Two different ways of looking at prices are responsible for much confusion and misunderstanding.
At the micro, individual transaction level, a price determines the post-transaction allocation of wealth between buyer and seller. Assuming both buyer and seller have some flexibility in the price at which they are willing to transact (which is normally the case), a slight increase in price will simply benefit the seller, and vice versa.
This simple, intuitive feature of prices is the one we most often encounter in our own dealings. It makes it feel like prices are set somewhat arbitrarily, and that forcing a price change by setting minimum or maximum prices will merely change the relative wealth of sellers and buyers. Nothing else.
At the macro level, however, things look very different. In a market free of government intervention, people naturally transact at the market clearing price, the price at which the quantity of products offered is equal to the quantity of products demanded. Short of changing the cost of production, the desirability of the product, or the quantity of money, the market clearing price cannot be changed.
When the legal price is different from the market clearing price, one of two things will always happen. Either the legal price is higher than the market clearing price, in which case a smaller quantity will be demanded than offered, and surplus of unsold products will start accumulating, or, conversely, if the legal price is lower, the quantity offered will be lower than that demanded, and shortage will be observed.
Surplus means that merchandise is going to be wasted. Minimum agricultural prices during the New Deal led to huge quantities of products being destroyed. Minimum Wage means that some workers are unable to find a job. Unemployment inevitably follows. Often, the effective price drops below the legal price, as when workers are mistreated, effectively lowering the value of selling their labour.
Shortage means that willing buyers are unable to full-fill their needs. For example, in rent controlled jurisdictions, it becomes very difficult to find an apartment. Typically, some arbitrary process determines who will and who will not get the products. Often, the effective price increases above the legal price, as when waiting in line for a long time increases the effective cost of purchasing. In rent-control situations, landlords often neglect to maintain the housing, reducing the quality (and effectively increasing the price).
If we want government to help people, the most effective way of doing that is by directly helping them, rather than by trying to manipulate prices. For example, if we really want to help low-skilled workers through government, it would be much better to eliminate Minimum Wage and instead subsidise the salary of low-incomers. Similarly, if we want government to help low-income people rent apartments, it would be much better to pay them directly, rather than impose rent-control from which high-income people often benefit, and which discourages production of additional housing units.
Free market agriculture will inevitably turn fertile farmland into desert. Many farmers don’t want that. The farmers that do want that basically advocate stealing your children’s food. Therefore, we create entities (governments) that among other things, could (in a perfect world) protect the ability of farmers to farm, and to profit at farming, while at the same time allowing you and your children to eat. Too bad “agricultural subsidy”, in reality, just means corporate welfare.
I think you are confused. Fish stock is depleted as part of the “tragedy of the commons” because nobody owns the oceans. When farmers own their own land, there is no reason for them to over-work it.
In fact, I am not aware of any cases of farmland becoming desert. Are you?
The article mentions climate change as a major contributing factor to desertification. None of the countless mentioned are particularly known for their Capitalist practices.
In fact, if you are a farmer owning a piece of land, you will do all you can to keep it as valuable and productive as possible, won’t you? The most extensively cultivated regions in the world are in India, South East Asia and North America. No desertification there.
As for the oceans, Tuna are getting rare, yet chickens and cows are safe. Why?
Carving the oceans makes perfect sense, as are other private-property solutions. I am not an expert - but I have a very strong faith in properly-motivated and channelled human ingenuity.
Apples and oranges. Tuna are a natural resource. They are getting rare, as are other natural resources such as topsoil and aquifer water. “Chickens and cows” are commodities, which depend on natural resources.
It is well known that ocean-based fish farming is poor practice, environmentally speaking. See for instance.
India:
Southeast Asia:
North America:
Making a living trumps all for the farmer. Farmers add value in whatever way makes sense to them. Natural resources are in a sense their capital, and in order to stay afloat they will use that capital as needed. Aside from all that, they may not even be able to raise prices - witness a common modern plight of the dairy farmer - the more he produces the less money he makes!
What is it that makes Tuna a “natural resource”, while cows and chickens are “commodities”? Isn’t is simply that farmers raise chickens and cows, while Tuna roam the oceans unowned? If Tuna were owned, they would also become commodities.
As for decertification, I still see no evidence linking it to Capitalism. Over-using the land bears all the hallmarks of limited or non-existent property rights. When a farmer does not have a solid claim to the land, it makes sense to over-use it. The fact is that advanced Capitalism makes farming much more productive. The world now easily supports 7bn people, and can support a much higher number using a smaller and smaller fraction of its surface area. Those advances in agriculture have been invariably made in the most Capitalist societies, most notably the US.
As for dairy farmers, have you considered the simple proposition that there are too many of them? If one cannot make a living producing milk, that’s an excellent clue. If there were fewer dairy farmers, the price of milk would go up, until an equilibrium is achieved.
I apologize, I was rushing out and didn’t run my post by my editor. I meant to say that tuna is a natural resource and “cows and chickens” are goods. The tuna population, like any wild population, is part of a natural context which we all depend on for our health and wellbeing. Disturbing this context to a radical degree in fact disturbs our own wellbeing as well as the wellbeing of other forms of life. That some life forms are also goods is a moral question in a direct sense, but that’s not what this discussion is about. “Cows and chickens” are goods, as opposed to natural resources, in the sense that their populations are artificially produced for the purpose of consumption. The practices used to deliver these goods may be environmentally unsound, but the actual lives of such living goods are not so clearly connected to “the environment”.
These statements are riddled with contradictions. Desertification largely results from farming where farming should not occur (deforestation in sensitive areas), as well as poor farming practices. I’ve linked several websites to get you started on your own investigations. Your “capitalism” comment is misleading - I don’t blame capitalism in the least. I’m saying that your own theory that the world would be better off with some bizarre version of anarchism which includes the presence of corporations (though corporations can’t exist without the laws which define them) is a very poor one. People will farm where they own land. This is obvious. Farming in a sensitive location heavily contributes to desertification. This is obvious. You say that “advanced Capitalism makes farming much more productive”, and you miss the obvious point that the point of farming in “advanced Capitalism” is production, and short term production most importantly. The world does not now “easily” support 7 billion people - I can’t even begin to imagine where you get that idea from.
There’s an old saying from the dust bowl era - “taxes on the farmer feeds us all”. In your brave new version, you would have the farmer subjected to the same “free” market forces as people selling radioactive plants from Chernobyl as health food. Farmers would be forced out of necessity to sell denigrated products, which degrade the land. Niche markets (i.e. “organic”) may relatively flourish in these conditions, but could never make up for the destruction caused by your proposal.
There is no bright line separating owned goods and “the environment”. There are managed populations of deer, for example, which are allowed to roam free within their owner’s territory. How would you characterize them?
My point is that people take care of their property, while exploiting resources which do not belong to them. In desperation, people may “eat their own capital”, but there is not reason to assume that in a stable state, free society will result in many people “in desperation”. On the contrary - given property rights, people can and do plan for the future, save, buy insurance, form mutual aid societies, and otherwise prepare for unfortunate eventualities.
Am I wrong to equate, in the context of this discussion, “Free market agriculture” with “capitalism”?
Anarchism means absence of government, not absence of law. I’ll be happy to elaborate.
How am I missing the point? I agree with you that the point of farming is production. I am not sure what you mean by short term production. Over time, capital accumulation allows more efficient production method which require longer processes to mature. For example, you can start farming with primitive tools and methods very quickly. Advanced farming requires that farming machinery, fertilisers, seeds, etc. be produced first, resulting in a longer end-to-end production process, but one which is ultimately much more efficient. Capitalism naturally involves a gradual transition into longer and more efficient production processes, whether in agriculture or industry.
Total food production today could easily feed 7bn people currently alive. Starvation only takes place nowadays where wars (civil or otherwise) mean that men with guns stop food from being delivered where it is needed.
People prefer eating healthy food to unhealthy food, right? Consumers express that desire by willing to pay higher prices for healthier food. Producers and intermediaries can thus increase their profits by meeting that consumer preference, i.e. by producing demonstrably healthier foods.
Obviously the degree to which food is healthy can increase with increased wealth and prosperity. Poor farmers cannot be as selective as rich westerners (and, as far as food is concerned, virtually all westerners are rich).
In a free market, farmers would be forced out of necessity to sell those products that consumers actually want - i.e. healthy, good-looking products.
There is no difference in principle between agriculture and industry - in each case, free markets result in ever increased efficiency and prosperity, with better and better products becoming more and more affordable.
How will these starving people pay for food produced by western farming methods? They don’t have any money.
If ‘men with guns’ stop food deliveries, then how can you ensure that the food is delivered?
How can healthy food be guaranteed without government inspection and control programs? A serious threat is posed by bacterial and chemical contamination.
Won’t advertisers still convince people to eat rubbish? For example convenience foods, full of salt, which cause heart disease. Foods with large amounts of sugar which cause diabetes.
Categories like “natural resources” and “goods” overlap. I don’t see how that point has anything to do with this discussion.
Yes, that’s the mantra of all ideologues of privatization. And often enough, it is a true statement. But with your proposal, do people really own their land? I think they become something more like serfs.
Yes, to the extent that they can. In your scenario, the ability to do these things strikes me as heavily compromised. That you include corporations in your version of anarchism gives you away. Corporations without relatively democratic governments to balance their power would often prove (as is demonstrated by historical precedent) to be mere gangs of thugs.
Capitalism is an economic system. There is no capitalist economic system in the world where there is no governmental role. The lack of any government role at all is anarchic. I’m not discussing capitalism here - I’m discussing your own highly idiosyncratic political ideals.
It’s a moot point. In the final analysis, your corporations are likely merely undemocratic governments.
You’re missing the point that short term production is always destructive towards the capital (i.e. soil and water health) which provided for any short term success. The “efficiency” you’re talking about involves hidden costs. Many of these hidden costs involve environmental degredation.
Does your assessment of the success of current agriculture really come down to something so simplistic - we can feed people with the amount of food we have? Why am I even having this conversation then?
Umm, yes. That’s one reason why we have governments. We want to guarantee that our food sources to be demonstrably healthy enough.
Do you really think the complexity of market forces miraculously makes it all match up so that people sell what people want? Are you kidding?
With agriculture, increased efficiency is an illusion as it involves hidden costs that are ignored by a purely free market. The products in such a situation degrade more and more over time, as the causes and conditions that lead to superior products also degrade over time. Affordability, then, is also illusory. The prices are in fact artificially deflated, as they ignore the true costs of sustainable agricultural production. In a nutshell, this is why sustainable agricultural practices should be subsidized, even in a paradigm which involves minimal government intervention overall. That governments currently subsidize corporate monoculture rather than sustainable agriculture is a perversion of the roles of both governments and corporations.
I am not sure I understand. Serfs are people who are legally bound to their land. A farmer owns his land, and can sell it at will.
What historical precedent?
While there is no place on Earth not controlled by one government or another, the degree of government involvement is far from uniform. There is no area on Earth in which crime doesn’t exist, but that doesn’t mean we cannot both strive to minimize crime, and contemplate life without it. But I do take your point - you are thinking of Capitalism as a mixed system involving both markets and government. Admittedly, my “highly idiosyncratic” ideal would do away with the latter.
I don’t see why. Walmart doesn’t send people with guns to your home if you refuse to shop there. The US government does, if you refuse to pay taxes. Governments always and everywhere use coercion to force compliance. Corporations qua corporations are voluntary associations of people who interact with others on a voluntary basis. The difference couldn’t be deeper or more significant.
If a farmer owns a piece of land, it is in his obvious interests not to allow it to get degraded. Given half a chance, the farmer will employ whatever farming methods most appropriate for preserving the productive power of the land. Farmers have done so successfully for millennia. Until very recently, governments have never been involved in telling farmers what to do and what not to do. What am I missing? Why would that change if we removed government from the equation?
I will grant you one additional criterion (on which we may differ). Not only is current agriculture capable (easily) of feeding more people than ever lived in the past, with healthier, more reliable food production and using a smaller fraction of available resources than ever before, the trend is to continue and improve agricultural productivity, increasingly using smaller and smaller land area with less and less environmental impact. Further, current practices are not just sustainable - they are scalable, so we could feed many more people if we needed to.
But why do you need government for that? Couldn’t private organizations provide quality testing and rating? Many already do, in many areas of life (including food production).
I would probably use “marvellous” rather than “miraculous”, but yes, market forces do an incredible job, far better than any central planner ever could, of matching production to people’s preferences. The process is not perfect - merely as good as it can realistically be. Are you seriously suggesting that government intervention can do anything but reduce the efficiency with which markets meet people’s preferences?
I am not sure I understand why. The value of agricultural land (which includes its future productive capacity) is part of the balance sheet of any farmer (private or corporate). In a free market, farmers would use whatever production methods best balance current revenue generation with long-term value preservation.
Are you concerned about farmers applying short-term thinking, not caring about the long-term value of their land? Or are you thinking about the impact of agricultural practices on the environment beyond the farmer’s own land?
I meant it in the casual sense, not the technical sense. A farmer, under your proposal, has less control over his land use choices than you think.
The precedent of corporations bypassing government oversight in order to steal from consumers.
I’m glad it’s clear that I’m not discussing capitalism per se here, as capitalism is an economic system, and an economic system only. A capitalist society can protect “the environment” from businesspeople, just as it can protect its citizens against murder by businesspeople. It’s very straightforward. Society, through government, sets the parameters by which the economic system (for example) is allowed to operate.
You have an erroneous view of human nature. You think that by getting rid of governments you will get rid of what you see as a problem. It’s like thinking that killing Bin Laden solves the problem of the relationship between Islam and the modern west. Walmart doesn’t send people with guns into my home because I and others, through government, don’t allow that to happen.
Population explosion for one. But what makes you think that “farmers have done so successfully for millenia”? Chinese farmers traditionally use human feces to maintain soil fertility. This may work quite well with respect to just one issue - soil fertility - but what about disease? And many of the world desert regions were deforested long ago, to support agriculture.
I guess my comments on the effects of “productivity” on natural capital are going in one ear and out the other. You seem to ignore my assertion, rather than respond to it.
The government deals with the minimum requirements. Anything that is available on the shelves, in theory (of course there are black markets), passes the government’s minimum requirements. The private organizations that are involved work within that paradigm. Without any government involvement at all, there would be merely a chaos of competing voices, with the most powerful gaining the upper hand. As profit-making corporations, without government oversight, they could monopolize, accept bribery, etc., and the end result could easily be that vegetables from Chernobyl are labeled “organic” and praised as the healthiest food available on the planet.
Isn’t it amazing then, that I can’t hammer a modern nail into an older (1920’s) piece of wood in my house, without pre-drilling.
Again, you simply ignore my points. We’re repeating ourselves.
I’m concerned that in your system, the farmer is prevented from the ability to do anything more than “care”. He is prevented from acting in a caring way. Just as the individual tuna fisherman wants an endless supply of tuna, but through necessity, won’t stop (over)fishing tuna, so the farmer, by necessity, degrades his land for short term gain. And yes, I’m very concerned about “the impact of agricultural practices on the environment beyond the farmer’s own land”.
I think a farmer who owns the land he works have full control over his land. Short of using it in a way that invades other people’s property, he can do whatever he wants. What limitations of control do you have in mind?
Some corporations have engaged in criminal activities, just as some individuals had. Being criminal is not an essential part of being a corporation. In fact, I would argue that it is a rare exception. Being criminal (in the moral, not legal sense) is an essential part of being government. It goes with the definition of what one is. In the society I envision, effective mechanisms will exist to deter criminality, whether perpetrated by individuals or corporations.
Why are you confusing “society” with “government”? Government is a self-interested, self-propagating organisation that exploits the rest of society using political (i.e. violent) means. Society is an organic term, capable of expressing itself in countless ways, many of which involve no use of violence or coercion. For example, consumers can organise and boycott corporations or products they disapprove of. That, in my mind, is the moral way for society to express itself.
On the contrary - I have a realistic view of human nature. I think humans are prone to abuse positions of power. That is why I don’t want power in society to be concentrated in the hands of government - made, after all, of humans. Walmart doesn’t send people with guns to your house because that is not its modus-operandi. That’s not how it funds itself. Without government, other organizations will fill the role of ensuring that criminality is deterred and prevented.
I am puzzled. Humans eat better, are healthier, and use up less planetary land-area per person than ever before. Where is the evidence in terms of our actual lives that things are getting worst, rather than better? Forget about sensationalist scaremongering, and look around you. People live longer, healthier lives than ever before. They enjoy greater variety of foods (and other products). Where is the catastrophe to which you are alluding?
Is your assertion that we are depleting the “natural capital” of the planet? If so, when did we start? Do you see any real-world manifestations of that, say, through increased food prices, increased levels of food-related disease, growing levels of malnutrition?
That’s silly. Governments today marginalize private alternatives. Without governments, those alternatives will flourish. Enterprising journalists will very easily unmask any such fraud, and the corporation in question will immediately go out of business. Profit-making corporations are very very keenly aware of the importance of their reputation, which is why they pay so much attention to quality control.
Look at the food shelves at your supermarket. Look at the vegetables. They are all neat, trimmed, clean and attractive. There is no law that requires them to be so. Rather, consumers impose their preferences on the producers.
In fact, there is nothing amazing about that. I can think of many rational explanations. Perhaps there aren’t that many houses with '20s wood of that kind. Perhaps people prefer cheaper to more robust nails. Perhaps pre-drilling is just not a big deal.
Ask yourself the following question. If many people, like you, were frustrated with the quality of nails (which I assume is what you are referring to), wouldn’t hardware store rush to meet their need? Do you really think you understand the nail market better than the buyers at your friendly neighbourhood hardware store?
As I mentioned earlier in the discussion, there is all the difference between a fisherman who doesn’t own the Tuna (and thus has no interest in fishing it responsibly) and a farmer who owns his own land. I am sure you have not explained how a farmer is prevented (in my system) from acting in a caring way, if by caring you mean economically-rational (as opposed to fitting your own notions of right and wrong)
This isn’t working, Eran. I appreciate your tenaciousness though, in defending your utopian vision of a world in which benevolent corporations live in magical harmony with nature. Good luck with that.
I would remove “utopian”, “benevolent” and “magical”. Rather, I am hoping for a world in which self-regarding corporations and individuals live in harmony with each other by respecting property rights.