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Social Structure, Government, and the Economy

people or blind adherence to philosophy

Social Structure, Government, and the Economy

Economics as a field of study is generally taught as stemming from questions of resource allocation: the what, how, and who questions of production and distribution. What they do not generally teach is the process by which this relates to the very basics of social structure and the formation of government. This short list provides some of the important points in the process.

Follow along with these points in order, as if this were a step by step process, in order to grasp the logic.

1. Human greed cannot be eliminated. It cannot be wished away and it cannot be legislated away.

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2. As long as greed exists, people will exist who will never be satisfied with what they have. Somebody will always want more possessions and more power, no matter how much they already have.

3. Without social control, the incentive for the greedy to acquire power will be strong enough for the greedy to become the powerful.

4. In the natural state, without social control, wealth always goes to the already-powerful.

5. The most powerful individuals, motivated by greed, will control everything unless social controls are created.

6. The more that powerful individuals control, the less there is for everybody else.

7. Desperation becomes a motive for theft. Theft and greed become motivations for many types of crimes, including violent crimes. Indeed, most crimes result from greed, desperation, or both. Between greed and desperation, all social structures break down.

8. This situation means that the only connection to wealth is power. Power creates wealth relative to the powerless and this wealth can be used to create more power. Power and wealth feed on each other, creating a small wealthy class. Wisdom, generosity, a sense of humanity, safety, freedom, and the like play no role in determining who is powerful and rich.

9. With wealth and power increasingly going to whoever already has both, the incentive for the powerless to contribute to the economy by creating something that will increase the standard of living is nonexistent.

10. The end result is massive poverty, hunger, and an inevitable higher death rate.

11. Social unrest and revolution are also inevitable results. This can eliminate the powerful in the short run, but it cannot eliminate greed. A new cycle of power and greed feeding off of each other will begin.

12. Social control is the only way to prevent this outcome. Laws are established. This is called government.

13. This kind of government is not the same thing as the rich and powerful passing laws to control everybody else and to protect what they already have taken. “Government” by the rich and powerful is not really government at all. Instead, it is only a step in the power-and-wealth-feeding-off-of-each-other cycle. The kind of government that results in social control is government “for the people”.

14. Since a lack of government means that all of the wealth and power go to those who already have wealth and power, and since government is formed for the people in order to prevent the inevitable undesirable outcomes that this cycle of wealth and power creates, then what kind of outcome in terms of the distribution of wealth and power should the government for the people aim for? What methods should the government use to bring about a more desired outcome? What methods and outcomes would create a more desirable society? If wealth naturally moves upward towards the rich and powerful, eventually resulting in a breakdown in society and massive poverty, how much of this natural upward redistribution can be said to create a desirable outcome, or should this redistribution not occur at all? How much should contributions of wealth be rewarded, and how much should contributions of labor be rewarded? If equal outcome is the only goal, regardless of contribution, does this create a low level of living standard, due to a decrease in incentives? If contributions of wealth are rewarded more than contributions of labor, how much poverty, sickness, and death associated with poverty is acceptable to society as an outcome of rewarding wealth with more wealth? If neither the extreme of all wealth being centralized in few hands nor the extreme of equal outcome regardless of contribution are desirable, what kind of balance between the two extremes would be desirable? What method of reaching such a balance is acceptable? If fairness is a major concern, then whose idea of fairness should prevail?

15. Mankind has created different points of view in terms of answers to these questions. These viewpoints, the answers to these questions, go directly to the heart of all political and economic systems.


A version of this essay is included as a chapter in the book Common Misconceptions of Economic Policy by Jerry Wyant. You can purchase this book in paperback form from Amazon and other online book distributors. The list price is $12.99 (only $9.99 using discount code TA9GTK7E when ordering, depending on the distribution channel). Or if you prefer, you can download a digital version on your device (Kindle, Nook, etc.) for $4.99.

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Author: 
Jerry Wyant
Date: 
2014-08-04
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