By J.D. Alt
In the simplest terms, at some level the efforts of human society are being directed by the interaction of two genetic predispositions. The first predisposition views society as a loose-knit group of individuals or family units who are competing with each other for scarce resources. The weave of the social agreements that knits these individuals together is for the purpose of establishing and protecting private property rights. Property (the scarce resources) is acquired through competition, and once acquired its ownership is recorded and protected by the judicial and police powers established by the social agreements (the “State”.) In essence, the State has no other purpose.
The second predisposition views society as a tight-knit group of individuals or family units who are cooperating to share scarce resources. From this perspective, the weave of the social agreements is for the purpose of coercing or rewarding individuals to act in the interests of the collective good—and to ensure that the scarce resources are fairly and equitably shared. In this case, the judicial and police powers of the State are directed toward protecting collective rights, with private property rights being just one instance of the collective rights being protected.
Since these two predispositions operate simultaneously within a given society (for example, the United States) it is interesting to consider how they view each other. From the perspective of the “cooperative gene”, the “competitors” are the very individuals who must be coerced or cajoled into acting for the collective good. To the extent that the “competitors” private property claims deny scarce resources to the majority—or deny “life-essential” resources to any individual—those private property claims must be “adjusted” by the State to correct the inequity or protect the collective good.
From the perspective of the “competitive gene”, the idea that the State has any power to coerce an individual to give up some portion or aspect of his private property in the interests of a collective good is, simply put, a horrific aberration of the natural laws of society. This aberration attributes to the State powers it was never intended to have—nor should ever be allowed to have.
It is easy to see these two genetic predispositions jockeying for power in today’s American political arena. The jockeying occurs across a broad range of issues—from gun control to food stamps to protecting the fragile soil of prairie lands to Obamacare. There are two aspects of this I find particularly fascinating. The first is the primary dynamic by which the competitive gene keeps the cooperative gene off balance and largely ineffective. The second is to consider what strategy the cooperative gene might employ to more effectively achieve its mission.
“Money” is a Scarce Commodity
The dominance of the competitive gene depends almost entirely upon its controlling the social-political narrative about “money”. From its perspective, of course, “money”—like everything else individuals compete for and take possession of—must be a scarce commodity. Only if this is true is the competitive gene able to maintain dominance by competing for that commodity and, by winning possession of it, prevent the cooperative gene from commanding resources for the collective good.
For the competitive gene, it is conceptually unacceptable—or, perhaps more accurately, inconceivable—that the State should have the power to create and issue “money” by fiat. If that were allowed, the entire structure of the competitive gene’s position of power would be undermined: The State, instead of being directed by the competitive gene to use its powers exclusively to protect private property rights, could—in the interest of the cooperative gene and the collective good—actively seek to redistribute resources by issuing currency to individuals who had not “earned” (i.e. properly competed for) it. In short, if the State were allowed to issue money by fiat, it would suddenly be able to command and control resources under sway of the cooperative gene—resources which the competitive gene considers (by virtue of the natural laws of competition) to be exclusively its own.
The possibility of the State issuing money by fiat is an existential dilemma for the competitive gene for the simple reason that, in fact, this is what the State actually does every minute of every hour of the week. What is remarkable is the extent to which the competitive gene has not only been able to keep this fact hidden from the cooperative gene—but has actually replaced its factuality with a substitute narrative that enriches and empowers the competitive gene at every turn. This has been accomplished, for the most part, by the deft manipulation of a cognitive dissonance from which the cooperative gene habitually suffers. To see this dissonance, let’s back up for a moment to our initial observations about the goals of the competitive and cooperative genes.
For the competitive gene, human society is bluntly straightforward and simple: people compete for scarce resources and the social agreements (the State) protect the winners from having their winnings raided by the losers. The ethics of this—the right and wrong in it—have simply to do with the fairness of the competition. As long as the competition is “fair”, the outcome is in accord with the basic rules of nature, and there should be no room for complaint.
In contrast, the conceptual formula which the cooperative gene must resolve is exponentially more complex and nuanced. What is the “collective good”, and by what process is it defined? What is an “equitable” distribution of resources—is it simply an equal distribution, or is it a distribution based on “need”, and if so, how is “need” to be measured? Is it not true that the collective good surely must include the idea that what belongs to one man cannot be taken by, or coercively given to, another? If an able-bodied person is not willing to contribute to the collective good, should he receive a distributed share of the resources? Or should he be to some degree excluded—and if so, to what degree and in what manner?
The complexity and ambiguity of these questions makes it difficult for the cooperative gene to act decisively. It is like a deer transfixed in the glaring headlights of the competitive gene’s single-minded aggressiveness. Nowhere is this cognitive dissonance more blinding or crippling to the cooperative gene than in its understanding of “money”. And it is precisely on this point the competitive gene so ruthlessly takes the advantage.
The cooperative gene’s “monetary dissonance” begins with its agreement that “money” is a scarce resource. The reason it accepts this premise, apparently, is the intuitive observation that everything in the world is a scarce resource, and therefore money must be as well. Every cooperative gene has to balance its own checkbook and pay its own debts. In doing these things on a personal level, it becomes observationally “true” that money is both finite and scarce. The competitive gene, in turn, does everything in its power to reinforce this seemingly intuitive logic: It makes certain that several times daily the following narrative is stated, preferably in as many different contexts as possible:
Since “money” is scarce and competed for by private individuals, the only way the State can acquire money (for the purposes of commanding resources for the collective good) is by collecting taxes or selling bonds to the private individuals who have competed successfully and amassed quantities of the scarce commodity. Sovereign spending for the collective good, therefore, can only proceed by spending “the taxpayer’s money”—and sovereign borrowing creates a debt burden which the “taxpayers” ultimately have to repay.
What the cooperative gene apparently doesn’t realize is that in buying into this narrative, its genetically predisposed mission becomes essentially impossible. It is impossible because the cooperative gene has agreed, in essence, that “money” cannot be created through cooperation, but only acquired through competition. It has set itself up in the position of having to compete (with an aggressively competitive gene) for a finite quantity of “money”. The impossibility is magnified by the fact that the competitive gene, through two ingenious tactical maneuvers, controls the “quantity” of money which the cooperative gene can compete for. The first maneuver is adding a clause to the social agreement requiring, by law, that the sovereign government sell bonds (borrow dollars) in an amount equal to any sovereign spending over and above what is collected in taxes. The second maneuver is adding an addendum which establishes a specific debt ceiling limiting what the sovereign government can ultimately borrow.
The competitive gene’s substitute narrative is now encoded in the social agreement, and the cooperative gene is forever burdened with the need to “spend taxpayers dollars” or “borrow dollars the taxpayers will have to repay” each time it wishes to more equitably distribute resources or create collective goods. Given this burden, not only is the competitive gene advantageously positioned to harshly ridicule any and all propositions to create collective goods (because they will cost the “taxpayers” more than they can “afford”) it is also positioned to impose an ultimate limit—through the debt “ceiling”—on the creation of public goods entirely. Finally, the competitive gene is (and it shouldn’t be a surprise) conveniently positioned to financially benefit from any sovereign spending that does occur over and above what is collected in taxes—for it is the competitive gene (with its amassed savings) that buys the bonds the sovereign government is now forced to sell.
What can the cooperative gene possibly do?
It’s easy to make long and detailed lists of collective goods the cooperative gene would like to create—or, with greater desperation, would argue must be created to ensure the long-term survival of the collective society itself. It’s also logical to assume that the competitive gene—as a participant in that society—would benefit from these collective goods in equal measure to everyone else and, for that reason, could be swayed with a properly framed argument into a more cooperative mode. This assumption, however, overlooks the fact that the competitive gene is genetically predisposed not to seek benefit through cooperation, but only to seek dominance through competition. A long-term view of collective success is not even on its radar screen; its sights are pointed only down the short-term paths of its own victory.
The first reality, then, which the cooperative gene must acknowledge is that it is never going to persuade the competitive gene to cooperate towards the equitable creation of collective goods. The only strategy available, it seems, is for the cooperative gene to persuade itself that money is neither a commodity, nor is it scarce—that the narrative hammered out by the competitive gene is, at its very roots, a false and self-serving belief system that puts collective society itself at risk.
Given the relationship between “money” and real resources, it is impossible to equitably “share” real resources, and effectively create collective goods, when money is a scarce commodity controlled by competition. The mission of the cooperative gene can only be accomplished when “money” is understood and managed as a sovereign fiat currency. The U.S. mobilization to fight the axis powers in World War II proved this, beyond a doubt, to be true. The question is, will the cooperative gene ever be able to mobilize in America again?
The competitive gene may not be the most accurate way to describe that type. There seems to be an aversion to the risk of direct competition there, unless of course a clear weakness is observed. It seems to gain advantage more by exploitation of the good will of the cooperative genes, and less by true competition for the most part (the cuckoo bird springs to mind as a rough analogy). More opportunistic than competitive, with a good helping of stealth by nature.
It’s remarkable how quickly the competitive type works to recruit the aid of more cooperative types when an external threat to their interests is detected. As if suddenly there was no difference. Equally remarkable has been the history proven ease with which the cooperative (co opted?) gene may be recruited in these situations.
Whatever the case, the competitive/opportunistic type certainly does maintain mastery of the clever illusions, and focus on money, best suited to perpetuating a cross generational hegemony.
I like your analysis and comments, John C., and I believe you sum the reality of nicely.
I am wary of terms such as “competition” and “competitiveness” — all our lives we have been propagandized that America is a meritrocratic society, or a semblance thereof.
Yet, with the isolated experience of the US military during the draft (a most limited form of meritocracy), I’ve never observed nor experienced this mythological meritocracy I was taught exists here?
A perfect case in point would be my experience as a contractor for Microsoft’s retail tech support when they rolled out Win95 back in the 1990s. The group I was in was given a test in order to qualify (general and specific IT knowledge) and I later found out that only myself and one other passed this test.
Later, we were told again and again during training, that we would only be permitted to man the tech support racks after we passed both our Operating Systems test and Network test — yet only myself and one other fellow (the same fellow who passed the qualifying test with me) passed both tests, and then everyone was dispatched to man their retail tech support?
But, it didn’t stop there, given the absolutely simpleton questions posed to us by engineers, sysadmins and network admins at major facilities and companies (e.g., Compaq engineers calling to question us as to why their new state-of-the-art, one-of-a-kind drive they just developed, didn’t work with Win95 — and we patiently explained to them they had to code the drivers for it, as such a peripheral device didn’t exist at the development stage of this operating system — yet another typical question from the network administrator at Los Alamos Nuke Facility: during a network install of the operating system, it suddenly stopped at midpoint — upon tactful and patient questioning, we learned that they experienced a full-scale power outage at the OS install midpoint, and we most diplomatically suggested to them that once the power came back on, they could continue with their network install of the OS).
Who hired these people? Other simpletons? This may sound slight off-tangent, but such a myth of meritcracy hasn’t really ever existed in a nation with a capitalistic education system, and growing far more elitist over my lifetime.
Privilege is too often mistaken for merit in this world.
We sorely need a thorough examination of
(1) the mechanism of financing WW II, especially the role of the Fed under Marriner Eccles,
(2) the beneficial effect of WW II deficit spending upon the US economy in the succeeding years, and
(3) the economic impact of deficit spending from 1933 to 1939 upon the German economy and its role in boosting Hitler’s popularity.
There are serious lessons to be learned.
Try Keep from All Thoughtful Men: How U.S. Economists Won World War II By military historian Jim Lacey (2011)
And, “A Call To Arms” – Maury Klein.
Along the lines of RMM, you assume that that competitive gene places no value on the collective well-being, when in fact it is their stated goal. They believe that larger government has harmed, not helped, the collective well-being. They can point to statistics to back up their claims, such as the increase in poverty and inequality that started with the “war on poverty” and the Great Society programs, when poverty and inequality had previously been declining. The history of the US over the longer term is an ever-increasing role of government, which would seem to indicate that the cooperative gene has been dominant, at least most of the time.
Competitive genes will accept and embrace MMT, if they can be made to understand it. Mosler’s first proposal is to cut taxes, and that would accrue immediately to the competitives, enhancing their own position while simultaneously enhancing the common good. Indeed, cutting taxes is what the competitives have done when they get the chance, which is evidence of their good intentions, however faulty their understanding of the nature of money may be.
It is not a war between competitives and cooperatives, it is a war against ignorance and misconception on both sides.
A few competitive/opportunist types I know have had to pick their jaws off the ground once MMT has been explained to them. Of course what they may see in it is a potentially easier way to getting their “needs” met.
Absolutely. It is a better way for everyone to get their needs met.
Rodger Malcolm Mitchell.
Only when the economy is ice cold. He advocates using taxes when the economy is hot, there is no unemployment, and we’re staring at a level of inflation we don’t want. That’s what happened after WWII: 70-90% tax on the rich to allow the middle class to spend the dollars in their bank accounts that they couldn’t spend during the war because all resources were going to it.
“Only when the economy is ice cold”
Well, sort of. Also when it is hot, but starting to cool off, so as to prevent a recession. AFAIK, Warren has not opined on the type of tax to impose or increase, should it become necessary. ISTM it should be a tax that reduces consumption, which would be most effective on those most inclined to consume their marginal income. Raising the top income tax bracket would not have the desired effect, as the income taxed that way would more likely have been saved than spent. (Conversely, if the desired effect is redistribution, raising the top rate would do it with a less than proportional negative impact on the economy.)
I would replace the corporate income tax with a business gross receipts tax: no exemptions or deductions. The rate would need to be only low single digits, and an increase of a fraction of a % would be enough to control inflation, since it is so broad-based.
Why bother talking about genetic predispositions to co-operate or compete at all? Unless you have some groundbreaking insight into genetics wouldn’t it be better to discuss these themes under social psychology, sociology/anthropology or political economy?
This article breathes an alarming amount of life into the intentional fallacy. Ask a geneticist what a gene does and they’ll normally say it codes for a protein and that’s it!
I think he’s using the scientific terms metaphorically.
I was also curious if he was speaking metaphorically. Either way it is not correct. It is especially misleading when you paste an image of a karyotyope by the header. I have no problems with metaphors, but they must align with the thesis and they should not lead to more misunderstanding. A lot of comments are mentioning a competitive or cooperative “gene”, which does not exist; and to Phil’s point, genes do code for protein or RNA, but he is referring to genetic predispositions, which it has not been proven that altruism, competition and cooperation have genetic predispositions.
I work in biological sciences and without going into a lot more explanation as to why, I will just say this analogy does not work on any level, especially metaphorically.
Well, it sort of works if you consider the Progressive viewpoint, that great wealth – membership in the “1%” – is gained only by exploiting others, and not by skill or effort. Progressives often attribute malicious and anti-social motives to those who achieve great wealth. Even more so to those who inherit it. This is a try at a kinder and gentler approach: they can’t help it, it’s just the way they are.
Don’t take the metaphor too seriously. Non-scientists have recently acquired “a little knowledge” of your work. You know what that can lead to.
I believe Thorstein Veblen did the best job of summing things up …..
From Robert L Owen in his paper for Congress explaining National Economy and the Banking System of the United States — An Exposition of the Principles of Modern Monetary Science… (long title). He was Former Chairman, Committee on Banking and Currency, United States Senate.
http://archive.org/details/NationalEconomyAndTheBankingSystemOfTheUnitedStates, page 22
Excellent comment to which I would add:-
Much ignorance and confusion appears to reign in the minds of the public about modern money. This can be broken down as consisting of several key observations.
They don’t understand that money is created in two forms debt-free and debt-burdened and the inter-play between the two drives economic growth.
They don’t fully understand that each of these two forms of money creation needs a throttle and these two throttles have to be carefully operated in tandem with each other.
They don’t fully understand the various means by which the throttles are operated.
They don’t fully understand that the throttles can be operated for both the benefit and disbenefit of an economy’s citizens as a whole.
They don’t really understand that the determination of value measured in money by the operation of the market discovery process is also determined by the use of the money creation throttles.
Finally they don’t understand that the use of the throttles needs to be and can only be regulated by carefully constructed checks and balances and these can only be effectively created by collective governance itself also carefully regulated by checks and balances.
Two illustrations of these key observations are Bill Clinton failing to understand why running a government money surplus will induce a recession and the Great Financial Crisis being finally triggered by margin calls:-
Oxford American English Dictionary definition of “throttle”:-
“a device controlling the flow of fuel or power to an engine”.
“People have a general illusion that money is stable and that property is unstable … They do not realize that when all commodities and all forms of property fall in value, it is not because the intrinsic value of these properties and commodities change, but because the money, with which they are all measured, changes”
When did he write this? Clearly it’s not true any more. Everyone, since the 1970’s, is familiar with inflation. It is more common today for people to incorrectly attribute relative price changes to inflation.
1939. It was a presentation to Congress to explain the difference between what preceded the change to fiat money domestically versus what it would do for them now (1934 on). Doubt anyone read it; it didn’t get printe for two to three months, and by that time, WWII was looming. BTW, did you listen to Kelton’s interview with Wray? They both say that when the money supply falls, so do corporate profits.
Owen has a chapter called The Inflation Bogey, which is interesting to read in light of your comment. Search the PDF. The text version is full of OCR mistakes.
Haven’t heard it yet. I think I know what they will say, and I will listen to it. It’s not surprising that profits would fall during deflation. Everything falls: prices, employment, production.
Which sort of relates to the “gap” issue. It would seem that if employment were to increase, for whatever reason, then the owners of the non-labor factors of production – the “1%” – would see their sales and profits rise dramatically, would even be able to raise prices with impunity because of the strong demand for their products. Why would one believe that the “gap” should shrink as a result of MMT-inspired fiscal policies?
Not sure which gap you refer to. But the JG is by design the least government spending that will attain full employment at or above a set minimum wage and therefore should be the least inflationary policy for a given amount of spending. How employment is increased matters. As Wray likes to say, it would take an enormous amount of missile building, enough to create a lot of inflation, to eliminate unemployment in Harlem. And until the point of full capacity, the owners’ desire to maintain market share can restrain raising prices with impunity. If they are certain enough of full employment and low inflation they might even try to make money the old-fashioned, unfashionable way, by rational investment in new production facilities, instead of ripping people off. (I know, a crazy dream. But somebody built all the factories and facilities in the USA before everybody realized Wall Street will make everyone rich by financial engineering.)
The gap between the rich and the poor. GINI index, if you will.
I agree about the JG. It is the only rational way I know off to achieve truly “full” employment. The Phillips Curve lives.
But most businesses are retail, and individual retail outlets can’t easily expand, but they can easily raise prices when the goods are disappearing from the shelves. That enriches the owners, not the workers. With a wage anchor like JG, every worker hired by a producer adds to profits for the owners. Wall Street notwithstanding, I think a strong economy could very well lead to more, not less, inequality.
Even only relying on old-“Keynesian” inflation-prone agg demand management top down policies in the USA, strong economies historically lead to more equality, not less. And not even more inflation overall than the neoliberal quackery of the “Great Moderation”. So it is vanishingly unlikely that bottom-up policies like those of the First New Deal, MMT policies would do worse – on either the equality or inflation front.
but they can easily raise prices when the goods are disappearing from the shelves. And they can just as easily stock and order more, from wholesalers who can easily expand. There are a lot of very major retailers like WalMart, Aldi, Dollar Stores that compete on low prices. Confronted by a public newly thrifty from the Great Recession, I think they would be happy with robust demand and profits for a long time.
“As long as the competition is “fair”, the outcome is in accord with the basic rules of nature, and there should be no room for complaint. In contrast, the conceptual formula which the cooperative gene must resolve is exponentially more complex and nuanced.”
Only because ‘fairness’ is defined so very unfairly!
The general rule seems to be that if there is no specific, arbitrary impediment prohibiting you from competing – Jim Crow laws, say – then all is well. But this is hardly fair. What about children born into poor ex-mining areas who get lead poisoning from the compromised water supply? As well as having far fewer opportunities than those born elsewhere their poisoning will also leave them cognitively impaired and behaviourally predisposed towards more violent behaviour for the rest of their lives.
The ‘level playing field’ of the market can’t ever be really level if some people have had their kneecaps shot out from the start of play.
Were the enormous complexity of ‘fairness’ itself acknowledged the ‘competitors’ would be as confused and indecisive as the ‘cooperators.’
The fact is that the competitors only care about what fairness means *to people like themselves*. They’ve got the most bleeding of bleeding hearts for someone who fails to get a business off the ground because of government regulation but they’ve got little more than a black lump of ice behind their ribs for someone whose employer forces them to work long hours of unpaid overtime in poor conditions because they’re afraid of not being able to find another job, etc.
Fairness is only a simple concept because competitors fundamentally don’t care very much about the suffering of people unlike themselves – either that or they are simply blind to the suffering of others, which amounts to the same thing.
You have hit upon a salient point here Philip. The competitive aspect of capitalism should be of the type that benefits all of us, by moving us in the direction of having more of our needs and wants met with less overall time and energy expenditure.
The forms of competition in practice today no longer meet this requirement.
Clearly, some mechanism is required to limit the “competition” to that between ideas about how to move us all forward in this sense and should not be a struggle by a few to gain privileged access to resources made available only through the efforts of the many.
The fundamental basis of this article is set up on two false premises. Firstly, we must choose between either/or, competition or cooperation, when in reality we choose both. Secondly, that the quantity of resources available to human beings is inelastic. So in the first case, for example, we may compete for advancement in the organization we work for but cooperate with our colleagues in order to compete in the outside world against other organizations. In the second case, because we are able to cooperate (and the development of human language suggests a strong instinct for cooperation) we are able to engage in a Division of Labor which better facilitates increased harvesting (which includes genetic manipulation of plants and animals through selective breeding processes) of natural resources and increased production of manufactured goods and deployment of services.
The missing understanding in consideration of the evolutionary process is as the sociobiologist Martin Nowak argues “natural cooperation” which acts as “a third fundamental principle of evolution beside mutation and natural selection”. It is this recent insight which allows us as a species to escape inaccurate narrow Malthusian profiling and move to the more fortuitous and accurate eusocial profiling of Nowak and his Harvard colleague E. O. Wilson. Indeed as you will read in Nowak’s article “Five Rules for the Evolution of Cooperation” below “a population of only cooperators has the highest average fitness, whereas a population of only defectors has the lowest”. The reasons for this are fairly self-explanatory on an overtly pessimistic Hobbesian view that “the condition of man… is a condition of war of everyone against everyone” because war destroys resources not builds them.
Apologies. The first line of my last comment should read:-
“The fundamental basis of this excellent article is set up on two false premises.”
The article may be completely logical and the best way to sell the idea, but I am coming to think that for the sake of reducing fragility, the problem is really that the government has given to much of the fiat currency to the wealthy who are squirreling it away rather than putting it to work in the economy. It might be easier to kiss this money good-bye and just create more money to be put to better use. However, the idle money cannot be ignored. As long as it exists, there is the chance that it will be taken out from under the mattress and put to use just at the most inopportune time in the economic cycle. This will cause inflation.
Better to cut the downside risk of inflation, something the Republicans claim to be worried about, by taxing back the idle “money” and putting it to the use it should have been put to in the first place.
That risk has always been present. The deficit is endogenous, mostly. Still, massive changes in savings rates (in either direction) can overwhelm the automatic stabilizers, never mind the ability of Congress to respond. JG would improve the automatic stabilizers, and awareness of MMT might even make it easier to make small legislative changes (although I would prefer a smaller group with limited ability to make small changes in tax rates).