Purpose: 1800 words

[MasonC@xxxxxxxxxxxxx (Mason Clark)]

       THE PURPOSE OF THE POLITICAL ECONOMIC SYSTEM

   A recent inquiry to Internet economic groups and PKT
   elicited a variety of suggestions about the "purpose"
   of the economic system.

   There were objections to the use of "purpose" as a
   property of a system. It would be better to say, "the
   purpose of economists in designing an economic system."
   However, what is intended seemed to be understood by
   everyone so let it stand for now as an abbreviation.

       A system cannot have a purpose. The purpose of
       the people and institutions is to meet the
       various needs of the people.

       Analogous to the unconscious processes in our
       bodies.  There is no purpose.

       The system was not designed with *a* purpose in
       mind.  It serves the purpose of maximizing the
       welfare of the participants . . . given their
       initial endowments.

   An explanation of the intention of the word "purpose"
   will follow this listing of other responses:


   THE ORTHODOX, TEXTBOOK, PURPOSES:

   1a. "...three fundamental...economic problems"
       (quoting Samuelson)

         1. WHAT commodities shall be produced.
         2. HOW shall they be produced.
         3. For WHOM shall goods be produced?

   1b. To satisfy the economic needs of the people,
       primarily food, clothing, and shelter.

   1c. Valuate resources; production of goods and
       services.

   1d. Distribute scarce goods and resources
       -- unsatiable needs and desires.

   1e. Provide a framework for decisions regarding
       utilization of resources.

   1f. Provide an environment to encourage creation and
       distribution of goods to the benefit of society.


   WEALTH DISTRIBUTION was of some concern:

   2a. More wealth; or equality; or sustainable prosperity

   2b. Improve the material benefits of the average/median
       of people.

   2c. Amelioration of low income inequalities.


   COMPETING GOALS of the system were suggested, with
   reference to the ubiquitous controversy:

   3. Security or Freedom


   A DEEPER FUNCTION of the system was proposed:

   4a. Coordinate individual actions is such a way that
       society as a whole produces better.

   4b. Mediate cooperative production among very large
       numbers of people.

   4c. Facilitate the socialization of people.


   CARE OF ENVIRONMENT was thought important:

   5a. Fostering new technology for enriching people's
       lives while preserving the natural environment.

   5b. Continuation of the human species; the invisible
       hand is not adequate to this task.


   NOT BREAD ALONE:

   6a. Satisfy the "need to be a player in the system."

   6b. Meeting all basic human needs, including providing
       dignified and gainful employment.

   6c. A referral to Maslow's human motivations /
       fulfillments hierarchy.

   For the purpose of the study of economics, distinct
   from that of the system, one respondent suggested the
   interesting medical analogy:

   Diagnosis; Prognosis; Therapy;  Outcomes.


   THE WORD "PURPOSE".

   What is meant is:  If we were to design an economic
   system, what should be our purpose?  What is the
   specification we wish to meet?  If we sit with an
   architect to design a house, we must first specify what
   we want to accomplish.  How many bedrooms, how large a
   living room, how many cars in the garage, how long the
   swimming pool, etc., and finally how high the cost.
   Having once set those specifications the architect can
   begin to draw.  What is our economic dream home?

   This assumes the system can be in the hands of
   thinking, purposeful beings, perhaps even economists,
   rather than in the palm of the invisible hand.

   With this understanding, "purpose" seems preferable to
   such less exciting terms as "function" or "utility."

   What is the purpose of the physics system?  Of the
   chemistry system?  Of the mathematics system?  Of the
   plant world? They exist, they do not have a "purpose"
   (except of course in the mind of God: none of our
   business).

   Until the Renaissance, with scattered exceptions, the
   study of the "hard" sciences was the study of the
   purposes of God, a study governed by the authority of
   the theologians; a science then more dismal that
   economics has ever aspired to be.  God's purpose was to
   put man at the center of the universe, therefore the
   Sun must revolve around the Earth.  The purpose has
   determining effect on the science, just as axioms have
   a determining effect on subsequent logical
   derivations..

   With the break from theology, the purpose of God no
   longer governed and the learning proceeded post haste.
   The scientists learned the laws, the engineers
   invented and designed, the manufacturers built and the
   economic system become inscrutable.


   WHY A PURPOSE IS NEEDED

   While systems have purposes in one sense, their
   students have a different kind of purpose.  Physicists
   may have the purpose of learning and extending the laws
   of the science, by observation, by theory, and by
   experiment.  But other physicists may have as a purpose
   some manufacture: an energy source, a bomb, a weather
   satellite.

   Some economists are devoted to the study of economic
   systems by observing their history, by proposing
   theories, and by observing if not conducting  great
   experiments such as the Soviet Union.  An idealistic
   statement of purpose provides a basis for evaluating
   the observed systems and the merit of theories for
   their improvement.

   Other economists may have as goal the design and
   adjustment of existing systems, and even participation
   in the political processes. To do so constructively
   there must be an end purpose in mind, a specification
   of the house to be built.


   THE FIRST TEST: REDUCTIO AD ABSURDUM

   There is no better and certainly no quicker way to
   detect flaws in hypotheses than reductio ad absurdum.
   If by some logical deduction a ridiculous conclusion
   can be reached, one cannot trust the validity of the
   hypotheses.  If the stakes are high, as they certainly
   are in the design of an economic system, the starting
   point cannot be in doubt.

   Let's us test our Purpose candidates:

   Begin with the textbook list:

           a. WHAT commodities shall be produced.
           b. HOW shall they be produced.
           c. For WHOM shall goods be produced?

   Design a system that satisfies these to
   perfection.

   A selection of commodities is made, subject one
   supposes to some periodic plebiscite under Jimmy
   Carter's supervision. Assignments are made for their
   production; voluntary servitude of course. The goods
   are justly distributed to all the people by formulas
   meeting their approval.

   Surely this system will serve us very well.

   Oh, I should have mentioned that the three requirements
   are met by means of long-lived machines and there will
   be need for only fifteen percent of the population to
   perform the necessary operations and maintain the
   machines.  Nothing in the specification precludes this
   solution.  It a natural historical development.

   Human history has proceeded from hunting/gathering to
   farming to manufacturing. Each system has occupied
   almost all of the population in its time, then by
   increased labor efficiency has required a lesser
   portion of the population.  All economists are familiar
   with the farm labor history of the United States.
   And manufacturing automation is now often urged, even by
   economists, and is well underway.

   Machines are becoming so intelligent, in a machine sense,
   that human labor is less and less required.  The sneer
   of "luddite" does not make it less so.  It would be
   unkind and unfair to suggest that it may be only
   computer illiterate economists who do not understand
   what is happening.

   Our well-designed economic system will give us an
   unemployment rate of eighty-five percent.  Not itself
   an absurdity. Discounting the great projects, perhaps
   this was the would-have-been unemployment rate in the
   best years of ancient Egypt.

   Can we agree that this economic system doesn't work?
   Is the study of the unemployed human population to be
   an integral part of the study of economics? Or can we
   agree immediately that this economic system, a perfect
   solution of the three textbook problems, won't work?  I
   will suppose the latter.

   We look back at our list of purpose candidates to find
   an addition to dodge this absurdum and find items (7)
   and (8):

      Satisfy the "need to be a player in the system,"
      and meeting all basic human needs, including
      providing dignified and gainful employment.

   Now I, for one, don't want employment, dignified,
   gainful or not.  So a few of us will be players in the
   system by providing employment to golf course managers.

   My brother, overseeing the activities of teen-age sons,
   commented: "They're going to do something, that's for
   sure.  I've got to keep them too busy to get in
   trouble."  So must be the task of the economic system,
   and so it has been throughout history.  Look at what we
   most know of all great nations, great civilizations.

   A newly efficient agriculture system in the valley of
   the Nile posed a problem for the pharaohs. And the
   surplus labor was put to work digging holes and filling
   them.  The Greeks developed an efficient economic
   system based on trade and slaves.  With the surplus
   people they built temples and set out to explore and
   conquer the world.  The Romans followed.  All great
   economic systems have determined what to produce, have
   known how to produce them, and have somehow distributed
   to the people.  Having done this efficiently they
   undertook great projects with the surplus labor.

   Only where the economic system has been inadequate have
   no great projects left their great works for our
   information.  We know little or nothing of the nature
   of such systems and nothing of their projects for they
   had none.  We know only of those mysterious hordes
   moving about the planet struggling for survival with
   hunter, gather, pillage economic systems.

   On the historical record, it is inherent in any
   successful economic system that great projects will be
   necessary to keep the natives (and the teen-agers)
   quiet.


   AN ADDITION TO THE PURPOSE

   The suggestions (6) above must be added in some form.

   Perhaps 6a:  Satisfy the "need to be a player in the
   system" will serve us for now, though a review of
   Maslow or the psychology texts may be needed.

   How, in a system satisfying all material needs by the
   efforts of fifteen percent of the population can we
   provide for the remaining, unneeded labor?

   If they manufacture more goods, by definition--having
   already supplied all the needs and wants--the goods
   will be surplus.  Like pork in the heyday of Henry
   Wallace, they must be buried. Or given away, with what
   consequences?

   If they undertake great projects, who will pay?  The
   system was fully and perfectly functional before these
   people demanded attention.  The opportunities for
   reductio ad absurdum arguments here require no further
   explication.

   Clearly we cannot make an ex post facto adjustment.
   The system must be designed with all the population in
   mind from the start.

   So, from the start, let's incorporate the unneeded by
   giving them an annual stipend sufficient to share a
   nominal portion of the wealth of goods produced. Our
   perfected system is producing those goods already.
   Then build arenas sufficient to seat them for great
   circuses, perhaps drug wars, to keep them all--even
   the teen-agers busy.  Or build secure barracks with
   high concrete walls, electric fences, and guards.
   We can thereby facilitate the socialization of people
   with security and freedom, at least in the cells.

   But I have been reduced to absurdity, from science to
   harangue.  Can someone rescue me?  Can anyone tell us
   how to do economics without a purpose?  Can anyone
   convince us that it doesn't matter that the economics
   textbooks have no purpose free of lurking absurdity?


--
|--------------------------------------|
| Mason A. Clark  MasonC@xxxxxxxxxxxxx
|--------------------------------------|