James T. Kloppenberg — The three principles of democracy [excerpt]

Whether or not true democracy can ever be achieved remains uncertain. Historian James T. Kloppenberg argues that while democracy can be defined as an ethical ideal, the practical definition of democracy is too contentious to be adopted as a political system. The following shortened excerpt from Toward Democracy analyzes three contested principles of democracy: popular sovereignty, autonomy, and equality.

OUPblog

The three principles of democracy [excerpt]
James T. Kloppenberg | Charles Warren Professor of American History, at Harvard University

John Keane — Capitalism and Democracy [part 4]

Earlier parts of this series on capitalism and democracy raised questions about the tense and often contradictory relationship between capitalist markets and the egalitarian spirit and power-humbling institutions of democracy. Each contribution has pointed out that we shouldn’t be surprised that monitory democracies* otherwise as different as South Africa, Argentina, France and the United States are all feeling the pinch of plutocracy. For if capitalism is defined as a restless system of commodity production, exchange and consumption based on risk taking, competition and profiteering, then it follows that market winners will grow wealthy while others fall behind. From the point of view of democracy, the trouble with capitalist competition, as George Orwell pointed out, is that somebody has to win, while others lose. Part four of this series probes this point. It complicates things by asking: what exactly do we mean by equality?

John Keane's Blog
Capitalism and Democracy [part 4]

John Keane | Professor of Politics at the University of Sydney and at the Wissenschaftszentrum Berlin (WZB), and a co-founder and director of the Sydney Democracy Network (SDN)

* John Keane, "Monitory Democracies?" Paper prepared for the ESRC Seminar Series, ‘Emergent Publics’, The Open University, Milton Keynes, 13th-14th March 2008 

Miles Kimball — The Complexity of Liberty: How Equality Enters into a Good Definition of Liberty

Having blogged through to the end of On Liberty, I know that what John Stuart Mill claims in the 9th paragraph of the “Introductory” to On Liberty is simple is anything but simple…

Liberalism deals with harmonizing freedom, egality, and community, another one of those pesky trifectas.

Confessions of a Supply Side Liberal
The Complexity of Liberty: How Equality Enters into a Good Definition of Liberty
Miles Kimball | Professor of Economics and Survey Research at the University of Michigan

Peter Radford — Equality

Peter Radford investigates equality and comes up with some economic insights. But in my view his analysis underplays the key point that equality is essentially a legal concept based on liberal political theory, namely, absence of power-based privilege guaranteed by a single standard of justice in which the rule of law is determined by all those subject to the law having a voice of the same weight.

To my knowledge the only political theory to put forward a concept of economic equality is Marxism, and that is not mathematically determined but rather determine by potential and need:  "From each according to ability and to each according to need."

Social liberalism, developed in reaction to the economic liberalism characteristic of Dickensian times, emphasizes social justice rather than economic equality. It's concern is with adjusting for the failure of markets to distribute goods and services adequately for the needs of all to be met. The objective here, however, is not economic equality. Economic inequality is accepted as part and parcel of  investment-driven production and market-driven distribution.

Social liberalism is opposed by economic liberalism, called Libertarianism, and a scaled-down form of social liberalism, now called neoliberalism.

The issue of equality as to do with political liberalism rather than economics, and economics enters largely as a source of power asymmetry leading to political and legal privilege, a double standard of justice, and asymmetrical social, political and economic power leading to a hierarchical class structure of wide disparity in distributional effects.

The Radford Free Press
Equality
Peter Radford

Steve Randy Waldman — Mobility is no answer to dispersion

The cost and shame of downward mobility dramatically outmatches the potential benefit of upward mobility. If that sounds abstruse and theoretical, it shouldn’t. For example, I don’t think you can understand the United States response to the financial crisis without taking into account the genuine sympathy of policymakers and other influencers for the plight of people within their social communities who faced banishment to dramatically lower stations under theoretically superior policy alternatives. A functional polity values rising fortunes across the wealth spectrum, but it fears and resists falling fortunes much more strenuously. I would go so far as to claim this is a universal social fact, a characteristic of all polities that endure. Capitalism is always crony capitalism — and socialism tends towards crony socialism! — not because of corrupt bad actors but because human lifestyles are sticky-downward. Large social divergences can in practice be remedied smoothly only by convergence upward from the bottom. The wise course is to prevent extreme divergence from emerging in the first place. Once it has, the only way out is to hope for growth, and to direct the fruits of growth towards the bottom of the distribution.

Interfluidity
Mobility is no answer to dispersion
Steve Randy Waldman

The nitty gritty of the dilemma of the conservative principle that some are better than other and meritocracy is the optimal ordering principle and the liberal principle that all are created equal and deserve equal standing involving no privilege and equal opportunity to succeed.

A conversation with Wang Hui — Interview with Gabriele Battaglia — China, a new equality and the world

Wang Hui covers a lot of ground on Chinese development and its future, comes out for Snowden.

Asia Times Online
China, a new equality and the world
A conversation with Wang Hui
Interview with Gabriele Battaglia

Lars Syll — There is no trade-off between equality and efficiency

Neoclassical economists often maintain that there is a trade-off between equality and efficiency. That this is a false contention is shown forcefully by research conducted for example by Andrew Berg and Jonathan Ostry.

Lars P Syll's Blog
There is no trade-off between equality and efficiency
Lars P. Syll | Professor of Economics, Malmo University

Another shibboleth of neoliberalism as a political theory based on economic efficiency bites the dust.

Google Earth Helps Indian Man Find Family And Village After 25 Years

This is a heartwarming human interest story, but I am posting it for another reason. It is the story of an Indian child, a beggar, who gets lost and is permanently separated from his poor family. He is later adopted by an Australian couple, is educated and attains success in business. Still remembering his Indian family and village, he searches for the village on Google Earth and discovers it. Returning, he finds his birth family living in a slum.

The social, political, and economy point is that poor people are not poor by nature but by circumstance, and by changing their circumstances, they can assume a higher position in society and lead lives normal for the society, even a much wealthier society.

This is strong argument against the notion that the poor are poor by choice and if they just worked harder and pulled themselves up by their boot straps everything would be fine. It also give the lie to the notion that people born in better circumstances than other deserve the head start they get in society through the luck of the draw. (Others would say karma, and this is my view also; but this is beside the point here.)

If the basis of democratic egalitarianism is equal opportunity, then a democratic society needs to pay more attention to circumstances that affect lack of equal opportunity. MMT analysis shows that lack of affordability is no excuse for inaction.

Read it at The Mercury (AU)
He's our Slumdog Millionaire
by Emma Hope
(via The Huffington Post)

New Wave

Musings of visions and dreams of possible futures, speaking truth in a time of lies and pondering my place in the midst of this radical awakening and fall of the Empire.

Read it at Out on a Limb
The Gentle Economic Collapse of the Empire
by Mary Hall

Warning for economically straight folks: "Utopian socialism"

I would not call this collapse of the presently cresting wave, but rather would see it as a new wave swelling up.

As I see it, there are two major forces at work in creating a major trend that is developing, and both are libertarian-anarchistic. One is anarcho-capitalism, and the other is anarcho-communitarianism. These are manifesting socially and politically as the Tea Party, on one hand, and Occupy and the 99% Movement, on the other. The mainstream has not yet grasped the underlying structure and dynamic. Therefore, mainstream perception of both is mostly a caricature of the underlying reality, and so it misses most of the substance and interplay.

In most major fields a trifecta is operative. In socio-politics it is "Liberté, Égalité, Fraternité," that is, freedom, equality, and solidarity or community.

Liberty involves individual freedom and protections, as well as self-determination. Liberty includes freedom from arbitrarily imposed constraint, freedom to choose as one wills, and freedom for self-determination and self-actualization.

Equality involves rights and responsibilities, the rule of law, equivalence of persons before the law, due process, and absence of privilege. Equality recognizes diversity of individual characteristics and circumstances. Equality holds that all humans are identical as persons while being diverse as individuals.

Solidarity implies community based on voluntary cooperation of self-sufficient individuals for mutual benefit in creating and administering institutions suitable for accomplishing tasks at hand, guided by natural leadership. Solidarity recognizes that relationships among individuals in social groups is as significant socially, politically and economically as individuals as members of the group. "No man is an island." Human beings are inherently social, which implies complex webs of relationship.

The various social, political, and economic positions approach resolving this trifecta differently. History is the dialectical record of interaction among these positions and shifts in which is "king of the mountain" where and for how long.

Guest Post by Shaun Hingston — Allocation and Equality

Shaun Hingston posted a provocative comment on allocation and equality recently, and I asked him to expand upon it in a post. Here are his thoughts.

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Allocation efficiency is the ability to effectively allocate resources towards activities that increase one's welfare. If someone has more resources to manage than they did before, will they still allocate those resources with the same efficiency? I think not. As the amount of resources one has increases, so does the number of allocation errors. Therefore one's allocative efficiency falls, as the amount of resources they have increases.

Such a statement is intuitive. As the amount of stuff I have grows, the harder it is to keep everything running at the optimal level. Whenever a resource is misallocated, it is no longer producing the optimal amount of income. So, the number of misallocations grows as the amount of resources increases.

Assume a second person equally capable, but with less resources than the first, what course of action should be taken to ensure that the income from all the resources is maximised? For a given single resource item, is it more likely to be misallocated by the first or second person? Since misallocation is proportional to the amount of resources one has, the first person is more likely to mis-allocate the resource item. So to minimize the amount of mis-allocations, first person should give some of their resources to the second person. But how much resources should first person give to the second person ?

The objective is to maximise the income from resources, which is achieved by correctly allocating resources. The first person should continue to give resources to the second person until each person is equally likely to misallocate resources. Recall that mis-allocation is proportional to the amount of resources each has. So they are equally likely to correctly allocate when they have the same amount of resources. This means that the income from resources will be maximized when person one and two have the same amount of resources.

What about for a third person? The rule still holds. That is, the total resources should be divided equally between one, two and three. This will ensure that income from resources will be maximized. This rule will hold for any subsequent person. Therefore a community will achieve maximal income when resources are divided equally, assuming equal allocation ability.

Unequal allocation capacity

So far it is assumed that everyone has the same ability to allocate resources, which isn't true. The assertion doesn't hold when considering different allocation skill levels. Therefore one must consider the cost of education and allocation.

Lets consider the above scenario where the first person has more resources than the second person. Let's also assume the second person is less capable than the first person. From the community's perspective the first person can either use her energy to allocate resources or educate the second person. This is a simple profit/loss calculation. Calculate the cost of educating second person and the associated allocative gains, compared with the allocative losses incurred to educate first person. If people were immortal then on average the optimal decision is to educate second person.

For society as a whole, this obviously shows that the more time and effort spent on empowering people, the greater that society will be. Society may suffer a short-term fall in allocation efficiency, but it will result in a long-term allocation capacity increase, and consequently income.

From the community's perspective undereducated people are an obvious resource. Raising people through education will increase the communityÍs ability to allocate resources. This will lead to an increase in income and consequently prosperity for all.

Economic growth and inequality.

The businessman might argue the teacher should educate him instead of you. This assumes that the businessman is more capable of learning than you are. Indeed this could be true. However, it becomes harder to justify not teaching you as his wealth grows many times greater than yours.

The businessman has a huge amount of resources to allocate. So it is significantly more expensive to fund the education of a businessman than you. Allocative errors grow because the businessman is learning instead of allocating, a huge cost considering the amount of resources they must allocate. This huge cost must be justified by a corresponding improvement in allocation efficiency. In addition, the businessman's allocation efficiency increase must be greater than that achieved by educating you. The resources used to educate the businessman could be used to educate you or others. And since you do not have as many resources to allocate, then the time-cost is significantly less. Therefore even if it takes you significantly longer to learn the same topic, it may still be cheaper to educate you, many times over. Thus resulting in the greatest allocative efficiency.

The gap between the rich and the poor could be viewed as a way to measure the allocation and learning ability of the rich compared to the poor. A large gap can only be justified if the rich are allocating resources better and can be educated cheaper than everyone else. Given that allocative errors grows as the amount of resources one has increases, and education costs also rise as the amount of resources someone has increases, then today's gap is unlikely to reflect the true capacity each individual has. In fact as the gap grows, the errors will increase, which will detrimentally affect income. As the gap becomes ever greater, income from resources is sub-optimal. Society underperforms without any logical economic reason.

Shaun Hingston