Tuesday, April 01, 2008
Wealth and Democracy (1)
My dream is not to have to go to work everyday. I’d much prefer to stay home to farm and homeschool. Given that such things don’t happen overnight, unless one wins the lottery, my wife and I have tried several different business ventures on the side, in an attempt to build another income source that could be grown into something that could sustain us. In that process, I’ve learned a few things. Some of these things should have been obvious, but hey, experience is the best teacher. Right?
Lesson number one: It is virtually impossible to get rich farming. Traditional farming consists of long hours and backbreaking labor, with the result of having some surplus to sell in a good year and starving in a bad year. Until relatively recently, it was even more difficult, as a percentage of the harvest had to be given to the landlord. Today, mechanized farming has more in common with modern manufacturing than it does with traditional farming. Mechanized farming has completely changed the cost structure of the business, and consequently has changed the price expectations of the populace when it comes to the final product for sale. Unless one can compete on price, or find a niche market where a higher price is accepted, it is virtually impossible to sustain a family by farming, at any level. In fact, even many of the medium-sized mechanized farms have difficulty competing in the marketplace and only really make money on land speculation. Mega-farms are the new baseline, and they are here to stay.
Lesson number two: It is virtually impossible to get rich manufacturing. If you think you can build it, chances are very good that someone else can do it faster, better, cheaper, and sooner than you can. Unless one has the capital to compete on their level, the chances of success are somewhere between slim and none. Never forget that you are now competing with 5.7 billion other people, many of whom are willing to live in a cardboard box. There are niches to be found and exploited, just as there are in farming. However, they are rare, crowded, and short-lived.
Lesson number three: There is a reason the American economy has been moving toward service industries. With farming and manufacturing largely either outsourced or mechanized to extreme efficiency, there is both sufficient leisure time and sufficient wealth to make services a dominant part of the economy. Having a service economy is a result of all other basic necessities being satisfied by the labors of a fairly small portion of the populace.
It seems that economies evolve, from farming to manufacturing to services. Every economy in any era can be broken down to look at it as a division between these three categories, with the division largely being determined by the technological sophistication and governmental philosophy of the society.
Most ancient cultures were hopelessly mired in the first stage of the evolution - subsistence farming. Huge portions of the populace were involved in labor intensive farming, and there was not a whole lot of margin for error in times of famine. The middle class was either small or non-existent, and the wealthy class typically consisted of the land-owners that were able to exploit the labors of the underclass.
There are a few cultures that bucked this trend. Typically these were the trading cultures, the seafaring cultures that were able to take advantage of the fact that commodity X has different values at point A and at point B. By being able to move that commodity, usually by ship, the traders were able to pocket the difference between A and B, less expenses.
Trading was the first large-scale service industry. It had a bad reputation and was considered truly immoral by many, as it was considered to be making money by means other than honest labor. The great misunderstanding was that though there was no material wealth creation involved in moving a commodity from point A to point B, there was indeed a great and valuable service rendered. The people at point A had a surplus of something, grain after a bumper crop for example, and the people at point B had a deficit of something, grain shortages during a time of crop failure for example. Is it better for the grain to rot at point A while the people at point B starve, or is it better for someone to profit from the transfer of the grain from those who can’t use it to those who can?
The Phoenicians were one of the first true trading cultures. They were based in the eastern Mediterranean, in the area that is today Lebanon and Israel. They traveled around the Mediterranean, trading and planting colonies. Soon afterwards, the Athenians joined them on the world stage as a major trading culture.
The Athenians had two major advantages going for them - olive oil and wine. The climate around Athens is perfect for growing olives and grapes, both of which can be refined into a valuable product that can be easily transported in clay jars and that are largely shelf-stable even without refrigeration. With the combination of farming these crops, manufacturing them into valuable finished products, and then trading with the known world, Athenian society rapidly became quite wealthy.
One major difference between trading and subsistence farming is that traders are generally no longer under the thumbs of a ruling class. Given their mobility, traders have a large degree of independence, and the ability to accumulate a significant degree of personal wealth. Subsistence farmers usually were the equivalent of stereotypical medieval serfs, shackled to the land by tradition, law, and brute force. In short, a trading culture has the opportunity to develop a middle class, a subsistence farming culture can be stuck in serfdom for centuries.
As the Athenian middle class grew, men began to realize that there was more to power than brute force and the hereditary right to rule. If all you need to gain wealth is a ship and a will to roam the seas, the upper classes of society are no longer an exclusive right of hereditary aristocracy. Class mobility is greatly enhanced, compared to a subsistence farming culture.
Men began to get strange ideas. If anyone can become wealthy, maybe there isn’t really anything special about kings and the dynasties they form. The newly wealthy began to demand a say in how they were governed, and thus, the world’s first democracy was formed.
Along with democracy came thoughts about equality. Not real equality, as we’re still better than those barbarians over there, and definitely better than the filthy underclass, but no longer was the right to rule tied solely to blood. Men of the right class were considered fit to rule, and that class was not closed to newcomers, as it is in monarchical cultures.
Along with these thoughts of equality and leisure time resulting from accumulated wealth came the seeds of philosophy and Western Civilization. Our culture and our moral philosophy are intimately tied to our economic structure, in a very real way. A thriving trading culture like what was prominent in Athens, and the resulting class mobility, are absolutely vital to the functioning of what we consider a healthy Western culture. It is true that our modern society may no longer be confined to trading as a means of achieving this class mobility, but only because our economy started with traders and evolved from there. Without an economy that results in inherent class mobility, inequality is not just a de facto reality, it is a mindset inherent to the culture. Might makes right is the default state of the world, while equality is the abnormal state brought about by unique (in the ancient world) economic circumstances.
Note that equality here means fitness to rule, or fitness to participate in civilized society. It has absolutely nothing to do with equality of economic outcomes, or inherent equality of all mankind. Those are ideas that came later.
Continued in part 2.
