Energy and Society: Chapter 12: The Distribution of Consumer Goods
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Attention must now shift from production as a socially defined and socially sanctioned act bringing its own rewards to production which is justified primarily by consumption. This poses a new set of considerations. In the low-energy society, as we have pointed out, the relation between producer and consumer was spatially close and likely also to be functionally intimate. But this situation is less and less characteristic of high-energy societies because of the necessity to accumulate converters and the roundabout methods of production required for the wide use of high-energy converters. Claims on the goods produced in the hands of many, and they react to one another only derivatively and unpredictably. This makes the old concepts of “fair exchange,” “just price,” and “a fair day’s work for a fair day’s pay,” which were meaningful in more stable societies, decreasingly serviceable as actual guides to conduct. In fact, conflict arises primarily because there is no agreement as to the “justice” of claims made, particularly on products of newly formed surpluses.
Two antagonistic points of view emerge in most societies confronted with the opportunity to shift from low-energy converters and their fuels to a high-energy system. One would preserve the values and stability of the old system, with its ethical justification for production, even at the sacrifice of the gains from high-energy technology. The other is willing to see most social relations disrupted if necessary in order to gain the fruits of the new energy. If the first of these positions is triumphant, there is no further “advance” in the use of high-energy converters and the old ethical standards remain in force. But even where the second position prevails, there is still a drive toward keeping some kind of ethical control over production and consumption.
The slogan “production for use” was adopted in the effort to maintain the “moral” relation. Obviously, by definition, all production is for somebody’s use. To have any meaning, then, the slogan must point to enhanced values or lowered costs for the consumer. Thus basically it is reiteration of the moral claim that all have against each in society. The slogan implies that the purpose of increased production is moral only when its gains are distributed among all consumers (as opposed to being shared only by those who have actually had a part in increasing production). This, as has been emphasized elsewhere, is the very base on which rest the demands for unfettered application of the law of supply and demand. It supplies the premises from which spring strictures against that “conspiracy in restraint of trade” which presumably permits producers to hold their prices above what competition would make them. Claims made in the name of the general welfare as opposed to that of specific producers are exerted most effectively among people holding common values. They are thus most apt to be respected in the small, self-contained village community of low-energy society. In more widespread economic systems the producer is unlikely to accept passively the burdens which the exercise of this “right” imposes upon him. He tends to be more responsive to claims to his goods which are based on the offer of the exchange of something substantial for them. Thus if production for use is to come about it will result either from the universal acceptance of a single set of supreme values or from the exertion of claims by the consumer in some other fashion than the expression of a pious wish.
“Production for use” does, of course, characterize production by a single person for his own use. In this case, it is precisely the ends which he has in mind as consumer that direct his activities as producer. Relations of this kind are coextensive and reciprocal: coextensive because production and consumption are centered in the same person, extend through the same time, and involve common use of space, and reciprocal because the ends achieved justify the sacrifices required. Such a system is a social equilibrium. No other factors need to be introduced to get those acts performed which must be performed. However, it is rare, if ever, that a single person constitutes a complete production-and-consumption unit. Robinson Crusoe, the perennial example of an earlier day, consumed much that he had not himself produced, both directly in the form of goods taken from the ship and indirectly in the form of ideas, techniques, skills, and knowledge learned from English society. Moreover, as a single person he could leave no progeny and thus could not replace either the consumer or the converters on which his system depended. Obviously, and lasting system depends on the reproduction of both.
Contents
- 1 Inadequacy of the kinship group
- 2 The high-energy consumption unit
- 3 “To each according to his need”
- 4 The family commune
- 5 The communal state
- 6 The market place
- 7 Price
- 8 Market maldistribution
- 9 Instability of the free market
- 10 Some consequences of market operations
- 11 The businessman versus the politician
Inadequacy of the kinship group
There can, then, exist no social system of pure individualism. The smallest lasting coextensive and reciprocal social system must include at least the family. Such a kinship group can teach its members as children to assume the roles which they must play as adults to secure the goods and services necessary to perpetuate the group. The goods produced, in turn, provide through their consumption, part of the incentive necessary to stimulate further production. Reproduction of the converter is assured by the same process that recreates the consumer. Kinship groups can be set up in a wide variety of forms to meet the requirements of geographic, technical, and demographic conditions. They have sometimes survived where other forms which have temporarily supplanted them have died and disappeared. Where they have been abandoned, then, there must be some compelling reason. Part of that reason can be found in facts which we have dealt with earlier. Like other forms of social organization, the kinship group operates as a production-and-consumption unit within energy limits. The lower limit is of course easy to see. No social system can survive unless it provides regularly a daily minimum of around 2,000 Calories in the form of food for its members. The upper limit is more difficult to see clearly. It is the point where the family can no longer serve as the production unit for the number and kinds of converters necessary to produce an increase in energy. For example, if the kinship unit is incapable of providing the social relations necessary to create and maintain, say, mass-produced automobiles, then a society using only kinship organization cannot provide its members many cars. The limitation on cars curtails the amount of energy which can be used, even where an abundance of fuel exists. Thus, the amount of energy available to the kinship group is limited by the use of the kinship system. It is seldom, however, that a small unit such as this is permitted to operate up to its potential maximum. Before it reaches that point, it usually has to compete with some other form of organization more effective in providing the social means to operate high-energy technology. The kinship unit may thus be confined to more limited operations than it is inherently capable of performing, but in general, as we have seen, the very extensive and intensive coordination required for high-energy technology exceeds the capacity of kinship and communally organized structures to serve as production units.
The high-energy consumption unit
But this is only part of the story. The kinship unit is also too small a consumption unit to serve some of the functions necessary to high-energy society. By a consumption unit we mean all those person who derive sufficient satisfaction from a particular act of consumption to act so that such consumption can be repeated. As has been stated, it is assumed here that humans make repeated choices in the light of the consequences of their previous experience. That is, the consequences of previous acts either reinforce or inhibit future acts. The repetition of an act serves as an indicator to the observer that the factors affecting choice are operating in such a way that the “consummatory response” of the performer is adequate to induce repetition.
It is the ends sought by individuals that provide the means by which a society is maintained, but the ends sought by individuals arise from socially directed experiences. Thus, if the society is capable of providing experiences such that the individual who successively make it up regularly choose to do what is expected of them, the social structure is maintained and reinforced. The cycle, from some early consummatory response which reinforces the experience giving rise to it, to a situation in which the individual actively seeks the conditions which are expected again to give rise to that response, may be “explained” in terms of a number of psychological systems. The choice between these systems need not here be made, for it is from the observed fact of repeated act that the values necessary to reproduce the act are here inferred. Value here denotes the factors that within physical and physiological limits affect choice. The nature of the factors can be examined introspectively by any individual and the inference drawn that similar acts by others derive from similar subjective experiences. From such self-analysis, or by other means, a hypothesis that a particular factor affects choice can be made; this can subsequently be tested by altering that factor and discovering whether or not choice is altered. Something of the nature of the factors affecting choice in given types of situations may be so revealed. But, in whatever manner the factors affecting choice are revealed, the fact of repeated choice serves to show that the experience to which the choice gave rise was adequate to reinforce that choice.
“To each according to his need”
We return to our definition of the consumption unit. The repeated action that perpetuates such a unit is brought about when the individuals who comprise it are so affected by some act of consumption, which falls within the category of acts necessary to secure the end sought by the group, as to want to repeat the act. The effects of consumption upon the consumer, whether or not he is a physical participant in the act of consumption, determine how he will act in similar situations in the future. An individual may be so identified with others, or with an idea or ideal, that he will “find satisfaction” in consumption by others who act in the name of, or are thought to be perpetuating, an idea or ideal. For example, in the family, the most common and pervasive consumption unit, parents are often identified with their children that they commonly regard the food and clothing and other goods and services consumed by their children as sufficient justifications to repeat whatever acts are necessary to make it possible for them again to consume. (They may also do this in particular instances for other reasons.) In fact, it is relatively common to discover parents, at some stage in their relations with their children, doing without goods and services that they themselves might have consumed in order to provide these for their children. It is likewise true that at another period the children may make similar sacrifices in favor of their parents. This identification of self with the activities of others is of course typical of all consumption units larger than the single individual. The self must be identified with a unit of consumption by that unit or any member of it is to justify to the self its activities in behalf of that unit. Men sacrifice for the perpetuation of corporations, unions, lodges, fraternities, political parties, churches, states, and nations time and energy which might be spent in the attainment of such satisfactions as leisure, opulent living, or aesthetic enjoyment because they place the values so derived higher than the values sacrificed to attain them. The most extreme form of this identification of self is found in the sacrifice of life itself to perpetuate some social unit such as the family, the nation, or the church. In making this sacrifice the individual seeks to assure the achievements and/or the perpetuation of ends more significant to him than the survival of the body, which is offered as a sacrifice to maintain these ends.
The processes by which such values are created and maintained are not mysterious or unknown. They constitute the means by which most of the repeated action of the human organism is secured, and are common practices in every family and existing social group. In some cases such repetitive acts are immediately related to the necessary physiological functions and hence may be called “biologically adequate” for survival. In others these acts are only remotely connected with the physiological needs of the organism and can be connected with such needs only by assertion. But whether or not such acts are biologically adequate, they must be socially adequate. Thus one proof of the fitness of a group, movement, or institution to survive is its ability to command energy sufficient to carry out the acts necessary to that survival. Diversion of energy to this end must go on in competition with diversion to all the other ends that the associated groups and individuals are seeking. Thus, as he grows older the individual discovers the competing claims of all the groups in which he must or may function. Each group attempts to assure that the emerging individual will have experiences that will subsequently result in the choices necessary to achieve group ends.
In every society the claims of the family must first be met, else the family will disappear and with it the society. Beyond that, the order primacy of other types of claims, for the perpetuation of other groups or institutions, varies widely. Demand also exists to preserve the relations socially necessary to create and serve particular personality types, to secure particular physical ends, or to meet needs which arise because some socially approved end is sought. The appearance or disappearance of social structures takes places as these necessary conditions are met or fail to be met. What is primarily demonstrated here is that the conditions imposed by high-energy society require varieties of social organization which rest on value-creating experiences in many ways different from those which are apt to take place in low-energy society. It is this that makes the realization of many of the utopian dreams derived from a pastoral world possible.
If it were possible to extend the process of identification characteristic of experience in the family to include all producers and all consumers, the production unit would in every case be coextensive and reciprocal with a consumer group. The problem of securing social coordination of production and consumption would then be solved. Morality would automatically assure that each would produce “according to his need.” Ability and need would be socially defined, and socially created norms would be so related as to produce the choices necessary to secure the required repeated action. Since each individual would want to do what he had to do, nobody would have to be forced to do anything.
Primary groups do sometimes act in this way in low-energy societies. Moreover, during at least part of the life of the child, every family today operates on this basis; else, children would die before they could become producers of what they must first consume. Many idealists argue that since this “proves” there is nothing in human nature to prevent society’s operating on this basis, there is nothing anywhere to prevent it. They would expand the family to include all the people of the world and thus assure the production necessary to satisfy all man’s needs. Because most men spend some years as children in families, where this kind of primitive communism exists there is a recurring pervasive longing to “return” to it. Whether this is a search for a “father substitute” or a symbolic return to childhood in some other sense, it is clear that for many, beset by a world which seems harsh and rule as contrasted with the security of their early childhood, and economic system based on experience with the altruism of their parents is appealing. It is likely to be particularly appealing to those who cast themselves in the role of the child who receives rather than of the parent who gives.
The family commune
However, as we have seen, the conditions that favor an expanded family system are themselves unlikely to exist together with the use of high-energy converters. The family is an inadequate unit for some kinds of production. Examination will show that it is also an inadequate unit for some kinds of necessary consumption. Family life involves close interpersonal relations. Such experiences must by their nature be shared by only a few persons, for human beings in such relations demand responses, each of which takes time; time being limited, interpersonal response is therefore also limited. Aside from interpersonal experience with actual people, identification of the self with a cause, idea, or ideal comes to be made through symbols. But symbols stand for experience and gain their meaning from it. To an individual raised in a democratic family “fatherland” means something different from what it means to one raised in an autocratic patriarchy. “Mother country” evokes no nostalgic response in an individual raised without the affection of a real mother (who apparently need not be a biological relation). Thus the experience of children provide the base upon which many loyalties rest. Subsequent interpersonal relations provide further experience, which may redintegrate or disintegrate the patterns developed in childhood.
In low-energy society, as we have seen, the necessity to operate with little energy-wasting conflict and the necessity for local interaction among groups claiming individual loyalty result in some kind of accommodation among the claims of the groups in which the child will normally function. But in high-energy society there is no necessary accommodation at the structural or cultural level among these claims. Moreover, the goals or ends sought by various groups come into conflict or competition at many points with the family-maintaining codes which were earlier taught to the child. The tremendous emphasis upon those personal qualities which perpetuate the family, qualities idealized in the Christian religion among others, seems to the child to offer a means to solve all subsequent moral problems. But as he confronts adult life many of the passive and altruistic attitudes which he has been taught are seen to produce results (at least immediately in his world) quite other than those which lead to success in terms of his role as a provider or protector of his family. What is more, even when it is recognized that all men are brothers and all children God’s children, the claims of a man’s own family must in many cases transcend those of another family if the goals sought for his own family are to be realized. He chooses to put a coat on his child’s back before he provides a shirt for someone known to him only as the child of another American or of a fellow Christian in some remote place. He chooses to stay at home and defend his immediate family rather than to leave them to face danger while he protects his fellow countrymen on some distant battlefield. But this may endanger the state, the nation, or some other unit of which he is a part. In a very large part of the world today men are able to secure even the necessities of family living only if they are able to defend their territory with military means, and exploit their resources with the aide of extensive social, economic, and political organization. Loyalty to the family is by itself not enough; loyalty to such organizations as the company, the union, the state must at times come to take precedence over the claims of the family. These units must be able to justify their claims through generating appropriate values in individuals. A given form of the family cannot survive unless it provides means whereby children learn that it is sometimes necessary to sacrifice the primary group values to those supporting more extensive organization.
The communal state
High-energy technology has resulted in the aggregation of such huge amounts of power that small social units operating alone are often ruthlessly and unheedingly swept aside in their ends are antithetic to the purposes of those who control the power. This increase in power has forced changes in the value hierarchies obtaining among the world’s population. It is possible for each small unit, acting alone, to induce its members to act in its defense in collaboration with members of a large number of similar small units, in such a way as to control power adequate for their defense. Such confederations have served in special situations; Switzerland is perhaps the best example. But this kind collaboration for defense is rare. In fact, it is only where ideas such as the supremacy of nationality over other aspects of the personality have become characteristic of very large numbers of people that the necessary military and political efforts have been effective to protecting all the groups included in the nation. To obtain the immense amount of power required for its defense the national state must compete as a consumption unit with the family, the church, and other institutions. It must control enough of the value-creating system continuously to justify that flow of energy. Unless the hierarchy of values is such as to assure this, the state will be unable to carry on its defense function and the people of the state will become subordinate to any other state which seeks, and has the means, to control it.
This not to say that the fundamental requirement for survival for all societies everywhere is the subordination of all other values to military and political ends. It is merely to point out that when one powerful agency seeks to dominate another, only adequate force will deter it. To secure adequate force to protect itself, the national state must become a consumption unit for such things as tanks, battleships, bombers, and bombs. Only as a sufficient number of men take satisfaction in seeing these made available to the armed forces of the state will they provide the means necessary to get the implements of war reproduced. Not only in military but in other activities the state pursues ends that require large units. Sanitation, flood control, conservation, research and education, and many other types of production can be justified only if the great body of the citizenry accept these kinds of activities as ends which to them justify the necessary costs. If a society fails to stir men from the limited attitude that only such consumption as is participated in by members of the kinship group or the local community is justifiable, it may fall before the more effective techniques possible to those who have succeeded in inducing men to take satisfaction in activities involving larger consumption units.
It is clear, then, that the state can for some purposes serve both as a large production unit and has a large consumption unit. On the basis of this fact, it has been assumed that if the state can serve some values it can serve all values. But just as it is necessary to realize that the family, while it is adequate and necessary for some purposes, is limited in its capacity to serve, so also it is necessary to recognize the limitations of the state as a consumption unit. First of all, of course, is the fact that the state as such cannot provide the interpersonal experience which the family provides for the begetting and rearing of children. No state can make love or bear offspring. Unless there is some rewarding experience to justify it, parents will not rear children, and unless someone responds to the child many of the very qualities upon which the state will later depend, such an altruism, idealism, willing cooperation, are unlikely to appear among its citizens. If, on the other hand, parents provide these responses, they will also tend to prefer their own children to children unknown to them. A man who willingly pays taxes to put arms into the hands of a neighbor as he goes off to defend the country will much less willingly take bread from his own mouth and put it into the mouth of an improvident neighbor who remains at home. Some acts of consumption remain immediate, sensual, and personal. Some are symbolic and relate to larger groups of which the consumer is a part. Nowhere is mass consumption all of consumption. If there are circuses, there must also be bread. Between such extremes as self-immolation in war and self-indulgence in lovemaking lies a whole range of possible acts of consumption. These acts may serve one family rather than another, the employees instead of the stockholders of a corporation, a nearby school, library, gymnasium or park or one far away, a hospital for us or a tank for an ally. Identification with various groups competing for preference forces the creation of a hieracrchy of the claims made by different social structures. The demands of the union may during a strike require sacrifices in respect to the demands of the family. The demands of the church may require forswearing marriage. Within the same personality the demands of the veteran may compete with the resistance of the taxpayer to those demands. Neither the state alone nor the family alone can serve all the values of men equally well everywhere, nor can either provide experiences assuring that the ends sought by all men, everywhere, will be such that each man will develop precisely that hieracrchy of values which would make him choose to perform the very acts required to meet the expected demands.
It is in households that many of the goods and services which high-energy technology can deliver are apt to be consumed. Paradoxically, the household becomes smaller as the high-energy society develops; thus the size of the consumption unit for many goods becomes smaller as the size of the required production unit for the same goods and services is enlarged. Hence, the “ideal” situation — those in which consumption and production units are coextensive and reciprocal — becomes less likely as high-energy technology develops. In high-energy society the values developed in the consumption unit are not likely directly to justify production, and experience in production roles will not directly serve to create those values redintegrated by consumption of the goods produced. Increasingly, production must be undertaken for the purpose of exchange. The dreams of the primitive communist become less attainable as high-energy technology develops. The parallel dream of the utopian that sees in the omniscient and omni competent state the means to realize all man’s hopes meets no better fate. Rather, it seems, that a multiplicity of social structures, each of which is justified by the achievement of only part of the values of the individual will appear, and/or that some system must emerge which permits each individual to try to achieve some of the goods he seeks — regardless of their origin or effects — through exchange for them of whatever he controls which is to himself less valuable.
The market place
In fact, of course, all high-energy societies have produced both of these conditions. The market has emerged as a place in which the variations in value can be given maximum range. A multitude of forms of social organization — groups, associations, and institutions — have at the same time come into being, each seeking to serve only a few of the values of those who make them up. The price system, operating alone, permits the individual to act independently of all the groups of which he is a part. At the same time each group seeks controls over him which will prevent his acting in the market in a way thought to be dangerous to the survival of the group or likely to interfere with the achievement of its goals. It is in the West that the use of price as a means to mediate values has become most widespread. It is so widespread that in many cases value is frequently equated with price. Other values than those measured in the market are conceived to be of less significance. Their pursuit, if it interferes with the maximization of price-measured values, is often thought to be unnatural and dangerous to society. Only price mechanics are considered to be legitimate means to secure those values which price currently mediates. A slight acquaintance with the history of the West will show that many goods and services once “in” the market, such as titles, commissions, and slaves, are no longer considered legitimately to be so. Other goods and services now mediated through price have only recently been otherwise provided. Many of what are now called the “economic” functions were in the medieval world defined and controlled by the religious, moral, political, and legal system. They were not mediated in the market. This is typical of low-energy systems. There the individual consumer-producer has little reason to question whether the average operation of the system provides for each of those who cooperates in it specific opportunity for consumption “commensurate” with his effort in production. There is neither need nor opportunity for him to ask whether the value of the goods and services he gives is greater or less than the value of the services and goods he gets. Only rarely does the special situation in which an individual finds himself as a result of luck or disaster justify an unusual reward or penalty. When scarcity might induce price rise, to the producer the traditional reward is felt to be enough, and disaster is compensated for by unusual types of aid to the afflicted. This changes with increased use of high-energy technology. The fact that money will serve in a variety of groups, regions, and situations as a common denominator of many values gives it peculiar advantages here. These advantages include the fact that such values as can be translate into monetary terms are then subject to mathematical manipulation and statistical treatment. This quantifiability has in turn given a kind of seeming reliability to price-measured values which does not appear to exist for other values.
Price
Price served the early trader well, for he sought to deal with only those values that did enter the price system. But the success of trade provided support for the belief that all values could be brought under the same sort of calculus as is represented by price. What had been “political economy,” became “economics.” The former had concerned itself largely with the question of the proper sphere for the operation of various value-mediating institutions, particularly the state and market; the latter word sometimes has presumed to mean that the calculation of all significant values could be made in terms of price and market considerations. Such economics concerns itself exclusively with the study of price mechanisms. From what is happening in the market it infers what would happen in a world with no values other than those finding expression in price terms and with no locus for judgment about the ordering of values other than the mind of the individual buyer or seller. The economist who confines himself to the examination of this kind of evidence and makes this kind of inference obviously deals with only part of what really happens at any place and time. Seemingly there will always be a choice between values which can be expressed in terms of price and values which are not so expressed. There will always be not only the exercise of choice by the individual but also the organized operations of groups whose objectives frequently represent an ordering of values altogether different from the individual value hierarchy of many of their members. Predictions that events will follow a pattern like that which would result if all values were expressed in the market as a consequence of choice by individuals frequently are at variance with the events that actually follow. There are apparent limitations on the use of price as a measure of value and as a determinant of action. While the unfettered operation of price might have many advantages, it also has consequences which lead men constantly to seek to avoid its use.
The advantage of price lies in its flexibility and its universality. These characteristics permit the price system to bridge the gaps between producer and consumer in a world where they are likely to be unknown to one another and seldom share all the same values or seek them in the same order. Cooperation comes to be mediated by rates of exchange determined through price rather than specific performance ethically, politically, or legally sanctioned. This facilitates the ordering of individual hierarchies of value in terms of the costs of gaining the cooperation of those who control the goods and services necessary to achieve those values. But it must not be forgotten that many values are not measurable in terms of price; the love of children by parents, patriotic devotion, religious conviction, and numerous others. Much of the cooperation necessary for the functioning of price mechanics is secured by means other than those operated by the market. It thus measures only part of the factors necessary to its own existence. A “pure” market economy would immediately destroy itself.
The proper sphere of pecuniary valuation is not, then, to be discovered by some a priory discussion about its merits as a universal means to mediate value; it can be determined only by examination of the probable consequences of its operations upon given groups and individuals as they contemplate or experience these consequences.
Price in the early years of limited trade was a relatively stable factor. As we have seen, the limits on productivity change only slowly in low-energy society. Consequently the “just” price or “normal” exchange value could be worked out over time by trial and error and the social controls necessary to stabilize values could be developed. Such a system deals inadequately with the rapid alterations in the proportion of the factors used in production and the rapid changes in the hierarchy of values which characterize high-energy technology. The old slogans cease to be statements of generally accepted norms and become instead exhortations designed to assert the claim that a particular group, class, or region should, on the basis of some position held in the past, continue to share the results of increased use of surplus energy or other gains resulting from change.
Market maldistribution
Because of his increasing inability to determine his own worth except in terms of the market, the individual is forced to use the same measuring rod to discover that of other people. He seeks to minimize his costs and maximize his gains. He attempts to evaluate several combinations of factors that will secure his objectives at least sacrifice of his values, including but not confining himself to those measured in the market. But in dealing with those who supply him he often is confined to treating him as an “economic man” all of whose significant values can be measured in price terms. Frequently, in this endeavor he forces men who have only their own bodies to serve as converters into competition with other men who produce the same goods with the aid of cheap fuel and high-energy converters. The price system thus may have the effect of threatening to destroy many of the values of those who operate under it. They in turn may seek to avoid the use of the price system because of these very consequences. To say that action of this kind is contrary to nature, that is, it deprives man of his freedom to choose, or that it reduces his efficiency, is merely to reassert the assumption that he ought to want to use price rather than some other system of evaluation and that he ought to want to maximize his gains as a consumer of priced goods and services rather than in some other way. The “oughts” in this case, derive from assumptions that are not currently accepted by all men everywhere. “Economic Man” represents more and more a discredited myth.
Price is generally thought to bring about the kind of equality of opportunity which has been the aim of many democratic thinkers. In operation it has frequently produced no such result. In fact, a man who has the opportunity to buy and sell freely even in a world market can cooperate only in terms of his alternatives. He who buys an automobile tire, for example, pays for the cooperation of all those who combined to produce it, in so far as their cooperation became a charge in the market. The costs of the services of the Malayan rubber worker, the Mississippi cotton hand, the Akron tire builder, and the vocalist on a TV program that sells the tire are among the factors that help to determine the price of tires. But the cost of the service of the Malayan is set in price terms based on the cost of his alternatives. If he owns no land he may have the choice of near starvation in the jungle or employment on the plantation at a wage set by the willingness of his neighbors or of a synthetic-rubber worker in Texas to take his place. The “worth” of the cotton raiser in Mississippi reflects his alternatives, which are quite different from those which the rubber workers’ union has been able to provide for the Akron worker in a market where other employment opportunities in other industries supply his alternatives. The consumer of tires in turn pays a total bill which represents a choice among his alternatives. What the various producers receive out of the tire is a measure only of the alternatives open to them. To say that each has been paid according to his productivity is merely to define his worth as being identical with whatever he had to be paid. The tremendous variation among these payments indicates how completely price is divorced from need, effort, skill, or discomfort on the part of the producer. Under such circumstances “worth” loses for the performer of a task most of its meaning. He is put in the position of saying that since he is able to demand more he is worth more; and for him the increased price resulting from restriction of production is in the same category as increased payment arising from increases in physical output.
The range of alternatives open to those who cooperate in production reflects differences between low- and high-energy production as well as differences in social organization and in skill, training, and ability. As I said earlier, the consumer of a good or service seeking to minimize the costs to himself may force workers into competition with other men, equipped with high-energy converters, who are able with little effort to produce many times as much as they. They consumer could, in a pure, completely free price system, exploit these differences to reduce some men to penury. The proponent of the free market, who assigns to the consumer the “right” to demand all the gains made possible by such situations, faces the same dilemma as the Marxist — he solves the dilemma by insisting that it is labor, as producer, that has the right. Each has to choose between seeking to reduce the human energy costs of production — even if in so doing he denies to many men the opportunity to exchange labor, the only thing they have to exchange for the goods and services they seek; and, on the other hand, limiting the substitution of other converters for men by guaranteeing “full employment.” When he does this, he guarantees that some men will continue to live only by labor for which a machine could be more cheaply substituted. Whichever choice an onlooker makes, he should anticipate that there will be resistance by those who are thus denied what might otherwise be theirs.
Instability of the free market
Price represents one means of measuring value. Many of the goods measured in this way can also be measured in others. Two hundred pounds of pork always weighs more than one hundred pounds, but it is possible that sometimes one hundred pounds of pork will sell for more than two hundred. Thus, the goal of increased production as measured in pounds is not always compatible with the goal of increased production as measured in dollars. If increased production results in decreased price, those who impede achievement may be rewarded more highly than those who promote it. The very nature of price relations is likely, except under very carefully controlled conditions, to produce this paradoxical situation. Price always measures both scarcity and value, and it does not distinguish between limitations on supply that spring from “natural” causes such as the shortage of materials, converters, tools, or manpower and those that reflect the deliberate policy of men to refrain from or to hamper production. Thus deliberate restriction may be as well or better rewarded that “full” production. In these circumstances cooperation to limit supply is as normal as cooperation under other circumstances to increase it. In fact, then, it is only by deliberate intervention to prevent group action that the supposed beneficence of the free price system can be maintained. It must not be forgotten that although some goods and services may be freely exchanged in terms of price alone, other goods and services will continue to be sanctioned by the reciprocal obligations of the family, the duties imposed by the state or the church, the exercise of “rights” which are believed to imply no exchange of thing or service in return, and the multiplicity of agreements, understandings, codes, and customary privileges that characterizes every society.
Value continues to be a consequence of many experiences. Only some of these are reflected in terms of price. The law of supply and demand is merely a statistical statement of the outcome of the factors at work in a situation to the degree to which they are expressed in price terms. Exchange reveals the location of values that relate to the market, but the individual who holds them may at the same time seek through other institutional arrangements to achieve other aims. The pursuit of these goals may have the result of preventing his achievement of what he seeks through the market. Price mechanics permit the individual to exchange those goods and services placed low in his own hierarchy for those placed higher and thus to minimize the frustrations arising from this inability simultaneously to satisfy all his wishes, needs, and wants. By thus revealing the order of his values the market makes it possible to anticipate what the order of his future choices is apt to be. Action by others in anticipation of persistently repeated patterns of choice permits the fulfillment of those choices. But this is possible only if, on the average, choices remain consistent. That is to say, unless it is known that tomorrow the average individual will choose goods in about the order he does today, no basis exists for making the kinds of investments which will pay off only over long periods of time. If the individual is too “free” or too capricious in his choices, high-energy technology becomes impossible. Yet the operations of high-energy technology produce change, and change affects values. Knowledge of the experimental or tentative character of the market becomes extremely important in carrying out the process of discovering changing values and so allocating resources that they will not be used wastefully or destroyed. A market too “liquid” is, however, likely to destroy the stability necessary to induce investment. A market too “sticky” may allocate resources in such a manner as to become a relatively inefficient means to certain ends as compared with some other institution such as the corporation, the state, or the family.
Some consequences of market operations
The free market, dependent upon the limited knowledge and experience of individuals, is always subject to the danger that they will choose on the basis of temporary or fleeting emotions or on the basis of incomplete or inadequate foreknowledge of the consequences of their choices, and will, when those consequences become manifest, subsequently refuse to repeat those choices. Rapid oscillation in choice may destroy much of the value of some of the fixed assets necessary for high-energy technology. Moreover, if the market is the locus for choice among the basic needs of all, extreme fluctuation in the market may make it impossible for the individual to meet the demands of other roles he plays in other institutions. Thus, unemployment created by the operations of the market may threaten the existence of the family, the state, or some other institution, and reaction will set in to limit the sphere of the market. For its own survival, then, a modern firm may be required to spend a good deal of its effort “normalizing” demand, this is, creating those values by which its existence is justified. To affirm that in satisfying those demands which it has created it is responding to the free operation of the law of supply and demand is, at the least, confusing. In the early days of the trader the market revealed areas of possible change which could have been discovered by no less delicate instrument. In modern societies some men are equipped with the power to override the established values of weak groups and have the means to create the values which will justify further “advance” in terms of the values they seek. They may find such a delicate arrangement as the free market to be unnecessary. In fact, in the “monopolistic competition” of this day, it is often possible to predict rather accurately where and when a market will arise under the stimulus of modern means of advertising and propaganda. This kind of manipulation of course has its limits, but there is no question that creating wants makes them easier to anticipate than merely discovering them.
Whatever the “proper” role of the market may be, the very fact that its functions change produces reactions among individuals and groups which make up the society in which it operates. Some of these changes may be extremely far-reaching and productive of revolution in its true sense. In high-energy society the sphere of the market has grown in competition with all the other institutions. To it have been transferred functions previously carried out by the church, the family, the community, and the state. In the process some of these institutions have had their ability to carry out their remaining functions weakened. For example, when the head of a household who is dependent upon the market to assure bread for his children becomes unemployed for reasons which in the market are considered good and adequate, he ceases to be capable of performing his role as breadwinner. Because of his inability to carry out this function, he frequently becomes incapable of carrying on other functions which the market is totally incapable of absorbing; for example, the discipline of his children. His diminished capacity to serve in this role may lead to increases in delinquency or dependency, giving rise in turn to increased function by the state, both to supply bread and to provide a substitute for parental care. Thus increased emphasis upon the free right to hire and fire in the market may give rise to increased use of coercion elsewhere in the system in order to protect those institutions upon which the very operation of the market itself depends.
The businessman versus the politician
We might summarize this in another way. Around the points in the economy where the use of new converters permits the utilization of the surplus energy, nuclear fuel, gas, coal, oil, and waterpower, there form pools of unclaimed surplus energy. The effort to claim this energy itself involves a reformation of previously sanctioned behavior. The nature of the property system, the concept of “rights” currently held, the degree of collective consumption, the rate expansion of new converters will all modify the results, but in any case, modification of codes will take place. Much of the new surplus energy itself may be distributed in the process of changing these codes. Where the price nexus is used, this distribution of surplus will be reflected in prices. On the other hand, the state may draw off all but a small part of the available energy for some purpose of its own, and the sphere of the market remain relatively undisturbed. A case in point is the industrial experience of the United States during the Second World War. The enormous expenditures for war were almost wholly offset by increased productivity. A larger portion of the American population was permitted to man machines which, under the administered price policies which represented labor and management codes in “normal” times, probably would not have been produced, or having been built would have stood idle much of the time. During the war the surplus productivity of these machines was claimed either through taxes or through bonds. It was delivered in the form of war goods. At the same time, there was also a definite increase in consumption of consumers’ goods by the population. The pool of increased energy available was not large enough to maintain permanently both streams of goods because, during the war, in the civilian economy converters were being worn out faster than they were being replaced. It is probable, however, that forty or fifty billions of dollars’ worth of goods could have been produced, to be consumed by the government continuously, without much affecting the expectancies in the form of consumption goods which were developed, previous to the war, among the various groups cooperating. However, postwar inflation created claims in excess even of the increased capacity to produce. To a lesser degree this was the case in Canada and in other areas where war did not destroy the basic converters. But in Britain, Germany, and Russia the downward spiral of production created by the destruction of basic converters created great difficulties for those seeking to restore cooperation induced by price. There the economy was incapable of delivering goods in the volume adequate to meet the demands customarily made on it and at the same time to supply what was necessary to maintain the codes of the groups required to cooperate in production. Thus the sphere of pecuniary valuation was reduced and the area of coercion increased by inability to maintain the necessary rate of production.
These examples illustrate the fact that the sphere within which price operates expands and contracts in accordance with the ability of the society to develop codes of behavior adequate to induce cooperation through price. Which brings us to a discussion of another element of the system of pecuniary valuation — its effects on the process of value creation.
In earlier societies the church or the state usually had control of the surpluses. Vast wealth was accumulated during the Middle Ages for the greater glory of God. In huge cathedrals costly works of art and jeweled treasures were held before the eyes of the people as examples of the use to which surplus should be put. Its magnificent palaces demonstrated the standards of the old regime in France.
Businessmen changed all this. They expanded the production of things, through new converters, beyond the level previously thought possible or considered desirable. It was the merchant salesmen who opened up new avenues of productivity and who were therefore in a position to determine in large part the uses to which the newly created surpluses would be put. The support of the arts, of the church, and even of government passed to them because they controlled these surpluses. Great emphasis upon the possession of things as evidence of success was one consequence. Advertising and education created new values dependent upon the possession and the rapid obsolescence of things. If they did not wear out fast enough, “fashion” could be created to destroy old values and inaugurate new ones. Competitive relationships were extended into areas where status had long been fixed. For example, the significance of costume as an indication of status was threatened by the mass production of cheap clothing from “upper-class” models. Midday now had constantly to buy the new to demonstrate her superiority over those who could not afford to discard clothing until it was at least partially worn out. Similarly, rapid obsolescence of automobiles, houses, and furniture became characteristic.
What we have been witnessing, in reaction to this profit-motivated, price-mediated determination of the uses to which increased surplus energy may be put is the rise of the corporation and the state as competitors. In particular the use of the corporation to serve state determined use of energy has been escalating. The fear of the use of the state to coerce “free” men gives rise to new populist and liberal shackles on government. But the fear of the same coercion exercised from abroad forces even “liberals” to vote increasingly for the use of huge amounts of energy in preparation for or the prevention of war. The government of the United States determines how a larger and larger share of the energy produced in the area it controls shall be used. Through its use of “public relations” experts it tries to create values that will justify that use. In many cases the contemplation of the use to which the USSR is putting its own increased surplus energy is sufficient to arouse the fears and still objections of “rational” men.
There is also growing reliance on research supported by tax funds to evaluate the way the corporation and the market are serving the consumer. The development of environmental health programs, increased use of public funds to provide more adequate health care, emphasis upon increased access to education, the needs of the elderly, the poor, and those without access to the transportation which is necessary to receive many of the goods that the market does make available. All these “public” needs that have been neglected by those who look only to the market to determine what can be produced, and who will get it, are increasingly a “burden” on managements accustomed to econometric analysis as the measure of all good things.
There remains a deep-seated belief among them that “economic values,” which usually means price-mediated values, are superior to and should take precedence over any others.
Wherever events follow this hierarchy of values — that is, where the market serves to introduce new methods of production and the trader consequently gets the first claim on any new surpluses — the use of pecuniary symbols and standards will grow. The peculiar explanation given to this development in the United States under the heading “profit motive” fits the actual happenings no better than the collectivist jargon used in Russia explains what goes on there. In fact, in both places a large portion of the people’s activities is incomprehensible in terms of the official explanation, and all kinds of rationalizations are given to explain, or expletives uttered to abjure, the “normal” behavior of many persons in the society. During the Second World War, “profit-motivated” America used fixed prices for consumers’ goods as a base upon which increased productivity actually took place, whereas the Russians, heralds of the virtues of the “planned state,” resorted to free prices for much of the product of the peasant to get their results.
Both the advertiser and the socialist agitator, in their roles as value creators, frequently overreach themselves. They set up expectations in excess of those which the system of production can satisfy. Their efforts to increase the value of the goods which they have to offer, when compounded with the efforts of others along the same line, may succeed only in disturbing those relationships between services and things which have hitherto been accepted. The process of creating value without definite knowledge either of what the probable increases in the volume of things will be or of the prices they will sell at, invites miscalculation. At the moment, knowledge is probably not sufficient to form a basis for predicting just what the controls would have to be in order to keep a continuously harmonious relation between, on the one hand, increased volume of consumption goods produced and increased use of high-energy converters and, on the other hand, the necessary stimulus value of the things produced. Certainly, there is little in the record or planned states to indicate that they have learned the secret. They have had to revert to coercive controls whenever price-induced cooperation broke down, and have rarely restored the price mechanism over any large sector of human relations after such a resort to coercion. It must of course be remembered that since it is a matter of ideological pride in some cases that the price mechanism should not be restored, the fact that it has not been done is not conclusive evidence that it could not be done.
From the evidence at hand we can conclude that a cooperative relationship between highly diversified groups and individuals can be carried on through price if at the same time and place supplementary means, including the use of the state to enforce contracts and to police the other codes developed, are used to secure the necessary coordination. There are cooperative systems serving a limited area without the use of either price or statute; the rise of unions, trade associations, professional societies, better business and similar bureaus, as well as informal controls by agencies of the party in one-party states, indicates that there exists a whole set of values which neither the state nor the market is well equipped to implement. The groups which have built and which serve such codes act continuously to prevent the operation both of the free market and of the total state. The number of situations that demand this growth of groups and codes increases with the increasing use of energy, and this growth in turn presents new problems solved neither by the omnipotent state nor by the free market.
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