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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Friday, March 31, 2006

Rothbard on the Myth of Social Efficiency

Several weeks ago Sheldon Richman posted this quote from Rothbard as an answer to those who justify enclosures, old and new, on the grounds that the gentleman farmers of the 18th century or the agribusiness plantations of the contemporary Third World make "more efficient" use of the land:

"[I]ndividual ends are bound to conflict, and therefore any additive concept of social efficiency is meaningless. . . . Efficiency . . . can only be meaningful relative to a given goal. But if ends clash, the opposing group will favor maximum inefficiency in pursuit of the disliked goal. Efficiency, therefore, can never serve as a utilitarian touchstone for law or for public policy. . . . [C]osts, as Austrians have pointed out for a century, are subjective to the individual, and therefore can neither be measured quantitatively nor, a fortiori, can they be added or compared among individuals. But if costs, like utilities, are subjective, nonadditive, and noncomparable, then of course any concept of social costs, including transaction costs, becomes meaningless." ("The Myth of Efficiency," in Time, Uncertainty, and Disequilibrium, Mario Rizzo, ed.)

As I argued in my post on "The So-Called Green Revolution," the most "efficient" agricultural techniques for a piece of land depend on who owns it and his goals in farming it. The techniques of large-scale commercial farming, with heavy mechanization and intensive use of chemicals and GMOs, are "more efficient" for those who happen to have huge tracts of land and heavily subsidized irrigation and other inputs, and are producing for export markets or the cities. For the peasant who farms a small tract of land and whose objective is to feed himself and his family as self-sufficiently as possible, the most efficient techniques will more likely involve careful stewardship of the soil and the use of drought-hardy locally improved varieties of seed. To say that the robbers make "more efficient" use of the land begs the question of whose ends should prevail: the robbers or the robbed?


Anonymous Anonymous said...

I remember reading some statist economist who got close to realizing what you're talking about. He said something to the effect that economics doesn't take into account theft since it merely represents a redistribution of "society's resources", yet there seemed nonetheless to be something illegitimate about comparing the gain of a thief to the loss of a victim (gee, ya think?). Score 1 for the libertarians!

March 31, 2006 10:14 PM  
Blogger freeman said...

This comment has been removed by a blog administrator.

March 31, 2006 10:29 PM  
Blogger freeman said...

While not entirely on topic, I just wanted to express my appreciation for all the writing you've done relating to the history of the enclosures. It's an aspect of history of which I was entirely oblivious.

I recently acquired a copy of the sole issue of Agorist Quarterly (Fall 1995) which has an interesting essay that I don't recall you ever mentioning. Joseph Stomberg wrote it and it's entitled "English Enclosures and Soviet Collectivization: Two Instances of an Anti-Peasant Mode of Development. Once I get through reading it, I'll post a little something about it on my blog.

March 31, 2006 10:30 PM  
Blogger Kevin Carson said...

Thanks, Stefan. The "efficiency" arguments also remind me of justifications for eminent domain.

freeman: I've heard of the Stromberg article and thought it sounded intriguing, so I look forward to your post.

March 31, 2006 11:05 PM  
Anonymous Anonymous said...

Don't forget that this formulation doesn't determine who are the robbers and who the robbed (if either). While not the usual case, it can and has happened that large landowners were the rightful owners (by most systems of reckoning), and then small farmers combined to rig the system and get them out. One example was the ending of the Dutch Patroon system in New York state in the 19th century.

It can happen that neither is in the wrong but both are victims; I remember a fictionalised description of this in a comic book version of Bonanza. Squatters turned up on the Ponderosa, and it turned out that a crooked lawyer had sold them fake title deeds.

The more usual cause of this "efficiency" confusion is not the one of forgetting which outputs to compare with which inputs - honest and competent economists know that problem area - but of not realising that non-cash measured imputs and outputs have to be considered too.

It's still the accounting thing that the professional skill isn't knowing how to count but what to count (and not double count).

April 01, 2006 1:57 AM  
Anonymous Anonymous said...

Oh, the cost of robbery thing can be factored in by imputing a cost to the taking itself, basically the market cost of protective services if only they could have been had (but there are estimating troubles there). I suspect economists are reluctant to make this sort of adjustment since it should also be applied to get the true cost of tax funded transfers via governments.

April 01, 2006 2:03 AM  
Anonymous Anonymous said...

That's a really good idea P.M. Lawrence. I wonder if it's because of ignorance, the estimating trouble you refer to, or cynical self-interest what with economists playing the role that Rothbard called "economic advisors to the state".

April 01, 2006 4:44 PM  
Anonymous Anonymous said...

I don't know that it matters very much, Stefan, but I think it's mostly a combination of the first two. Poor economists fall into the same error when they assume that, say, transactions are made in full knowledge of supply and demand curves.

Of course no real economist is that stupid - unless he is being deliberately selective. He knows that information about markets must itself be obtained at a certain cost, so this information isn't "just there". But when they make this sort of assumption they are actually doing something else.

A good economist makes assumptions so as to see if the results confirm them, i.e. to see if he has a disproof by falsification or supporting evidence for them. Alternatively, it may be a sort of engineering approximation, one that doesn't matter as you get close to an equilibrium or something.

But either way, a good economist isn't ever really living down to the "assume a tin opener" sort of joke. But they are tempted to provide partial results which get misinterpreted, like ignoring the unmeasurable compliance costs of a GST (follow the link above to my index page, then look at the GST article on my publications page).

We don't altogether have to impute and estimate, though, if all we want to see is that tax collection does have costs of this sort. Independent Abyssinia and Sarawak under the White Rajahs both had tax collecting expeditions that were essentially organised and systematic raiding (pay tribute if you prefer not to be raided).

With that, there's the clear deadweight cost of the expeditions themselves, plus the casualties from the raids that did happen when people were too poor or too reckless to pay (both sorts had to be made examples of). We can see this sort of non-cash cost, in those simple systems.

With self assessment income tax, there's a cost of similar nature but that you are forbidden to consider as a real cost, just so governments can pretend they cut costs by no longer assessing you themselves, and so on.

It may be worth recalling Isaac Asimov's observation that predators were usually about three times the size of their prey, to reduce risk to themselves while still having a meal worth the effort of the hunt (he noted exceptions like wolves where the size of the pack is what counts, or super-efficient approaches like whales filter-feeding).

Anyway, I think the last point is really only relevant to how the economists' results are selected and to the agendas used in training them - but a lot of people cynically give the "right" answer to pass exams while keeping schtumm about what they really saw in the materials.

I did that myself during my MBA in the early '90s, and it still led me to explore the parts they hadn't told us much about in the economics and corporate finance units, but which I noticed when I looked around. Things like the effects of coffee - and then other cash crops - on conditions in third world countries.

April 02, 2006 3:24 AM  
Anonymous Anonymous said...

Granted that the efficiency of an arrangement varies depending on who is in charge and what their goals are.

But - a genuine question - what are the ultimate implications for a, population size in each country and b, the future of urban living? And how do we get from where we are, to where we would go ?

Does agriculture of the sort you describe produce enough to be able to support the sizes of cities we see around the world?

April 02, 2006 6:13 AM  
Anonymous Anonymous said...

Chris Stiles, the ultimate constraints on population remain Malthusian, and we are a long way from those (at any rate in most countries).

As for urban living, the likelihood is that a form of momentum will apply in many places, i.e. the existence of industry will to some extent encourage replacements in the same places rather than by relocation. Some cities are geographically natural hubs too, because of their geographical connections to their own hinterlands (New York and Buenos Aires) or where trade routes intersect (Birmingham and Chicago).

However there would be a marked drop in cities that mainly exist because they funnel revenues. This was the main reason for very large cities in earlier times, like Constantinople and the great cities of China (trade by itself only made a relatively small city at Byzantium before it became a capital). As with mediaeval ports that got silted up, these would probably fade into small towns.

All up, however, there would be less overall need for great cities - later generations would drift away as they no longer felt the need. But it is unlikely that any would vanish completely and squeeze out people who would prefer to remain (the silted ports survived on that scale).

If local defence needed it, city states of some form might remain for self protection against banditry I suppose.

The transition would probably be gradual, probably on the order of human lifetimes, unless someone explicitly adopted a "year zero" approach and used forcible measures to unravel existing states, but anybody who tried that would rather have missed the point of engineering out the need for enforcement.

I can imagine it happening if some calamity forced a change anyway, or if someone thought there was only a narrow window of opportunity to use - but that would create the wrong sort of precedent and lead to recurring trouble later.

April 06, 2006 6:23 AM  
Blogger Kevin Carson said...

PML and Chris Stiles,

I tend to agree with Henry George's critique of Malthus. It seems to me that the absolute size of the population and the volume of consumption (throughput) don't make that much difference, so long as inputs are replaced sustainably. But I don't see cities on the present scale as having come into existence without a lot of forced depopulation of the countryside, and state-enforced unequal exchange between city and country. To the extent that present state intervention promotes labor efficiency at the expense of land efficiency, I'd guess that a free market might reduce the agricultural surplus and the size of the non-agricultural population. But a North America in which (say) ten percent, rather than one percent, were farmers, wouldn't be that bad.

PML, on the issue of not allowing us to treat assessments as true costs and the like, what comes to mind is my annual bill from the DMV to get new license tags. It includes a line item for the postage cost of sending out the bill. Also, the personal property tax bill every year includes a checkoff for "voluntary tax" of a certain amount, and asks if you want to pay it. I used to write in "If you can't get by on what you steal from me at gunpoint, you can choke on it." But in these days of zero tolerance and "terrorist threats," I have to be more circumspect.

April 06, 2006 12:26 PM  

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