threaten to downgrade US bonds, Keen wonders why the agencies should be trusted at all. As he notes, they are for-profit entities - which are, by definition, responsive to investors, be they stakeholders in the rating (i.e. as consumers) or not. This isn't just an unmasking of the profit motive's role in the securitization mess - this is also why it will have to be phased out altogether.

A Silent Majority

The Tea Party is Targeted by Communists in Mechanicsville, VA NBC12
What may be most disturbing about the profit motive's success in dominating our economic reality may be the relative obscurity it has in the daily lives of those who must sell their labor. The working class does not seek exponential growth in its economic power: they only want the exclusive rights to their own labor. As disparate as the policy proposals are of the Tea Party elite, they are catering to precisely the same ethic: taxes are framed as a manner of exploitation, while entitlements and government spending are described as "indebtedness," missing the point that government money cannot "run out."

There isn't any widespread clamoring for greed. The attitude of economic society at large - that is civil society - is mutual benefit. The market is only supported because it is argued to represent these interests - and then, only because it serves the interests of capitalists to expand the market. And while the left has to occupy government buildings to make the media take note, the Tea Party has only to collect a few scared baby boomers in an abandoned firehouse to get media attention. But occasionally, a few in the silent majority are radicalized: just last weekend, communist graffiti was marked on one such building, apparently targeting the Tea Party that meets there.

Its not enough to treat other humans as community or family, but it helps. Moreover, this is the silent majority: the burgeoning civil society in the US, growing as people stop moving house as much, and start relying on each other more. And increasingly, this civil society is meeting demands that the capitalist economy cannot:
"Mintz has grappled with the problem in caring for her husband, who has multiple sclerosis. Earlier this year, she had trouble finding someone to change his catheter twice a week while she was at work. So she says she resorted to something a little crazy.

"With Steven's permission, I actually put a note on the neighborhood Listserv," she says.

Sure enough, a man who works from home said he'd be willing to try it. He's been doing it ever since — for free.

Mintz says we need to expand our definition of "family." Next year, she plans to launch a recruitment drive to match those in need with volunteers.

"It might be, 'I can drive her to PT for the next five Thursdays,' or 'I can bring meals for the next six months,' " Mintz says.

In other words, create a community of caregivers — an old idea for a new age."

-Jennifer Ludden, Morning Edition: AARP Finds Toll On Family Caregivers is 'Huge'
A new age indeed.


  1. Small correction, Belgium is the nation that had a colony in the Congo Free State, not Denmark and until 1908 it was held privately by Leopold II King of Belgium and not the Belgians themselves.

  2. That was the one bit of data I didn't bother to double check; thanks for the correction!


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