Simon Duffy

Thoughts, Bemusements & Arguments

Month: May 2014

The Liberal Fallacy or Yet Another Argument for Basic Income

Liberalism, or neoliberalism, has many flaws but we don’t always focus on its biggest flaw.

You can see this flaw most obviously once you accept one of the most important axiom’s of liberal economics: if prices are flexible then the market will clear.

But what does that mean?

Well let’s begin with a simple example:

Farmers come to the market in order to sell their harvest. Shoppers go to the market in order to buy their food. The price is whatever money is exchanged for the goods. Now, if prices are flexible, then we can expect all the goods to be sold – the market will be ‘cleared’. When shoppers compete to buy some rarer item then its price will rise. When sellers compete to offload a less popular item then its price will drop. Eventually everything, even the most unattractive item should be sold as the price approaches zero.

Now the most obvious flaw in this account is that real markets don’t work like this:

The day finishes, and some goods are left over, even when there has been heavy discounting at the end of the day. This might be for all sorts of practical reasons – perhaps fewer people came to the market that day etc. But also the seller does not always accept the logic of liberal economics. He might insist on holding to his notion of a fair price – whatever the market conditions. Like the grandfather in Halldór Laxness’ The Fish Can Sing, who always sells his fish at the same price: On a day when there is high demand for fish he does not increase his price – he simply sells his ‘bargain’ fish quickly. On a day when demand is low he may not even sell his fish at all.

So, real markets are not like the pure markets of economics, not just because of the complexities of reality, but also because some people simply refuse to bend to the idea that the market should set the price. For the liberal this is a kind of irrationality: how can the fish have a value outside of the market mechanism? If nobody will pay your ‘fair price’ how can you imagine that this is its true value?

The liberal is competing with an older view (certainly the medieval view) that things really do have a fair price. And this is probably linked to Aristotle’s way of looking at things. Within the Aristotelian tradition all things have their true essence – their meaning or their value – which the wise can discern. But too often we see only the accidental properties of a thing – their semblance or their price. Within this tradition the market can no more measure value than the fool can find truth.

It seems to me that this debate about value has been at the heart of politics and society for some centuries. Liberals are modernists. The notion of an essential value is, for them, a fiction. Only the social mechanism of the market gives things a price. This may be sad and unromantic, they argue, but, for example ‘Your house is only really worth what someone is willing to pay.’ And unattractive as this is in some respects, as an argument it does have a certain power.

Today we can see these two competing perspectives playing out in the debate between those want to see greater market flexibility in wages, versus those who want to see greater rigidity, for example by the application of minimum wages, living wages or stronger employment rights. The liberal argues that, whatever the apparent disadvantages of zero-hours contracts, self-employment or reduced employment rights, any increased flexibility will improve market efficiency and so does benefit society in the long-run.

Liberalism may be rational but it is certainly unrealistic. Real markets don’t clear and real people certainly don’t behave ‘rationally’. In fact we all turn out to be a strange mixture of the modern and the medieval. When house prices went up by 360% in 11 years we became liberals, enjoying (if we owned a house!) the ‘rising housing market.’ [Interestingly this kind of jargon reveals exactly our confusion, for markets don’t rise or fall – they are just spaces.] But now that bubble seems ready to burst we have all turned medieval. We want the Government to bail us out and defend the ‘value’ of our house and to ensure that we don’t lose out from our own bad investments. Our sense of the fair price for our own home seems wonderfully flexible as long as its direction is upwards.

We are liberals when it suits us. Bubbles make fools of us all.

But this debate between fair-value and market-value is a sideshow; it does not reveal the essential flaw in liberalism. It cannot lead to any helpful answers to the fundamental questions of social justice.

The essential flaw in liberalism is much simpler – there is nothing in the market that will ensure the seller will get enough – enough to live on, enough to thrive, enough to support their citizenship. Market’s don’t care, they are not moral, they are not fair and they don’t need to ensure the survival of those who ‘come to the market.’

A flexible labour market certainly benefits employers, especially if they need to compete on price with organisations in countries who have much lower labour costs. Investors certainly prefer the cost of labour to be controlled or reduced employment securities. This reduces their liabilities.

But whatever benefits a flexible labour market offers to employers or investors, it still does not ensure that people will have enough to live on. Like the canny shopper, waiting until the end of market day, to see what price the unsold bananas might fall to, the employer knows that, when the seller is desperate enough, they will be able to buy the labour they need, at almost any price.

The essential flaw in liberalism is that, by its very logic, it will never provide a decent and secure income for citizens. To do so would be to undermine the market itself.

Of course, those who campaign for increased minimum wages or a living wage know all this. But they are forced to deploy the medieval argument – which while is attractive in many ways – is also fraught with many problems. They have been drawn onto the enemy’s territory. Their motivation is good, but perhaps their strategy is wrong. They seek to mitigate the market’s inevitable injustices, but they thereby accept that the regulation of the price of labour is the proper means of reducing social injustice. This brings with it a host of problems.

By arguing about prices we are arguing on the liberal’s territory. Instead, we must, as the Chinese say, lure the tiger from the mountains. We must start with need and justice.

This is how we can strike at the heart of the liberal fallacy. For, if the market cannot deliver fair and secure incomes for all, then perhaps so we must abandon the market for that purpose. Instead we must secure our basic income or our citizen’s income socially and politically. We must agree together what is fair, and distribute to each other the necessary resources for our basic or citizen’s income.

This is not to abandon the market for all purposes. It is to put the market in its place (in a more humble place – a secondary place). The market cannot ensure that we each have enough. So let us stop trying to make it. Instead we must create real income security together – we set a basic income and ensure that each citizen gets it. We must fix what is fair together and then we can let the labour market help us distribute our gifts and our talents between each other – at prices we are free to set ourselves.

This strategy has two further advantages over the mitigation of the market strategy which is currently being deployed by our allies.

First, it just lets the market do what is does do well – connect people’s needs to other people’s gifts. Price flexibility (once our basic income is secured) is a boon, not just to employers, but to employees, not just to customers but also to producers. If I love to write poetry, but the going rate for poetry is low, then I can sell myself cheaply, while knowing that I am doing what I really value. If I choose to do something that few others seem to value, like cleaning toilets, I can demand a higher price for my labour. We are free to decide what is important to us – in both buying labour and selling labour. We are no longer at the mercy of the market.

Second, we start to breakdown the illusion that the market can value us. Today we are constantly being told that all sorts of people are worth more than the rest of us and so are deservedly entitled to whatever salaries they award themselves – be they bankers, politicians, footballers or whoever. The price we pay for this exploitation of markets by the powerful is not only economic, it is spiritual. We are only too likely to believe the nonsensical idea that some banker is ‘worth more’ than some other person – perhaps the toilet cleaner. Constantly we forget what a proper understanding of economics can always teach us – there is no real relationship between value and price: water is cheap; diamonds are expensive; but it is water that we need to live.

Perhaps it is time to put the market in perspective. It is not a demon, it is not a saviour. It is just a useful tool for any society that understands that we are each worth infinitely more than our price in the labour market and that markets don’t take care of us – they never will. Only we can take care of us.

The Eugenic Fallacy

The contemporary philosopher, Peter Singer, is not the only modern thinker who thinks ‘the handicapped baby should die’. Eugenics is not dead, it is just in hiding. Singer is just more outspoken than most.

But he, like other eugenicists, is guilty of a fallacy. His views may seem obviously wicked to some of us; but to many others they are quite tempting. Yet they are also deeply illogical – as I will attempt to show – and it is logic by which philosophers like Singer must live or die.
To begin with, let us acknowledge, even if we know that we  disagree with the eugenicist, that their  arguments do build on some kind of distorted truth.
Humanity is varied (as it should be) and, of course, part of that variability means that there are some of us who are weaker than others. [Although the concept of weakness is quite ambiguous concept, but we’ll leave that for another day.] This weakness, for example, might mean that I might need help to eat or to thrive; and this help can be treated as a cost – not just a financial cost – but as a cost in the lives of others. 
The eugenicist then demands that we put aside compassion, sympathy or love and instead we judge ‘honestly’ and examine the ‘burden’ that love or morality seems to demand: all the feeding, the caring, or the helping. At some point, they argue, we must recognise that this burden just becomes ‘unreasonable.’ And, of course, there is a genuine temptation here. Most of us might resent the care that we must take of others – all of us can imagine something else that we might do that would be more fun, pleasurable, relaxing, creative, productive etc. [Here we can each choose our own utilitarian poison.]
But how can there be an end to this. Each time we destroy the weakest a new weakest must emerge. Those who were second from last will now become last. There will always be someone with less, who needs more, it is a fundamental aspect of the human condition. The eugenic knife must keep on cutting – once we’ve decided that we are at liberty to destroy the weak we will find new people who are weak – and who must therefore be destroyed.
There can be no end to the destruction. And as the process destruction begins there must therefore appear two classes, those who destroy and those to be destroyed. We may feel that we will not belong to either class, but ultimately we must choose – there is only the illusion of a middle ground. If we are silent while the destruction goes on then we are complicit with destruction. If we resist then we stand with those who they wish to destroy.
Eugenics always opens this gulf within humanity – it is profoundly inhuman because it forgets that diversity and weakness is of our very essence. But it is profoundly illogical because it forgets that eugenics changes everything, for all of us. The eugenicist argues as if the act of genocide is merely some neutral act of science. But always there will be those who wield the knife, inject the toxin or turn on the gas. We must become killer or victim. And as the victims pile up the killers must turn on each other. Eugenics is pragmatically self-contradictory – it cannot be sustained (which is not to say it cannot happen – it is happening now).
Eugenics is a particularly tempting philosophy for those who are powerful or wish to be amongst the powerful. In the nineteenth century, as Arendt argued, it was a critical element in the thinking of al the competing elites – liberals, progressives, imperialists and racists:

Darwinism met with such overwhelming success because it provided, on the basis of inheritance, the ideological weapons for race as well as class rule and could be used for, as well as against, race discrimination. Politically speaking, Darwinism as such was neutral, and it has led, indeed, to all kinds of pacifism and cosmopolitanism as well as to the sharpest forms of imperialistic ideologies. In the seventies and eighties of the last century, Darwinism was still almost exclusively in the hands of the utilitarian anti-colonial party in England. And the first philosopher of evolution, Herbert Spencer, who treated sociology as part of biology, believed natural selection to benefit the evolution of mankind and to result in everlasting peace. For political discussion, Darwinism offered two important concepts: the struggle for existence with optimistic assertion of the necessary and automatic “survival of the fittest,” and the indefinite possibilities which seemed to lie in the evolution of man out of animal life and which started the new “science” of eugenics. 

The doctrine of the necessary survival of the fittest, with its implication that the top layers in society eventually are the “fittest,” dies as the conquest doctrine had died, namely, at the moment when the ruling classes in England or the English domination in colonial possessions were no longer absolutely secure, and when it became highly doubtful whether those who were the “fittest” today would still be the fittest tomorrow. The other part of Darwinism, the genealogy of man from animal life, unfortunately survived. Eugenics promised to overcome the troublesome uncertainties of the survival doctrine according to which it was impossible either to predict who would turn out to be the the fittest or to provide the means for the nations to develop everlasting fitness. This possible consequence of applied eugenics was stressed in Germany in the twenties as a reaction to Spengler’s Decline of the West. The process of selection had only to be changed from a natural necessity which worked behind the backs of men into an “artificial,” consciously applied physical tool. Bestiality had always been inherent in eugenics, and Ernst Haeckel’s early remark [1904] that mercy-death would save “useless expenses for family and state” is quite characteristic. Finally the last disciples of Darwinism in Germany decided to leave the field of scientific research altogether, to forget about the search for the missing link between man and ape, and started instead their practical efforts to change man into what the Darwinists thought an ape is.

Hannah Arendt from The Origins of Totalitarianism 

Today we have our own ‘neoliberal’ version of eugenics. ‘Let the market do the work of the eugenicist. Let those who are unworthy fall aside. Greed is natural and good. We are powerful, rich and strong because we are the best. We should survive and thrive, they should fail.’
This road to Hell has been trod before. The fact that it is all illogical nonsense does not stop it from growing in strength. Its strength is rooted, not in truth, but in fear and in our natural desire not to find ourselves on the losing side – the side of the weak. 
The only thing that will stop it before it destroys everything is that either when the weak themselves resist or that those who have not yet been marked out as weak choose to stand beside them. 
The trial lies before us now, but we close our eyes and hope it will go away of its own accord. This never works.

Weil’s or Pascal’s Wager

Here is Pascal’s famous wager, which proposes the absolute rationality of believing in God: 

If there is a God, He is infinitely incomprehensible, since, having neither parts nor limits, He has no affinity to us. We are then incapable of knowing either what He is or if He is….

“God is, or He is not.” But to which side shall we incline? Reason can decide nothing here. There is an infinite chaos which separated us. 

A game is being played at the extremity of this infinite distance where heads or tails will turn up. What will you wager? According to reason, you can do neither the one thing nor the other; according to reason, you can defend neither of the propositions.

Do not, then, reprove for error those who have made a choice; for you know nothing about it. “No, but I blame them for having made, not this choice, but a choice; for again both he who chooses heads and he who chooses tails are equally at fault, they are both in the wrong. The true course is not to wager at all.”

Yes; but you must wager. It is not optional. You are embarked. Which will you choose then? Let us see. Since you must choose, let us see which interests you least. You have two things to lose, the true and the good; and two things to stake, your reason and your will, your knowledge and your happiness; and your nature has two things to shun, error and misery. Your reason is no more shocked in choosing one rather than the other, since you must of necessity choose. This is one point settled. But your happiness? Let us weigh the gain and the loss in wagering that God is. Let us estimate these two chances. If you gain, you gain all; if you lose, you lose nothing. Wager, then, without hesitation that He is. 

“That is very fine. Yes, I must wager; but I may perhaps wager too much.” Let us see. Since there is an equal risk of gain and of loss, if you had only to gain two lives, instead of one, you might still wager. But if there were three lives to gain, you would have to play (since you are under the necessity of playing), and you would be imprudent, when you are forced to play, not to chance your life to gain three at a game where there is an equal risk of loss and gain. But there is an eternity of life and happiness. And this being so, if there were an infinity of chances, of which one only would be for you, you would still be right in wagering one to win two, and you would act stupidly, being obliged to play, by refusing to stake one life against three at a game in which out of an infinity of chances there is one for you, if there were an infinity of an infinitely happy life to gain. But there is here an infinity of an infinitely happy life to gain, a chance of gain against a finite number of chances of loss, and what you stake is finite.

Blaise Pascal, Thoughts

Pascal appeals to our reason, by asking us to recognise that reason itself has come to its limits. Instead we must make that great existential choice – we must commit ourselves. But to choose not to believe is to risk everything – an infinity of happinesses.

There is a power to this argument, but it is also fraught with problems. In particular, as Simone Weil recognised, its very logic is inconsistent with true faith.

Here is an alternative wager, put forward by Weil:

If we put obedience to God above everything else, unreservedly, with the following thought: ‘Suppose God is real, then our gain is total – even though we fall into nothingness at the point of death; suppose the word ‘God’ stands only for illusions, then we have still lost nothing because on this assumption there is absolutely nothing good, and consequently nothing to lose; we have even gained, through being in accord with truth, because we have left aside the illusory goods which exists but are not good, for the sake of something which (on this assumption) does not exist but which, if it did exist, would be the only good… 

If one follows this rule of life, then no revelation at the the moment of death can cause any regrets; because if chance or the devil governs all worlds we would still have no regrets for having lived this way. 

This is greatly preferable to Pascal’s wager.

Simone Weil, Gateway to God, p. 44 

The attraction of Weil’s wager is that she refuses to separate truth and goodness. If God exists then we have truth – even without Paradise or any eternal happiness – even if we crumble away into nothing. We had faith in truth, even if that truth turns out to be inconsistent with our eternal happiness.

And, if God does not exist, we also lose nothing, because we have not deluded ourselves with meaningless goods. She will not allow Pascal’s easy separation of a good that may be false.

Weil’s is the harder road, but it is the better road. Faith in God cannot be a gamble on a free ride to Heaven. And belief cannot mean just the mouthing of words or the holding of ideas. Belief is our commitment – belief is an action of the will – the very essence of our being.

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