Friday, October 1, 2010

Who gets the surplus?

A question that all societies face is: who gets the output of our production?

In ancient times, societies started out as small communal hunter-gatherer tribes that were mainly only able to produce their subsistence. They could only kill enough and gather enough to maintain their existence and keep the human race from going extinct. They most likely distributed their product to everyone evenly, maybe giving extra to those who needed more food such as growing children or the men who hunted. Advances in technology helped hunter-gatherer tribes to settle down into agricultural-nomadic pastoral civilizations. These societies were in most cases able to produce a surplus or some amount of output above their basic subsistence.

Here I must define subsistence. There is material subsistence which would most closely be defined as bodily nourishment, shelter, and clothing; and there is also social subsistence, which has a rather large range of possibilities. (In the United States today, this might mean owning a car, computer, cell phone, etc. Note: material subsistence is necessary to all societies; social subsistence is arbitrary and differs across societies)

These civilizations faced a perplexing problem of how to divide the surplus. By definition, this is the job of the economic system, allocating the limited output of the labor to the members of society.

The surplus could be distributed evenly with no private property--communism, mostly evenly with maybe some or no private property--socialism, to one or a small group of individuals--feudalism or monarchism, or roughly to the contribution of the individual with private property capitalism. (These options are not the only possibilities).

Those in power, get to decide. Early on, this power may have simply been by brute force or coercion, but later history gives control to those with political power or those who already have the surplus--the wealthy. In democratic societies, power is distributed more evenly across the population, but the coercive power of the wealthy remains a significant factor. This decision isn't always a conscious decision; it may develop out of specific circumstances.

The decision is completely arbitrary, but may have very adverse consequences. No controlling elite can suppress the poor for very long without attempts at a revolution. The elite also face the decision of serving self or serving the community. Most likely the decision will fall somewhere in between, but history has shown that there is a tendency toward serving self (which the Church recognizes as the doctrine of original sin). The elite, in most cases, attempts to extract as much surplus from the output of the society as they can without disrupting the societal balance or their control over society.

Those with little surplus act in much the same way often battling the elite for a larger piece of the surplus pie.

So the question is: In an ideal world, who gets the surplus? Justice would say that it goes to those who produce it. Unfortunately, this is hard to determine with certainty in more advanced civilizations because of the division of labor. The Catholic Social Teaching principle "universal destination of goods" says that God gave "the earth and its resources to the common stewardship of mankind to take care of them, master them by labor, and enjoy their fruits."

However, the Church also says the ownership of private property is "legitimate for guaranteeing the freedom and dignity of persons and for helping each of them to meet his basic needs and the needs of those in his charge."

So should everyone enjoy the fruits of everyone's labor? or should they enjoy only the fruit that they produce? This question is far less difficult or troubling when everyone is able to meet their material subsistence or perhaps even their social subsistence (which is often or always above the material subsistence). But in a world where some are enjoying much fruit, while there are others who aren't meeting their material subsistence, how can we say that our economic system is working?

If we choose capitalism, which, from experience, best allocates the value of the product to those who produce it, then we have to address why there are people in the world without food, clothing, and shelter who want to work and produce enough to share in those fruits but are unable to because the system is broken or incomplete.

Capitalism doesn't allocate surplus according to who works the hardest, or the longest, or who wants it the most, but allocates to those who produce the most value as the society defines (or demands in an economic sense) it. This is helped by many deep rooted circumstances that are inherent in any society, not just capitalism. Those who start poor are very unlikely to leave that situation, while those who start wealthy are very likely to stay in that position. Is that just? Is that fair? Is it okay to enjoy surplus beyond surplus while there are others dying from lack of material subsistence?

"In his use of things man should regard the external goods he legitimately owns not merely as exclusive to himself but common to others also, in the sense that they can benefit others as well as himself."

"Goods of production - material or immaterial - such as land, factories, practical or artistic skills, oblige their possessors to employ them in ways that will benefit the greatest number. Those who hold goods for use and consumption should use them with moderation, reserving the better part for guests, for the sick and the poor."

Ideally, everyone would be able to work and would work for the common good, sharing the output of his labor for the good of first, his family and those nearest him, and ending with those furthest away with the preferential option always going to those in greatest need. The surplus would go to the person who earned it, and that person would share it willingly. The receiver would humbly accept, and do what he could to produce so as not to be a burden on his fellow men.

Capitalism doesn't do this. It falls short. It fails. This is what many economists and politicians are trying to fix and there is much disagreement over what the solution is, but the solution seems simple to me: charity, justice, temperance, and a commitment to the common good. The hard part is carrying it out.

Quotes taken from the Catechism of the Catholic Church found here.

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