"Redistribution of Wealth" Goes Both Ways
"Redistribution of wealth" is a dirty word to free market theorists. And so it should be -- especially when it signifies vertical redistribution rather than horizontal redistribution. Vertical redistribution occurs when market mechanisms draw wealth from the middle and lower classes increasingly to enrich the wealthy and widen the gap between them and those from whom they draw it. Horizontal redistribution occurs when market mechanisms pull wealth from the top tiers of wealth down to the lower and middle classes. Any shift in ratio in either direction amounts to redistribution, no matter what mechanisms cause that shift to occur.
Traditional economic theory proceeds on the assumption that the actions of government are not market mechanisms. But I argue that within a democracy of any sort -- even a democratic republic -- governmental taxes and regulations are in fact market mechanisms. They are as much part and parcel of the free market as are the actions of corporations and businesses. A free market is constituted within an arena of competing interests. Competitors seek to gain advantage against one another without limit. In a controlled market, competitors who achieve monopoly status are able to control the margin of entry so that new competitors cannot arise. A market that is controlled by monopolies is a controlled market. A free market, in traditional terms, is a market controlled by the most powerful.
Democratically induced governmental regulations and taxes, however, constitute a free market response to monopolistic control. This assumes that the market comprises an unbounded arena of interests and resources. To exclude democratic reaction from the interplay of market forces is to restrict the scope of the market in an effort to control it. Democratic reaction to monopolistic power is a competitor to monopolistic power. To disallow this competitor is to grant monopolies control of the market. A free market, on the other hand, grants the right of conflicting interests to arise freely through politically induced financial mechanisms. Democratic government is a proxy for these conflicting interests. Thus government is a proxy for competitors whose interest it is to weaken monopolistic power. This does not constitute an antithesis to a free market but extends the arena of freedom beyond the arbitrarily restricted boundaries of traditional free market theory.
For this reason traditional free-market rhetoric no longer persuades me. It is the rhetoric of the rich and powerful trying to influence me not to threaten the redistribution of the wealth of the lower and middle classes upwards into their accounts. That rhetoric is a legitimate tactic within a free marketplace, but since to support it is not in my interests or the interests of a balanced, more broadly empowered economy, I will no longer let it influence me as I cast my ballot.
Redistribution of wealth is a dirty word, and it is absolutely profane when it is verticle. That is why I will support mechanisms that move wealth horizontally.
posted by Tim Elston at
11:08 PM
3 Comments:
Although it has very little to do with the ballot box, Tim, I think you will find interesting some of the works of the Free Culture Movement. Some of the more eloquent voices of the movement include folks like Larry Lessig, Eben Moglen and Yochai Benkler.
I'd like in particular to refer you to the latter's book, entitled _The Wealth of Networks_, available as a free ebook download here:
http://www.benkler.org
Or if you want to purchase it, it is published by Yale University Press, available on Amazon here:
http://www.amazon.com/gp/product/0300110561/sr=8-1/qid=1140626021/ref=pd_bbs_1/104-8246423-0950353?_encoding=UTF8
The reason this particular work interfaces well with your post above is illustrated from its subtitle: "How Social Production Transforms Markets and Freedom." Yochai Benkler is the Berkman Professor of Entrepreneurial Legal Studies at Harvard, and faculty co-director of the Berkman Center for Internet and Society. Harvard is surely a bastion of the old economy in some senses, and yet here is Benkler not only describing, but agitating for new forms of production that run absolutely counter to corporate economics.
The basic premise of the book (this isn't a summary of its content, but my recollection, so please don't blame Benkler for my misunderstanding. He's a freaking genius; I'm just a prole struggling to keep up with his insights).
He talks about the emergence of new forms of production that come at least partly from the new networked information economy. In the old economy, production and dissemination of information was hugely expensive. It took a large company to fund printing presses and distribution, or a large production company to fund a studio with recording equipment and a network of broadcast stations.
This is no longer true. The incremental cost of communicating and disseminating information is approaching zero. In this economy, old scarcity-based models of control and competition no longer apply. New models of value and new currencies are emerging that overturn the old rules, and new economic entities are emerging to challenge the hegemony of the corporation as the principle entity in the economic environment.
The inevitable result of this emergence of new economic entities is that the stakeholders in the old economy will fight against change - in many cases they will attempt to legislate new economic challengers out of existence through lobbyists and politicians who love them. But the new economy is versatile and agile, and is easily outmanuvering the bastions of the old economy, for whom the new rules are incomprehensible.
I think you'll find Benkler's works an excellent introduction to these themes, and I think you will find a lot of resonance with some of the themes you express here.
You will also probably enjoy (Stanford University Professor) Larry Lessig's book _Free Culture_, though I think it's rather likely you're already familiar with it. You'll find its subtitle equally provocative: "How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity". It's available (also for free) here:
http://www.free-culture.cc/
Lessig talks more specifically about freedom of knowledge and information, not to mention content of all kinds. He briefly considered running for Congress as a Democrat from California, but decided to concentrate on working against government corruption of all kinds. You can see some of his latest work here:
http://lessig.org/blog/2008/09/4dems_4gops_change_we_all_can.html
There are two videos here in a post from September 11 of this year under the rubrik "4DEMs, 4GOPs: CHANGE we (all) can push for."
Lessig is one of the progenitors of a non-partisan group called Change-Congress dot org:
http://change-congress.org/
The Change Congress movement urges Republicans, Democrats and Independents to change the way Congress spends America's money in a fundamental way. Both parties have some good ideas. Neither party is completely clean in the way they allow money to be used. This is a non-partisan movement that challenges both sides of the debate to get real.
Rob, your comment is impressive. Have you been doing research on this subject? I've read a couple of "Economics 101" books lately, but nothing like you list here. In the wake of Republican practice over the last two presidential terms, as contrasted with their usual rhetoric during this election cycle, and in the wake of the market cataclysms since the repeal in 1998 of post-Great Depression banking and investing safeguards, I've been forced to lay the axe to my traditional Republican mantras. I will take a look at the materials you reference, because it has become clear to me that the Executive and Congress are in collusion with the banking and investment industries to effect self-serving deregulations that are fundamentally at odds with the best long-term interests of the United States. Rather than shift to a partisan pseudo-alternative, I want to tap into economics research. Your references are welcome.
I tried to e-mail you at various addresses that I found online, but my attempts were returned. Please get in touch at my new address: rdottimdotelstonatgmaildotcom. It would be nice to have updated contact information.
You articles are fascinating. I think they call the mechanism for vertical redistribution of wealth from the lower to the upper class - the stock market.:>
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