It often surprises me to watch presidential candidates debate about how to deal with several problems occurring today in the United States.  I am not an American, and I don’t vote for the U.S. presidency.  However, through social networking in Facebook and Google+, and what I read in the news daily, it seems that Americans are looking for a good candidate for the presidency.

The right-wing is now divided between the more intelligent conservatives and the Tea Party.  I agree with the economist Robert H. Frank when he said that if you use Venn diagrams you will be able to see that the set of issues the Tea Party is angry about and the set of issues the Tea Party is confused about intersect perfectly in one whole circle.  When they describe Obama as being a socialist bordering on Nazism and Marxism, they are not really thinking.  The fact that Nazi means national-socialism does not mean that the sort of socialism that socialists in general are asking for involve concentration camps. Tea Partiers forget how many Marxists and Communists were persecuted by the Nazi regime, and how Hitler expressed his hate for them in Mein Kampf.  Needless to say that not all socialists are Marxists.  There are anarcho-syndicalists or libertarian socialists, which involve socialism comprised of free federation of communities of workes without the existence of a state.  There are also socialist-democrats (and I count myself as one of them) who essentially advocate for a mixed economy where the free market should have its own place, but regulated by the government, while the government would assume the responsibility of certain essential goods.

Yet, Obama is none of these things.  Supposedly, he is a liberal (pro-capitalist, but centrist), although I agree with Bill Maher that he is not even liberal.  This means that Tea Party and other people in the right have absolutely no idea what they are talking about.  If Obama were a socialist a la Soviet Union, he would have socialized all banks and private enterprises at this stage of his command.  He hasn’t.  He has only carried out a bad Keynesian approach, which is different from a Marxist approach.  Marx wanted to abolish capitalism.  Keynes wanted the government to intervene to save capitalism.  Much of what Obama has done has been to temporarily assume the shares of some companies and bail out others which are “too big to fail”.  I don’t think that this was a good approach to companies responsible for the economic downfall, but ever since Bush, this has been the tendency of the federal government (and most industrialized governments thus far).

On the other hand, for many liberals and progressives, Obama’s term has been an abysmal failure.  Progressives elected him because he did talk about change in Washington, D.C., no more business as usual.  He wasted a lot of valuable time trying to be “conciliatory” to an anti-conciliatory right-wing, especially when Congress was dominated by the Democratic Party.  Before the 2008 elections, I knew he would also be a failure in terms of human rights.  Before he was elected president, he voted for FISA.  He promised to end the Iraq war and he did, but after three wasted years spending money on it, increasing the national debt exponentially.  He promised to close Guantanamo …  that never happened.  He promised that his administration would be crystal clear regarding Iraq and government affairs in general, yet, the year 2011 is an all-time record of secrecy and censorship regarding freedom of expression (see the statement made by the Electronic Frontier Foundation).  To make matters worse, still in the midst of a recession (with a timid sort of recovery), as we speak the President is preparing U.S. forces in the Ormuz Straight in an apparent plan to attack Iran. Suppose the U.S. win, will it stay in the same way that the U.S. stayed in Iraq, draining the U.S. economy and needlessly increase its debt? Obama has also been the president who has most enforced anti-immigration laws (more than Bush or any other Republican administration ever has), especially Hispanic illegal immigrants.  And last, but not least, he signed the damnable National Defense Authorization Act of 2012 recently (December 2011) which opens the door to violations of human rights against American citizens.  In almost all accounts, from a progressive and even liberal standpoints, Obama’s administration has been significantly worse than Bush’s.

Obama:  Hope ... You don't get indefinitely detained

Both the right and the left are looking for new options, and the U.S. is paying close attention to Republican presidential candidates, given that the Democrats are pretty much stuck with Obama.  What completely amazes me among all the candidates is the apparent blindness regarding taxes.  Even Rick Santorum, a candidate I certainly do not respect (politically at least), stated that for job creation, we need to reduce corporate manufacturing rates to zero percent, and I know of other Republican candidates who would perfectly agree with that plan.

This is insanity!

Since when tax-exemption in any industry has been key for job creation?

Let’s Read Adam Smith Again!

Republicans and conservatives in general are supposedly followers of Adam Smith.  I’m a socialist, but I can really, really appreciate Smith’s invisible hand doctrine.  There are some forms of selfishness which benefit the public by creating innovation at low cost.  If selfish people enter in the business world, in an environment of competition, the market will make sure that the public will have the best quality product at the lowest market price possible.  This is perhaps one of the greatest insights in the history of political economy.  Yet Smith himself was a lot wiser than his supposed disciples.  Not always would the market benefit the public.  We should take into account these passages from The Wealth of Nations:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.  It is impossible, indeed, to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. (p. 111)

To widen the market, and to narrow the competitiion, is always the interest of the dealers.  To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can only serve to enable dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, as absurd tax upon the rest of their fellow-citizens.  The proposal of any new law or regulation of commerce which comes from this order, ough always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention.  It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it (pp. 213-214).

Yet, for some reason many people on the right, especially those of the Tea Party, readily ignore Smith’s advice.  Smith’s position is not that the government should not participate in the economy …. period.  On the contrary, when things are unequal, and certain people “of the same trade” conspire and oppress the public, the role of government is precisely to set the laws and regulations in order to prevent that from happening.   Smith’s advice that government should not intervene with the economy has more to do with the fact that many people of “the same trade” will seek to go to government so that a certain bill is passed, so that a new law will benefit corporations in detriment of the public.  In such cases, government should just stay out of the way, not legislate such policies, and let the “invisible hand” of the market rule.

However, there are some other aspects about Adam Smith’s doctrine which are usually overlooked by many of his supposed fans when they propose tax exemptions as the way of creating jobs. In the third chapter of The Wealth of Nations, Smith talks extensively about division of labor.  This chapter is very illuminating.

As we all know, Smith held that the wealth of nations is basically the product of three components:

  • Rent of  Land
  • Salary
  • Benefits

Rent of the land involves the sort of payment for facilities that you need for production (although in The Wealth of Nations Smith uses the term “land” in a broad sense, Smith uses examples of agriculture to convey his point).  Salary is the nominal labor price which you pay your workers, while the benefits involve the profit component.  Note that Smith did not dismiss taxes.  Smith recommended that taxes should be established on luxury, as well as on the rent of land, not over benefits. (See an excellent brief summary on his views on taxes here).  Actually, he elaborated extensively (about one third of his work) on how governments should tax.  Certainly he, an ethicist, would have never subscribed to the slogan that “all tax is theft”.  Yet, I want to differ from Smith regardding the idea that profit should not be taxed, and suppose tax on benefits to use Smith’s own theory to get to the point I want to make.

Notice that, though taxes themselves can serve to regulate the economy (e.g. taxes on luxury), nowhere in Smith’s analysis taxes (or lack of them) play any role whatsoever in creating jobs.  That is because in the third chapter of The Wealth of Nations, Smith reveals the most fundamental aspect of job creation ….  the size of the market (pp. 10-11, 21-25). When I explain Adam Smith to my students, I always say: “I wish that there were massive sales of philosophy books all over the world, so that we see the fruits of such industry of thinking and rationality.  Yet, since the market of the Twilight series is much greater (yuck!), I guarantee you that the number of workers producing Twilight products is greater than those producing philosophy books  (grumpy face)”.  Since the Twilight market is a lot greater than the Husserl market, then the number of employees needed for the Twilight market will be a lot greater than the Husserl market.

Of course, taxes should not be so high as to strangle an industry.  Taxes which require a hundred percent of profits would make any industry fail miserably.  Yet, with more moderate taxes, let’s suppose 15% or 30% or so, an industry might persist (depending on the circumstances).  Yet, once a right tax rate has been required by the state and the federal government, then the question is whether reducing it will create jobs.  The answer is no, for reasons given by Smith himself in that third chapter.  I will use a more “down to earth” analogy.

Let’s say that I want to create a business selling toasters in Puerto Rico.  I do a market analysis and I find that in order to satisfy the effective demand (the number of people who want my products and can pay for them), I will need to hire 500 workers.  I hire these workers, and the production process and sales lead to a net profit of $1,000,000.00 this year (without taxes).  Suppose that I need to pay 15% taxes on profit.  Then that means, that at the end of the day I will end up with $850,000.00.

Now, what would happen if the government, for whatever reason, wants to lower taxes to provide economic incentives (supposing that my market size remains the same)?  Does it create more jobs?   Not really.  If my market research still shows that all I need is 500 workers, then hiring more workers than that will not give me an economic advantage over my rivals.  As Adam Smith pointed out, the quality of production depends greatly on the ratio between those workers who are actually producing and those who are not (p. 8).  If I hire more workers than I actually need, then that would be a disadvantage in the market.

On the other hand, it is perfectly conceivable that I could use that money to increase my workers’ salary.  Yet, that would not be creating jobs, would it?  All I am doing is keeping the same number of employees, but I would be paying them more.  On the other hand, due to the competition in the market, if my rivals are not increasing their worker’s salaries, then that would mean that increasing my workers’ salaries would be another disadvantage in the marketplace.

So, what did the tax reduction accomplish?  Making me richer … and that’s it.  Let’s say that politicians wanted to reduce the tax rate from 15% to 5%, then I would end up with $950,000.00 profit.  In other words, I would end up with $100,000.00 more without creating a single more job in the process!

Conclusion for Part 1

What we have seen here is just the beginning of how the right-wing (especially the radicals of the Tea Party) completely misunderstand basic economic concepts and how the economy works.  Lower tax rates on corporations, taken on principle and completely decontextualizing the proposal, can be an incentive for industry but in detriment of the public.  There is simply no way that a general policy of tax exemption will create jobs, simply because taxes (or lack of them) have no relationship at all with job creation.  This is because job creation is directly related to market size (supply & effective demand), not to tax rates.

In other words, the key to creating more jobs is to create a market, and, as John Maynard Keynes pointed out, only government has the means, the motive, and the power to create those markets, and turn things around …. even if that means more government spending and debt!  The problem with the federal government today is that it has made little effort in creating these markets through the component of effective demand, spent too much money bailing out corporations which are “too big to fail”, and spent trillions of dollars in a war everyone knew would not be won in the end.  I’m sad to say that both Bush and Obama have contributed to this crisis.

This is not all I have to say about the subject, it is only the beginning.  I want to talk in later posts about the role of tax exemption in the globalized world, and in the U.S.  For now, I leave you with some final thoughts by Bill Maher.

References

Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations.  US:  The Pennsylvania State University.  (It can be downloaded here for free in its entirety in PDF Format).

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Book Review: “The Darwin Economy” by Robert H. Frank

On December 28, 2011, in Economy, by prosario2000

"The Darwin Economy" by Robert H. Frank

In my dreams would I have imagined that I would read a book like this, especially during my research regarding applications of Darwinism to social.  I know that in some tangential way, Darwin’s theory of evolution was related to the way we create economic systems.  Darwinian natural selection has to do with the competition among individuals and groups for scarce resources.  Humanity’s economic systems have to do with the distribution of scarce wealth.  Also, we have to look at the fact that we inherit much of our behaviors from our ancestral animal behaviors regarding scarce resources.  Yet, economic systems are conventional and, in a way, unrelated to nature.

Yet, there is a challenge being made by Robert H. Frank in his new book, The Darwin Economy: Liberty, Competition, and the Common Good.  He predicts something rather odd:  in a hundred years from now, if you ask professional economists who do they consider the father of their own discipline, instead of Adam Smith, most of them would say “Charles Darwin”.

Charles Darwin??!!!

Yeah, Charles Darwin!

Before you place Frank in a psychiatric facility (at least in your imagination), he invites us to take a look at the way Darwin describes natural selection processes.  He reminds us of Darwin’s initial development of multilevel group selection, and how individual interests relate to group interests.  For example, how did the gazelle accomplish its current average speed?  Classic Darwinian natural selection would tell us that it is the result of species warfare.  Nature selects gazelles who have the ability to escape predators using fast speed.  In this case, through reproduction, the fastest gazelles pass on genes that will benefit the group.  In this case, individual interests and group interests agree completely, since the group on average is better able to escape predators.

The same happens at the economic level.  Adam Smith’s “invisible hand” of the market works perfectly in this case, because the competition among individuals or among companies benefit both individuals and groups.

Yet, there are other scenarios.   The cover of Frank’s book tells us all about it.  Consider the bull elk.  They have antlers which function as weapons in order to compete with other males for female.  The winner, gets to pass on genes.  So, from the point of view of the interest of the individual bull elk, the bigger the antlers, the better!  This leads to the prevalence of larger and larger antlers. Yet, the process cannot continue ad infinitum.  Having very big antlers is a disadvantage from a group standpoint:  large antlers increase the risk of getting stuck among tree branches in densely wooded areas, hence the risk of being eaten by wolves.  If those genes are passed along, they would compromise the group.  In this case, individual and group interests diverge.

The same thing happens with the economy.  Too much competition among individuals or corporations can lead to the sort of negative externality which can be a real problem, even a threat, to the group.  In this case, when too much competition happens, and the interests of the individuals and groups diverge, Smith’s “invisible hand” breaks down.

Frank even adds another imaginary, amusing, but interesting statement.  If bull elk were to be asked in a referendum whether to reduce their antlers by half, they would overwhelmingly favor it!  Of course, such experiment cannot be carried out with actual bull elk, but we can do so with humans.  We don’t have antlers, of course, but we are often found in competition, sometimes too much competition.  Frank gives the example of an actual experiment being carried out with hockey players. Thomas Schelling, an economist, has pointed out the fact that when hockey players are individually given the choice of using their helmets or not, they usually tend not to wear helmets, yet, when they are asked to vote to implement a rule for the group to wear them or not, they invariably vote in favor of wearing helmets.   Why is that?   If you make individuals choose whether or not to wear helmets, they will choose not to, because not wearing a helmet increases a player’s advantage.  Maybe he can see or hear better than players who are wearing helmets.   As a result, those players who use to wear helmets will now choose not to, to gain that advantage.  At the end of the day, no one will wear helmets, and everyone would end up having equal advantage.   The downside of not wearing helmets, though, is that everyone is at risk of serious head injury.  Everyone is worse off.  This is similar to the bull elk having horns too big, there is excessive competition.  So, when hockey players are asked whether to implement a rule requiring everyone to wear helmets, they will vote in its favor.  A simple nod or loose agreement among players is not enough, they need a collective mandate.

The same thing happens to states.  During the Cold War there was a huge amount of waste due to the arms race.  In this sense, the U.S. and the Soviet Union were incredibly wasteful.  In order to control that, they couldn’t control that race just with winks among their representatives and diplomats, but rather by signing treaties to slow the pace of  competition or to disarm very harmful weapons.  The treaty would include checking on each other’s facilities in order to be certain that this would be carried out.   That’s how they could use enough money for education, health care, utilities, and so on, without spending it most or all on the arms race.

Frank argues persuasively that, contrary to what many progressives think, many of the ills of the economy are not produced by the prevalence of monopolies and oligopolies, but rather by too much competition.  Libertarians are usually right when they say that government is wasteful.  Yet, excessive competition can be incredibly wasteful too, in ways that are many times more harmful than government.  Just one example (of the many offered in the book) when rich people celebrate parties for children’s birthdays.  Here another element creeps in the competition process, the degree in which people spend on those kinds of parties is not based on absolute position, but on relative position.  As a result, if you are a millionaire who celebrates their fifteen years-old birthday with a $5 million party, perhaps your neighbor will want to do it better and spend $6.5 million party for his fifteen-years old.  This process will go on indefinitely leading to big waste of money.  This is not a hypothetical situation, this really happens!  At the end of the day, the children will be just as special, nobody is happier no matter how much money has been spent, so the money is … wasted … literally!

In these cases, Frank does not suggest that we forbid $5 million parties, but rather establish a steep progressive consumption tax that will persuade rich people not to spend too much.  The state or federal income obtained through this consumption tax will serve for roads, bridges, security, firefighting, police, and so on. This will benefit both the rich and the poor.  Frank argues that if you are a smart rich man, you would love to live in a place with those sorts of rules and laws.

Of course, libertarians and people of the Tea Party will say that all tax is theft, that we should diminish the government.  Interesting thought, but, as Frank points out, we need to tax something.  If we don’t tax, there can’t be a state, if there is no state then another country will invade … and you’ll end up paying taxes to that country.

Frank shows that in many cases, taxes are a unintrusive way to stir corporations and businesses away from the sort of harmful behavior which arises due to too much competition.  The problem that we have now is that we are usually taxing the wrong thing:  the payroll tax or the savings tax.  Yet, we don’t tax harmful behavior enough.  We usually penalize them, but don’t tax them.

The author of The Darwin Economy uses this Darwinian framework to evaluate the economy.  Unlike bull elks or gazelles, who can’t communicate and cannot act in ways which are against their nature, we can make better choices.  Darwin helps us evaluate these competitive dynamics that occur even in the economy, lets us evaluate the problem, while simultaneously helping economists point out possible ways of solving these problems. Within this framework, Adam Smith’s “invisible hand” insight is just a special case of a broader and more general understanding of competition. There are criticisms to both progressives and libertarians alike.

He applies this reasoning to lots of cases:  such as pollution control, employees competition for better salary and safety, housing, alcohol, among many other aspects o the economy.  It is also an invitation to many in the right wing to really think about how taxes can be beneficial for society as a whole when done the right way.  Tax should not be a forbidden subject, especially in the United States.  Let’s scap taxes to all useful activities, and tax to discourage activities, especially those which can cause harm to others:  noise, carbon dioxide, road congestion, etc.  Have a progressive consumption tax, not an income tax.

This is a fascinating book and I highy recommend it.  For me, it has been very illuminating.

Video – Part I

Video – Part II

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This article is part of a series of articles on the subject of evolution, ethics and spirituality:

Parts: I, II, III, IV, V, VI (1), VI (2), VII, VIII (1), VIII (2), IX (1), IX (2), IX (3), X (1), X (2), X (3), XI (1), XI (2), XI (3), XII, XIII, XIV, XV, XVI, XVII (1)

Evolution, Ethics, And Spirituality: Part XVII — Two Big Mistakes in the Twentieth Century (and the Twenty-First?) (2)

(The entire analysis from here on is based on this proposal by the philosopher André Comte-Sponville with some modifications of mine)

Comte-Sponville's Proposal with Modifications

Ayn Rand: Religious Zealot

I remember the first time the name "Ayn Rand" appeared to my consciousness. It was in an online Yahoo! forum which no longer exists. A girl (presumably a teenager) was learning philosophy reading a book called Philosophy: Who Needs It? by Ayn Rand. She said that Ayn Rand called Kant an "idiot", which is the reason why he should be rejected. The self-righteous tone of this girl made me wonder about either her understanding of Rand, or about Rand herself.

I went to the bookstore, and found the book in question, and I read it. To my surprise, I saw that this girl did not misunderstand Rand at all, quite the opposite, Rand was aggressive against Kantian ethics (and Kantianism in general). The reason for her hostility against Kant has to do with the fact that he says that the more disinterested is an ethical act, the more valuable it is from an ethical standpoint. In other words, only an act from duty can be more valuable if it is more removed from our inclinations (I have discussed that in this blog post). After I researched more into her way of thinking, I understood why she rejected this view. She was born of a rich Jewish family in Russia, who witnessed the atrocities made by Stalin, and had to flee. When she went to the United States, he then praised capitalism because of its egoistic principles, and professed what she called "ethical egoism", a doctrine which says that a moral being should act in his or her own self-interest. Of course, the best ethicists around the world consider ethical egoism to be inherently unethical, even from an utilitarian standpoint … and even the utilitarian standpoint has a lot of flaws to become an adequate basis for ethics (see Ferrer & Álvarez, 2003, pp. 110-113). Rand’s egoism almost sounds as the way as Dawkins’ selfish gene should act, but even from an ethical standpoint, Richard Dawkins argues that sometimes we should go against our selfish genes.

I have read a lot of Rand (an indigestion of her philosophy would be a more adequate description), and I can say is that if she is a "philosopher" then I’m the king of Antarctica. My specialty is philosophy of science and epistemology, and I raised my eyebrows a lot of times while reading her books, and it became too evident that her conception of logic is too primitive. She says that it is based on Aristotelian logic, but even Aristotle’s Organum is far more sophisticated than her way of looking at logic. It overlooks completely all Medieval advances in logic, needless to say all contemporary advances of mathematical logic. Any philosopher which such an extremely poor understanding of logic should not be called "philosopher" … period. Needless to say I have also studied epistemology of mathematics, and Rand’s view on the subject is so miserable that if her proposals were ever carried out, mathematics would literally fall back to a stage even before Pythagoras. Some issues she raises about science don’t seem to account for recent advances in philosophy which would render her entire epistemological doctrine obsolete (it is not more advanced than seventeenth century epistemology, sometimes I wonder if no more advanced than fourteenth century epistemology). Her understanding of Kant, Marx, Wittgenstein, Bertrand Russell and logical positivism is also miserable, because she practically used strawman arguments all over the place, placing in their mouths things they didn’t say, to then quickly dismiss them as "irrational". Her annoying repetition of the empty statement "existence exists" doesn’t contribute anything to philosophy. All of her positive aspects of her doctrine can be found elsewhere, better elaborated with much more sophisticated reasoning. Even her right wing views can be found elsewhere better supported by evidence and with much more sophisticated reasoning. Again, if she is a philosopher, then I am the bald King of France (to use Bertrand’s Russell’s famous example).

However, what most surprised me was that unlike serious philosophers, I found that some of her books had a card for you to mail and join the Objectivist movement. It almost made me feel as if I this was reading Dianetics and you are invited to fill the free personality test and be recruited by Scientology. This analogy with a cult like Scientology is not far-fetched. Rand made her views into a cult. One trait we can find all over her works is that she uses the word "rational" arbitrarily. It is almost as if she called "rational" all of those things she likes, and "irrational" all of the things she doesn’t. Even some admirers of Ayn Rand, such as Michael Shermer in his Why People Believe in Weird Things?, have noticed this behavior. Shermer, in his book, talks extensively about these aspects of the Objectivist movement, ones initiated by Rand herself (see Shermer, 2002, pp. 114-123; this chapter is reproduced in this website). But the best analysis I have ever seen regarding Objectivism and Rand appears in David S. Wilson’s Evolution for Everyone (Wilson, 2008) in a chapter called "Ayn Rand: a Religious Zealot" (pp. 268-282; he basically reproduces much his arguments here). From an evolutionary standpoint (specifically group selection’s), religions develop their own doctrines (many times diverging from reality) for their practical consequences. Yet, some develop fundamentalist views, and Ayn Rand falls into one particular form called market fundamentalism. Sloan states what is wrong with Rand’s ethical standpoint:

Of course, the fundamentalist beliefs of Rand and the Hutterites differ vastly in what they impel the believer to do. Hutterites are impelled to abandon self-will and objectivists are impelled to pursue their own interests as the highest moral virtue, but both are comforted with the certainty that everyone will benefit in the end.

It is on this basis that I can use the term market fundamentalism, not as an epithet, but as a verifiable fact. Use my 2×2 table to code the way that words such as "market" and "regulation" are used by market fundamentalists and I’ll bet you money that the win-lose and lose-win boxes will remain largely unfilled. That is a manifestly false description of the real world that eliminates the possibility of resolving the hard tradeoffs of life (Wilson, 2010).

Market Fundamentalism: The Golden Calf

The Golden Calf

The Bible talks about the story of the golden calf. The people of Israel were in the desert, Moses went to Mount Sinai to receive the Torah from Yahweh. Meanwhile, the Israelites have this idea of building a golden calf to represent Yahweh and develop a cult to worship it as if it were the God who brought them out of Egypt. When Moses walked down from Mount Sinai ordered that image destroyed, because Yahweh rejected such practice, which was essentially idolatry … trying to substitute the real Yahweh with a representation of him … as a golden calf (Exod. 32).

André Comte-Sponville criticized Marxism for suspending the inherent economic requirements for functionality and substituting it with ethical logic through the juridical-political stratum. Yet, he warns greatly about the opposite: to suspend many of our ethical responsibilities and judgments to substitute them for economic needs. He calls this the Golden Calf Error, the idolatry of capitalism (Comte-Sponville, 2004, p. 97-102). It is essentially what Ayn Rand advocated for: market fundamentalism. This consists of diminishing the power of the juridical-political stratum to let the market roam free.

Golden Calf Error

The reasons why the Golden Calf Error should be considered a mistake should be evident for everyone, but not many people see why. As we have argued so many times before, the economy is amoral. Since it is amoral, no one should expect for it to be responsible, which is one quality which can only be applied to moral beings. The economy (any economy!) is intrinsically irresponsible, it doesn’t matter how much you try to rationalize it to make show it as responsible.

Yet in recent years we have all been the witnesses of the irresponsibility of the market. I don’t say this to condemn the market a priori, but to say the obvious. We should not expect the market to make responsible decisions. And it is incredible that I often hear some friends of mine who identify themselves as right wing libertarians who recognize that the market is indeed irresponsible, but at the same time ask for less regulations so that the "invisible hand of the market" keeps operating on its own. Well, every time such a thing happens, an irresponsible foul up follows. When they complain, I ask them: "If you know that the market itself is irresponsible, why the heck do you expect it to act responsibly?!"

In fact, one of them loves to watch Jim Cramer’s "Mad Money" TV show. From an ethical standpoint, it is one of the unethical things I have ever watched on TV, CNBC should be fined heavily for it, and Cramer should be in jail. "Mad Money" has made a lot of lives miserable, because it makes people invest everything they have in an irresponsible Wall Street stock market. It shows Wall Street literally as a game! When everything in the stock market went south, the people misled by Cramer and CNBC people lost everything! If you don’t believe me, watch Jon Stewart of the Daily Show tear Jim Cramer (and CNBC and the media in general) to pieces: Part 1, Part 2, Part 3.

And this subject is important, not merely because moralizing the economy itself is dangerous in terms of human rights (as I’ve shown in the case of Marxism), to cancel our ethical concerns on the free market can be just as dangerous. As Naomi Klein has shown in her book, The Shock Doctrine, after the coup-d’état of the socialist government (democratically elected… by the way) of Salvador Allende, the famous Chicago Boys thought that the best thing to do was to give Chile "shock therapy", that is, to build a completely free capitalist country from scratch. What did it had to do for that to be possible? Create a dictatorship! Why a dictatorship? Because a dictatorship would eventually cancel the legitimate ethical concerns people had about the way the market would be run, or propose alternatives to the "program" of the Chicago Boys. It would even cancel the legitimate concerns by people who actually were in favor of capitalism, and didn’t sympathize with Allende’s socialist government. The result? The disappearance of about 3,000 opponents, tortured 32,000 of Chileans, more than a thousand exiled, from 1973 to 1990. At the end of the day, he had to implement some socialist measures in order to calm down the opposition. The similar things happened with right-wing governments in Guatemala, El Salvador, Brazil, Bolivia, Argentina, Panama, among many others in Latin America.

Let’s say, for the sake of the argument, that such measures would have actually worked. Does the fact that it worked make the inherent indignity and human rights violations worthwhile? In other words, the canceling out the of the ethical realm would be a violent act against human dignity, because it would turn humans as mere means for the market, not the other way around. Contrary to what Ayn Rand says, pure capitalism (especially corporate capitalism) is inherently incompatible with ethical virtues and acts.

In essence, to let the "invisible hand of the market be free" is nothing more than another instance of the Funes Syndrome: the argument that if the market were the freest possible, then everything would be better. Market fundamentalism at its best! Capitalism is successful over a Marxist system, because it appeals to human nature, asking it to be greedy, as we were made to be. But to the extent we make such an economic system the "most perfect possible", it degrades human nature.

Needless to say, such economy is self-defeating and unsustainable, but, this is the economic model being adopted world-wide in the new global market!

References

Comte-Sponville, A. (2004). El capitalismo, ¿es moral? México: Paidós.

Ferrer, J. J. & Álvarez, J. C. (2003). Para fundamentar la bioética: teorías y paradigmas teóricos en la bioética contemporánea. Spain: Desclée de Brower.

Klein, N. (2007). The Shock Doctrine: the rise of disaster capitalism. NY: Metropolitan Books.

Peikoff, L. (1991). Objectivism: the philosophy of Ayn Rand. US: Meridian.

Rand, A. (1982) Philosophy: who needs it? US: Signet.

Rand, A. (1990). Introduction to Objectivist epistemology. US: Meridian.

Shermer, M. (2002). Why people believe in weird things? Pseudoscience, superstition, and other confusions of our time. NY: Henry Holt and Co.

Wilson, D. S. (2008). Evolution for everyone: how Darwin’s theory can change the way we think about our lives. NY: Delta.

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This article is part of a series of articles on the subject of evolution, ethics and spirituality:

Parts: I, II, III, IV, V, VI (1), VI (2), VII, VIII (1), VIII (2), IX (1), IX (2), IX (3), X (1), X (2), X (3), XI (1), XI (2), XI (3)

Evolution, Ethics, And Spirituality: Part XII — Imperfection and the Economy

A Divine Problem: Imperfection

It is very rare to actually read an economist who shows that he or she is well versed, not only in the economy, but also in philosophy, literature, science, politics, and so on. It is an absolute delight to read Adam Smith’s The Wealth of Nations, because it shows how brilliant is he as an economist and as a moral philosopher. I love to read Marx’s Capital because hidden in it there is allusion to today’s classics, such as Bram Stroker’s Dracula, or Mary Shelley’s Frankenstein. You notice that he has a taste for horror: ghosts, specters, werewolves "transmuting", etc. He also shows a lot of theological and philosophical knowledge throughout his writings. Yet, I fail to remember other more contemporary economists who express themselves this way. Smith’s and Marx’s works are classics and speak to all of us for this reason. Even those of Keynes speak to us and remain relevant. Yet, today, I’m sad to say that most economists are working as technocrats, and have forgotten that touch of Humanities.

Yet, I do think that there is one particular economist who, regardless of what he writes, he shows his intellectual depth, his acquaintance with philosophy, literature and history, and has a great economic insight. I want you to meet this Puerto Rican economist: Francisco Catalá Oliveras.

Francisco Catalá Oliveras

This is a renowned economist in Puerto Rico. The Center for the New Economy (CNE), an organization which works frequently with the Brookings Institution, uses to invite him to give speeches on the economic situation of my country, Puerto Rico. The banking sector and the foreign corporations hate him because he frequently suggests that we should raise taxes on foreign corporations investing in Puerto Rico. Of course, like the Tea Party movement in the U.S., who likes to label anyone it doesn’t agree with its economic policies a "Marxist", our banking sector and corporate industry label him a "Marxist", even though he isn’t. He is now a retired professor of the University of Puerto Rico, and works as advisor for labor unions, cooperatives, and the Puerto Rican Independence Party (PIP). He also advocates for independence for Puerto Rico as the key to its economic growth and better future. We will not be concerned with this particular subject right now, but I wanted to let you know his background.

Catalá is well versed in philosophy and literature, and part of his formation was his reading of Erasmus’ The Praise of Folly (in Spanish Elogio de la locura). Inspired by both literature and history, he wrote one of those books I wish there were a version in English for my English-speaking friends: Elogio de la imperfección (The Praise of Imperfection).

Elogio a la Imperfección

His whole focus of that book is what he calls the Funes Syndrome. Now, if you can’t find such a syndrome in Wikipedia or in any medical journal, don’t worry, he made it up.

Yeah, it sounds like a sort of psychiatric term, yet, its origin is literary. (Ah! There he shows his literary formation again!) He read a short story by the renowned author Jorge Luis Borges called "Funes el memorioso". In it he Borges tells the story of a man who had the perfect memory. He remembered EVERYTHING, even the minutest details … a sort of Adrian Monk, the famous detective played by Tony Shaloub. Yet, unlike Monk, this guy was not a hypochondriac, but rather an insomniac. Funes is tormented by the fact that he is in constant vigil, and his perfect memory enables him to remember everything simultaneously, and his recollections overwhelm him constantly. Ironically, Borges says, the guy could not think. Why is that? Thinking requires abstraction, and abstraction implies forgetting some things to take into account only a few of them. For Funes, there was nothing but immediate details, he couldn’t forget.

Now, what is the Funes Syndrome according to Catalá? It consists of two errors people frequently fall into:

  • The error of believing that perfection is possible in this world.
  • The error of believing that if perfection existed, it would be functional

While I was reading his amazing book, Catalá solved one of the problems which tormented theologians for a long while, one of the aspects of the theodicy problem (i.e. if God exists, then why is there evil in this world?) New atheists like Richard Dawkins cannot point out enough all of the imperfections in the world as a sign that there is no intelligent designer, and, that no God exists at all. Evolution is a messy process, supporting living beings on Earth involves a lot of waste. Our eyes are a mess, and, as I’ve argued before, our brain is too. Why the heck would God choose such a messy process to support living things? Kenneth Miller, who is himself a Roman Catholic, tries to solve it in many ways in his book Finding Darwin’s God. Other authors such as Darrel Falk or Francis Collins try to address that particular problem. Yet, the answer to this problem is so amazingly simple! A perfect world wouldn’t work!

If there is a reason why nature works so well to the point of letting life emerge constantly through evolution, it is because it is an imperfect "blind watchmaker". Why is our brain capable of reasoning? Because it is imperfect and it is all messy regarding how it distributes its functions among its own organs. Life is possible only because death exists. Without death, other living beings cannot arise. The natural creation of objects in the universe exist only because destruction exists. Our Solar System exists because an earlier star "died" and exploded. These things work precisely because the universe is imperfect.

Economists Dealing in Absolutes

"Only a Sith Lord deals in absolutes."
~ Obi-Wan-Kenobi
(Star Wars – Episode III: Revenge of the Sith)

Now, why would an economist in particular be interested in such a very important philosophical subject. The answer is that as an economist he has seen too much of his colleagues fall into the Funes Syndrome. Pro-corporate economists always point out how the powers of the state should be minimized and how the economy would do "just fine" without it. The less the power of the state has over the economy, the "more perfect" (so to speak) the economy would be, capital would flow happily, poverty would be eliminated from the Earth as Adam Smith predicted, and we would live happily ever after.

That doesn’t mean that the economic right-wing is the only one falling into the Funes Syndrome. Marxism does too. Marx is an excellent thinker when you see him diagnose capitalism as a system. Capital is still a work to be read, and look at our economic reality through its lens. Yet, when it comes to evaluate history from the materialist view he proposed, well…. take his proposal cum granus salis (handle with care!). And when it comes to implementing his version of socialism as a transition period to a more just society, such efforts are doomed to failure as history has taught us. We should be fair with him, though. No version of the implementations Marxist socialism resembled remotely what Marx originally had in mind. Yet, that can be a clue to the fact that Marx’s solution was a failure from the very beginning. Right and left-wing versions of Anarchism are no better when it comes to solving the problem. As studies of efforts to build communal life have shown, they all fail in one way or another, mostly because of internal conflicts and tensions within: secular socialist communal societies collapse after a median of two years, and religious communal societies last a median of twenty years (ref. Pinker 2002, p. 257; see Klaw, 1993; McCord, 1989; Muravchik, 2002; Spann, 1989). As the linguist and cognitive scientist Steven Pinker tells us what is wrong with this reasoning:

Studies of altruism by behavioral economists have thrown a spotlight on this sword of Damocles by showing that people are neither the amoral egoists of classical economic theory nor the all-for-one-for-all communalists of utopian fantasies (Pinker, 2002, p. 256).

Part of the failure of implementing any of these economic policies or solutions is that, sometimes, it completely disregards the necessary social conditions for them to be possible, and tries to implement their theories in an absolutist and perfect manner. In the case of those who wish to implement capitalism in the freest way possible, the elimination of state powers is only geared at less economic restrictions by the state. Yet, for some reason, this leads invariably to more state restrictions towards people. For many people this is a mystery, but in reality it isn’t.

Sometimes, blinded by ideology, we want to refuse to believe what Marx reminded us over and over again about the capitalist system: it carries with it the seed of class struggle. Class struggle as understood by Marx is not an ongoing street fight between the bourgeoisie and the proletariat. Class struggle is the result of the fact that wealth is scarce in principle, and the bourgeoisie and the proletariat have opposite interests regarding the way it should be distributed. So, when the state eliminates the restrictions on the economy, and lets the bourgeoisie and capital act the way it wants, it will necessarily lead to more poverty in the working class, and the poverty of people who are not proletariat because of the imperfections in the capitalist system, and depend on state assistance. Obviously, this leads to unrest, protests, and strikes (many times violent), which then require the state to become a militarized or police state.

As Naomi Klein (2007) has shown in her research, this is exactly what happened in Chile, when the Chicago Boys wanted to make Chile an economic blank slate, and start a pure and perfect form of capitalism from scratch after the coup against Salvador Allende. The result? A government under the Augusto Pinochet. It is said that Chile "prospered" under his government, but at the expense of human rights. Despite that, even Pinochet had to implement some socialist measures to alleviate or minimize social unrest. Similar repressive measures were made in many countries in Latin America which led to abduction of opponents of the regime, to killings of families, to outrageous forms of tortures. We can say this has happened in the United States during its history. Lousy history teaching in schools has made people forget completely what happened in the past when capital was free to rule with next to no state restrictions. Invariably it led to more misery, harsh living conditions, continuous violations of human rights which were rarely validated by the courts. If today you have Social Security, pensions, and other benefits, it is because of the huge fights which happened so frequently in the past.

The situation was no different under both the Clinton and the Bush Jr’s administrations, when much restrictions were stricken down. This led to reinforce all sorts of the most repressive sectors of government, especially the military, intelligence operations, and extensive surveillance. Unfortunately, these policies have continued and increased under the Obama administration, whose significant contribution to restricting the economy has been limited to health care, and even THAT is going to be struck down with current Congress or, perhaps, a future Republican (Tea Party?) president..

This does not mean that communism is paradise. As many intellectuals are realizing, even Marxists, communism led to many human rights violations. As Pinker (2002) points out:

The Nazi Holocaust was a singular event that changed attitudes toward countless political and scientific topics. But it was not the only ideologically inspired holocaust in the twentieth century, and intellectuals are only beginning to assimilate the lessons of the others: the mass killings in the Soviet Union, China, Cambodia, and other totalitarian states carried out in the name of Marxism. The opening of Soviet archives and the release of data and memoirs on the Chinese and Cambodian revolutions are forcing a reevaluation of the consequences of ideology as wrenching as that following World War II. Historians are currently debating whether the Communists’ mass executions, forced marches, slave labor, and man-made famines led to one hundred million deaths or "only" twenty-five million. They are debating whether these atrocities are morally worse than the Nazi Holocaust or "only" the equivalent (Pinker, 2002, p. 155; see also literature on this subject: Besançon, 1998; Chirot, 1994 Conquest, 2000; Courtois et al, 1999; Getty, 2000; Minogue, 1999; Shatz, 1999; Short, 1999).

This conviction is reinforced with the fact that today, as much as I sympathize with Venezuela’s Bolivarian government, as well as Ecuador’s government, there have been violations of human rights (although the majority of the cases never reach the level of repression of earlier right-wing governments in Latin America), which have been reported by Amnesty Intentional and Human Rights Watch. In the case of the latter, the head of this organization had been expelled from Venezuela.

How can it be that Marxism, an ideology whose goal is economic justice for all, reach this level of repression, genocide, murder, and so on?

Corporate Amorality

The economy is the result of two things: an evolutionary process, hence the biological constitution of humans, and culture. Groups of organisms have a sort of economy, an ecosystem. It is nothing more that a form of distribution of energy through a food chain. Plants get the energy from the sun, animals eat plants, and other animals eat these animals. Yet, unlike other animals, humans have intelligence and culture, which let us create ways of arranging a form of distribution of energy in the form of wealth, otherwise we wouldn’t be able to live.

To say that economic systems are imperfect is a truism, yet, it is not a trivial one. As we have seen, assuming that a perfect economy is possible can lead to disaster, especially when looked at from an ethical standpoint. And here we touch a very particular subject that sometimes is ill-addressed: the interaction between the economy and ethics.

Today it is a fashion to talk about business ethics. In universities we breathe it. The first time I was going to teach ethics in UPR in Cayey, and talked to some members of the Business Administration faculty, they asked me if I knew anything about "business ethics". That is because it is a new fashion in the business world. Some weeks ago I even received a book by José González Barja called Ética empírica para el éxito (Empirical Ethics for Success), which advocates for "business ethics" to lead people to "success" in the business world (or life in general). Of course, when I studied ethics, I studied philosophical ethics, but had no idea about the particulars of "business ethics". In my naïve attitude, I supposed that it was much like bioethics: the rational examination of biotechnological and medical production and practices from an ethical standpoint. The more I researched business ethics, and the more I talked about it with some of my colleagues in philosophy, the more I came to realize that this was not the case of "business ethics".

"Business ethics" is not a field of Applied Ethics, it only pretends to be. It takes its name too seriously. It stems from the genuine worry by businesspeople regarding the problem of low wages, the gap between the rich and the poor, environmental concerns, and so on. Yet, in its attempt to address these concerns, they make business ethics have as premise the following statement: "Only acting ethically, you will have success in your business". In other words, acting ethically will mean that in the end you will have more benefits, and more money. It is an ethics designed to legitimize business, because, despite the fact that this premise actually begs the question, it suggests that if you are successful, it is because you are behaving ethically. Nothing further from the truth!

Take corporations, for instance. A corporation is a group of people who ask for a charter to create a legal person, which will limit the investors’ (stockholders’) liability. Inherently, corporations have one end: how to produce the maximum wealth possible for the stockholders in the shortest time possible. In the U.S. it became a judicial decision to place the stockholder’s welfare above everything else, including the public good (Dodge v. Ford). The question is, why does the juridical system grant stockholders a limited liability, if ethics leads to financial success? In principle, there shouldn’t be any problems if that were true!

And what sort of person is a corporation? A key to that is what Baron Thurlow said: "They have no soul to save and they have no body to incarcerate." This abstract artifice, the corporation, cannot hurt or be hurt, it is not happy, does not cry, nor does it suffer. The only way it "suffers" is if it loses capital and profit. Does it act ethically at least most of the time? Not necessarily, but these are successful giants, and it is not because they are concerned for what is good. Lacking emotions and empathy, you are left with one sole conclusion: corporations are amoral entities. Don’t believe me? Let Dr. Robert Hare, an FBI consultant on psychopaths explain the whole thing for you.

Yep, you can actually be very highly successful, if you are a psychopath … not if you act ethically.

Many people, even my colleague philosophers, can be deceived by "business ethics", because they see the genuine ethical concerns by businesspeople, and I emphasize the word genuine. I’m not saying that CEOs are not worried about oppressive regimes, or the environment, or sweatshops, or child labor. Many of them are worried about that! They are themselves moral beings, they empathize, they want everyone to be happy, they are for world-peace! They can give you Miss Universe sorts of answers if they participated in that pageant, and mean it! In fact, many CEOs in their personal lives might dedicate their own resources to many good causes.

Yet, at the end of the day, the stockholder has all the judicial system on his side, and will demand of CEOs that they do everything they can to maximize profit now, not matter what. As a result, they will lay off workers, will establish sweatshops, exploit children around the world, contaminate the environment, lie to Congress, and so on. Why? Because there is competition, if you don’t do these things, the competition will squeeze you out, and your corporation is screwed. Corporate obligation is not ethical. Yes, there may be studies that show that paying a good health care or your employees will ensure that they will be more productive, but if my job as a CEO is to maximize profits now, then my duty is to give my workers in salary the minimum of the minimum, which includes no health care.

Don’t get me wrong! I’m not saying that corporations are "evil". There are many products, services, goods, merchandise, that are inherently good for us. Hey, I loved The Dark Knight, I love computers, and they are amazingly useful, and I love books like crazy. Yet, what does that imply? It implies the use of contaminants of the environment, copyright restrictions and penalizations against users who dare use even a small segment of a movie soundtrack, and cutting off trees for paper production… needless to say, paying authors little money in royalties. Corporations are not (ethically) good, but they are not evil either. They are amoral, hence they have no moral conscience, and also inherently irresponsible.

The fallacy of "business ethics" is that it businesspeople can actually make all of these ethical decisions in business management and have more profit because of them. This whole "field" is a humongous non-sequitur. Corporations are externalizing machines, as well as money-making machines. This is a problem for corporations because externalities are their essential trait. If you are not acquainted with the word "externalities", at least learn what it is: an externality occurs when a third-party (not consenting a specific transaction) has to pay for the transaction made by the other two. Due to competition, the maximization of profits, and market pressure, all corporations externalize: let somebody else pay for contaminating the environment, let somebody else pay for the layoffs, let somebody else die in wars while we profit from the oil, let someone else pay for our irresponsible behavior, establishing mortgage rates so high no one is able to pay, or let someone else pay for our bad decision for making the Hummer. If you don’t believe in "externalities" … well… listen to one of the Chicago Boys (Milton Friedman) and a corporate CEO of Interface Global (Ray Anderson) talk about it!

And in the case of Ray Anderson, I strongly sympathize with him. He is the face of a CEO who wants to really look for alternatives to save all living things on Earth. Go and buy his book Confessions of a radical industrialist, and see how he is trying to address environmental concerns. Yet, Interface Global, despite its best efforts, still has to externalize in many other ways, because … at the end of the day, a corporation is all about profit! Interface Global is doing a great job in trying to produce environmentally friendly carpet products, and Ray Anderson is trying his best to convince other CEOs to do the same for their companies. The problem is that it is almost certain to convince an oil CEO at a personal level that climate change is a real phenomenon, and that if we use solar panels, wind, and other alternative energy sources it would be better for humanity. Yet, as a CEO, if those alternatives bring much less income than with oil, then that means much less profit for the shareholders … which means that as a CEO he will do everything it can to bring down all sorts of alternative fuels. Don’t believe me? Just ask yourself Who Killed the Electric Car?, and why corporations are making sure that the only fusion project that is funded is the Tokamak, which hasn’t worked for over 25 years, while much more promising fusion projects which require relatively small funds, like the Focus Fusion Project are underfunded, or not even mentioned in the media!

Also, many people in the "business ethics" arena take refuge in Muhammad Yunus microlending strategy (the banks of the poor). Yet, the strategy itself is also amoral … for one simple reason … the economy itself is amoral.

Economic Problems and Ethical Problems

I need to clarify once again that when I say "amoral", I’m not saying "immoral". What I am saying with "amoral" is that an amoral being is not concerned about the ethical values of right and wrong, or good and evil. Just like nature, the economy is exactly what Dawkins said about nature: "no evil and no good, nothing but blind, pitiless indifference".

The capitalist system is amoral, a Marxist socialist system tries to be moral, but at the end of the day, for it to work, it has to become amoral. Contrary to the claims made by Ron Paul, there is no such thing as a "compassionate economy". The marketplace is the marketplace: all the problems which arise in an economy depend solely on supply and effective demand. No ounce of ethics get into it at all. Prices in the market do not respond at all to the notions of duty and dignity. These have no place in economic equations. If chocolate prices soar or they flunk, it will depend exclusively on supply and effective demand. There are no decent market prices, there are no evil market prices either.

No economic system is perfect … and it should be that way, no economic system will work if it were perfect! Let’s not fall into the Funes Syndrome. Yet, there is a sense that the economic system is screwed up because of problems which arise inside and outside the economy. From an economic standpoint (in theory) low wages are the result of a combination of criteria that the company takes into account in order to have significant profits and compete in the marketplace. From an ethical standpoint, depending on how low are low wages, they can become inhumane. From a political standpoint it is not good for the state (public) for corporations to do this. Yet, another externality is the cost to the state (public) if government is bribed by corporations or members of the bourgeoisie (to use a Marxian term).

How do we deal with the economic, ethical, and political frameworks?

Stratified Problems and Solutions Model

In the following blog posts I shall be working on what I will call the "Stratified Problems-Solution Model". This will consist of a blend of two proposals:

  • Karl Popper’s Problem-Solving Scheme: which we have discussed at length here and here: the evolutionary problem-solving scheme that Popper posited for epistemological growth, but now placed in the cultural realm in general.

Problem-Solving Scheme

(Generalized Problem-Solving Scheme)

Evolutionary Problem-Solving Scheme

(Popperian Evolutionary Problem-Solving Scheme)

  • The Stratified Model Proposed by André Comte-Sponville. Comte-Sponville is a French philosopher who has dedicated most of his life to make expositions on other philosophers and making ethical reflections on world affairs. His book Le capitalism est-il moral? (Is capitalism moral?) is one of those books which I’m sorry is not available in English. As far as I’m concerned there are only two versions: French and Spanish.

My proposal is nothing more than a slight modification of Comte-Sponville’s proposal with a Popperian touch and other things. It stems from a premise that due to the fact that no aspect of human life is perfect (including the economy), each stratum will generate two sorts of problems:

  1. The internal problems of each stratum.
  2. The external problems generated by a stratum.

This model I’m advocating for will propose a sort of interaction between strata. It will also identify the basic problem with many proposals made by so many thinkers to create "perfect" societies: level confusion. Level confusion is a categorical confusion that occurs when we want to understand or solve the internal processes of a stratum in terms of an external stratum or sets of strata.

The "field" of the so-called "business ethics" is bogus, because it is fundamentally a glorified level confusion: it states that you can act ethically in the internal dynamics of the economy to generate profit. Imagine that! So many universities and businesses have invested so many billions of dollars in something that is not possible. No business can be ethical, and acting ethically will not lead you to wealth.

Sorry for deflating "business ethics" in the minds of so many people.

Sources

Achbar, M. (Prod.), Abbott, J. (Ed.), & Bakan, J. (2005). The corporation. [Documentary]. Zeitgeist Films.

Anderson, R. & White, R. (2009). Confessions of a radical industrialist: profits, people, purpose — doing business by respecting the Earth. NY: St. Martin’s Press.

Bakan, J. (2004). The corporation: the pathological pursuit of profit and power. NY: Free Press.

Besançon, A. (1998, January). Forgotten communism. Commentary, 24-27.

Catalá, F. (2007). Elogio de la imperfección. PR: Ediciones Callejón.

Catalá, F. & Rivera, C. (2010). El movimiento cooperativista en Puerto Rico: un paso más. PR: Ediciones Huracán.

Chirot, D. (1994). Modern tyrants. US: Princeton University Press.

Comte-Sponville, A. (2004). El capitalismo, ¿es moral? Spain: Paidós.

Conquest, R. (2000). Reflections on a ravaged century. NY: Norton.

Courtois, S., Werth, N., Panné, J. L., Pczkowski, A., Bartosek, K., & Margolin, J. L. (1999). The black book of communism: crimes, terror, repression. Cambridge: Harvard University Press.

Getty, J. A. (2000). The future did not work. Atlantic Monthly, 277, 113-116.

Klaw, S. (1993). Without sin: the life and death of the Oneida community. NY: Penguin.

Klein, N. (2007). The shock doctrine: disaster capitalism. NY: Metropolitan Books.

McCord, W. M. (1989). Voyages to Utopia: from monastery to commune — the search for the perfect society in modern times. NY: Norton.

Minogue,, K. (1999). Totalitarianism: have we seen the last of it? National Interest, 57, 35-44.

Muravchik, J. (2002). Heaven on Earth: the rise and fall of socialism. US: Encounter Books.

Pinker, S. (2002). The blank slate: the modern denial of human nature. US: Penguin Books.

Popper, K. (1994). Knowledge and the body-mind problem: in defence of interaction. London & NY: Routledge.

Shatz, A. (1999). The guilty party. Lingua Franca, B17-B21.

Short, P. (1999). Mao: a life. NY: Henry Holt.

Spann, E. K. (1989). Brotherly tomorrows: movements for a cooperative society in America, 1820-1920 NY: Columbia University Press.

Yunus, M. (2007). Banker to the poor: microlending and the battle against world poverty. US: PublicAffairs.

Yunus, M. (2009). Creating a world without poverty: social business and the future of capitalism. US: PublicAffairs.

Yunus, M. (2010). Building social business. US: PublicAffairs.

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