Author Archives: Paul

Consistent Worldview? GTFO!

Here’s something I never expected to say: Tomi Lahren, you go girl!

She might be insufferably bratty, but she’s brave. Tomi was recently suspended from her show and lambasted by fans for? Having a consistent ideology.

Tomi declared that she is pro-choice. “I’m someone that is for limited government… Stay out of my guns, and you can stay out of my body as well.” Tomi said that to believe in one and not the other would be hypocrisy. This flies in the face of what most conservatives believe (an ideology I call modern American right or MAR), hence the blackball.

A friend and I recently had a text conversation about the ideological divide, and I brought up an observation made by Sam Harris in this podcast. He said that an individual’s stance on one issue is, but shouldn’t be, an alarmingly strong predictor of that person’s stances on other unrelated issues. To me, this is a problem in and of itself, but my friend nonetheless asked a great question: is it actually a problem? He elaborated, “I believe in liberty. I believe one person’s freedom ends where the next person’s freedom begins. Knowing that about me makes my stances on multiple issues very predictable.”

Good point, right? Maybe it’s not a problem; maybe it just means that people have underlying principles that guide them towards stance 1 or stance 2 on every issue. But maybe they don’t. Maybe the very fact that my friend identified an underlying principle (believing in liberty) points to the problem: that modern American right and modern American left ideologies (MAL) are actually just a bunch of random stances strewn together.

Here’s what I mean. Libertarians believe in the non-aggression principle and other notions of liberty. They will tackle complex issues philosophically by breaking them down into matters of prevailing rights. These principles of liberty are the axiomatic foundation of libertarianism. Guns? People have a right to do what they want, so long as they’re not hurting anybody else. Tax? People have a right to do what they want, so long as they’re not hurting anybody else. Business? People have a right to do what they want, so long as they’re not hurting anybody else. Marriage? People have a right to do what they want, so long as they’re not hurting anybody else. Abortion? Ok I’m sick of the repetition.

But what is the consistent principle behind modern American right or modern American left ideologies? It almost seems like there’s not one, because both are paradoxes when it comes to the role of government. MAR ideology says we should chill out on government interference with economic liberties but the government needs to walk a fine line with civil liberties, while MAL ideology says sure let the government meddle with the economy but they need to leave civil liberties alone.

There are nonethless some attempts at reconciling the paradoxes in order to point to some underlying principle behind MAR or MAL. One I’ve heard is that liberals believe people are inherently good, while conservatives believe that people are inherently evil. Another is that liberals believe that greedy rich people are a drain on society while conservatives believe that greedy poor people are a drain on society. The former is more of a personality trait than a principle, and the latter is basically scapegoat-seeking. Either way, both attempts to capture a principle behind MAR or MAL lack the philosophical elegance of libertarianism’s insistence on liberty.

Epilogue?

Now that I put libertarianism on a pedestal, let me knock it back down with an ontological question about “freedom” and “rights:” IRL, where exactly does one person’s freedom end and the next person’s freedom begin? Is there not murky territory? Which right should triumph if my right to sing loudly conflicts with your right to not hear my bad singing? I only want to make the point that even though libertrarians may be the most consistent when it comes to having an overarching theme to their stances, statements like “one person’s freedom ends where the next begins” draw a line that doesn’t exist in reality. Rights are, after all, social fiction. They’re completely made up.

Thanks to RFP!

Beards

Like a ton of dudes my age, I’ve had a beard most of my adult life. Beards, and maybe facial hair in general, have surged in popularity over the last few years. This happened before, but it’s been a while. In 1976, an economist at the University of Washington compiled a study published in the American Journal of Sociology which shows, quite plainly, a multi-decade beard explosion in the second half of the 19th century.

What was happening in the world during this period that might have compelled men to abandon a clean, diplomatic Roman look for a bold, wise Greek look? I’ll throw a couple things out there:

-First of all, the Second Industrial Revolution (evolution?) was happening. Society was trying to orient itself as it made the shift from agriculture to mass production, and in the US, the standard of living would not increase until the early 20th century. That means that instead of hunting and farming, lots of American men were going to work in factories, and they weren’t doing a better job than their fathers at providing for their families.

-In 1841 Ralph Waldo Emerson published Self-Reliance, a plea to emancipate the self from the corrupting forces society and its institutions.

-Third, this era was also influenced by the ideas of one Karl Marx, who identified the alienating nature of factory labor as one of the damaging and unsustainable characteristics of capitalism.

So, I propose that men of the second half of the 19th century let their beards grow out in an effort to reclaim their lost masculinity and individualism.

Could the current beard surge be for similar reasons? Maybe millennial men, helplessly anonymous in the desk jobs of corporate America, feel emasculated, especially because they know that their baby boomer dads were doing better as young yuppies? Millennials have been called the slash generation, as in “I’m a marketing specialist/singer” or “I’m a customer service supervisor/blogger.” This mass reclamation of individualism caught my attention years ago; proprietism is ultimately the economic manifestation of it.

We’re really divided right now. Let’s hope that beards are the only thing we have in common with the second half of the 19th century.

civilwarbeards

The two guys with mustaches were being ironic.

Thanks for the inspiration, DT!

An Ideological Civil War: Let’s Not and Say We Did?

Conveniently, I found a scapegoat for the writer’s block I’ve had over the last several weeks. I kept getting distracted by the increasingly dangerous and irreparable ideological divide in this country. I’ve written before about how we need to get beyond “left versus right,” even alluding to it two posts ago and in the homepage, but it was worse than ever this month. So, I’d like to discuss (yet) again how we got here and why it’s bad for us.

The process of indoctrination into a modern American ideology probably starts as early as childhood or adolescence: you absorb ideas from the media and people around you. One day, you take a stance on something. For example, maybe second amendment protection sticks out as an important issue in your young mind, or maybe it’s the right to marry someone of the same gender. You submerse yourself in ideas to validate or invalidate your stance, and validation usually wins, at least at first, because it feels better. You collaterally absorb ideas about other stances from the same media and people, and you form a worldview. A worldview is kind of like a mosaic of stances, and if yours is a popular one, then you have been indoctrinated into a modern American ideology.

3d-glasses

Sometimes there’s a part two to the process. I’ve seen a lot of peers go through what would best be described as a post high school ideological revolution, which I’ll call PHSIR. Most of the ones I observed involved people who grew up in conservative families with stances oriented around Christianity. Something about entering the working world, or maybe something in the college curricula or community, inspired the young adults to question their backgrounds, usually moving them towards civil rights and away from capitalism and Christianity. That’s what I’ve seen the most, but it’s not the only kind of PHSIR. In college and grad school, for example, I absorbed perspectives from the business world. Some people bounce back after their PHSIR and become moderates. Others keep the same ideology their whole lives, and yet others may never settle on an ideology.

The problem is not so much this process of indoctrination in and of itself, but the lack of mainstream ideologies to get indoctrinated into. Our culture is dominated by two: modern American “left” and modern American “right” ideologies, which I’ll call MAL and MAR. In this post I discussed, among other things, how these two ideologies evolved from two different takes on classical liberalism, the granddaddy of Western ideologies. MAL says “yes” to civil liberties, “it depends” to religion, and they want to dial the economy a notch towards socialism and away from capitalism, because they believe that to be a fairer way to help people succeed. MAR says “it depends” to civil liberties, “yes: Jesus” to religion, and they want to dial the economy a notch in the capitalism direction, because they believe that to be a fairer way to help people succeed. MAL thinks greedy rich people are responsible for society’s woes, MAR likes to pin it all on greedy poor people.

Just now as you read those (somewhat intentional) oversimplifications, you probably experienced some emotions and possibly even tried to decode partisanship in my word choice. If you agreed with any of the descriptions, I validated your worldview. If you disagreed with any of the descriptions, you probably didn’t think that I invalidated your worldview so much as you thought I was being biased. If you’re reading this and you don’t know me, you may have even judged me to be a Republican based on my comment above about absorbing perspectives from the business world.

This is precisely the problem. Most of us in the United States, through the process of indoctrination, have identified with either MAL or MAR. The current ideological war has fostered a very black and white (blue and red?) “us versus them” mentality, so we’re always hypersensitive to and ready to attack anything we can’t identify as belonging to our own ideology. This makes it impossible for most Americans to handle any new idea. At a glance, new ideas don’t seem to fit within our ideology, so the reflex is to dismiss it as radical or associate it with the opposing ideology. Usually we’ll even go the extra mile and draw analogies between a new idea and Nazi-occupied Germany or dystopian science-fiction. That is how deeply the left versus right divide has damaged us.

hitler

Take proprietism for example: the economy as a vast network of sole-proprietorships. Already it sounds complicated and radical but maybe you’ll listen because you’re polite and want to be a supportive friend. Then I tell you it’s pro free-market, so if you identify closely with MAL, you’re already writing it off and preparing a critique of capitalism. Then I tell you it involves shared-ownership on a massive scale, so if you identify closely with MAR, you’re already writing if off and preparing to admonish me of naive Marxist idealism. MAL attacks everything as though it’s MAR and vice versa. Since our ideological war has rendered us incapable of being open to new ideas, we’re opting instead to continue down whatever schizophrenic middle ground it creates.

I usually conclude posts with a hopeful tone, but this problem shouldn’t be contorted or watered down. Instead we’ll close on a high note by introducing you to my friend’s provocative new Facebook blog, Elevated Content. His blog’s mission is akin to mine: a viewpoint not on the “left versus right” spectrum, but separate from (or elevated above) it. The result is content that focuses on the connections between the people and entities that shape the world, rather than content framed in the context of an ideologically gridlocked world.

If you visit Elevated Content right now, you will see subject matter in support of our president-elect, Donald J. Trump. Some of you will get a right-wing vibe, but what if I told you the author is a former Obama supporter? He and I had a fascinating phone conversation last week. If nothing else, try that. Don’t avoid talking about politics; that’s not helping. Talk about it, but dig past all the superficial stuff like whether politician so and so lied about this or that. Get into the big questions about what roles and responsibilities we have as the most industrious and ubiquitous species on the planet. Maybe start with a discussion about what utopia should look like, and then work backwards to identify what policies we’ll need to get there. I bet you’ll be shocked at how much common ground you’ll uncover.

Are We More Orwellian or Huxleyan?

Aldous Huxley‘s Brave New World and George Orwell‘s Nineteen Eighty-Four were highly influential warnings of what the western world might become. They are both dystopian, futuristic science fiction novels in which the characters and plot are ancillary to the authors’ primary objectives: world-building and examining human nature.

The two worlds have striking similarities and contain thematic elements that seem all but essential to dystopian fiction. A catastrophic war occurs prior to the events of the book. Atop the rubble emerges a totalitarian regime and a submissive population. Society is rebuilt with a commitment not to repeat mistakes of the past. The society, by way of error, contains some ancient relics: a few flawed but comprehensible characters who feel alienated and mistrusting of the brutalist civilization around them. Both 1984 and Brave New World explore this tension.

Upon that backdrop, two different stories emerge from two different means of controlling the masses. In 1984, the government of Oceania portrays itself to its people as an omnipotent, omniscient, and foreboding force. The main character’s environment is bespattered with cameras, microphones, and posters of Big Brother, a propagandistic personification of the government. In the world Orwell created, the years following World War II represented only a mild setback in a global macro trend towards centralization and authoritarianism. Orwell was keen to notice that, despite popular political paradigms placing Nazi Germany on the far “right” and the Soviet Union on the far “left,” the two states were actually under the control of similar governments. He may have even foreseen how the Cold War would create economic and military alliances, the likes of which would turn the world into a checkerboard of communist and capitalist states. In 1984, the three world superpowers are in ideological gridlock and perpetual war.

Brave New World presents a happier but equally upsetting and, to some, scarier future. In this world, Henry Ford and Sigmund Freud, who are believed to be the same person, are the philosophical and spiritual grandfathers of the era. Humans are created in assembly lines where they are chemically conditioned into different castes (Huxley was not yet aware of genetic modification). Sex is no longer taboo, but the very notions of “family” and “motherhood” are. The population is easy to control, easier even than the people of Oceania, because they are, if not genuinely happy, superficially content. They go to “feelies,” movies that offer a completely sumbmerssive sensual experience where you feel what the actors feel. They take soma, a euphoria-producing medication that is ubiquitous to the point of being a dogmatic staple of their society. In short, the consumption of popular culture and products is cool and fun, so why worry about crap like finding meaning in life?

Orwell’s vision is more overtly frightening, and our focus on preventing it may have taken energy away from preventing Huxley’s. For example, Edward Snowden arrested our attention and concern when he revealed that the US Government has been using our technology as survellience while we drown in an ocean of entertainment via the same technology. Therein lies the ultimate irony: a conservative estimate is that we will take 1.2 trillion photos in 2017, many or most of which will be of or about ourselves.

Consumer culture has induced us to surveil ourselves not because we’re intimidated into doing so, but because it’s cool and fun.

BN1984

But let’s not go too far…

I live in the United States in the year 2016 and not only have I had the chance to live a fulfilling and meaningful life, I can write and publish opinion pieces like this too. I’m one of those people who thinks you can be critical and grateful at the same time. I admit that while hammering this one out, I’ve been more cognizant of distractions than I normally am. I’m researching Huxley one moment and browsing cycling gear or watching SNL’s watered-down satire the next. This certainly doesn’t feel like dystopia, but it still is a brave new 1984.

Why Millennials Support an “Idiot”

We get it: a serious presidential candidate should know the names of at least some foreign leaders.

The media is a little confused as to why such a huge chunk of millennials support Gary Johnson, the presidential nominee of the Libertarian Party. In this short video, MSNBC’s Chris Hayes lists some hot issues that millennials care about (or should care about in MSNBC’s opinion?) which Johnson does not support, including free college and Obamacare coverage. On a Real Time with Bill Maher episode that aired September 30, Maher called Johnson a “fucking idiot,” and expressed his frustration and concern that former supporters of Bernie Sanders in the Millennial demographic would jump ship on Clinton to support Johnson.

This past weekend I was hiking with a close friend who told me he would vote for the fucking idiot. His logic is this: we need to start breaking the tyranny of the two-party system, and that’s not going to happen unless we start to back alternate parties. In other words, we need to get the momentum going on the third and fourth-party numbers so we can one day kill the following scenario: “I would vote for [third-party candidate], except that he/she has a snowball’s chance in hell so all I’d be doing is taking a vote away from [lesser-of-two-evils] and giving it to [greater-of-two-evils].”

My wife, who is from a country with three prominent parties, asked me, “ok so what’s your actual problem with a two-party system?” That threw me off. Because the US of A is a huge and diverse nation so there’s no way two parties can accurately represent all our ideologies? That’s a ridiculous answer because what then would be the magic number of parties to accurately reflect the views of 320 million people? Because it blocks third parties from entering the election? That’s almost tautological. Or maybe it’s personal because I can’t squeeze most of my views into either “democrat” or “republican?”

I think it might be that last one. I also think it’s my frustration that perfectly valid candidates for president get marginalized. John Kasich: too moderate to get support. Bernie Sanders: too grassroots to be mainstream.

Or maybe I’m just tired of the black-and-white thinking that comes in tow with a two-party system. If I agree Donald T. is a little thin-skinned, I must be a Clinton supporter. If I say it’s lame that of all the crazy things the guy said, America tars and feathers him for using hyperbolic guy talk, suddenly I’m on a slippery slope to being OK with sexual assault. I scroll through Facebook and see the clickbait articles posted by my more zealous friends; they take tiny pieces of information about either Clinton or DT and extrapolate wild conclusions. Also, my perception may be fallacious, but it feels like the mud-slinging gets worse every 4 years.

In reality, the majority of us agree on a majority of issues, but it’s hard to see that. At some point, probably early in our adulthood, we all go through a political orientation. We find a perspective we like and we submerse ourselves in the dogma that most closely aligns with that perspective. For example, a person may decide early on that they find abortion repulsive, surround themselves in conservative ideology, and end up supporting death penalty along the way.

But for some reason I just have this na├»ve feeling that this problem is going to get better. Millennial’s love their Facebook friends, but we hate running with the herd. We hate the status quo and that’s why we like Sanders and Johnson.

Anyway, it’s 2016 and we have Google. At some point, I don’t know when, we’re going to care less about what a candidate knows and more about what kind of decision-maker he or she is.

Thanks to MK for the inspiration.

The Importance of Discussing Utopia

Like any writer, I can look back at my previous work with no shortage of criticality. I will, however, do my best to resist any temptation to actually edit any of it. That said, I’d like to revisit A Discussion on Utopia to elaborate and clarify some of the points.

In the post, I identify three features that I believe we would generally agree a utopian society should possess. I still believe that these three features are pretty all-encompassing, but I am open to additional ideas so please contact me at pkurke@gmail.com if you have some. The three traits of utopia I discuss are:

1. Zero crime
2. Zero poverty
3. Continual progression towards (a) human happiness and (b) understanding the universe

Zero Crime

On the issue of zero crime, first we need to define “crime.” Since civilization has always had substantive gray space between “right” and “wrong,” a certain action could be a crime or not depending on the presiding legal authority who acknowledges and judges the action. We likely evolved our senses of right and wrong. An action is righteous if the actor had pro-social motives, in other words, he was doing something for the good of the tribe. Likewise, a wrongful action feels that way because we suspect that the actor had the intention of benefitting himself or herself at the expense of the tribe. It’s hard to fathom everybody agreeing on right or wrong: one American may feel that a young lady who had an abortion is a criminal, another American may feel that an overpaid CEO is a criminal.

Libertarians are among the only group that have a clear underlying axiom defining right and wrong. The non-aggression principle (NAP) is an ethical principle forbidding any aggressive or coercive act. From this perspective, a woman who pays a man for a sexual act is completely righteous, because they both agreed on the transaction and no coercion has taken place. The exchange was voluntary, and we assume that if it was not beneficial to both parties, they will not agree to do it again. Any aggressive act that transpired is a crime in and of itself, unrelated to the act of prostitution. The exchange of sex for money is illegal in the United States because voters have elected government officials, and the majority of them agree that prostitution is wrong under all circumstances. For contrast, die-hard libertarians maintain that taxation is a violation of NAP, since a taxpayer is being coerced into the transaction. For a lot of folks, achieving a perfect society seems like it would be pretty hard to do without tax.

The point is that we would need to agree on a single definition of right and wrong if we want to have zero crime; only then we can discuss “how.” In the earlier post, I single out three methods of getting to zero crime. This is not intended to be an exhaustive list of ways to achieve zero crime, but it is everything that I can imagine. I have elaborated by adding pros and cons.

1. We could possibly achieve zero crime via some sort of enlightenment that makes people not want to commit crime. It’s easiest to imagine this enlightenment taking the form of a philosophy like Buddhism, but that is certainly not the only option. Perhaps it could be a materialistic enlightenment, e.g. an understanding that altruism, prosocial behavior, and honest business interactions enhance ones own power.
a) pro – positive reinforcement
b) con – may be difficult for there to be no dissension or discord against the “enlightened ones.”

2. We could possibly achieve zero crime via some sort of fear of God or eternal damnation that scares people into behaving prosaically.
a) pro – probably effective for believers
b) con – negative reinforcement, unlikely that everyone will believe, and it seems counter to progress (Most folks might not call such a society utopia.)

3. We could possibly achieve zero crime via some sort of perfect justice system that can adequately assess and analyze all relevant information surrounding every questionable action. Judgment would ensue and the efficiency of the system would deter crime.
a) pro – doesn’t require universal dogmatic beliefs
b) con – negative reinforcement, and any such system is likely to be hackable and compromising of personal privacy, because it would likely involve ubiquitous survelliance

Zero Poverty

In the earlier post, I (more or less) concluded that zero poverty is actually a question of how much equality or inequality society is willing to tolerate.

A society will tolerate inequality so long as (a) the “have-nots” lack the power to overthrow the system, (b) the “haves” don’t feel guilt over the living conditions “have-nots” and (c) the inequality is not believed to be an overall detriment to the system, i.e. it’s generally understood that the “have-nots” would wreak more havoc on society if they receive entitlements.

A society will tolerate equality until they feel that meritocracy no longer exists in any form. Perhaps utopia might adequately achieve meritocracy by rewarding those who contribute to society with something non material, but I believe it’s likely that we will always retain sensitivity in this realm.

We make mental calculations of ourselves and those around us, and it looks like this: contribution divided by compensation. This idea is known as equity theory. I like equity theory because I’m a fan of the IPO model and the two are similar and compatible. I agree that we feel contempt and injustice when we think that we are being stiffed, but I do not think that we work harder when we think we are overpaid or underworked (at least not in modern society). Instead, we just construct mental models of “the ways of the world” to justify our gratuitous compensation. These mental equations and models are often fallacious.

Benoit Mandelbrot wrote the paper
How Long Is the Coast of Britain? Statistical Self-Similarity and Fractional Dimension
. The interesting mental experiment concludes that a coast’s length increases as the length of your measuring tool decreases. A gigantic measuring stick ignores all of the intimate and wandering curves of a coastline, while a smaller measuring stick will capture more of those curves and thus measure the coastline as longer.

I think the coastline question is a great metaphor to describe the fallacy of our assessments of other people’s contributions and compensations. We know our own job and our own compensation quite intimately, so the measuring stick we use is quite small. It’s capable of measuring every complication that occurs when doing our job, and respects (or over-glorifies) our job’s complexity. The measuring stick we use for other people’s jobs can be much bigger. We don’t know all the little complications that come up on their job, so we measure with a big stick: “all he does is create reports for the blah blah.” Tragically, we may even have an egocentric view of that person’s role, acknowledging only the one thing that person can do for us in our role: “I don’t know why she hasn’t emailed me back yet. All she needs to do is tell me the blah.”

It could very well be that our human nature will keep us married to some form of meritocracy in which some people will feel cheated. The degree to which the cheated ones are living abjectly is naturally limited by the stability of the society and its cultural views on meritocracy.

Continual Progression

The more I ponder the notion of continual
social progress
the more I see it as being central to utopia. I think it’s important to identify what we are progressing towards; surely we don’t want to achieve equality for the sake of equality, industriousness for the sake of industriousness, or wealth for the sake of wealth. If we’re not seeking to maximize human contentment in some way, then progression is in vain.

The previous post additionally mentions progressing towards a more complete understanding of the universe. By this, I’m referring to our continual quest to uncover the laws of the physical, life, and social sciences, the humanities and the arts. I’m making the assumption that this understanding of the universe is what’s behind advancements in medicine, engineering, socioeconomic systems, and entertainment, and that those advancements are what’s behind human contentment and achievement. It follows that in order to get to utopia, the conditions need to be present to allow for as much creativity and innovation as possible.

The conclusion in my previous post was that there must be some sort of reward system (i.e. meritocracy again) in order for citizens of utopia to have the incentive to innovate. If Utopians are capable of innovating without any incentive like recognition or a financial reward, then humanity has successfully indoctrinated utilitarianism, which might be a slippery slope. Utilitarians may invent great things to help society progress, but they may also chose to do weird things like sacrifice a healthy person to harvest his organs if doing so could save the lives of two or more other people.

Conclusion

I wanted to revisit this discussion to elaborate and rationalize some of the criteria for utopia. In order to achieve zero crime, we must first agree on a definition of crime and then either build a perfect justice system, achieve some sort of enlightment, or both. The justice system runs the risk of compromising privacy. The enlightenment could either be spiritual or materialistic. In order to achieve zero poverty, we need to find the perfect balance: enough meritocracy to elicit advancement, but enough equality to not tear us apart. Finally, we should constantly be seeking to expand our understanding of reality and maximize human contentment, which also necessitates some form of meritocracy.

As I stated in the earlier post, it is extremely important to discuss utopia, and I wish our leaders would do so. Imagine two architects teaming up to build a single structure, but one has blueprints for a factory and the other has blueprints for a hotel. We need to argue about what utopia should look like first, and then we can discuss policy in the context of getting there.

Special thanks to D. Tinch for the help!

Reinventing the Firm

When you start drilling down into proprietism, a mild paradox emerges. On the one hand, proprietism assumes that everybody is an independent contractor. On the other, I often depict proprietist firms, and describe them as operating like an ESOP, co-op, or other form of profit-sharing organization. So which is it? Is proprietism a world of sole-proprietors, or is it a world of ESOPs and co-ops with a marketing makeover? If we’re all a bunch of self-owned entities, what or whose profit is being shared?

Before answering, we should take a step back and ask ourselves “what is a firm?” The most prevailing paradigm is that a firm is formed when the transaction costs of coordinating activity through a market is higher. This is a very concrete definition of a firm that obviously involves people as the lowest common denominator, and suggests that they will organize themselves into a firm when it is more cost-effective to do so. I agree with this theory, but I think it omits explanation of a very important type of firm: single-person one. A firm “emerges,” when two or more parties “get together,” so therefore a firm of one cannot emerge.

Michael C. Jensen proposes a different but not necessarily opposing view. He describes a firm as a “nexus of contracts,” between suppliers, customers, owners, employees, and other stakeholders. I like this view because it recognizes the firm for what it is, a social fiction that doesn’t actually exist materially, and it doesn’t undermine the existence of single-person firms.

The nexus of contracts is a great description of a firm, even for the simple firms. I buy baking soda, coconut oil, Tupperware containers and spices from Wal Mart. My receipt is like a contract in that provides a description of the products I bought, what and how I paid, the date, time, and some other information about the store and how I can go about rescinding the agreement if they fail to meet my reasonable expectations. I make deodorant out of the materials I bought and package it in the Tupperware and sell it to some people. My sale will also include a receipt or invoice, which is a contract as well. I am now a collision of two contracts, so even without being legally recognized as such, I am a firm.

But what about the labor I exerting making the deodorant? A firm is a fictional arrangement, but it still involves a coordination of resources and human effort, which may not necessarily always be contractually bound.

I propose a firm as a nexus of capital, resources and labor, and to illustrate the point I will once again use the IPO model. An IPO model is a simple and basic model to explain any system. It has input, some sort of processor to turn the input into output, and it can interact by feeding its output to another system as input.

ipo 1

Do you remember microeconomics 101? We can use basic microeconomic terms and abbreviations to identify the inputs and outputs that make a firm. Capital is raised and used for resources or capital goods (K) and combined with labor (L) as inputs into the firm. Through the process of production, the firm manufactures and outputs products (X and Y), which are sold to customers. The customers pay money for the products, and that money is input back into the firm as total revenue (TR). That money is then reinvested back into the firm, and the output is the cost to suppliers (C[K,L]) for more capital goods and labor, which will input back into the firm, and the cycle continues. In this model, an employee is a supplier of labor: her salary is output from the firm in C[L], and she inputs her labor back into the firm as an input L.

ipo 2

This natural and human arrangement: the combining of resources (including raw materials and technology) with human work to output a product is a firm. Some firms, like a manufacturer, input lots of capital goods for the plant and other raw materials. Other firms, like fishermen, are using some equipment and lots of labor. Law firms and consultants use even less capital goods; perhaps they just have an office and office supplies. The price of their end product X (the legal advice or professional consultation), is mostly based on the level of expertise held by those who contributed labor.

The government that allows firms to operate may have taken on many different forms and theories over the course of human history, but the basic nexus has remained intact. The firm has itself evolved over time, and in modern society we have assigned departments to refer to different functions within that nexus.

ipo 3

Most firms start with some sort of product idea. Perhaps there is some market research that concluded the product would be profitable in its intended market, and that if the function of a marketing department. Perhaps the firm started with a focus on a brand new product that has never been made before, or a brand new manufacturing process for an already existing product. This is the role of research and development departments. Once we have done sufficient research, we raise capital to finance the cost of capital goods and labor inputs. The finance department’s job is to manage those funds, accounts payables and payroll departments manage the outgoing funds to suppliers and workers. Purchasing, inbound logistics, and HR departments manage the incoming capital goods, resources, and labor. The inputs of capital goods, resources, and labor all combine in a production or manufacturing process managed by production or operation departments. Finally, products X and Y are the end result. Sales uses research from marketing and finds viable customers for X and Y, and customer service and outbound logistics coordinate the ordering and delivery of X and Y to those customers. Accounts receivables collects the sales from the customers, and the cycle starts all over again.

With the firm now redefined as a nexus of capital and labor, I’m ready to address the question originally posed: what profits are being shared if, in a proprietist system, there is no clear line drawn between a company and its partners?

Let’s turn our attention to the two end-products: X and Y. No matter what you’re doing in an economy, you have some end product X. In the case of the example earlier with me as a one-person firm, the homemade deodorant is X. The end-product X could also represent your labor; if Nathaniel is a logistics supervisor, Nathaniel’s supervision of a team of logistics analysts is X. In that case, there is another X somewhere along the supply chain in which he is also contributing. Maybe Nathaniel works for a logistics firm and is providing a logistics service to another company that sells a widget which ultimately gets sold in stores to consumers.

Here’s the idea: tiny percentages of the selling price of that final consumer product get distributed to everyone who contributed to it.

Kim is a retail associate and it is decided that her selling service is worth 5% the selling price of the widgets she sells. This is similar to commission. Ashley operates a machine that mines minerals, some of which get used to make the widgets that Kim sells, and some of which get used in other products. Ashley’s cut of every widget that Kim sells would be significantly smaller, say 0.1%, but Kim earns based on the sales of all the final products in which she partakes. So Kim earns a lot on a few end-products, and Ashley earns a little with a lot of end-products.

This scheme, which would undoubtedly require extremely agile information systems and planning, would align the entire economy towards consumer products. The obvious technical challenge would be deciding the exact percent share that each person gets. Louis Kelso, who invented the employee stock ownership plan, proposed that a worker responsible for contributing 10% of an operation deserves to keep that 10% share as the company grows. ESOPs function like this; the idea is that employees are compensated with shares of stock that will grow as the company does. Likewise, we can work out an arrangement in which a worker has a personal and permanent invested interest in the success of the end-product to which he or she contributes.

Conclusion

On the question of how proprietism is structured, it could look like a network of sole-proprietorships, and the profit-sharing could look like an ESOP or co-op. The stock each worker receives could be based on sales of the end-products that that worker touches or to which he contributes. This may seem like a complex arrangement, but the structure could solve many modern problems in the realms of compensation and inequality. Additionally, it would align all a product’s stakeholders towards the long-term success of that product, rather than incentivize short-term gains and cost-cutting.

A New Mantra

Take a look at this great video featuring Paul Green Jr. of Morning Star. In it, he describes how Morning Star operates without bureaucracy: no titles, no bosses, and no job descriptions.

Paul tells a fictional narrative to illustrate the starkly different way of thinking. If he comes home one night from work to find his kids crying in their pajamas and saying that their mother refused to feed, bathe, and take them to school, how ridiculous it would be for him to tell them, “Sorry but I can’t help. That’s not my job.” Yet that’s exactly the attitude we so often assume at work. Segregation of duties is such a deeply ingrained paradigm that we’re even unapologetic about it, like “how can they have ignorance/audacity to think I need to do that!?”

Paul drops a devastating line at around the 13 minute mark. He states that you can’t ask somebody to take total responsibly without granting them total freedom. I think this might as well be a mantra; the new “no taxation without representation.”

I have a close friend who works at a large and well known IT provider. One of the programming teams with which he works has faced dramatic slashes in headcount and budget while being pressured increase their output and follow all sorts of new, micromanaging rules. If they don’t, their bonuses and jobs are in jeopardy. As a result, the department has been further disrupted with higher than normal turnover, loss of the big picture, and internal squabbles and turf wars. We all know it, but we rarely have the energy to fight it: Bureaucracy Kills Productivity.

Paul’s ideas are all paradigms necessary for proprietism to work. Possibly the strongest takeaway is this: don’t chase numbers; just help each other and your organization will flourish.

Avenging Inequality

CEO Dan Price became a business superstar in 2015 when he announced the implementation of a minimum salary of $70,000 at his company Gravity Payments.
Since then, perhaps not surprisingly, he has met plenty of controversy surrounding what his true motives may have been.

Nevertheless, Price’s move was bold. The documentary Inequality for All with former Secretary of Labor Robert Reich demonstrates the vicious cycle brought about by income inequality. I recommend watching the whole film for a thorough understanding; one of the main main takeaways is that when wages and salaries stagnate, the middle and lower classes stop buying stuff, so businesses make less money and governments receives less income from tax. The truly elusive question is whether or not government redistribution of income or wealth is the right answer to the question of inequality.

There are two schools of thought from which arguments against the redistribution of income and wealth are based. The first is libertarian: taxes are in direct violation of the non-aggression principle, because a government does not have the right to seize justly earned income or property, for such an act is aggressive. The libertarian perspective is black and white: revoking the right to keep your entire income is as much an infringement of personal liberty as revoking your right to free speech.

The second school of thought that argues against redistribution is, when presented earnestly and free of doublespeak, social-Darwinist. The idea of survival of the fittest playing out on a social landscape goes back to very beginnings of Darwinism (and contrary to what Darwin apologists say, he was well aware of these social implications). One interpretation of “fit” in this discussion is wealth. This view justifies a capitalist system in which the strong survive and the weak are weeded out due to their diminished ability to afford safe and healthy lives. The other interpretation of the word “fit” is more biological: producing more offspring. In this view, poor people in modern society are technically more “fit,” as they tend to have higher numbers of children per household than the rest of society. No matter which definition is used, the same utilitarian logic applies: redistribution of income is counterproductive to social progress because it allows the weakest people in society to survive and reproduce at disproportionately high rates, and if we allow it to continue, it follows that the hilarious but slightly uncomfortable film Idiocracy is a prophetic vision America’s future.

The point is that it sucks, for lack of a better word, that inequality is such a problem, and we seem to think the only solution is government-mandated redistribution, which might forever be deeply unpalatable and controversial to most of us.

That’s why we need more Dan Prices and Blake Mycoskies. I’ve written before, specifically here and here, that we need a new “third way.” Businesses have the power to fight inequality by helping their employees. We need to let the product markets do their thing and at the same time compensate employees better or profit-share with them. Businesses also have the power to fight inequality (and protect the environment) with their products or charities. Consumers are changing, and they’re saying they want to buy products from socially responsible companies. Business leaders need to realize that the most competitive thing they can do right now in 2016 is knock their employees’ socks off with compensation, transform into a PBC, or at least declare some sort of improve-the-world vendetta.

Have the Social Sciences Degenerated to Pseudoscience?

In this 2014 Podcast with Social Science Bites, Roberto Mangabeira Unger makes a bold claim: the social sciences have degenerated into pseudoscience.

To summarize his views on economics as an example (perhaps to interpret them loosely as well), the discipline makes imperfect assumptions, primarily about human behavior, then builds theories of exchange on top of it, omits theories of production, and borrows the idea of competitive selection from Darwinism without offering an equivalent to Darwin’s idea of mutations as being the platform on which “survival of the fittest” plays out. At the risk of disrespecting the technical fortitude of Unger’s argument, I must say that I too have been struck at the obvious and largely ignored differences between the natural sciences and the social sciences, mostly because groups of humans are much more complex than particles and objects.

It’s almost as if classical economics was developed as a tribute to Newtonian physics. Economics defines the human as a self-interested, rational individual, and then develops the mathematically predictable behavior exhibited when these humans trade. Similarly, physics defines objects or particles and then develops the mathematically predictable behavior exhibited as those objects interact. The metaphor is elegant but impotent; the problem of course being the assumptions economics makes about the person. We know that humans make choices with imperfect information (yes, even in the Information Age) and are very much temperamental decision makers often motivated by insecurity, short-term pleasure-seeking, and fear of death.

So can we have a theory of economics as thorough as physics? In pondering that question, I was reminded of the wonderful book Thinking Fast and Slow by Daniel Kahneman. It explores a whole spectrum of experimentally documented behavioral biases that go directly against utility theory: the idea that people make decisions to maximize their utility. Maybe one day we could assimilate every documentable logical fallacy and construct a pure theory of economics.

But maybe not. Maybe it’s a mistake to assume that somewhere out there is a clean and perfect science that will precipitate a productive and growing economy forever, and all we need to do is create the right institutions to let that theory play out. Maybe we already know everything we need to know to make a perfect economy.

For example, we’ve learned much in the way of how people interact in closed and open systems. We know what it’s like when there aren’t enough rules, and we’re learning right now in the 21st century that too many rules can create an equally toxic environment. We know that humans need respect and work that feels personal and valuable. We know that happy employees are more productive. We know that the more hierarchical organizations get, the harder it is for them to adapt to change.

Maybe we don’t need all these organizations and institutions; they’re fictitious anyway. My sister’s art instructor Michael Rakowitz demonstrated this perfectly when he drew a square in the floor with tape and put up a sign declaring that anyone who stands within that square is sovereign of the U.S. Constitution. Anyone who considers this exercise may be forced to ask themselves some logical questions such as:

Can he do that?

What authority is required to relinquish oneself of the constitution?

What authority had those who declared the constitution in the first place?

It shouldn’t take long for the absurdity to set in. This thing, this very real document, these words that have built an empire, these ideas that men have died over… aren’t actually real. The question of how to achieve a more perfect society may therefore not be a question of what social fictions we need to invent, but an abolishment of structure altogether. This is the motif throughout my work on proprietism: let’s embrace a system that accepts civilization for the inconceivably complex network it is and try to make it work on its lowest levels rather than organize it better on its highest.

A social science free of social constructs and fictional institutions sounds impossible, right? I don’t think so. In Leaders Eat Last, author Simon Sinek almost does this. He discusses the brain chemicals that our forager ancestors evolved to help them hunt, gather, plan, and work together: endorphins, dopamine, oxytocin, serotonin, and cortisol. Sinek argues that our ancestors were able to get an even balance of these, but the modern working human only gets stressful cortisol shots when work gets tough and cheap, temporary dopamine rushes when work gets done. He tasks leaders everywhere to fix this by creating “circles of safety” in which teams foster trusting and cooperative relationships rather than cynicism and self-interest.

Not that I have the authority to declare this, but I find Sinek’s ideas to be a formidable response to Unger’s call for more scientific social sciences. But then again, authority is just a social construct anyway.