Are command economies the only way to achieve economic equity? This question was asked recently on Reddit. It illustrates a common misconception about market economies. Also, this blogger thinks a discussion on types of economy should include sharing as practiced by some smaller tribal societies.
I should start this discussion by saying I am highly prejudiced against command economies because I don’t like people telling me what to do or how to think. I would like the economy to be organized so that most of us can decide for ourselves what we are going to do with our energy and our time. So long as modern agriculture holds that should give most of us a lot of leeway.
The misconception about the market economy is that it is not compatible with equality. If we had a perfectly competitive market economy there would also be perfect equality because there would be no profits – only wages and a return on investment. What we call a market economy is one in which governments pass legislation which restricts competition so that some people can make profits. So if we want more equality in our economy then we should look for more competition by repealing the restrictive legislation.
From reading, from discussions with an anthropologist and from four years living in a coastal British Columbia Indian village (undergoing transition) this blogger suspects that the predominant exchange of goods and services in traditional small-scale tribal economies was based on sharing. When the fisherman came in with his catch he shared at least part of it with family or clan members and sometimes with a white couple living in the village. This sharing would have allowed traditional societies to exchange goods and services without money. For a relationship to be satisfactory there needs to be a more or less equal exchange. I doubt if there was any formal keeping track but probably most relationships were satisfactory.
This type of sharing is not practical in the large-scale economies with which we are familiar but it may give us guidance as we try to cope the current economic crisis. I have been thinking the type of economy proposed in the essay “LETS go to market: Dealing with the economic crisis” on this weblog might be a step in this direction. The exchange of goods and services would follow true market competition but the different way of creating money would lead to a major change in our way of economic thinking. As money would be a tool to facilitate exchange there would be less incentive to be motivated by profits and we could see ourselves as sharing. With the economy in decline, sharing would be a more humane way of exchanging goods and services.
This post started with a question which assumed a command economy would be a good way to achieve equality. My favorite example of a command economy is that of the ancient Egyptians who built the pyramids without money. I doubt if there was much equality in that society.
When this blogger was back in junior high school he learned that people had fought and died for the sake of equality. Sometimes it seems some people are trying to correct past inequalities by creating new ones. The most effective way to make our society more equal would be to increase economic competition so as to reduce profits.
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