Archive for April, 2009

On the Recent Piracy Trial

Friday, April 24th, 2009

As some of you may know, the “piracy” trial ended with the conviction of the administrators of the web site The Pirate Bay to one year in jail as well as (for Sweden) record-high damages to the entertainment industry. Whereas it is not clear if they have committed a crime – hell, it isn’t even clear that a crime has been committed – some interesting facts about the trial have emerged.

The courts in Sweden are highly politicized. As is common in civil law countries (like most Western non-anglo-saxon countries), the Swedish court system is not based on principles such as the courts or judges discovering law (which is, originally, the case in common law countries) – they but enforce the law as decided by The Ruler, be he king or a faceless parliament – and trial by peers (the jury system).

The courts do, however, have a pseudo-jury system where a judge runs the show but a number of people are chosen to assist the judge in finding the defendant guilty or not guilty of crime. These people are appointed by the political parties with representation in the parliament. In other words, there is a kind of political jury system where the political elite gets to appoint who will make sure justice is upheld. That the same elite enacts the law that is tried in the courts is not a problem to most Swedes, it seems.

In this particular trial, a high-profile trial with international coverage, the politicization of the Swedish courts is extra troublesome. The road to the trial has been paved with scandals, where the entertainment industry’s organization Antipiratbyrån not only has done the police’s job at raides against private web hosting firms, but they have worked closelly with the police investigators and even hired or paid a number of them. Furthermore, the U.S. government has pressured the Swedish government into taking a number of actions that are not necessarily allowed in the Swedish system of “justice” – sometimes even outright prohibited. 

This has not stopped the investigation, however, which is still partly based on what was found or interpretations made based on the illegal investigations. The propaganda war is also an important part of the story, where the public obviously supports and engages in file sharing (both the legal and the copyright-violating kinds) while the political elite is whole-heartedly on the side of the industry. In fact, the political elite has been enacting a number of laws significantly reducing the rights and privacy of Swedish citizens only to get to the small number of illegal file-sharers.

It is in this context that a trial with a judge and politically appointed judge assistants (nämndemän) is highly problematic. But, as I have already mentioned, this seems to not be a big problem in the Swedish public debate. The special interest owns the political elite, and the political elite both enacts and enforces the law.

Furthermore, the trial has been tragicomic. The defendants’ lawyers have very frequently objected to the prosecutor’s use of evidence not previously shown to the court. There are transcripts from the courts showing how one of the defendant’s lawyer objects saying the prosecutor is “doing it again” and that he “did it yesterday” and “will you never learn?” The court never disallowed the evidence even though the defendants had to react without any preparation whatsoever.

Also, the court has consistently misunderstood what the technology does. The prosecutor has repeatedly made statements about the “copyrighted files on the Pirate Bay server,” whereas anyone who has the slightest knowledge of the bit torrent technology knows that there should be no such files. The Pirate Bay had only a torrent library – a type of links that any search engine also has (but torrent/file links, not web links).

These problems set aside, what has caused a debate after the conviction is that new information about the judge has surfaced. Not only is he ignorant of this particular technology and allowed the prosecutor’s consistent use of procedurally prohibited conduct. He is also a member of the Swedish Organization for Copyright. In other words, he is a member of the organization that promotes copyrights and has done so since 1954.

Does this mean the trial is dismissed and needs to be done all over again? Not necessarily – the court could decide that his membership further his knowledge of the issue rather than makes him biased. And it is likely that the request for appeal from the defendants will generate exactly this assessment. 

How, then, would the appeals court assess the fact that this same judge asked (asked, not ordered) one of the politically appointed assistants to step down and leave the court due to probable bias because he was a musician and member of the same organization? It would probably think this is a separate issue and that it was the correct call by the judge…

The fact is that this is a minor issue considering what has been going on for a long time during the investigations. Police investigators have been contracted by the Antipiratbyrån and then, when/if fired from the police, hired by them. The Antipiratbyrån folks have been assisting the police during raides even though it is strictly illegal to do so – yet the politicized system of “justice” has not reacted. The Swedish government has broken its own laws to please the U.S. government and a U.S.-based industry that is way off track and unwilling to change its business strategies despite the technological advances. And the entertainment industry has received legal privileges to take actions that not even the police has the right to take.

There are simply so many strange things going on that undermine the court system, the government legal system, the legitimacy of enactment and enforcement of laws for the sake of protecting a relic of intellectual property, that this doubtlessly will be known to future generations as something to be truly ashamed about. That is, if you are a statist. If you are not, then this was expected; what was not expected is that this has been going on without even trying to cover it up.

Posted in Political Economy, Politics | 1 Comment »

Why Do Economists Sympathize with the Right?

Saturday, April 11th, 2009

This is a legitimate question even though it doesn’t necessarily imply that economists (American such, at least) in general are Republicans. But it is a fact that economists in general tend to be to the “right” (according to the common understanding of the political right) of e.g. sociologists and political scientists. It is also a fact that you will find more libertarians in this discipline than in virtually any other such in academia. Why is this so?

The general leftist might not find this question troubling, since the “obvious” answer is that economists work with money and capital and therefore have a natural and benefiting relationship with capital owners in our capitalist economy. This may be an answer that explains some individuals’ actions and convictions, but it is hardly the reason economists in general – theoretically or in reality – tend to have free market ideals. But it may be an easy way of avoiding over-simplifying and over-politicizing the issue.

Some may argue the other side of the simplified leftist coin: that there is a “selection bias” and therefore that people who like money and capital(ism) are more likely to choose to work with and study money and capital. This too may explain why some of the individuals in economics feel they belong on the right. But it doesn’t explain why virtually a whole discipline identify with the “right” side of the political spectrum.

The real answer should be based in simple economic theory: the theory of incentives, or, rather, the assumption that people do what they have an incentive to do. This is a core understanding in economics of the true nature of human action. People do what they have an incentive to do, and understanding this may lead the individual economist researcher to the solution to many a problem. Understanding that people do what they have an incentive to do explains virtually any social standards or institutions.

What this means here is that economists think this way and therefore necessarily think this way also with respect to politics and the organization of government. Seeing that individuals in government are acting on their incentives means seeing all the possible problems with government. For instance, take any democratically elected parliament taking the proposed budget to a vote. If the members of parliament would pay whatever is spent themselves they would have a great incentive of minimize the budget, make sure that it is spent and distributed efficiently, that only projects with great chances of success and with real benefits would see the light of day. But this is not the case; politicians choose what to spend other people’s money on.

Imagine what this screwed up set of incentives would mean in another setting, e.g. a common grocery store. We know that the owner or manager of the store makes sure to hire those he can trust to sell (and not steal) the groceries and he will only buy those groceries he knows people will buy. Why? Because his ass is on the line – if he spends most of the budget on groceries nobody wants he will lose customers and therefore his own money…and perhaps the whole store. 

Now imagine the same situation but where the owner or manager can decide how much money he gets to spend through simply taking other people’s money. Whoever lives in the area has to pay whatever percentage of his income to the owner of the grocery store so that the grocerer can buy goods to offer his customers. Now what are the incentives for him to buy only good products, only products people will like, and hire people he can trust? It makes more sense to buy the cheapest groceries, no matter if people like them, and hire the people he likes or people he feels sorry for or people he wants to do a favor. 

It is not necessary to ask which grocery store will be of greater utility for the customer, even if some of the groceries in the “political” grocery store are for free. 

This is how any political parliament works: politicians claim they are limited by their budgets, but they get to decide the size of the budget (and take the money necessary) and even if they should stay within the budget. It is often the case that they spend way more than they take from people, thereby not only spending people’s earned incomes but also the money they will earn in the future. So any political organization is, in terms of incentives, totaly screwed up. Or, to translate it into economic lingo, the incentives between the principal (voter) and agents (politicians) are misaligned.

So it makes sense for economists to identify with whatever politician that seems to understand more (read: seems to be less ignorant) about these things. And these people, at least rhetorically, are often found in the political right. I say rhetorically, since it is pretty obvious to whoever understands politics that in the choice between Bush and Obama neither one understands the first thing about economics. But Bush was able to make it sound like he had a fraction of a clue. 

The interesting point is not really that economists identify with the political right, but rather why they do not follow their theoretical understanding all the way through and demolish the State – at least in their thinking. Some of them clearly do (I am one), but not very many. 

So what we have here is really a whole academic discipline that understands, or supposedly understands, economics and therefore can identify the lack of aligned incentives in political organization – but don’t do so all the way. Economists either do not fully believe economic theory or they do not believe government is what it is (and claims to be). Which is it?

Some clearly do not understand and do not wish to understand economic theory nor apply it on other things than their precious formulas and functions. Such economists will never find any truth and will not produce anything of value to anyone. But what about the rest? It is clear that many economists live in symbiosis with the State and therefore do not wish to think about it in less positive terms. After all, the government employs a lot of economists and economists find it very prestigeous to work for the people with political power. So they simply neglect to apply their economic understanding on the organization they wish to serve.

So how about the rest, i.e. economists who do understand economic theory and wo do not find it necessary to lie to themselves in what regards the State? The answer to this question is what is very sad. It should be the case that economists who end up identifying with the political “right” while supporting government simply do so because they are as brainwashed as most people. Despite being scholars in economics they have learned throughout their lifetimes that there is no way to survive without government.

Economists (many of them) may not like government, but they accept it and even support it. And they use their sound theories to make government more efficient and effective – simply because they have been taught that there is no other way. To a free-thinking individual with economic understanding this is of course the same as saying that a certain industry “must” function like the “statist” grocery store mentioned above – but that we need to make its wasteful operations as efficient and effective as possible not to get “too much waste.”

Anyone understanding the competitive market understands that waste is not acceptable, that waste is minimized automatically through the profit motive and the pressure from competition. The problem here is not only that government is a monopoly and that the profit motive is nonexistent. The problem is also that it is an organization that can “legitimately” force its customers (and non-customers) to pay for its costs while it can supply whatever it wishes at whatever cost it finds most appropriate. 

Government, in other words, is an organization that is much much worse than any monopoly mentioned in economic theory – it is a monopoly cubed, judging from the weird incentives it creates and the effect it has on the market. There is therefore no way of understanding economists’ support for government other than that they have given up in the sense not applying what they know to it. Brainwashing works, even on those who have dedicated your whole professional lives to learning the truth – and when the truth speaks out clearly against government.

Posted in Economics, Political Economy | No Comments »

Responding to Klein and Rothbard on Agorist Organization

Tuesday, April 7th, 2009

Peter Klein wrote a blog post yesterday on the Mises Economics blog continuing the agorist vs. anarcho-capitalist discussion on organization. In his post, Klein summarized his contribution to the discussion followed by a quoting Rothbard’s assessment of agorists view on organization. But both Klein and Rothbard make unsupported general conclusions that they seem to base on some agorists’ personal preferences rather than agorist theory.

It is true that agorists in general do not fancy “organization, hierarchy, leaders and followers, etc.”, which is a common preference among anarchists of all varieties. Rothbard (and Klein) is right in that there is not necessarily anything wrong with voluntary organization or voluntary “membership” in hierarchical structures where one is subjected to the rule of majority vote or the whims of a ruler. But as good economists both Rothbard and Klein seem to assume too much: there is nothing wrong with making an informed decision to take a low-level position in a hierarchy ceteris paribus.

Ceteris paribus should here be understood as choosing in a situation where the only thing that distinguishes the hierarchical position from the non-hierarchical is hierarchy. But this is hardly ever the case in State society. Rather, individuals have to choose (if at all) from a very limited set of alternatives, where hierarchy and submission is part of all or most of the alternatives. Vietnamese children working in a Nike sweatshop are better off than as child prostitutes, ceteris paribus. But one cannot take the choices as exogenous to the political situation in the area, the region, the country, or the world. A political theory such as agorism needs to take into account the effect of political rule in the choices people make.

Agorists do just that: they realize that the limited options for a child, i.e. working in a sweat shop or becoming a prostitute, are not the result of the market but of political institutions. The choice in itself may be easy, but the context certainly isn’t. The person making the choice is subjected to political oppression through the unavailability of choices due to political regulation, rule, and coercive institutions.

This is not the same as making choices “subject to” alternatives made available in a free(d) market. The market measures costs to benefits and awards individuals with alternatives to the extent economically feasible. Political rule, however, causes imbalances in the marketplace which forcefully (directly or indirectly) removes alternatives that should have existed were it not for political oppressive rule. The choice between a sweat shop and prostitution is a choice only because of politics; it is not a “real” choice set, since it is forcefully limited.

The same is true with any choices we make today, and agorists, compared to other anarcho-capitalists, tend to put more weight on the choices that have been forcefully taken away from us. While many libertarians would compare a choice to status quo, an agorist would compare the choice situation with that which should obviously have been real in a free market. It is not an economic analysis, it is a political analysis based on a radical passion for justice.

This is relevant to the debate on organization, since agorists have a slightly different perspective than anarcho-capitalists, especially economist anarcho-capitalists. There is of course nothing supporting any counter-factual view on what would have been the case under different circumstances. But it is reasonable to draw some conclusions: the child would have more alternatives in a free market than sweat shop work and prostitution, of which some would likely have been better than both.

Only the better alternatives are important to our analysis, but it is safe to say that we can remain fairly confident that such better alternatives (subjectively identified and valued) would exist. State oppression has therefore deprived the child (in this case) from the choice he or she would have made were it not for State oppression. An economic analysis, at least using the tools commonly taught in academia, is too limited: it does not take into account the fundamental and far-reaching effect of the State on institutions and individual as well as collective behavior.

From this perspective, it is not necessarily the case that people in a freed setting would organize the way the presently choose to. It could be the case that people organize in large corporations, but it is unlikely. Why? Because people in general tend to dislike being “bossed around” by others, and they tend to very often dislike management because it is management or because they believe management’s decisions are incorrect or improper. Ask yourself: in a free(d) market, would more or fewer people choose to work in large structures where their actions are subjected to the decisions/management by others?

The answer isn’t necessarily obvious, but considering the multitude of organizational solutions that would be available were it not for the State, as well as the cost of e.g. corporation-like limited liability if fully internalized by the individual actor/organization, the answer becomes clearer. Agorists don’t despise or dislike organization per se, but I believe it is reasonable to say their analysis takes more facts into account. In quantitative economics lingo, agorists tend to control for many more variables.

So how does this relate to Klein’s post and the Rothbard quote? It provides the reason agorists, on average, are more skeptical than other libertarians to contemporary organizational structures. Agorist theory does not dismiss organization, but agorist class theory identifies, comparatively speaking, a great many more State-caused and State-inflicted problems with severe effects on the very bases on which choices are made. This makes agorists more skeptical towards organizational choices in contemporary State society.

If it were indeed the case that agorists were opposed to organization in and of itself, they would abstain from organize themselves. But this is not the case: agorists organize their efforts in the Molinari Institute as well as the Center for a Stateless Society and the Agorist Action Alliance.

Furthermore, agorists are strong proponents of voluntary organizing of free markets to create individual wealth while withdrawing support for the state to the greatest degree possible and providing real and viable free alternatives to State-controlled institutions. Agorism provides a theory for how to set the world free through liberating yourself and thereby fully take advantage of the economic incentives naturally provided in a free society. So-called counter-economics is a cornerstone in agorist theory and practice, and arranging or joining a counter-economy is voluntary in a sense no choice made in the State sanctioned market ever is. This is perhaps what distinguishes agorists from anarcho-capitalists the most: that they define “voluntary” in a much more absolutist sense.

 

Cross posted as a comment to Klein’s blog post. For more information, see my articles Saving the World through Saving Yourself, A Strategy for Forcing the State Back, and my previous blog post The Savior Complex.

Posted in Academics, Philosophy, Politics | 17 Comments »