Ivan Illich Tribute
Anyway, Pollard recently had a great post on Ivan Illich. Having already been repeatedly nagged to read Illich, he finally stumbled across him in a serendipitous moment while looking (among other things) for "a way to unite progressives and libertarians... against the onslaught of the neocons in a Green Movement."
In the course of his own interesting discussion, Pollard quotes the Infed (Informal Education) site's article on Illich at length, including a thought-provoking list of the central principles in Illich's social analysis. Especially noteworthy is the principle of counterproductivity." "Counterproductivity is the means by which a fundamentally beneficial process or arrangement is turned into a negative one. Once it reaches a certain threshold, the process of institutionalization becomes counterproductive."
Although Illich's application of his counterproductivity principle is brilliant (he presents specific case of it in, e.g., Deschooling Society, Energy and Equity, and Medical Nemesis, and the general phenomenon in Tools for Conviviality and Vernacular Values), in my opinion he comes up short in identifying the causal mechanism behind it.
The chief reason the threshold of counterproductivity is reached is the role of government in creating externalities.
In a genuine free market, where every actor fully internalizes all the costs and benefits of an action, no technology will be adopted to the point of counterproductivity because it will become unprofitable for the individual using it at the point where the total costs outweigh the total benefits.
Government subsidies and government enforcement of special privileges, on the other hand, protects privileged actors from fully internalizing all the costs and benefits of their actions. Since the cost and benefit sides of the ledger are dissociated from each other, with costs and benefits accruing to different actors, those receiving the benefits of the action have no rational incentive to stop at the point of diminishing total returns to society as a whole. For them, no point of diminishing returns exists, because the cost is kept artificially low or nonexistent. So society adopts technologies beyond a pareto-optimal level: that is, it adopts them to the point that those benefiting from them benefit at somebody else's expense.
That, in essence, is what government does: it creates externalities, or zero-sum situations. The state, as Oppenheimer wrote in his famous work of the same title, is the "political means" to wealth. Production by peaceful labor, and voluntary exchange of labor-products between producers, are the "economic means" to wealth. When all wealth is obtained by such means, the situation is "pareto-optimal" (i.e., everyone benefits) because economic transactions are voluntary and perceived as beneficial by all the parties to them. When the political means of exploitation are introduced, and privileged classes of capitalists, landlords and bureaucrats are enabled to obtain wealth at the expense of those who produce it, the situation becomes zero-sum: one party uses coercion to impose a transaction on the other that he would not have chosen freely.
Under corporate capitalism, technologies are adopted to the point of counterproductivity because corporate elites are adopting them on somebody else's dime. The profit remains private, while the costs and risks are "socialized" on the taxpayer.
In other words, government-enforced privilege is what differentiates capitalism from the free market.
For those interested in Illich's thought, Richard Wall's appreciation of him at Lew Rockwell is worth checking out. Wall also did a nice piece on Paul Goodman.