Greed – Babbage & Babbit

There is much discussion of late of “greed” and “sharing” and such – I’m having an interesting discussion about that on the net right now. But, I found this statement in a book I’m reading:

pg 183 The Difference Engine – the biography of Charles Babbage –>

They may lock up in their own bosoms the mysteries they have penetrated — whilst they reap in pecuniary profit the legitimate required of their exertions. It is open to them, on the other hand, to disclose the secret they have torn from nature, and by allowing mankind to participate with them, to claim at once that splendid reputation which is rarely refused to the inventors of valuable discovers in the arts of life. The two course are rarely compatible.

This is the Babbage (altruism) and Babbit (greed) debate –

Yes, well, what Babbage is saying is greed is bad, that making money is somehow tainted, though, still, legitimate – but then he proposes this “altruistic” method – of sharing one’s ideas. And what do the sharers of ideas “earn” – what is their “profit”? Supposedly is there is none – for the thing was shared, no patent obtained, mankind benefited easily and cheaply from the sharing – but, there is “profit” – and that profit is laid out clearly by Babbage, though, despite his great genius, he doesn’t see this: why, the profit is: “to claim at once that splendid reputation…” – yes, accolades – that’s profit enough for some people. But profit it is. Profit is not always a cash thing … which is what confounds some economists – everything comes down to dollars and cents and money – but it’s not.

Indeed, “value” is often set by price, but there’s value that is not in price at all – there’s sentimental value, and practical value. One of the great fallacies of Marx was to use the Great Coat (that is, the really long warm woolen coat needed to survive the European winters,) as his value example. He proposed that the “value” of this coat was in the labor that went to making it – the workers, sewers, farmers getting the wool, etc. So to Marx, and many of his followers, the value of this coat is within the coat – clearly visible and quantifiable, and thus, as Marx said, they should earn the profit and not the great coat manufacturing company. Several things are missing.

Primarily, while it is true that in England a great coat is a useful thing, to a man in Taihiti it is pointless. Yet, the same value went into making the thing. The same labor. How could the exact same labor be worth much in one place and nothing in the other? In 800 pages of “Capitalism” Marx doesn’t explain this, or come near to even recognizing this reality – a coat’s value is only made by the wearer – not by the workers, the manufacturers or any other thing – if the coat has a value it is what the potential wearer will provide for it. How many hours of work, (aka, money) will it take to acquire the coat, and, is it worth it? To a man with a coat, a second one has less value, while a man without a coat in England’s winters values such a coat far more. And to the man in Taihiti he looks at the coat and wonders what on earth anyone would give a moment of anything for.

Now, Babbage, and his altruistic pursuits, is of course, also a bit confused about the need to obtain value for a process or machine. It turns out that Babbage didn’t have to worry about selling his ideas – in the 1830s he inherited 100,000 pounds sterling – that is, he was vastly rich in his times. He never had to work a day in his life again. He could pursue his ideas and give them away all the live long day. Why, he even paid a guinea a day – or two or three times the prevailing wage – to make sure that a draftsman was on hand at all times to draw up Babbage’s ideas. Babbage mentioned other men such as he – though, without the 100,000 PS – and there was a man who made a platinum process, and guarded it jealously – and, in 20 years made 30,000 PS – which is 70,000 less than Babbage got on one day. Oh, Babbage like the death bed conversion to altruism of the man with the platinum idea – for only then did this man release his idea to the public so all could benefit. Yes, well, he would have starved had he given away his idea for free – because he did not inherit so much money (not a dime, really.) How easy it is for a rich man to give away his ideas and the potential for making more money, and how very hard it is for the poor man with the idea. Not to mention, Babbage had hundreds of ideas, while his idea-selling friend had but one idea.

Now, then I got this response from a friend of mine:

You’re right Jim, and for the record, I’m not against capitalism. I’m all for a free market, but I think a free market is a utopian pipe dream. What I am against is the fascism and corporate dictatorship which capitalism inevitability causes. And I should also go to state that it’s not just capitalism that causes this, but any paradigm that supports a monetary system based on scarcity for profits will always create a situation of classicism. Until we adopt a system based on abundance and not scarcity, we will continue to have the “absurdities” that capitalism (along with communism, fascism, etc.) inevitably cause.”

OK, then – the “free market” is as utopian as any idea really – it’s merely a statement of who is the primary controller of wealth – individuals or government. The less “free market” the more “government” – one goes up, the other down, that’s the way it is. Nothing can be totally without government – few suggest it can be. Where the dividing line is, that’s the bugaboo – well, it’s somewhere at about 15 or 20% – that is, about 15 to 20 % of what society has to do is requiring government action – and the rest does not. So, there’s a controlled market for a small number of things, like, oh, a water company, and an uncontrolled market for everything else. Simple enough – I would suppose there’s quibbles over the 5% between 15 and 20. It’s one reason, though, that naturally, it seems, that governments rarely can eek out more than 20% of taxes from the economy without resorting to force. That’s because, naturally, for some reason unexplained of yet, nearly 100% of the people agree that there’s this small percentage, 1/5th or 1/6th of the economy that naturally is collective, and the rest is not. When it goes beyond the 20% or the 1/5th it turns to something else, and begins to fall apart – under this limit then there is harmony, above this limit is discord. We’re way above this limit.

Now, the statement that “capitalism inevitably (I correct the English as I move along here …) causes” “fascism and corporate dictatorship” is false. Unless one us using the term “capitalism” as Marx used it, of course. He invented the word, shouldn’t we go by his definition? In fact, what he described was, oddly, Babbage – that is, landed aristocracy and the super rich from inheritance – or, “corporate dictatorship.” Indeed, in the beginning of the industrial revolution and the start of alleged “capitalism” (the 1750s to the 1850s) in England it was almost a given that anyone with an idea without his own means had to go to a duke, lord or earl or some baron or landed titled hoobah. That’s what Marx complained about and that’s what he called “capitalism” – and yes indeed – this sort of thing is “corporate dictatorship” – but it already existed long before the “Free Market” came along.

Why, since the dawn of time it was kings, emperors and churches, aka, the authorities, who almost always determined what was made, sold, created, at what price for how much weight, etc, the details – indeed, the guilds where the first corporations – and they were created under a dictatorship – oh, I’m sorry, a king – geez, what’s the difference? The word? That’s about it. So, we can see that the “Free Market” which has never existed did not and could not and does not cause corporate dictatorships – but that corporations in cozy league with government – “fascism” or “corporate dictatorship” was first. These dictatorships, um, Kings – they ran the economy like private playpens. There were no entrepreneurs – why, the Catholic Church railed against making money for centuries. They were against banking (made the Jews do it, and people wonder why Jews controlled banking in Europe for a few centuries? They were required to run the banks that everyone knew were needed but good Christians were not allowed to sully their hands with.

So, the free market doesn’t lead to anything, but well, the free market. There is not only no incentive within the free market to create a fascist leader – after all, people are busy making money, not seeking political power to control other people’s money in a “free market” – but there’s no mechanism. Every monopoly on earth was and is a creature of government, not markets. Indeed, markets have the nasty habit of ripping apart monopolies and destroying them. Schumpeter termed it “creative destruction.”

It’s only when government steps in to save “capitalists” from supposedly themselves, or the capitalists in the country next door (aka, smugglers, or free marketers who make better and cheaper – or, oddly, like China – countries that tax their people so that they can subsidize the sale of goods, called “dumping” – it is to our benefit in America that the Chinese people are taxed to subsidize the production of cheaper products – the Chinese people are covering a bit of the true cost of the product, and we get a cheaper price. Woe to the prices of “made in China” things if the people there get wind of how they are subsidizing the consumer in America with their money. And we complain about “outsourcing”? Yikes.

Now, as for “money” – money is a battery for labor – there is no way to store labor but in “money” – what people agree is “money” is flexible, fungible as the money folks say. Yes, it could be shells, stones, beads, gold bars, silver coins, pieces of paper and even electronic bits – but the reality is no one on earth can make what they need – humans are fragile delicate things – unlike animals we can’t just go rip, say, a zebra out of the herd, eat, then sleep in the savannah, no, we need houses and shoes and clothes and stuff. All this must be made, by specialists – some do better at this or that, some by training, some by natural inclination. As we make and sell stuff we get “money” – and that we use to exchange with other folks.

Now, we could all barter – and get rid of “money” – but we won’t. Money will still be present – but merely not as recognizable. The reality is that, again, we can’t make all our own stuff – and so, perhaps we make shoes, but don’t sell the shoes for “money” but trade the shoes for wheat. In this case it happens that the shoes and the wheat are both “money.” But this money has limited uses. It’s a poor battery. It’s why even so-called primitive (I prefer “traditional”) societies had “money” – wampum, if you will.

So, money came first, then came the corporate dictatorship – and then, finally, thousands of years later, maybe, to a degree never before seen, we have a “somewhat free market.” Which no society ever achieved because, well, it’s so new and novel that it’s considered old and the first step on the way to dictatorship – but I dare say, there was corporate dictatorship and fascism and communism in Hammurabi’s Babylon – and there was no free market prior to it which led to this. Free markets are the last thing to appear – while the isms got there first.

So, my friend has cause and effect backwards. I’m working on him, and many others.

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