01 Jan 2018

Does a Worker Help the Rest of Society?

Economics 23 Comments

In the past on this blog, I’ve complained when Krugman argued that if you believe workers get paid their marginal product, then you can’t also argue that entrepreneurs help the rest of society.

In the current EconLib article, I try to clearly explain at least two major problems with that approach. However, it’s not a Krugman-bashing episode; I agree with him that superficially, it *does* seem that those two (typical free-marketeer) positions contradict each other.

Here’s the intro:

Critics of capitalism have raised many objections to the market economy. For example, Marxists claim that workers are systematically exploited because they are paid less than the full value of their labor. Meanwhile, progressives typically believe that the rich should “give back to the community” that has showered such blessings and privilege upon them.

To be sure, an economist who wishes to defend the virtues of laissez-faire capitalism has well-honed responses to such critiques. Regarding worker pay, it is literally textbook economics to show that so long as there is competition among firms, workers will tend to be paid the “value of their marginal product,” meaning that there is a definite sense in which workers are paid the “full value” of their labor. When it comes to the rich “giving back,” the economist might point to all of the staples of modern life—such as the automobile, telephone, Walmart, and iPhone—that were developed by pioneering entrepreneurs. In a voluntary market setting, the way to get rich is to serve the masses. Indeed, there is a definite sense in which someone’s income is a measure of how much the person has already “given to the community.”

These objections, and the corresponding responses, are typical. And yet, doesn’t it seem that there is at least a tension between them? If it’s true that a worker gets paid an amount just equal to what he or she adds to total economic output, then how can there be any surplus left over to benefit the masses? In particular, suppose that an incredibly productive person decides to drop out of the workforce altogether. Should the rest of society even care, or is it all a wash?

23 Responses to “Does a Worker Help the Rest of Society?”

  1. Anonymous says:

    Bob Murphy has been informed of the role of genocide and slavery in the birth of the car industry, and yet still he continues to write propaganda pieces like this one to cover it up. Denial of atrocities is a method propagandists use to allow those atrocities to continue, so we can clearly see that Bob Murphy loves slavery and genocide and wants them to continue so that he can continue to have luxury products like cars and iPhones.

    The automobile industry was born in the enslavement and genocide of the Congolese people.

    At the very beginning of the twentieth century there was an unquenchable demand in America and Europe for an amazing new technology—air-filled rubber tires. The Age of the Railroad was ending. Henry Ford was making cars by the million, bicycles were pouring out of factories, freight was moving in gasoline-powered trucks, and they all ran on rubber. The Congo had more natural rubber than anywhere else. To meet this demand King Leopold II of Belgium, in one of the greatest scams in history, tricked local tribes into signing away their lands and lives in bogus treaties that none of them could read. He sold these “concessions” to speculators who used torture and murder to drive whole communities into the jungle to harvest rubber. The profits from the slave-driving concessions were stupendous. Wild rubber, as well as elephant ivory for piano keys and decoration, was ripped out of the forests at an incredible human cost. Experts believe that ten million people died. It is the great forgotten genocide of the twentieth century. One witness was an African-American journalist named George Washington Williams. He coined the phrase “crimes against humanity” to describe what he saw.

    – Kevin Bales

    Today many cell phones are also made with the enslavement and genocide of the Congolese people. See Blood and Earth by Kevin Bales.

    Bob Murphy writes that, “When it comes to the rich “giving back,” the economist might point to all of the staples of modern life—such as the automobile, telephone, Walmart, and iPhone—that were developed by pioneering entrepreneurs. In a voluntary market setting, the way to get rich is to serve the masses. However, the examples he gives of cars and cell phones did not originate from a “voluntary market setting”. If Bob Murphy stuck to spinning utopian stories about how things might work in a “voluntary market setting”, he might not do so harm, but as soon as he brings up cars and cell phones he is no longer simply spinning a utopian story. He is spreading propaganda to cover up slavery and genocide. Walmart in particular is know for doing almost nothing to keep slavery and genocide out of its supply chain.

    The rich who have profited from slavery and genocide should indeed “give back”. Tales about how things might work in a “voluntary market setting” are not sufficient reply to complaints about how things actually work in a world full of slavery and genocide. Unfortunately, what the rich who have pro fitted from slavery and genocide owe is more than can ever be repaid. If all of Walmart’s assets were to be turned over to the Congolese people, there would still be a huge balance owed to them.

    Bob Murphy’s depravity knows no limits. He is pure, unadulterated evil.

    • guest says:

      Seems counterproductive to kill your cash cow. How will these evil slave owners make a profit if they kill off their slaves?

      … Or do they keep some alive because they are profitable, and only kill the ones who aren’t? Hmmm …

      Also, Tom Woods gave a lecture in which he talked about the British charity Oxfam having to admit that their attempts at agitating for a higher minimum wage for sweatshop workers had the effect of driving children into prostitution, or starving to death [Applying Economics to American History}.

      Anonymous must be in favor of child prostitution and starvation.

  2. Anonymous says:

    Nor is competition sufficient to protect workers from exploitation. The fact that slavery continues to exist and to be brutal even when there is bidding between employers to buy slaves is evidence of this. Nor is talk of “marginal product” much use. If “marginal product” is calculated based on what consumers are willing to pay, then what use is it when consumers are quite willing to buy products made by slaves? The customers simply share in the benefits of exploitation.

    If the prices consumers are willing to pay are insufficient measure of whether someone is exploited, then perhaps it can only be measured subjectively. If violence is applied to cause someone to accept a job they would not accept under freer circumstances, we can say they are exploited. Slaves can be automatically presumed to be exploited, since they do not remain of their own free will. Slavery is the most extreme and direct method of using violence to force someone to do a job they would not do under freer circumstances.

    However, it is possible for someone to be exploited without being enslaved. Violence may occur by other methods. A farmer whose land is stolen may wind up accepting a job he would not have accepted if he were allowed to keep is land. This can potentially happen even with self-employed people, who are forced to change their line of work after their preferred method of earning a living is taken from them, so even business owners may in a way be exploited.

    When a landowner who is not a worker claims ownership of the means of production, what he generally means is that workers may not sell to customers directly, but may instead only sell to him, at whatever price he is willing to pay them. (And, also, that the workers are forbidden to use the means of production as they wish, e.g. to grow food instead of cash crops if they so desire.) If the landowner built the means of production, there is at least some moral basis for this. However, it still restricts the ability of the worker to sell to the highest bidding customer. (Or whichever customers they favor for other reasons.) And, when the landowner does not have legitimate claim to the means of production, we can say that the relationship is definitely exploitative.

    An example of an illegitimate landowner making such a claim is Lord Leverhulme, who claimed ownership of certain palm groves in the Congo, though neither he nor his ancestors planted them. Since Lord Leverhulme was not willing to pay a high enough wage to persuade the Congolese to work for him voluntarily, he wound up using slave labor. However, even if he had refrained from using slave labor, it would have still been exploitative for him to demand the rights of a landowner over palm groves he did not himself plant, maintain, or have any legitimate claim over.

  3. Transformer says:

    Are you saying that there are 2 sources of the benefit to society of an individual workers contribution

    1. From economies of scale and specialization and
    2. From infra-marginal benefits that you describe ?

    If so I am not sure I agree these are 2 separate things. The first one is what creates the additional utility from social co-operation and the second is an attempt to explain how market forces lead to the bigger resulting output being divided up.

    – A person alone on a tropical island would produce goods until the dis-utility of labor became greater that the utility of the utility of the good produced. All the goods whose utility is greater that the marginal good provide something that is very similar to “consumer surplus” . if co-operating with others and/or producing goods are then traded with others increases utility then this surplus will increase. From this I conclude that co-operation (including through trade) is the source of all this “consumer surplus”.

    – I’m a bit skeptical of the idea of infra-marginal benefits accruing to employers. If these existed then wouldn’t the higher profits they resulted in lead to additional firms entering the industry until they had been eliminated ? Also, if they existed wouldn’t Marxists be right to say workers were being exploited ?

    In conclusion: Output (and individual utility) is increased by co-operation and trade. Market forces tend to lead to incomes of all participants reflecting their contribution to total output. If a worker withdraws from the production process then total output will fall by the full extent his contribution. This will likely have a non-zero effect on others as at the margin some of the benefits of co-operation and trade will be lost. However if the economy is large the effect of the withdrawal of a single worker will be non-zero but probably negligible.

    • Anonymous says:

      Utility is often reduced by trade. Example: Rwandan invader enslaves Congolese person. Through a series of intermediaries, Western electronics company provides funding for Rwandan invader to have more weapons in exchange for minerals mined by Congolese slave. The suffering endured by the Congolese slave is greater than the benefit Westerners receive from the electronics, so net utility is reduced.

      Wages for non-enslaved miners also drop due to competition against enslaved miners. Thus Marxists are correct in noting that exploitation is common. And some of them, such as John Tully, are even aware that slavery is part of the problem. However, many benefits of the exploitation are passed on to consumers rather than employers.

      Unlike Transformer, John Tully the Marxist is against slavery.

      The quotas and wholesale labor requisition sorely damaged the native economy. Villagers were forced to neglect their farms, and traditional industries fell into a state of disuse for lack of labor. Casement contrasted the “flourishing and prosperous” government posts with the sickly underfed and ill-housed natives who were prevented from working for their own livelihoods by such impositions. If the Belgians were concerned about this, it was only a matter of what some now call “collateral damage”; the fact that they did not have any moral right to expect the Africans to labor for them never seems to have crossed their minds.

      – John Tully

      Indeed, John Tully is not the only anti-slavery socialist. There’s an anti-Congolese slavery article on Socialism Today.

      Contrast to libertarian websites, which almost always seem to glorify the automobile industry while neglecting to mention its birth in slavery and genocide. Case in point, Bob Murphy’s article above.

      Claiming that trade invariably increases utility is simply pro-slavery propaganda. Especially since you continued to make this claim even after the problem of slavery was pointed out above. Trade is leading to the rape, enslavement, and genocide of millions of Congolese men and women so that rape-aholic genocidal maniacs like Transformer can have cheap electronics. Transformer’s depravity knows no limits. Like Bob Murphy, Transformer is pure, unadulterated evil.

      • guest says:

        “Indeed, John Tully is not the only anti-slavery socialist.”

        But apparently not anti-mass-murder:

        The Black Book of Communism

        Good intentions are not a substitute for sound economic thinking.

      • guest says:

        “The suffering endured by the Congolese slave is greater than the benefit Westerners receive from the electronics, so net utility is reduced.”

        Annie Leonard speaking in a video co-opted by Lee Doren in a “Critique” video he made:

        [Annie Leonard]: “Kids in the Congo paid with their future. Thirty percent of the kids in the Congo now have dropped out of school to mine Coltan, a metal we need for our cheep and disposable electronics.

        [Lee Doren]: “She did not just bring up the Congo. Those kids are leaving armies and the battlefield to go work.”

        Story of Stuff, The Critique Part 2 of 4 ‌‌ – Lee Doren

    • Bob Murphy says:

      Transformer wrote:

      I’m a bit skeptical of the idea of infra-marginal benefits accruing to employers. If these existed then wouldn’t the higher profits they resulted in lead to additional firms entering the industry until they had been eliminated ? Also, if they existed wouldn’t Marxists be right to say workers were being exploited ?

      Transformer here’s the key paragraph from my article, with bold added:

      In particular, even though the owner of the factory is paying the workers “the full value” of their output—in the sense that each worker is paid according to his or her marginal product—the factory owner would, nonetheless, be devastated if all five of the workers called in sick or quit. This is because at full capacity, the factory churns out $259 worth of bubble gum per hour, while paying the workers a total of 5 × $9 = $45 per hour in wages. So if these five workers decided to become monks, we can see quite clearly that “the rest of society” would suffer. The “rest of society” in this case would include not just the factory owner—who might not be earning much of a profit at all, considering all of his expenses beyond just labor costs—but also the owners of land and the machinery used in the factory, as well as the consumers who buy bubble gum.

      • Anonymous says:

        When you buy food, you are farming by proxy. When you buy jewelry or electronics, you are mining by proxy. When you buy shrimp, you are fishing by proxy.

        When you buy products made with slavery, you are enslaving by proxy. When you buy products made with rape, you are raping by proxy. When you buy products made with murder, you are murdering by proxy.

        Every time you buy something made with slavery, rape, or murder, you are receiving more than your marginal product. You did nothing to earn the part of those things that was made with slavery, rape, or murder, and have in fact contributed to continued suffering. At the same time, the victims of slavery, rape, and murder are being exploited for your benefit.

        As Confucius wrote:

        Coarse rice to eat, water to drink, my bended arm for a pillow – therein is happiness. Wealth and rank attained through immoral means are nothing but drifting clouds.


        When a country is well governed, poverty and a mean condition are things to be ashamed of. When a country is ill governed, riches and honor are things to be ashamed of.

        A country where you are able to buy things made with slavery, rape, or murder is clearly ill governed, and the more of those things you buy, the more ashamed you should be.

      • Transformer says:

        I’m still not convinced that in equilibrium the “rest of society” will benefit from infra-marginal benefits any more than business owners.

        Lets assume that the land and the machinery used in the factory are rented for $100 per hour. Then the total costs are $145 and the profit per hour would be $114. This sounds like it would be sufficiently high to attract other entrepreneurs who want some of the action. Wages and rents will be bid upwards and prices will fall until entrepreneurial profits in the gum industry match those in all other industries. At this point (I think?) marginal product will equal average product and infra-marginal benefits will have dis-appeared. Everyone (entrepreneurs, workers, landowner and capital owners) all would earn their marginal product.

        • Anonymous says:

          (Please approve this comment, not the previous one, due to a formatting error.)

          And what gives the landowner the right to charge rent? He must have some legitimate claim to the land, otherwise any amount he collects is exploitation.

          In May 1911, in England, E.d. Morel had reproached Lever for having negotiated a Convention with Renkin which turned Africans, who had been owners of palms, into wage-earners working for him. He had asked Lever how he proposed to get the palm fruit from Africans if they withheld them. Lever had answered that he counted upon buying them at a tempting price. The Lever-Renkin Convention had been vague about prices, but it had on the other hand fixed the workers’ wages at 25 centimes a day. Lever counted upon having the fruit cut down for him, rather than buying it, and for such hard work the aforementioned wage was wholly inadequate. To be employed as a cutter of palm-fruit clusters was no laughing matter, since it involved using a large belt in order to climb the tall palm trees to the very top, where the clusters containing the fruit grew. In order to climb the trunk of a palm tree, the cutter makes himself a belt out of two detachable pieces of vegetable material. The larger piece serves as a back, while the smaller is supposed to clasp the trunk of the palm tightly. The two parts are joined together by simple knots. At the foot of the tree, the cutter undoes the second knot, throws the free end round the tree and re-attaches it to the back. He begins his climb. He leans against the back, with his two feet on the bark. By bringing his body closer to the tree, he lets the belt hang free and is able to raise it 20 to 30 centimetres. He presses up against the tree again and moves his feet higher. the alteration of these movements brings him gradually closer to the crown. Once he has reached the top, he adopts a stable position and leans against the back, opposite the cluster of fruit that he plans to pick. A few blows from the machete enable the cutter to detach a frond (leaf) from its base. He then cuts the cluster that has grown in the axilla of the leaf, and lets it fall to the ground.

          When in the Congo, Lever was able to ascertain for himself that the wage he was paying for the cutting of the clusters was insufficient. Indeed, in a diary entry for Christmas Eve 1912, he noted that the problem of the cutters of palm fruit “has grown as an ominous dark cloud”, and that the people of Lusanga were no longer bringing fruit, after having done so for barely a year. From this Lever did not conclude that it was necessary to reduce the number of clusters to be cut each day. He did not want to devote money to ensuring the fair remuneration of Africans, who, given such circumstances, would have worked quite willingly. Instead, he adopted the method generally used during this period to make Africans work, namely, coercion. In mid-December 1912, prior to Lever’s arrival in the Congo, his agent general had anyway asked the governor-general of the colony to set up a State military post in the vicinity of Lusanga, with patrols travelling the length and breadth of the region.

          Intent upon turning his concessions in the Congo into a personal “kingdom”, Lever returned to Europe in March 1913. He was now less than ever disposed to buy the fruit at a tempting price. The Africans would have to work “his” palm trees as wage-labourers, on the pittance he chose to pay them. Where the Africans were concerned, Lever would prove to be not a philanthropist but an oppressor. The HCB was not destined to be the great enterprise which Lever, who was to become Lord Leverhulme in 1922, declared it to be, and that his admirers would subsequently take it to be. He had launched himself upon the Congo in order to turn the HCB into a sordid affair of large-scale profiteering, not heeding the harm done to Africans.

          – Jules Marchal, Lord Leverhulme’s Ghosts, pages 3-4

          In this example, Jules Marchal explains one of the key features of landownership: the Africans may no longer sell the fruit to whomever they wish, but may instead only sell the fruit to Lever at whatever price he is willing to pay them. If he at least paid them enough that they did not wish to withdraw from the palm industry altogether (albeit less than what they might earn if they could sell the fruit to whomever they wanted), it would still be merely exploitation, not slavery. However, since he was unwilling to pay even that much, he turned to using forced labor (slavery) instead.

          Even if Lever had refrained from using slave labor, his claim of ownership of the palm groves was illegitimate, meaning he had no moral right to prohibit the Africans from selling the palm fruit to whomever they wished. Thus, even in the absence of slavery, illegitimate landownership still leads to exploitation, since it involves an illegitimate prohibition of the workers using the land and the fruits of their labor as they wish.

          The natives contested this illegitimate landownership, as summarized by Hyacinthe Vanderyst and quoted by Jules Marchal.

          Are there natural palm groves?

          In the debate between the State and the natives, this is a question of the utmost importance. The natives claim in the most formal sense that they–they or the ancestors–are the creators of the palm goves in the Congo. They deny the existence of natural palm groves, at any rate so far as their own observations extend. Conversely, with a remarkable display of unanimity, the interested parties, both the State and the companies, assert that the Congolese elaeis palm groves are natural formations, that is to say, formations which arose of their own accord in nature, and without any human intervention whatsoever.

          Who is right? This is the question that must be resolved. All of my own observations, researches and studies confirm in the most positive and absolute fashion the argument espoused by the natives. For this very reason, I hold it to be my duty to intervene on their behalf. Conversely no one has so far openly attempted to prove that the palm groves are natural formations. This is no more than an assertion, wholly lacking supporting arguments . . .

          The natives declare themselves to be be owners of the palm groves, and perhaps of the secondary forests, and this on several grounds:

          On the grounds that they were the original occupants of the country, in terms of stable settlements, hunting, fishing and the harvesting of natural products;

          On the grounds that they were farmers who cleared and exploited the savannahs, which were thereby turned into forests, and later into palm groves

          On the grounds that they were clearers of virgin forests which, being periodically exploited for the production of food, gradually turned into palm groves;

          On the grounds that they were creators of palm groves thanks to their direct and deliberate intervention, which had entailed introducing the elaeis palm into the country . . .

          For what reasons does the State deny these grounds, or refuse to take them into account?

          – Hyancinthe Vanderyst, as quoted by Jules Marchal, Lord Leverhulme’s Ghosts, page 58

    • Jan says:

      Marxists aren’t right because although infra-marginal benefits of the workers’ labor do indeed accrue in step 1 to employers, in step 2 the employers pass them on fully to consumers because they only charge the marginal (i.e. lower) price on ALL products, including the infra-marginal ones.

      • Anonymous says:

        That doesn’t prove Marxists wrong because most corporations consider only a small fraction of the world’s population, which does not include many of their own employees, to be customers. It simply means the customers share in the benefits of the exploitation. For example, freed cocoa slaves have testified that they had never tasted chocolate. They received negative benefit (torture) for something they worked hard for. The fact that this made chocolate cheaper for people who were actually allowed to buy it doesn’t prove that there was no exploitation. Rather, it makes the chocolate consumers effectively cannibals. As one freed chocolate slave said, they are eating his flesh.

        Plus your statement is inaccurate. Slaves are often charged very high prices for products (when they are allowed to buy things at all), because their lack of freedom of movement prevents them from shopping around.

        Slavery was mentioned above. You should have anticipated this response. You are likely another evil pro-slavery propagandist.

  4. DZ says:

    Krugman’s argument boils down to a new way of saying economies are zero-sum and that improvements in well-being can be solely attributed to improved redistribution. The argument suffers from multiple reductio ad absurdum fallacies though.

    Your article covers one well by highlighting how, if you start with no one working and add a series of individual workers who each get paid the full extent of their product, _real_ gains will accrue in each of the ways you mentioned.

    Krugman’s argument also suffers from the implications of its being correct, wherein benefits to society would be maximized when exploitation (as defined by Marx) is also maximized. Which makes the idea even more odd, since there’s no reason it should only apply to the rich. In such a case, the best political strategy may be to implement a 100% tax on all incomes or legislate wage _ceilings_ to ensure all workers are paid less and less of their marginal product.

  5. Giovanni P says:

    Everything seems to be correct in the article, but I believe there is a problem with the approach.

    What would happen if there were only one worker capable of producing bubble gums (or whatever) in the whole society and he produced 200 packs per hour, getting paid (almost) $200? Also, all the bubble gum consumers would pay $1 for the bubble gum pack because they all valued it at (almost) $1.

    So if the worker left to become a monk, the net loss for society would be (almost) $0, right?

    The problem is in the “almost” statements (sorry, not a native English speaker, I should be using better terms). No consumer values anything at the exact price they’re paying for it — otherwise they would never buy these things — and no employer values any employee at the exact wage they’re paying for it — otherwise they would never hire these people.

    So what happens is that yes, there is a net loss for society whenever a productive worker leaves; but no, no worker is ever paid his marginal product (unless there are calculation errors, but we’re not considering these now).

    • Anonymous says:

      The value of a worker to an employer or the value of a product to a consumer is not equivalent to the value of that worker or product to “society” as a whole. Value to society is simply the sum total of value to all individual members of society. Because the wishes of people who are not voluntary participants of a transaction of often not taken into account, or are not taken into account accurately, there may be a huge difference between a workers value to an employer, versus that worker’s value to society as a whole. Likewise with products. There may be a huge difference between the value of a product to a consumer, and its value to society as a whole.

      Effects on people who are not voluntary participants can be called externalties – a rather impersonal, dehumanizing term, but unfortunately the formal one. When an NGO frees and rehabilitates a slave without requiring payment from the slave, the NGO is generating a positive externality. However, enslavers generate negative externalities, most notably on the slaves themselves. Externalities help explain why there is often a huge difference between wages and prices paid and actual value to “society”.

      A slave owner hiring an overseer to torture his slaves for him no doubt values that overseer at least as much as he is paying him. However, the overseer is literally generating torture, a negative contribution to “society” as a whole. Thus he is paid far more than what he is worth (he receives a positive wage even though he is making negative contributions) even if he is paid someone less than his value to the slave owner.

      On the other hand, an NGO worker who frees and rehabilitates slaves is providing a tremendous positive contribution that the slaves cannot afford to pay for. He may receive payment from charitable donations, but there is no way these will ever match the tremendous contribution of helping to deliver people from extreme suffering.

      • Giovanni P says:

        Why are you talking about slaves? Slaves are not economic actors, they’re victims of a crime. The same way robbery is not a economic trade, slavery is not an economic labor relationship.

        You’re misunderstanding economic theory that way. If we included every robbery in the scope of economic theory we would reach the conclusion that all economic laws are flawed and se to rewrite everything, like what you’re doing here.

        I know you’re concerned about slavery, but slavery is another topic entirely. You can’t question the entire field of economics on those grounds.

        • Anonymous says:

          I am talking about slavery because Robert Murphy is a pro-slavery genocidal maniac who makes head taxes, which have lead to mass enslavement in the Congo, Uganda, and a number of other countries, sound as if they are not that bad. That is to say, the sort of tax a person is required to pay even if they earn no income. These were instituted in the Belgian Congo and a number of other colonies as an excuse to arrest non-wage-earning natives and force them to earn monetary income against their will, under threat of whipping, so that they could then pay the head taxes. In other words, the government was essentially selling the natives to companies demanding labor for the price specified by the head tax. For further details about head taxes in the Congo and how they lead to slavery, see books by Jules Marchal.

          Here is the article where the pro-slavery genocidal maniac Bob Murphy made head taxes sound not that bad.

          We have pointed out to him that he is in error, but being an evil pro-slavery propagandist, he refuses to publish a retraction. It is good to protest against pro-slavery genocidal maniacs.

          Crime is very much part of the economy, and any economic theory that does not take crime into account is, quite simply, wrong. An economist trying to pretend crime isn’t relevant is like a physicist trying to pretend gravity isn’t relevant. If you come up with some utopian theory of how a world without crime would work, and then try to use this theory to reach conclusions about how thinks work in the real world, you will reach incorrect conclusions, like like a physicist who came up with a theory of how a universe without gravity would work and then tried to claim that was how this universe worked.

          Economics is allegedly a science. The job of scientists is to attempt to describe how the world works, not how it should work. Theorizing about how it should work is the role of ethical philosophy.

          Besides, crime is relative to law. Which laws? Qatari law? Nepalese law? United States law? What year? You can say that slavery is always a crime relative to natural law, but relative to many laws written by humans, it has often been legal.

          When Austrians talk about the economic effects of taxes and regulations, which from the perspective of anarchists are probably crimes against natural law (or at least performed by what anarchists consider to be a criminal organization), is that not an acknowledgement that crime (as defined by anarchists) is part of the economy? Why then not also discuss the economic effects of slavery, of hiring hitmen, of every other type of robbery, theft, or outright murder?

          When a hitman accepts a contract to kill someone, he does so for the same reason that a more ethical individual accepts a contract to build a house – because he wants the money or whatever other form of remuneration is being offered more than he might like to simply enjoy more leisure time. Ethically, the there is a huge difference between killing someone and building a house, but both are motivated by the same thing.

          When someone is told “sell us your land, or we will buy it from your widow” and proceeds to sell his land, he does so for the same fundamental reason as someone who is told “if you sell us your land, we will give you $1 million dollars” who also proceeds to sell his land: because he believes that he will be better off if he makes the exchange than if he does not. The difference is that the latter was motivated by ethical means (the offering of $1 million dollars) assuming that $1 million was obtained ethically, and the former was motivated by unethical means (a death threat).

          At its core, slavery is fundamentally a form of trade, but instead of selling a positive (offer of some form of genuinely enticing payment), the slaver is selling a negative (threat of beating, whipping, or whatever).

          This was described millenia ago by Epictetus, a former slave himself, who seems to have been helping another slave consider whether or not he should cooperate with his master.

          For to one man it is consistent with reason to hold a chamber pot for another, and to look to this only, that if he does not hold it, he will receive stripes, and he will not receive his food: but if he shall hold the pot, he will not suffer anything hard or disagreeable. But to another man not only does the holding of a chamber pot appear intolerable for himself, but intolerable also for him to allow another to do this office for him. If, then, you ask me whether you should hold the chamber pot or not, I shall say to you that the receiving of food is worth more than the not receiving of it, and the being scourged is a greater indignity than not being scourged; so that if you measure your interests by these things, go and hold the chamber pot. “But this,” you say, “would not be worthy of me.” Well, then, it is you who must introduce this consideration into the inquiry, not I; for it is you who know yourself, how much you are worth to yourself, and at what price you sell yourself; for men sell themselves at various prices.

          – Epictetus

          Victims are still actors, because there are many ways to react to crime.

          And thus we can see that Stoic economics was more advanced than Austrian economics. Unlike Austrians, Stoics did not attempt to address the issue of slavery by alleging that it either did not exist or was irrelevant.

          Some Stoics do seem to have condemned slavery, or at least the extremes practiced by the Romans, but unfortunately they did not state their views as strongly or clearly as more modern abolitionists. For further details see this article.

        • Anonymous says:

          Speaking of which, recognizing the agency of slaves, rather than portraying them as passive, is a huge issue in the latest, most ethically advanced abolitionist art.

          Check it out.

  6. guest says:

    Neither the worker nor the entrepreneur help the rest of society – at least not directly.

    Indirectly, they are both expressing information that could be used by others to make their own profits. Nothing guarantees that others will choose to use that information, or that others will be in a position to use that information.

    But the worker helps himself, and the entrepreneur helps himself. And there’s nothing sinister about that.

    Krugman is technically right, but so what. Economics is not about “society”. It’s about individuals attempting to satisfy their preferences.

    • Andrew Keen says:

      Helping society is a good thing, whether directly or indirectly. If an entrepreneur and a worker collaborate to produce something good, then their efforts are good for society and stifling their efforts is bad.

      • guest says:

        “Helping society” is a collectivist way of thinking.

        Only individuals can benefit economically.

        Krugman’s dig presumes that “the collective” is something that should receive benefits, and when we respond that the free market does benefit “the collective” we’re actually granting his premise that “the collective” is something that exists and that can receive benefits – and receive economic harm.

        See that? If the collective can be benefitted and be harmed by individuals’ market actions, then maximizing the collective good by regulating individuals’ actions is worth pursuing.

        Stop granting them the premise that we’re a collective.

        • Andrew Keen says:

          I used to think like you.

          It is true that society is a collection of individuals. But it is also true that the whole can be greater than the sum of its parts. Rigid individualists often ignore the value of community and focus instead on the burden that community places on its members. It is generally true that a voluntary community is preferable to a coercive one. But it is wrong to say that, because the community is composed of individuals, the community therefore does not actually exist. A community certainly does exist and has real value. Action must be taken to maintain it or it will fall apart. In ways, it is more real than the individuals that compose it because it transcends and outlives those individuals that belong to it.

          Libertarians must stop denigrating society. It is too obvious to the average man that his community is real and valuable for him to accept the propositions of the rigid individualist.

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