Distribution of Wealth? Downscale

After the mammoth attempt to reduce "economics" the residue includes mainly this issue of distribution of wealth (DoW).

10 farmers working an acre each individually can provide enough food to feed themselves. But with division of labour and economy of scale these 10 acres can provide more food for the same labour. However according to Gregory Clark the increases are very limited and quickly the efficiencies become diminishing returns. The balance is finely tuned and I need to research the exact nature of the relationship further, but some profit is created.

It is not the major profit however. That comes from machines and fossil fuel. A machine can replace many persons and require a fraction of the "running cost". This means that fewer people can produce more, while those that are displaced from the field of labour become unproductive.

Now Adam Smith highlighted labour as the source of wealth. It is through the productive labour of people that wealth is created. It seems then fair that wealth should be distributed based upon the labour that caused it.

Maybe I have misunderstood Smith, but this ignores machines. A machine can do the work of 10 men, but has that machine created wealth? Does a cow eating grass to make milk create wealth? Does a tree growing in a wild field and bearing fruits create wealth? The standard argument is that no it does not, but the person who harvests or invests in these items has. So to pick an apple from a tree and take it to market acrues the seller the full value of the apple. To milk a cow and take that to market likewise. And the person who purchases a machine and supplies it with power owns the products of that machine. By way of contrarity what of a human female who was "milked" and her breast milk sold at market? Would the seller deserve all the wealth? It might be argued that it is up to the woman to form a contract. But if this did not happen a lot of people would consider it exploitation. Yet on what basis? Is a cow exploited, a tree, a machine? Disguised deep in economics is the thinking and prejudices of a bygone age when slavery was considered acceptable and society was profoundly split between workers and elites.

In a society where machines do many times more work than humans, where for example only 1 in 5 have anything at all to do with agriculture and its related industries and so 4 in 5 of us have all our food requirements met by other people and fossil fuels; in such a society the profits of each sector must be astronomical. Yet to gain a stake in these profits we must compete with machines and find a job. It is a strictly inverse relationship: as machines become more advanced and cheaper productivity increases but labour force decreases.

DoW it seems at a logical as well as fundamental ontological level cannot be based on labour. Sorry Smith but labour is not the source of wealth, and it can't be the the currency of exchange.

So what is there to replace it. This is why Smith's ideas have remained: there is no obvious alternative. Marx decided it should be distributed "according to need" but this is completely arbitrary and needs some God to do the accounting - and we know accountants are hardly gods. So recently I decided to be a bit reductionist to look more closely at this problem, and still need to research but here is a start...

Consider our "state of nature": a small island community. From actual evidence these seem to work on a sharing basis. The community works together. There is no management or central leader in tasks - it is an instinctive tradition. In Papua New Guinea the notion of Time I understand to be very similar to Tradition - it is the tradition which flows and drives the day and time. People do not decide what to do a particular time, but rather what they are doing determines the time. Like maybe in India where a different raags is played during the 6 times of day: I don't think originally they looked at a clock to decide when to play a raag (clocks are an import), it is maybe rather you could set your clock by the raags. Under tradition the community provides the productivity of the community and it is shared equally between the families at the end of the day. Someone who is lucky or good at his work is proud to share his labours: after all what is the point of hoarding your fish catch? You just get fat all alone in your hut while the going is good and starve all alone when you get unlucky, and meanwhile everyone else parties on outside. In the "state of nature" sharing is not a moral imperative it is natural - inconceivable that there is anything else.

Now this only works because communities are small and limited in extent. I believe humans can normally keep track of about 200 regular faces (might email Facebook to get the stats). If people from another island joined the hand outs at the end of each day and then retired to their islands to feed, never contributing in the catch and the visitors start to become so numerous that they are unrecognisable then the built in accountancy of a community breaks down. Initially people may continue the trust - never having had to deal with "outsiders" before - but clearly this is impractical and provides a schism in the community web.

So what is the solution? Either attack the foreigners with a view to driving them away, or attack the foreigners with a view to forcing them into exchange. This is the origins of the exchange system.

Blah Blah and now today the islands have shrunk from 200 down to about 20 or so family members with whome it is ok to share but everyone else is forced into exchange. And now in America it is shrinking to 1 as even partners draw up contracts to provide exchange in their relationships. The next stage is truly Freudian when we draw up contracts with ourselves so that if I(a) breaks some contract then I(a) owe money to a trustfund which I(b) can only access in certain conditions. Where I(a) and I(b) are myself but under different legal conditions and restrictions. I suppose personal pension schemes and insurances are already versions of this where we envisage a future self who is not myself, but will maybe be myself. At least its the end of individualism ;-)

I wrote a bit about prisoners dilemma before this again is the problem of an economic system. A midway is actually a reflection of true societies where we have ingroups and outgroups (as mentioned by that neurologist who studies cruelty). We are more likely to share with people from our ingroup than people outside the ingroup. Thus for societies with stable ingroups where people don't mix much outside the ingroup you will have a low GDP as a lot of exchange is actually sharing. In highly mixed societies where people work alot with people outside the ingroup then exchange increases and GDP (for the same material productivity) increases. This is why GDP etc are measures more of social structure than material wealth. The increase in violence, crime and social unrest that accompanies rises in GDP I imagine is because of the social distruption that GDP measures.

A solution then to crime, violence, social unrest and also the need for exchange value is the enhancing of localised social structues. This makes sense from economical and environmental perspectives anyway. The huge amounts of transport that the scaled up society creates are only effective because of the cheapness of fuel. As fuel runs out it will become untenable anyway. It is environmentally damaging too. Centralisation reduces jobs as fewer and fewer regions supply services to larger and larger areas under decentralisation. Analogous to the transport problem, communication becomes increasingly complex and error prone. Centralisation also provides less and less flexible solutions as it tries to meet more and more. Where once a local branch could personally deal with issues sensitively, now a hopelessly overloaded central switch board has to package all enquiries into a handful of database fields and linked-lists meaning that no problem is ever satisfactorily handled and the problems become protracted and exhausting for the system. Maybe as Gregory Clark calculates for the agricultural system, efficiencies in centralisation rapidly become diminishing returns also. And it should be noted the single greatest impact to destabalise society has been that machine called the car which enables people more than the TV or internet to live completely outside the community they acyually live in.

This is a point that I am behind on actually. From ever quarter these days people are calling for decentralisation. Centralisation and Systemisation are already becoming the bane of society. Yet the government in UK at least is even further behind and is still pushing for further centralisations.

Now folding that into the economic debate a localised DoW would also provide a healing to the central problem of economics.
== Addendum
Now like everything is can go to extremes. The counter balance is not capital profit, but efficiency through sharing. How can a private system which depends upon competition, and therefore by definition inefficiency, ever compete with a public system where competition is eliminated and complex machinery like a cancer scanner, for example, can be shared through many counties at once. The demise of Concord is a classic example of the small minded and limiting effect of free market economics - they create poverty. Only under the great centralised governments have the great achievements like space travel, concord, the global rail network, the sewage systems, housing etc been achieved. The private world has offered us only modifications of the great technologies - I can think of nothing that the private world has actually instigated from scratch: it is simply too expensive and risky. No! the driving force for "private" is exactly that: selfish gain. So decentralisation is not the only element in organisation: centralisation is the key to grand achievements also. But, while concord is clearly a central venture since it flies from centralised airports, the post office is clearly a decentralised venture since it serves people in every village.

The law (more correctly 'The Rules' as discussed before) is both a centralised feature since it should be universal across a culture, but also local since it must treat the needs of specific communities, people and situations. The current situation of a tiered system of courts is actually the ideal model! (But note all ye pedants that the Rules only work because of the educated Judgement of Judges. The Rules do not work "by themselves". This has been the argument with the 2 types of people.) In this paragraph lies in my view one of the most fruitful debates in philosophy and Life.

Summarising: Centralisation/Decentralisation is not a Rule, but a balance requiring judgement.