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Letter 60: What the World Needs Now
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Letter 60
What the World Needs Now

Competition, Alternatives to Competition, Limitations on Social Choice, Growth Points

I. Introduction

What the world needs now is a restructuring of the economy. This letter to some extent takes the desirability of restructuring for granted, and deals mainly with the feasibility of restructuring and with the meaning of the concept.

The eleventh word (perhaps I should have said "the eleventh hour word") in the first sentence above is "economy." In deliberating about whether to use the word "economy" I considered several issues. I considered writing instead, "What the world needs now is a restructuring of human ecology." The phrase "human ecology" would have made it clear that what needs to be restructured is what Karl Marx called "the metabolism of society," the human interchange of matter and energy with the environment.

I also considered using Marx's own term, "labor," and writing, "what the world needs now is a restructuring of labor." Marx was right to say that it is by combining gifts of history (i.e. accumulated capital), gifts of nature (what Ricardo and Smith called "land"), and labor that human needs are met. (Insofar as human needs are met at all.)

I decided to use the word "economy" instead of "human ecology" or "labor" because I am writing about solutions to problems which most people nowadays call "economic:" poverty, unemployment, scarcity of consumer goods, inflation, material insecurity, excessive taxation, excessive debt....

Nevertheless, I wish to enter a protest against the common belief that the solutions to the problems called "economic" will come from a science called "economics." The contributions of those who are trained in the analytic techniques of that field of study are necessary, but they cannot possibly be sufficient. I protest also against the common notion that economic problems will be solved "by jump-starting the economy," or "when the economy gets moving again," or "by stimulating the economy," or "when the economy rebounds."

There is not any entity properly called "the economy" which by augmenting its activity can create general prosperity. And if, per imposibile, there were, the consequence would be further ecological damage.

In view of the misleading connotations of the word "economy," and of the unsatisfactory character of alternatives to it, I considered omitting the end of my first sentence entirely. I could have written, "What the world needs now is a restructuring." This way of articulating my thoughts would have avoided the contradiction I apparently fall into when I say:

1. The basic structure of modern society is economic.

2. The basic structure needs to be restructured.

3. What the world needs now is a restructuring of the economy.

These three statements appear to lead to a contradiction because the restructuring proposed in (2) would lead to a new structure which would be different from the basic structure of modern society, and which would be, in all likelihood, best named with some word other than "economic."

But, even assuming that there will be a restructuring leading to a better basic structure, and even assuming that the new basic structure will deserve and will receive a name; I am not now in a position to say what its name will be. Therefore, I will use the word "economy;" it is a word which names well enough some of humanity's main problems as most people now conceive them. But I use "economy" with grave reservations, because I do not believe we will make much progress toward solving the problems in question until most people conceive them differently.

My reservations would be diminished if we could revive the original meaning of the word "economy," which is "household management," from the Greek oikos, house and nomos, rule; hence oikonomia is the rule of the household. This is the sense of oikonomia in the New Testament, e.g. in Luke 12:42, where the King James translation of the passage reads, "And the Lord said, `Who then is that faithful and wise steward (oikonomos) whom his lord shall make ruler over his household, to give them their portion of meat in due season? '" (See also Luke 16: 1,3,8; I Corinthians 4:1-2; Titus 1:7; Romans 16:23; Galatians 4:2.) By extension, "political economy" is the management of the larger household composed of the polis, the city-state; and perhaps by a further extension "economy" or "planetary economy" might be used to name the management of the earth household where there dwells the entire family of humanity. I do not mean to rule out the possibility that the best name for the basic structure of human exchange of matter and energy with the environment in the ecological age will be the same as the best name for the basic structure of our present economic age - "economy" again, the same word with a renewed meaning drawn from its ancient roots.

For my first sentence I finally wrote, "What the world needs now is a restructuring of the economy." I deliberately made "the" economy singular and referred to the "world," not to the economy of any particular nation or region, partly because I agree with Immanuel Wallerstein that for the most part a single modern world-economy is the dominant institution throughout the planet earth.

Insofar as one can speak of an "American economy," a "Japanese economy," or a "Bolivian economy" at all, one speaks of systems whose characteristics are decisively determined by their modes of insertion into the world economy. But perhaps one should not speak of national economic systems at all because nation-states have only a small tendency to weld into cohesive policies, programs and projects the various ways in which their citizens participate in global markets. Of course, some nation-states are more cohesive than others. It would make more sense to speak of a Japanese economy than to speak of a Bolivian economy, while the degree to which it makes sense to speak of an American economy, as a cohesive actor on the world stage, is less than the extent to which it makes sense to speak of a Japanese one and greater than the extent to which it makes sense to speak of a Bolivian one.

It is not a decisive objection to the claim that there is one modern world-economy to point out that there are still a good many protectionist measures in place, as well as many restrictions on labor mobility and capital mobility. The idea of the value of merchandise in the world market, once established in the imagination and in the realm of possible transactions, is a potent idea whether citizens of a given nation are allowed to purchase their goods at world market prices (or to sell their labor-power anywhere) or not. The world market value influences policies and motives - even if for some people it remains a theoretical quantity due to what economic science with an evident bias in favor of free trade labels "imperfections" - because nobody can escape knowing what alternatives they are obliged to forego (the "opportunity costs") when their political institutions forbid them to buy or to sell at world-market prices. It is because possible transactions have a systemic reality even where they do not become actual transactions that Saussure in his Cours de Linguistique Generale (Paris: Payot, 5th ed. 1960) was able to introduce his ideas of langue and of synchrony by comparing the meaningful relationships of words to each other in a language at a given moment of time (quite apart from the speech acts that members of the linguistic community happen to be performing at that moment) to the relative prices of goods in a market.

I have, in addition, another reason for choosing the word "world." It can refer to the shapes of the relatively small worlds in which people play out their lives. The word "world" occurs, for example, in such common expressions as, "we shall create a world for two/ for you/ Lili Marlene," and "the divorce of the parents shattered the world of the children," and "the world of the Hopi." "World" can be a place where people live subjectively. I want the double reference of the term because I believe that social reality is socially constructed in such a way that large socially constructed realities, such as the international market place both make and are made by small socially constructed realities, such as the everyday buying and selling where money is exchanged for commodities. The justification for saying the world in the singular while referring to "world" in its small as well as its large meaning is that the ubiquity of commodity exchange in everyday life parallels and reflects a vast market which spans the globe.

I use the word "needs" in the sentence, "What the world needs now is a restructuring of the economy," because it expresses sound value judgments. When it is said, for example, that humans need vitamin C because cells need ascorbic acid for defense against toxins and because the human body, unlike the bodies of some of our primate relatives, does not synthesize that vitamin, the implicit value judgment is expressed that life and health are good. I concur, and I consider this type of implicit value judgment to be in accord with the broader principle that in the end nature judges culture. Of course judgments of this type may be false: someone may judge that the human body needs Vitamin K and be wrong. And - this is a more subtle and controversial point - some claims to have needs may be true in one cultural setting and false in another; for example: the need of an 18 year old woman for a formal gown to wear to the high school graduation dance. The gown is no less a need because someone else in some other culture would not need it.

A reorganization of economic structures is required by those human needs which are more biological (although nothing human is entirely biological without a trace of culture); and also by those human needs which are more cultural (although no human cultural form is wholly independent of biology); and also by non-human, environmental, needs. (See on this point, and on other points pertinent here, John Dryzek, Rational Ecology. Oxford: Blackwell, 1987.)

The common word "needs" is often employed to introduce premises drawn from the natural sciences or from medicine in support of such normative conclusions as "X ought to have Y." Indeed, ceteris paribus, "X needs Y" implies "X ought to have Y." A world, composed of many life forms, can be said to need something when its parts require it to function.

The word "restructuring" can be used to refer to several kinds of reorganization. A corporation "restructures" its debt when it substantially changes its debt/equity ratio, or when it pays off old loans and takes out new ones - in the process changing interest rates and debt servicing schedules. A corporation is also said to "restructure" when it lays off workers and closes plants; it "restructures" too when it reshuffles the administrative responsibilities which belong to positions within the enterprise, so that who reports to whom and who is responsible for what is no longer the same as it was. A nation-state is said to "restructure" its economy when it adopts a policy of letting its protected industries die by exposing them to the full force of international competition, or when it privatizes a large chunk of the public sector, or when it nationalizes a large chunk of the private sector, or when it establishes or abolishes major autonomous semi-public corporations. The international trading system is "restructured" when many countries agree by treaty to reduce trade barriers, or when the United States dollar is replaced by some other currency or by a basket of currencies as the standard in terms of which international sales and loans are denominated. The word "restructuring" tends to come into play whenever everyday business as usual, within an existing framework of social conventions and contracts, is perceived as leading to problems so chronic and so intransigent that major redefinitions of the rules which have been guiding everyday business as usual are perceived as necessary, are proposed, and are implemented.

What would it mean to restructure not just a corporation, not just a nation-state, not just international trade, but "the economy?" That is to say: to restructure that form of human culture which defines the modern epoch? My answer follows, but not immediately. The route towards the answer lies through some considerations concerning functions which must be performed by any basic structure governing the means by which any human group produces the necessities of life; whether the group be tribal, ancient, feudal, modern, or future; and which our modern basic structure typically performs by putting into place the institutional context of free competition.

II. Competition

Labor discipline, or, if that phrase sounds too harsh, "labor motivation," is a feature of the basic structure of any culture --except perhaps that of a hunting and gathering society living in an environment so bountiful that homo sapiens survives effortlessly; or that of a culture whose means of production and distribution are fully automated. Discipline is ideally achieved by an education which fosters self-discipline; but usually the means through which necessary discipline is imposed are far from ideal, and, as Herbert Marcuse and others have pointed out (see his Eros and Civilization. London: Routledge and Kegan Paul, 1956), class -divided societies mix necessary discipline with the imposition of much unnecessary discipline which serves not to meet human needs, but rather to cement privilege into place under the guise of imposing necessary order.

I do not mean to say that the necessary part of labor discipline is usefully separated from discipline or motivation in general. Labor beyond that which is, strictly speaking, necessary, is desirable in order to make a good life possible for everyone. And even people whose living expenses are fully underwritten by a generous welfare state whether they work or not, need discipline and motivation --to avoid anomie, crime, and heroin if for no other reasons. The same is true of rentiers. The shaping of impulse by socialization is for many reasons necessary, and when I say it is necessary because labor is necessary, I do not deny that it is necessary for other reasons as well.

As long as labor is an essential component of the mode of production through which a society satisfies at least enough of the basic needs of its members to keep itself going from generation to generation, then the motivating of labor is a condition sine qua non, although not the only condition sine qua non, of the survival of society, and a fortiori it is a condition sine qua non of society's advance beyond survival to a beautiful way of life.

Our society, whose basic structure is the exchange of commodities, motivates labor to a large extent through economic competition. Of course, our society did not invent competition; competition among living forms began when the first DNA molecules reproduced themselves, thus beginning simultaneously competition for access to scarce resources and the type of energy flow pattern we call "life." What is distinctive about our society is a comparatively peaceful form of struggle to achieve control of scarce resources called "economic competition."

Compared to most of the predecessors which it eclipsed, as it came into existence in 16th century Europe and then expanded to become global, our modern world-system based on economic competition is in some ways less violent. The onset of the market system was in general quite violent, as in the enclosures which drove yeoman from their lands, thus permitting more raising of sheep for export and creating a propertyless labor force; or in the creation of a money economy by forcibly imposing a money tax in order to drive African natives to work in the mines; or in the many cases cited by Marx in his famous chapters on "primitive accumulation." (Volume I, chapters 26 through 30 of Capital). Nevertheless, the end result was a society in which exchanges, including the purchase and sale of labor-power, are in principle and to some extent in fact voluntary; and it was the historical existence of this partly voluntary system that permitted the elaboration of the ideal of a free society. Europe's colonialism was able to conquer the rest of the world by violence partly because its relatively voluntary and peaceful approach to organizing productive labor and business enterprise at home helped to give it overwhelming superiority in artillery and naval technology. People work, in the dominant form of the modern world-system, "voluntarily," because they need money to live, or because for whatever reason they want more money - but not because a master holds them as slaves and will order them whipped or confined to the gallows if they slacken; nor because they are bound by feudal ties to perform services for a lord. And owners of property invest voluntarily as a rule; among the major exceptions to the rule are social investments made with money raised by taxes. The general rule of capitalism is: free exchange is legitimate; forced labor and taking property by force are not.

In our culture where the free pursuit of self-interest is the culturally-legitimated guiding principle, it is perennially difficult to draw a precise line distinguishing crime from business, since both the criminal and the business person pursue self-interest, and the criterion of regarding voluntary transactions as legitimate (prostitution? drug sales? gambling?) and involuntary transactions as illegitimate (mortgage foreclosures? paying monopoly prices? being obliged to work for wages in order to survive?) is hard to apply. It is also perennially difficult to decide how many and how large will be those exceptional cases where taxes and other forms of governmental compulsion are legitimately used. Yet the general rule holds good: the free is good, the coerced bad. Our competitive society is on the whole one of free discipline; one freely chooses what to do, one's customers or clients freely decide whether one is a success at doing it. Many people work very hard, displaying amazing self-discipline, in spite of the absence of laws prescribing punishments for sloth; we think perhaps we know why they work even though they are not legally obligated to do so; we think it is because in some cases people must work hard to earn enough just to get by; we think in some cases that people work hard because they are ambitious; we note however that there are people who do not work hard and do survive and even prosper. And with regard to those in whom our free competitive labor discipline elicits high levels of effort, in many cases we just do not know why in the existing system many people feel highly motivated, in spite of famous hypotheses (like Max Weber's notion that the puritans prominent in early capitalism were driven by irrational religious sentiments).

The available scientific explanations of achievement motivation are rudimentary.

The features of modern society just sketched, implied, and wondered about - freedom, property, money, contracts, the international market, the labor market, competition, a work ethic which is sometimes potent and sometimes not - are features of the basic structure of modern society. If they were to be summarized in one word, the one word might be "economy," "commodity exchange," or "individualism." Max Weber preferred to identify the modern by the term "rationality," by which he meant Zweckrationalitat, "instrumental rationality," which is also known as "economic rationality." The list of characteristic features of this basic structure could be expanded; it might include also the nation-state, the abolition of compulsory state religion and its replacement by secularism and toleration of religious diversity, banking, accountancy, written as distinct from customary law, systematic scientific research, schooling, and others.... These features are not independent of each other, and together they define the principal way in which modern homo sapiens wrests a living from the environment. They provide the context in which it can be observed that free competition is the typical means by which our society does something that every society must do, namely: to discipline labor.

Perhaps I seem to exaggerate the extent to which our society is competitive, and to overlook the extent to which it is characterized by monopolies, oligopolies, and sinecures. This is not because I believe modern global society has achieved the ideal free market which its ideology postulates, but rather partly because I think the reality and the threat of competition are real forces of great moment in our global society; and partly because I wish to make my suggestions for improvement in the light of a model of our society working at its best, as it is supposed to work, rather than in the light of deviations from the free market model which are widely regarded as inefficiencies or as unjustifiable privileges. I will, in any case, allude to monopoly, oligopoly and sinecure again later in the section on Alternatives to Competition.

There are many other things that every society must do, among which I think it sufficient to mention just one more: effort must be directed as well as motivated. In the ancient societies organized by astronomer-priests, the priests explained when and what to plant at seedtime, as well as motivating - by ritual, by myth, by brute force - the putting forth of the necessary effort. In our society the direction of effort is famously achieved by the free market. Prices are the signals. Daily newspapers and all media report myriads of prices for the use of business people, who, in pursuit of profit, direct their efforts toward making what buyers want. Success depends in the end not just on hard work, but on work which produces something somebody wants enough to pay for it. Enormous pains are taken to research consumer demand in order to direct effort toward making products that will sell.

These two things, then, must be done by any society: labor must be motivated, and labor must be directed. Each of these is done in a characteristic way by modern economic society; and the characteristic institutional solution to each of the two problems is the same: the free, competitive market.

As is the case with a living organism, a frog for example, our culture has a basic structure; it is a whole made up of an interrelated set of parts. Even without having complete data about its behavior, and even without having satisfactory confirmed hypotheses about why it behaves as it does, we can know some useful things about it (i.e. either about the frog or about modern society) just by knowing its structure. One useful thing we know about modern society is that this society, structured as it is, possesses a form of labor discipline which, for whatever reasons, in many cases elicits high degrees of creativity and effort. Indeed, compared to other civilizations which humanity has formed, the degrees of creativity and effort manifested in free market societies are prodigious.

It would be an exaggeration to say that research has discovered the motives and beliefs which fuel and guide behavior in a competitive market. It is only part of the truth to say that aggressive instinctual tendencies are sublimated by modern society and turned into the competitive spirit of business (and, often simultaneously, into the spirit of athletic competition). If the research question asked is, "What do workers want most from their jobs?" the answer seems to be that they want security first, a good salary second, and friendly relationships in the workplace third. It is also known that many people do not think of themselves as working for themselves, but rather as working for the sake of their children and families. On the other hand, it appears that work motivation is strengthened when family ties are weakened, because those who have comfortable extended families can afford to quit, or to run the risk of being fired, while those who are alone in the world have no place to go if they lose their jobs. Protestantism is found to correlate with motivation for economic achievement more than Catholicism. It appears too, that unconscious irrational motives drive labor harder than conscious, rational ones; the workaholic is more motivated than the person who coolly calculates the costs and benefits of work. It appears too that company culture, more than individual psychological factors and more than gross measures of the carrots and sticks of paychecks and threats, explains why there is unusually high performance in certain organizations (e.g. the Disney Corporation); and that the culture of the nation-state (e.g. Japan) and that of the ethnic group also partly determine who will work and how hard.

I mention all of the above not in an attempt to summarize research on labor and management motivation, but in order, first, to indicate that the reasons why our existing system partly works and partly does not work are not entirely known; and, second, as a preface to the point that the very structure of the system, like the structure of a frog, allows certain conclusions to be drawn even in the absence of complete empirical data. Be all of the above as it may be, there are certain consequences of the competitive market as an institution which follow from its constitutive rules. They may be regarded as constitutive structural features of the system, regardless of what research on the correlates of success and failure in business may and may not show.

One of these structural features is that there may be losers. In a system based on voluntary exchange, it is not necessarily the case that someone will voluntarily offer to exchange something valuable for one's labor-power, or for whatever one has to offer. The idea of competition suggests that there are both winners and losers; while the very idea of exchange, an idea constitutive of our basic structure, implies the possibility of no-exchange, no sale, unemployment. (The oft-repeated maxim that everyone gains by trade, because where trade is voluntary it only occurs when both parties perceive themselves to gain by it, has as a corollary that where trade is voluntarily there may be no trade.)

The social scientist does not need a large data set to draw this conclusion any more than the biologist needs to verify the results of his dissection of a frog by collecting data on millions of frogs, for the absence of any guarantee that one's attempt to sell oneself or one's product on the market will attract a buyer follows from the constitutive rules which define economic competition.

Unlike competitive sports and games, economic competition inflicts on its losers a punishment which affects the ability to meet one's basic needs: moneylessness. In the free market you must please and charm customers or employers of one sort or another to the point where they are motivated voluntarily to give you money in order to get what you sell. If nobody wants the product of your labor, or the use of resources you control, then you get no money, and consequently you ordinarily get none of the things money buys.

It seems likely that the fear of becoming a loser with all the consequences being a loser entails is part of the motivation of workers and managers; and that when (as in the former Soviet Union) there is guaranteed employment, or when (as in many countries) there is a social safety net which supplies basic needs whether one wins or loses in economic competition, fear decreases.

Another constitutive feature of the system is that labor-power is not the only commodity offered for sale on the market. One can strike a deal and consummate an exchange whenever a willing buyer wants some resource one controls. The permissive act of allowing someone else to use one's property earns money by attracting a willing buyer, and the money which thus enters one's pocket can be spent just as readily as money earned by work. From this constitutive rule follows the injustice of the system, its unfair discrimination among those who because they have property-income do not need to work, those who are obliged to work for a living, those who are obliged to work even though the wages their labor-power brings on the market are less than what is required for a decent living, and those who need to work for a living but cannot find work.

The constitutive rule of voluntary exchange implies that there is likely to be a class of losers, and therefore misery; the constitutive rule that any valuable resource one controls can be a source of income implies injustice.

It is also part of modern society's constitutive rules that when people want to make an exchange they usually do. Consequently, just as there is no guarantee that there will be an exchange just because there is a need to be met, neither is there a guarantee that there will not be an exchange just because the exchange will lead to damage. Revenue is the normal motive of activity. An undesirable activity, such as cutting down the tropical rain forest and thereby changing the earth's weather pattern, will normally be done if it leads to revenue. Hence it is a structural feature of our system that it leads to ecological imbalance. (Again, see Dryzek, op. cit.)

More generally and abstractly: productive activity does not necessarily start when it should; productive activity does not necessarily stop when it should.

Although any society must have labor discipline and some direction specifying how resources, including labor, will be allocated, it is not a necessary condition of social existence that people be paid for the permissive act of granting others access to their property. Tribal societies are known in which nobody collects rent, profit, or interest, and in which, indeed, money itself plays a small role.

One can readily imagine, and even find, human groups among whom there are no losers. However, it does not follow, that the most conspicuous examples of what appear to be win-win nation-states, in the sense that in their economies there appear to be no losers, can be universally copied. Switzerland, for example, has virtually no unemployment and a social security system that meets all basic material needs for Swiss citizens. Hence all the Swiss are winners in terms of basic material needs, although some are still "losers" in the sense that they are not selected in the competition within Switzerland for university entrance; or for the learned professions; or for major positions providing profit or prestige. prestige.

It would be an error to suppose that in today's competitive international market every nation could be like Switzerland. It may be the case, and I think it is the case, that in our global society, as it is now structured, intense economic competition cannot be won by everyone, and that prosperity in a part of the system sufficient to support a complete welfare state is necessarily accompanied by poverty somewhere else in the system. Most cities have prosperous neighborhoods where the winners live, and poor neighborhoods where the losers live; the existence of cities like Zurich and Stockholm where poor neighborhoods do not exist may well mean that the Swiss and the Swedes have done especially well in international competition, with the result that other places, such as Calcutta and Rio de Janeiro, have more than their share of poor neighborhoods. The existence, on the other hand, of slums in New York and Chicago even during the years when the United States was doing very well in international economic competition, may show that the Swiss and the Swedes not only succeeded in the international marketplace, but also have shared more equitably than the Americans the fruits of international economic success.

In addition to the difficulty of creating an international market on a win-win model, there is the further difficulty of simultaneously meeting the basic needs of the needy and reducing the intolerable burden which the consumption patterns of the wealthy place on the environment. In this respect Western Europe cannot be a model for the rest of the world because its rates of nonrenewable resource consumption are not sustainable, much less generalizable.

III. Alternatives to Competition

It has always seemed likely that it should be possible to find alternatives to competition - not (in the minds of reasonable people) complete alternatives which would eliminate all competition and thus annul the discipline it imposes and the creativity it evokes; but partial alternatives which would allay its misery, its injustice, and its destruction of the environment. I will not argue here the case for a less competitive world, a sustainable world where every person born would feel more unconditionally loved throughout life, but will discuss rather the feasibility of (partial) alternatives to the free competitive market.

Alternatives in fact exist. Many people meet their basic needs while competing little or not at all in competitive markets. It is necessary to make at least a cursory inventory of the alternatives which actually function in the world at the present time, because any change process must take as its points of departure what now exists.

Families shield people from competition, and so do charities, friends, and government-financed welfare programs. So do monopolies, oligopolies, and sinecures.

Children in many parts of the world are not considered eligible to work and are supported by their parents and by public subsidies. (But in other large parts of the world the situation is rather the reverse - the nation-states have few resources with which to subsidize youth, while many parents are able to get by only with the help of the labor provided by the children.)

In addition to children, and in addition to parents cared for by their children, many other family members, and occasionally non-family members (such as elderly servants who worked for the family for many years) are cared for in families. It was for a time the custom in some countries to regard middle and upper-class wives as mistresses of a tranquil domestic sphere, which was to be shielded from the aggressive world outside the home. It is a more generally practiced custom to regard the family as a unit of mutual aid, in which whoever is able to bring home an income contributes to the support of the others - especially in developing countries where the public safety net is virtually nonexistent. Typically in such survival strategies the men wield more than their share of power and authority, while the women carry more than their share of the burdens.

In the USA and in some other nation-states perhaps the most common alternative to selling one's labor power for wages in order to meet one's basic needs is to claim poverty or disability. Many people live in such a way that they deliberately avoid having assets in order to be eligible for food, shelter, medical care, and other forms of material assistance provided by government programs, while many more do not deliberately choose to have no non-exempt assets, but find themselves in a position where the meeting of their basic needs is assured by government aid available only to the needy and disabled. Having children, drug addiction, and alcohol addiction are survival strategies insofar as they bring one within guidelines qualifying one for public aid.

Throughout the world there are people who manage to escape the pressures of competition through living on income produced by property. Once a certain amount of capital is accumulated, or inherited, it is possible to exchange the permissive act of allowing others to use one's property for money which can be spent to buy the necessities of life. The largest single group of people who do not compete because they have secure independent incomes consists of the retired people among the "middle masses" of the industrialized parts of the world, who have accumulated enough property to live off rents, interest, and profits; the most notorious people in this class are those with inherited wealth who have never had to work.

In many countries government-organized pension funds are subsidized by income taxes, through which the younger working population subsidizes retirees who have been freed from the pressures of competition.

It is an ingenious feature of the present world-system that capitals compete and thereby allocate resources while the people who own the capitals often remain secure. There is competition of capitals, but security for capitalists. The competitive comparison of profit and profit potential allocates the flow of capital among different investment opportunities, and therefore guides the allocation of labor and other productive resources. But the owners of the capital run little risk of substantial loss. The owners normally invest through a series of intermediaries who reduce risk through insurance, joint ventures, taking collateral as security and by other means. Investors diversify their portfolios and put only a small portion of them into high risk investments. Risking personal loss while participating in a system in which capitals compete is so little the norm that a trustee who manages investment funds can be held liable at law for imprudent management if she or he puts too much of a portfolio into high risk securities.

Some people (usually but not always women) survive wholly or partly on child support payments.

Many others (more commonly men than women) live by crime. Instead of or in addition to offering their labor-power for sale in a market, they resort to deception or violence, or to prohibited business (e.g. drugs) or prohibited professions (e.g. prostitution). Some alternate between living by crime and living at public expense in prisons and rehabilitation programs.

There is also a great deal of production throughout the world for use and not for exchange. In the USA most homes are improved by do-it-yourself projects, which people seem to enjoy, in addition to relying on them to maximize the value of their principal investment, their house.

Although a minority of humankind pays a great deal of money to have fun, for the most part amusement and entertainment fall into the production-for-use category, and into categories where people cooperate without exchanging money, if only because the majority of the world's population cannot afford to pay to be entertained.

Home gardens and the keeping of poultry and other small animals are major sources of food throughout the world. For many it is a source of enjoyment as well as a source of nourishment. In some South Pacific islands women do the gardening, and they arrange the garden plots in parallel strips, so that they can chat and joke with each other while they work.

Traditional production for use is typically gender-divided, with the women doing most of the hard work. Where survival strategies depend on a mixture of production for exchange and production for use, it is also typical for women to do more of the domestic work and, overall, to be doubly exploited (in the workplace and in the home.)

Most child care work is still done for no pay by parents (especially mothers), grandparents, and older siblings. But there is a trend, stimulated by the incorporation of women into work for wages, to take child care out of the production-for-use and into the production-for-exchange category. Most care of the aged is also still done for no pay by family members.

A great deal of work, especially but not exclusively in remnants of non-modern societies, is done in a celebratory mode. For example, in Peru Indians of some ethnic groups annually clean aqueducts to rhythm, chanting and singing as they clean an aqueduct from beginning to end, and concluding the project with feasting, drinking, and more music.

Children in school normally compete for grades, not for money. However, educators find that grades and the anticipation of future success are not sufficient to motivate high levels of learning, and they strive to foster what Jerome Bruner calls "intrinsic motivation," in which the inherent pleasure of the activity and interest in the subject matter motivate the learner to work. (Jerome Bruner, The Process of Education. Cambridge: Harvard University Press, 1960)

Religious people commonly think of their work as an opportunity for service, not as an exchange of labor-power for pay. There are precepts calling for service to others in the teachings of all the major religions, and the precepts taught in church, synagogue, mosque, or temple are probably practiced by believers to some extent even where the believer is from a secular point of view presumed to be working for pay. Religious people are numerically a majority of the world's population, but I would not care to hazard a guess concerning what proportion of those who are listed in statistics as followers of a religion in fact take their faith seriously, nor concerning how many of those who in some way or other actively practice their faith take its call to social service seriously.

Secular service ethics, which encourage people to work in order to serve and not (or not only) for pay are often taught by business people's luncheon clubs, youth organizations, lodges, professional associations, and political parties.

And by psychotherapy. For example, Japanese naikan therapy teaches its patients the virtues of gratitude and service to others. Similar ideas identifying mental health with qualities which make one a useful member of society - quite independently of competing in the marketplace for monetary rewards - can easily be found in psychoanalysis, in developmental psychology, in ego psychology, and in other schools of psychology.

In general, most people, religious or not, in or out of therapy, who participate in the labor market by selling their labor-power for money, also find other satisfactions in their jobs besides the pay. Management consultants propose improvements in the mythologies and ceremonies of company culture, and in human relations in the workplace, in part in order to make more profits for owners by motivating people to work more for the same pay. Work happens because of many motives, some of which were mentioned above as I puzzled about why it is that the free market system on the whole elicits high levels of effort.

Investors and owners, as well as workers, act from motives other than maximizing their advantages in a competitive market. A British parliamentary report, cited by A. C. Pigou, found that wages in Britain even in the absence of unionization and minimum wage laws were in general higher than employers would have paid if they had paid wages fixed by supply and demand. A famous study by Cyert and March (A Behavioral Theory of the Firm. Englewood Cliffs, N. J.: Prentice-Hall, 1964) found that managers on the whole act to "satisfice," i.e. to stay out of trouble, rather than to maximize profits. Tendencies of managers to act in a way which "protects their people" have been widely noted.

Unions shield workers to some extent from the pressures of free competition through such devices as the closed shop and collective bargaining.

Professional associations promote the licensing of their professions. The stated purposes are usually to maintain high standards of professional competence and ethical behavior, but a consequence is to prevent buyers from exchanging their money for professional services with whomever they want, and therefore to give some protection from the full brunt of competition to those who hold licenses. Licensing began with medical doctors and lawyers, and has been extended to accounting, real estate sales, pest control, contracting to do construction work, barbers and beauty parlors, hearing aid testing, caring for senior citizens, and numerous other fields.

Academics and many other professionals and civil servants have eliminated competition for senior positions by inventing the institution of tenure.

Workers are protected from the full brunt of competing in the labor market, especially in countries which do well enough in the international market place to be able to afford to protect workers, by laws which fix minimum wages, guarantee safe working conditions, and, in some cases, protect them against arbitrary dismissal. It is sometimes argued that the causal relationship is the reverse of the one I have just suggested, i.e. that countries which establish secure and pleasant working conditions therefore do better in international economic competition. A similar argument is made with greater force to contend that public investment in educating the work force is a cause, as well as a result, of international competitive success.

There are also large numbers of volunteers who do needed work for nothing.

Churches and other benevolent organizations often run shelters for the homeless and for the battered, and soup kitchens, and sometimes also drug and alcoholism treatment centers, and housing programs, and educational and job-skills programs. Such organizations have a capacity to make programs work by pooling resources of different kinds: e.g. cash donations, in-kind donations, government grants, grants from foundations, volunteer labor, and the labor of the beneficiaries.

Similar organizations recycle clothing, shoes, furniture, and appliances which are given to them free because people no longer want them and prefer donating them to trying to sell them. A substantial portion of the population in both the industrial countries and the developing countries is clothed and shod through the thrift shops and free-clothing programs run by churches and others on a substantially non-market, non-competitive basis.

Cooperatives have introduced viable modifications into the usual pattern of market exchange. Producer cooperatives, like those of farmers who produce oranges, or eggs, eliminate a layer of ownership by having common functions done through an entity run by a board on which producers sit. In other sorts of cooperatives labor is exchanged for labor, as in child care cooperatives; or house-building cooperatives where people join together to work together first on one house, then on another.

Some people live by gleaning, i.e. by going through the fields after all that is commercially marketable has been harvested, and picking up the remains; there are a few charitable organizations whose volunteers glean food from fields not for themselves but for others. The homeless in cities in many countries search garbage cans behind restaurants and markets for food.

There are still pastoral peoples who live to a large extent by keeping animals and living from the animals' milk, meat, and hides. They are found not only in remote places, but also, for example, in the large city of San Salvador, El Salvador. In that city there are people who make a living from goats, whom they herd through the streets in the middle of the night. The goats feed on scraps of garbage left on the streets during the day.

And there are still, even in this day and age when the capitalist system with its doctrine of free exchange is dominant worldwide, large numbers of people who are forced to do involuntary work where there is little or no pretense that they have consented to having their labor power exploited. This includes prison labor and the labor done by conscripts in the armed forces. It includes women and children who are in many places often treated as virtual slaves; and in some areas it includes slaves.

And in spite of the worldwide capitalist trend there are still state-run enterprises and many autonomous semi-public enterprises. Although the tendency among them is toward state-capitalism, in which the firm operates in every respect like a private firm even though all its stock happens to be held by the government, there are still state and semi-public firms which deliberately deviate from the "rationality" of free market competition in order to conform to public policy or to humanitarian ideals.

Perhaps more important on the world scene today are the private, essentially private, or state-capitalist firms which operate with the active backing of public authority. Often the aim is to shield the enterprise from immediate and local competition, and to amass levels of capital that in some countries only government backing can assure, in order that a national industry can in the long run be successful on a world scale --as is the case, for example, with the aluminum smelters of several third world countries.

Utilities are often non-competitive industries, sometimes because it is difficult, expensive, or impossible to duplicate services, e.g. to have more than one set of pipes to deliver natural gas to the buildings in a city.

Other industries are non-competitive because one or a few firms hold the necessary patents or trademarks, or control the sources of raw materials. Or because of trade secrets. Or because the prestige of the firm is so great that consumers will not buy the products of competitors. Or because the amount of capital required to enter the industry is too great in relation to any reasonable expectation of profit.

Some industries are non-competitive because the producers have formed cartels. Cartels are the world norm for many commodities, with only a few nation-states making serious attempts to break up combinations in restraint of trade.

Alternatives to competition function in every necessary area of human activity: food production, child care, house-building, clinics, and entertainment, to name a few. And non-competitive motives enter even into the heart of the most thoroughly capitalist institutions, in the forms, for example, of people who enjoy their work and people for whom work is a calling. There is no reason inherent in human nature why any given need, or any need at all, must be met through the institutional framework of the free competitive market.

However, it would be a mistake to suppose that human activity is so variegated that the modern world has no basic structure. The market is the dominant institution - if only because the sheer quantity of foodstuffs and consumer goods produced for sale in market contexts, and the sheer numbers of people who depend on paychecks for their livelihood, are so great that any major malfunction of market institutions implies major unmet needs. The free market is an especially oppressive reality for the poor of the world - those who have failed to get in on any of the many rackets through which a substantial portion of the population protects itself from the market's rigors. Furthermore, many of the modifications of the dominant model of living by exchange are created at the local and national levels, leaving the world market as a kind of higher reality where "true" prices reign undisturbed by the "distortions" introduced by the public policies of one or another nation-state, although "true" prices are not infrequently distorted by cartels. The realities of the world market confront the world's nations, especially the smaller and poorer ones, almost as a fact of nature, which must be dealt with but cannot be controlled. The free market is also a strong ideology - so much so that complaints about the real working of the global economic system are often met by reform proposals designed to bring reality into greater conformity with the free market. It is as if the rich, out of pity for the poor who must struggle to sell their labor-power in free markets characterized by a shortage of buyers of labor-power, offered to share the misery, by giving up some of their monopolies, oligopolies, and sinecures, and running the risk that they too might lose out in free competition. According to the prevailing ideology, that would be only fair. Even more obviously: it would be rational.

Although there exist many alternatives to competition in free markets, free and somewhat-free markets are important in reality, and they are also important as ideology. To a considerable extent our culture imagines the free market as an ideal defining fairness and rationality.

IV. Limitations on Social Choice

Evidently not all of the alternatives to competition are better than straight competition according to the standard rules of the capitalist game. Opinions will differ concerning the extent to which the world needs a utopian capitalism, where the promise of capitalist ideals would be fulfilled by breaking down the many barriers which limit true, competitive, free markets. My opinion is that it is hopeless to try to achieve the satisfaction of human needs by relying solely on making markets more competitive than they already are, and that the benign forms of alternatives to competition should be fostered. But any major increase in the scope of non-competitive institutions in human life needs to bring the world market under the sway of enlightened public policy at least to the extent that the national markets of the states with advanced social policies have been made responsive to enlightened public policy; and less competitive institutions can only succeed if they are able to find ways to do what the more competitive institutions do fairly well, namely, among others:

1. Motivate and discipline labor.

2. Allocate (through supply and demand, i.e. through prices) labor-power and other resources to appropriate tasks.

These considerations already imply limitations on social choice: we (where the "we" of the first person plural stands for we the humans of the planet earth, who are for the most part participants in and victims of the modern global economy) cannot simply choose:

1. to abandon the principle of competition, without replacing it by other forms of motivation and discipline, or

2. to abolish capital markets without finding a better way to allocate resources.

3. And we cannot do much at all at a global level without strengthening the processes by which the decisions of world organizations are made, implemented, and enforced.

4. It is also clear that a major limitation on social choice is that we cannot choose to let the world continue on its present course. Indefinite continuation of the status quo is impossible for chemical, physical, biological, and geological reasons.

Although there are no doubt many who do not fully appreciate the consequences of the four limitations on social choice just mentioned, and even though I, even though I wrote them down, probably do not fully appreciate their consequences myself, I do not think that many people would doubt that they are true. A much more controversial fifth limitation on social choice is associated with the theories of Karl Marx. Marx thought it to be an essential and important feature of capitalism that it is driven by the accumulation of surplus-value. At times he wrote as though neither capitalists nor governments, much less workers, made any choices of moment, because the history of capitalism consisted of capital accumulating itself: investment led to the production of surplus value, which was then re-invested to produce more surplus value, in an indefinite accumulative process. The slower capitals - the ones which failed to comply with the requirements of accumulation under conditions of competitive markets and advancing technologies-- lost the race, and were absorbed by the larger capitals, which went on accumulating.

On Marx's view social choices were severely limited because the competition of capitals and the necessity of creating conditions favoring business (i.e. favoring accumulation) dictated what decision-makers in private industry and in government had to do. Not keeping up with the competition (on the part of private decision-makers) and failing to maintain a favorable climate for business (on the part of public decision-makers) could only mean stagnation, which favored no one. Nevertheless, the end of the story, while no more a matter of social choice than its beginning or its middle, was the end of capitalism. Unmanageable capitalism could only end in socialism. The inevitable revolution would be, in a real and important sense, the end of prehistory and the beginning of history, because it would be the beginning of social choice. A new realm of freedom would be attained in which free, deliberating, cooperating humans would choose the main features of their common life.

Marx did not make it clear whether his model of inevitable accumulation followed by inevitable revolution was meant to apply within individual nation-states or on a world scale. Perhaps his view would have become clear if he had lived to write his proposed fourth volume of Capital, dealing with the international economy. (The existing fourth volume is not the one intended, but rather Marx's notes on the history of the concept of surplus value, edited after his death by Karl Kautsky.) His analysis applies to any economic system, and therefore in our times it would seem to apply primarily to the world system, since that is the system which now exists; but it could also be applied to any smaller entity within the world-system which could be correctly described as an economic system carrying out its own autonomous process of capital accumulation.

Marx's theory, whatever its defects, has seemed to be not entirely wrong because capitalism is in fact unmanageable. It is chronically unable to eradicate poverty and chronically unable to stabilize itself. Successive waves of optimism, when one or another model of civilized capitalism seems to be working, are succeeded be successive waves of pessimism, as civilized capitalisms prove to be local and temporary.

Beginning in the 1930s successive versions of Keynesian economics, also known as "macroeconomics," claimed to have found the secret of managing capitalism, and in Western Europe they appeared to have succeeded so well that Marxists like Lucien Goldmann and Jurgen Habermas concluded that capitalism had at last found the formula for managing itself, had learned to stabilize the business cycle and had learned how to make investor confidence compatible with delivering high levels of material welfare to the working class. Consequently, they concluded, thenceforth the case for socialism had to rest on cultural rather than on economic grounds.

The Keynesian miracle proved to be short-lived, and not only because the places where Keynesianism seemed to work were places enjoying privileges within the international division of labor which could not be sustained, and not only because certain aspects of the empirical and logical bases of the theory proved to be untenable. It proved to be short-lived also because the model called for smoothing out the troughs of the business cycle with government spending and with additional spending encouraged by government and central banks; but, as it turns out, capitalism tends chronically toward one trough after another, with the result that a world seeking to stabilize itself according to Keynesian precepts proved to be a world wallowing in ever deeper seas of unsustainable debt.

Western Europe and to a lesser extent the English-speaking countries outside Western Europe have also attempted to civilize capitalism with utopian capitalist theories like, for example, the Sozialmarktwirtschaft, the social market economy, advocated by Ludwig Erhard, the West German economics minister after World War II. (Ludwig Erhard, The Economics of Success. Princeton: Van Nostrand, 1963.) Its basic principle is to let the free competitive market do what it does best: allocate resources and stimulate creative business enterprises; and then to skim off enough of the resulting profits through taxes to run a comprehensive welfare state. Innumerable books have been written developing variations on the theme that free competitive markets provide the best means to generate the tax base needed to provide a safety net for the poor. And, it is added, the best guarantees of political and academic freedom.

Once again, the experiments offered as evidence that the Sozialmarkwirtschaft works hail from places privileged in the global economy's international division of labor and revenue. For example, Milton and Rose Friedman in their Free to Choose (New York: Harcourt Brace Jovanovich, 1980) have high praise for Singapore, a small nation-state which (they claim) has learned the lesson that by imposing low taxes on business one attracts business, and therefore in the end the government receives a high level of tax revenue because there is more business to tax. But the example is evidently not generalizable: everyplace cannot succeed in attracting business away from everyplace else.

But quite apart from the privileged status of the cases offered as empirical proof of the theory that the free market provides the necessary tax base for an adequate social safety net, and quite apart from the contrary empirical evidence which piles up as nations offer more and more freedom to business, but still find themselves with less and less money for welfare, there is a logical reason why in general and on a world scale the Sozialmarktwirtschaft will not eliminate poverty. It is that the condition for eliminating poverty by this method is to raise public revenue, while the condition for stimulating more economic activity is to lower taxes. The two conditions can only be met simultaneously in the unusual case when lowering taxes raises revenue.

In fact, while most of the world's nation-states and mainstream economic science is following one version or another of the social market economy model, public services in most of the world are desperately underfinanced. Lagging business activity in most of the world leads to balance-of-payments crises, which lead to austerity programs sponsored for the purpose of stimulating economic activity, which lead in turn to public services being even more desperately underfinanced than they were before.

One is tempted to conclude, therefore, that Marx was right after all, that despite all the intelligence and ingenuity of businesspeople, governments, and many thousands of university-trained economists, capitalism continues to go its own way according to its own laws leading to accumulation on the one hand and immiseration on the other, to instability, and (as Marx and Engels noted and later Marxists have emphasized) environmental degradation.

I would, however, put the matter a bit differently: there is a fifth limitation on social choice, which is the cause of the plausibility of the Marxian model of accumulation as an explanation of capitalism's unmanageability, and which is also the cause of the inability of Keynesian measures to stimulate economic activity sufficiently without incurring intolerable levels of debt, and which is also the cause of the inability of most social market economies to raise public revenues high enough to provide an adequate social safety net. It is:

5. We cannot simply choose to discourage investment (which in the existing system is normally done with the expectation of accumulating greater profits) without instituting equally effective motives and practices for getting productive activity going.

In other words, if there is only one way to help the poor - to tax business and spend the proceeds on the poor; and if there is only way to get productive activity going --to provide incentives for investment by, among other things, keeping taxes low, then we are in trouble. We need to restructure the economy in ways that encourage other options --other ways to help the poor, or, better, other ways for the poor to help themselves. Other ways to get productive activity going. (Additional facets of this fifth limitation are discussed in Letters 8, 9, 22, 24, 27-29, 33-38, and 59.)

This fifth limitation is not a counsel of despair. There sometimes are effective motives for getting productive activity going, other than the drive of surplus-value to expand itself - which Marx analyzed, which Keynes tried to stabilize by having governments and central banks stimulate spending to compensate for the tendency of savings to pile up uninvested, and which social market economists wish to give free rein. For example, a collapse in the profitability of export agriculture in a developing country not uncommonly leads major farm operators to lose interest in factory farms, with the result that squatters are tolerated. The squatters have a motive for getting productive activity going: hunger. They have a practice: subsistence farming, probably accompanied by a little cash-cropping, wage labor, and artisanry on the side. From the point of view of the International Monetary Fund, which measures production in terms of the money-value of the products brought to the markets where transactions get registered in the statistician's books, the result is regress; but from the point of view of peasants who measure production in corn, beans, and eggs; and who enjoy running their own little place, be it ever so humble, the result may well be progress.

V. On How to Select Growth Points

A restructuring of the economy would alter fundamental rules of the game. It would expand the gamut of alternatives.

It is not difficult to say what kind of results we would want from a restructuring. We would want the hitherto intractable problem of poverty to become a problem with a solution; we would want the solution to the problem of poverty to be compatible with sustainable relationships to the environment. We would want a mosaic of cultures characterized by a great deal of cooperation, and by competition which is stimulating but not so severe that billions of people suffer.

However, we do not really need to say what results would be best, nor what systems for motivating labor and allocating resources would be desirable and workable. We can leave deciding which institutional arrangements are best to experience, and to the good sense of billions of our fellow humans, as they grope toward cooperative solutions to their everyday problems.

We do, however, have to decide what to do now. This decision-problem can be described as the task of finding growth points, i.e. emerging discourse-guided-practices within the present world, which appear to be leading in constructive directions, and which therefore deserve support. The task of finding among all of the trends and constructive initiatives that are present in our contemporary world, those which are growth points leading toward a viable and beautiful future, is a matter of finding valuable forms of discourse and practice which attract energy. There needs to be, so to speak, some fuel in the metabolic processes of human beings which can be tapped, so that a project aiming toward good results will grow, like a seed in rich soil. I would like to say, too, that the good results will grow like a fire when a match is lit to dry tinder - but I resist my temptation to use that image because it suggests destructive fires which rage out of control. Not every social practice which attracts energy is a growth point - only those social innovations or revivals which both attract energy and lead to constructive results.

It goes without saying that a social growth point must be meaningful, communicable - for if it is not meaningful in the milieu in question, it is not social. It is just someone's private idea, or the idea of a small elite, which can only be imposed by non-social, i.e. violent, methods, because the people who are expected to adopt the new discourse and practice do not understand it and for that reason if for no other cannot be motivated by it.

Cultural action aimed at helping humanity to grope toward a viable future needs to keep in mind that not all social choices that may appear to be possible are really possible. As Immanuel Wallerstein has stated, it is a function of social science to lay out the real historical alternatives that are before us. I conclude, as a contribution toward distinguishing real alternatives from unreal ones, that real alternatives, and ipso facto real growth points, must comply with these limitations on social choice:

1. The role of competition in motivating work cannot be diminished without augmenting the roles of other sources of motivation and discipline.

2. The role of capital markets and the competition of capitals cannot be diminished without finding alternative ways to make decisions about how to direct labor and to allocate resources, which are equally efficient, or at least not hopelessly inefficient.

3. Global processes cannot be managed without global organizations which can make decisions that will be implemented.

4. No cultural structure is viable which conflicts with the limits imposed on social choice by ecology, i.e. by nature as a whole considered as the interaction of the systems studied by biology, chemistry, physics, astronomy, and geology.

5. We cannot simply choose to discourage investment (which in the existing system is normally done with the expectation of accumulating greater profits) without instituting equally effective motives and practices for getting productive activity going.

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