By analogy, it is hard to see how it is possible, in the nature of things, for any revival of true socialism to continue long. For such revival must necessarily depend upon both industry and frugality, and these cannot thrive in the face of ubiquitous temptations to squander capital. But as capital dwindles, so will industry. Accordingly, any social arrangement that undermines returns on capital, would undermine the basis of its industry.
I do not see how it is possible, in the nature of things, for any revival of true religion to continue long. For religion must necessarily produce both industry and frugality, and these cannot but produce riches. But as riches increase, so will pride, anger, and love of the world in all its branches.
A total ban on profits is the extreme case of such social arrangements. Arguably, its maintenance would depend on authoritarian rule and homicidal enforcement. This dependence follows directly from the nature of legal prohibition. To the extent that it exemplifies a sanction of the state, it must rely upon das Gewaltmonopol des Staates, the monopoly on the legitimate use of violence that Weber singled out as the defining characteristic of the state. Generally speaking, all interdiction chartered and enforced by the state ultimately rests on the legitimate counterparts of enslavement and murder that are constituted by imprisonment and execution under the color of law. The stronger the forces subjected to interdiction, the greater its reliance on violence. Justice becomes all the more violent in the face of a powerful incentive not merely to break the law, but to break it in a fashion that rests on consent by all participants. Economic exploitation is all the more competitive to the extent that it remains consensual. Making it illegal might make it less competitive. But at the point where deterrence begins to make a real dent in its competitiveness, the society would suffer pressures to escalate deterrence in response to its evasion. This escalation will apply to all forms of punishment short of exile favored by Saint-Just in his utopian state.
More specifically, we may proceed by cases. In formulating an ideal theory of justice, John Rawls stipulated a strict compliance with its principles in order to describe an ideal well-ordered society. Under his assumption, strict compliance is ensured by the sense of justice that disposes all citizens to adhere to the principles of justice, and common knowledge among them that all of them share such a sense of justice. Under less than ideal conditions, the outcome of partial compliance will require a social institution of enforcement. Such enforcement will be perfect or imperfect. Let us consider the prospect of perfect enforcement. Either it succeeds or it fails. In order for the prohibition of profiteering to succeed completely, it must be imposed on every instance of exchange. A perfect imposition would vitiate every vestige of privacy. An adequate social pressure would be required to control all natural inclinations toward private dealings. Looking at the disinterested society from below, it would have to create sufficient incentives for each citizen to inform the organs of criminal justice of all consensual exploitative dealings. In other words, it would instigate intrusion by third parties into every instance of private interactions. This scenario embodies an authoritarian rule. It makes sense so to designate every form of governance that permeates the social fabric with a moral code congruent with a criminal sanction.
Alternatively, if enforcement is imperfect, there will arise a black market in exploitative trades. Because exploitation is contagious, global integrity of the requisite social arrangements would depend on isolating and suppressing each instance of profitable exchange. And because the profit motive has proven itself capable of inspiring no end of violence, adequate isolation and suppression of profiteering would perforce depend on violent means of law enforcement.
There remains the case of imperfect enforcement realized in a metastable separation of a fair and disinterested, officially sanctioned market, from an inofficially tolerated exploitative black market bringing together exploiters and their consensual exploitees. Then either the boundary between these markets is strictly enforced to the point of perfect compartmentalization, or it remains amorphous and permeable. In the former case, compartmentalization would depend on violent means of law enforcement for reasons previously outlined. And in the latter case, the ensuing society would become practically indistinguishable from our own, where chartered non-profits come up short in competition against exploitative business enterprises.
To be sure, enforcing the sanction against economic exploitation may proceed along the lines of restorative justice. But to the extent that we discount the possibility of perfect enforcement, the imperfections that arise in enforcing the policy of restoration between the exploiter and the exploited will reduce it to an economic equivalent of taxation, as already imposed on profits by our capitalist society. In other words, at the point where a non-violent scheme of deterrence begings to make a real dent in the competitiveness of exploitation, it would have to deal with systematic evasion of deterrence. And the current social arrangements enable and encourage exploitative industries to use their profits to buy out their non-exploitative competitors. So purely restorative measures cannot suffice to ensure the survival of economic institutions purged of the profit motive, in their competition with a profit-driven black market.
Economic exploitation is supported and reinforced by the entire private structure of our economy. It answers a vast popular demand to make a profit. It enjoys a competitive advantage over non-exploitative forms of commerce. And owing to its competitive nature, exploitation also offers a better return on the investment of their labor to those willing to be exploited. Ronald Coase accounted for the nature of the firm by its creation of an enduring economic incentive over free agency and extension of this incentive to its employees. The existence of the corporation, as an instance of Coase’s firm, depends in the long term on furnishing and maintaining this incentive. A properly managed corporation will deliver better returns to its participants through bargaining on their behalves, than they would realize through bargaining as free agents. And in so far as modern corporations complement these savings on the transaction costs of doing business with a host of barely legal anti-competitive practices, the rush to be employed by them needs no fancy explanations.
Among his principles of justice, Rawls included the difference principle. It demands that in order for any social change must help the least advantaged members of the society in order to be accepted as an improvement. If the ban on profits is to be distinguishable from Rawls’ liberal constraints on capitalism captured in his difference principle, it must forbid exploitation even to the point where it improves the lot of the worst off. In other words, it would add up to coercing the worst off to abstain from material betterment and enslaving the workforce in fealty to substandard employment presently rejected by its majority. In view of this requirement it takes no trouble to anticipate the social pressures that would lead the citizens of the post-capitalist society to debase themselves by submitting to exploitation. They are akin to the social pressures that lead our fellow citizens to undermine the productive potential of American economy by spending their wages on cheaper Chinese goods purveyed by Wal-Mart.
Thus, regardless of draconian severity exercised in its interdiction, a black market for exploited labor will see no shortage of people going out of their way to allow others to steal from them, given that in doing so, they would earn much more than their counterparts employed by state-sanctioned, fair and balanced cooperative enterprises. Consider the failure of interdiction of illicit trade in drugs that create a mere semblance of temporary well-being in their users. How much harder would it be to forbid engagement in economic arrangements known to lead to actual long-term improvement of material well-being of all their participants? The economic effect of banning profits would deny the workers the opportunity of earning more in the employ of profiteers than they would in the employ of cooperatives.
This appeal to authorities has been extracted from an interminable debate on real_philosophy, with snide asides.
Posted to larvatus; banned from real_philosophy.