[RC] Re-Inventing capitalism, Part I

[Dr.Ernie Prabhakar]

Since we're (again) on a philosophical tear regarding Libertarian  
markets, I wanted to repost (with permission) some of Billy's  
thoughts on Capitalism that he sent [privately] back in July.  For  
the record, I basically agree with his fundamental insights.  The  
trick is what to do with them...

-- Ernie P.

On Jul 23, 2005, at 11:39 PM, Billy Rojas wrote:

Ernie :
We have bitten off quite a lot to chew . I've started to think about
our project in earnest and can already see where we are going to have
some serious problems to work through .

This is OK. It would be unrealistic to believe that the creation of a  
new
theory of economics would be anything but a huge challenge.

The "destruction" of Capitalism cannot possibly be our goal. Even if,
somehow, just that phrase seemed to express a profound truth , how
could we possibly use it ? The resistance to the thought, to images this
phrase would automatically conjure up, would be enormous. Do we
need that kind of obstacle ? I doubt if you would think so, putting the
matter in these terms.

For now, let me suggest the metaphor of "re-inventing Capitalism."
Perhaps we can do better, but as a working concept. The trouble
with the phrase is that  "re-inventing" is a modifier that has become
somewhat stale as a term in book titles, titles of articles,  and titles
of speeches. Yet "re-invention" does pretty much say it. We need to
create a form of Capitalism that includes the virtues of the current
system, which, after all, are many, but that  does not include its  
vices,
which are also plentiful. At least this is how I see the problem at this
time. If you have some other "take" on the issue please let me know.

I have begun to collect papers from the Web and elsewhere that discuss
economic motivation, viz, motivation that makes people want to work
whether or not they also work for an income  -which can hardly be
regarded as inconsequential. The trick is to find a balance between
the extrinsic reward of cash and intrinsic rewards that , in some  
senses,
may be valued more. This is certainly true in my case, to use a   
subjective
example. Again and again in life,  with very few exceptions, I have  
chosen
environment over career potential in making employment decisions. In
other words, I have  stayed away from cities like LA or Atlanta in favor
of towns like this one, or Flagstaff or Longview, Washington. The times
I have lived in big cities  I have , in most cases, been very  
unhappy. Thus
tradeoff, standard of living vs less stressful, more attractive, and  
safer
environments. In other cases people make different tradeoffs, for  
instance
a career that pays less but that allows greater autonomy or  
creativity or
more working with people.

If someone wanted to do the math the economic "cost" for such decisions
could be computed : Both in terms of loss and gain. Loss in gross  
income but
gain, in my case, in benefits of less stress, far less commuter time,  
less need
to wear expensive clothing,  etc, all of which can be assigned a  
dollar value.

What we are trying to do, at least as I understand it, is to develop  
an economic
theory that makes the dollar value of what are often regarded as  
intangibles
visible and available for cost comparison.

Dollar amounts may not be the best yardstick, of course. Maybe time is
better. How much time did I save over the years when my average commute
in places I lived most often , was 25 minutes vs 1 hour and 25  
minutes if
home had been LA or Houston ? Or , despite some health problems, what
more serious problems may -as insurance companies calculate such things-
have I probably avoided by living in smaller urban areas ?

There are other kinds of calculations. There may be great  
satisfaction that
can only be measured subjectively when considering a highly creative job
vs a job requiring the same general set of skills but one that is  
repetitive
and essentially unfulfilling but that pays more .

I remember a college professor's remarks in class, once upon a time,
when the topic was  social status . He used himself as an example
by saying something like : " Most other people with my level of
education earn more money, no question about it. However, I
would not  trade places with them. Why not ? For two reasons.
One is job satisfaction that comes with deep personal interest in a
subject that I chose for myself and the fact that there is time, since
I'm only in a classroom for 15 hours a week, to pursue serious
research, which I thrive on. I feel that I'm making a contribution
to humanity. The other reason concerns status. A bank manager may
earn twice my salary but he has less than half my prestige or social
influence. This is what status is all about. You cannot buy anything
with status but others who do not have it would pay a fortune to
get it."

The argument can also be made that America is already moving in the
direction of non-financial rewards as intrinsic to the national economy.

This, in a way, has been true of the republic since 1776. We are a  
nation
of entrepreneurs or, anyway, wannabe entrepreneurs. Can't say for sure
but my guess is that there are more privately owned businesses in the
USA than in almost the entire world put together, viable businesses
anyway. If this is an exaggeration then I would still bet money on the
USA having the highest per capita rate of small businesses.

Literally millions of people work from home. They may well earn
more if they took the corporate route but they prefer the advantages
of working at home as well as living there.

In many cases one's own business makes the concept of a 40 hour week
a total joke. Someone may put in 70 hours and earn less than minimum
wages, at least for some indefinite time period., because that is what
it takes to get a business off the ground. But they would not want it  
some
other way  -for all sorts of good reasons.

At the same time we cannot simply extol alternatives to the corporate
world. And, after all, the businesses that started in people's  
garages in
Silicon Valley in the 1960s or 70s are now huge corporations worth
billions of dollars. How does our theory effect mega-businesses ?
What can we say to Bill Gates and Steve Jobs that they would WANT
to hear ? How can our ideas benefit GM, 3M, and MGM ?

In other words, the case that  has to be made, graphically,   is that  
non-financial
factors count and sometimes count a lot. This may even be the crux of
the problem we have set out to solve.If you disagree, then what is the
primary Gordian Knot to untie ?

We also need to take into account the fact that non-monetary factors can
be "costed."  A non-financial form of incentive may register $ 0.00  
in one
sense but in another represent overhead savings, economic good will,  
advertising
advantage, perhaps merchandising disadvantage (to throw one monkey
wrench in, for the sake of argument), and other such things, plus and  
minus.

If this characterization is on target then part of what we need to do is
to examine work situations where people choose, out of free will, to
earn less money than  might otherwise be the case. AND, also quite
important, what are unconventional and satisfying ways to earn a
large amount of money ? What examples can we point to ? What
do both kinds of examples tell us about "economic"  motivation ?

To think that we will have answers in anything but a good amount of
time would probably be dreaming. So, there is no big hurry. But it
may be noted that if we can pull this off, actually develop a viable
alternative theory of economics that has real promise for solving a
good number of problems, both marketplace and social / political,
the Radical Centrist star would rise very far,  very fast.

This leads to the supposition that we have the ability and the willpower
to persevere. I believe we can actually come up with a convincing set of
ideas that, in due course, would have economists and others buzzing.
But how can we get to that place ?

BRIGHT IDEA  #1 (hopefully there will be #2, #3, etc, in future e-mails)

L.J. Magie was issued a patent for the prototype of a game that became
Monopoly, in 1904. Lizzie Magie was a follower of the ideas of Henry
George, the political leader who advocated a single tax, just on  
property.
He was also a dreamer and visionary and , by some standards, a
crackpot. His single tax idea was anything but the best concept to
ever hit the world of economic theory.

The point, however, is that the game , Monopoly, became enormously
popular. It also eventually earned a fortune for Parker Brothers.

By the time Monopoly was ready for the market (for the first few
years while Lizzie Magie held all rights it was strictly used for
educational purposes and had very limited distribution) Henry George
had become a complete non-factor in American politics. But suppose
that his ideas had caught on ? Monopoly as a political "teaching tool"
could have had considerable impact on elections, probably
indirectly,  but nonetheless significant.

Can we create a game that would teach the economic principles
we are seeking to develop ?

This is premature, of course. We do not yet have the ideas we would
like to promulgate. But there is another way to look at the problem.

Can we develop a game that, as we developed it, would clarify the
economic ideas we are trying to puzzle out ? This would, as the adage
has it, "kill two birds with one stone." I dislike this metaphor since
I am a one time amateur ornithologist, but the idea is communicated
effectively in the saying .........

Let me run this past you for your critique. Do NOT tell me that this
idea is good. I may think it is good but the real question is : Can this
game work ? Can it, when developed, become popular ? What are
the problems with it ? Etc,

Years ago, since I am a sort of gamer anyway (one sub-speciality in
futures research), I created a game called NETWORK.

The idea was similar to Monopoly. But instead of Baltic Ave and
Park Place there  were cities. The goal was to purchase the broadcast
rights for a minimum of one city set in each geographical area, NSEW,
the 4 sides of the board. Then your network could exist. In the meantime
you had stations in local markets. But as a local station the amount
you could charge for advertising was limited. Only when you created
a network could your ad rates go sky high and you could then wipe
out the competition !

That was then. What if, in creating a network, value was added that
enhanced non-economic  rewards ? Don't ask me how this might
be done. For the moment all I have are rough ideas.  But IF this  
could be
done, and to good effect,  with  players just as excited as in a game of
Monopoly, THEN we surely would be on to something important.

What kinds of motivators could do this ? Can't say for sure that
these motivators, if they work well in a fun game, would also
work in the world of business, but this does seem to be a real
possibility.

The  rough ideas for Network, the new incarnation, are these :

(A) Players use concepts that enhance market share. Whatever
these concepts turn out to be, the other players benefit in some
way. That is, while the game would have a winner it would have
runners up, all other players, even those that are unsuccessful in
organizing a network. Non zero sum.

(B) Players who are unable to put together a network would have
another option, an alternative career, as it were. Maybe there
could be several choices. For example, a player who realizes that
he or she cannot possibly develop a competitive network, might
then sell his or her accumulated broadcast rights to players who still
have a chance to establish a network. The player could, in the
process, be a kingmaker, or at any rate, tilt the "balance of power,"
even if the cost was no network. Compensation ? The player
opens an animation studio that all would-be networks need.
So, at the end of the game, the "winner" is the most successful
network, a network monopoly , say, but the player who has
become the chief exec at an animation company may actually
have earned more money. At least two winners, this way.

(C) Cards or an equivalent : Marketing instead of Community Chest,
and TV Programs instead of Chance. For a commercial version
the cards could be printed out. But what I like even more is the
notion of having blank cards that players wrote on (or print out
via PC) which consist of their ideas for marketing or good
television shows for the Fall lineup. This would give an open
systems quality to the game and stimulate creativity, a value
itself. Part of "play" would consist of conversation as cards
were drawn and others commented on the ideas. VERY unsure
if this is practical, some people are clueless about good game
design and what might make a good card, but as an idea......

If you have ideas along these lines, by all means feel free
to express them. If this is successful  -no guarantee about that,  
though-
we should both share in the rewards.

Needless to say, if such a game could be designed and proved to
be popular, we would earn $ for our cause  -with something left
over . So, in  a way, this problem is similar to the overall problem
we are trying to solve. Money does matter.But it does not matter
more than some other factors. All we need to do is to identify
those factors , using very concrete examples so that anyone
could understand.

Looking forward to your response.

Sincerely                                                                
Billy