A portrait of Karl Marx

Marxism

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Core beliefs

Marx sees human history in terms of class struggle. Hegel had an idealist concept of a struggle of ideas driving history. The Marxist view of history holds that change arises from the material interests of classes, particularly those of the ruling and working classes. Individuals can play key roles at certain moments in history, but change depends on economic and class factors. There is an unavoidable historical progress from primitive to advanced, so from primitive societies, to feudalism, to bourgeois capitalism, which would finally end in workers owning the means of production, so socialism.

The second core Marxist idea is the law of value under capitalism. Capitalism is a system of production for the profit of the owners of the means of production, who exploit those who own nothing but their ability to work. Labour creates all the things and services that we use and need, but the value of that labour is appropriated by the owners of the means of production as ‘surplus value’ over and above what labour receives for its work. That surplus value is accumulated as capital, which adds value to labour. A worker with the proper equipment can produce far more widgets than one without.

Marx’s theories have little standing in economics, but that is not the strength of Marxism. It lies in recognising that the organisation of societies depends on economic factors, with competition as the hidden driving force. We work in corporations because that gives a competitive advantage, which affects the organisation of societies. The simple fact that we have time zones with standardised times is a result of the Industrial Revolution and train schedules. And Marx offered keen insights into what is wrong with capitalism, but these were 19th-century views, so translating them into modern equivalents can be illuminating.

Value is subjective

Marx claimed that capitalists’ profits come from appropriating the value that workers create, so stealing it. He based his claim on the labour theory of value, which economists of his time considered valid. The theory says that the price of an item equals the cost of labour required to make it, thus including the labour to produce the raw materials. If making a pair of shoes takes twice as much labour as making a pair of trousers, shoes cost twice as much as trousers. Marx asked himself, ‘If that is correct, how can there be profits?’ It is because the theory is wrong, not because capitalists are appropriating the value that workers create. There is no objective measure of value.

On the market, the price of an item depends on what people are willing to pay for it, not on what it costs to make. Otherwise, you could work a year on building a better mousetrap and sell it for €50,000. Nobody will buy a €50,000 mouse trap. However, after spending another €50,000 on building a brand in a marketing campaign, you might sell that same mousetrap for €200,000. That is because value is subjective. It might seem stupid to buy a €200,000 mousetrap, but if you have too much money and showing off the mousetrap makes you attractive to the ladies, it may be worth it.

Marx drew the incorrect conclusion that labour gives a product value, when it is entrepreneurship that does. Businesspeople organise the production and distribution of goods and services, which includes hiring labour, managing customer and supplier networks, making estimates about future consumer desires, or creating them with marketing campaigns, and doing all of this at a profit, as the operation requires capital. Marx overlooked that part of capitalism. That is why communist countries are poor. They don’t have entrepreneurs. As we near the end of humanity, with the profit motive as the primary cause, leaving it there would be a fatal mistake.

Value is what we believe it is. Nothing is sacred. Everything is for sale, including the rainforests and even the Earth. The so-called owners think it is all theirs and can do with it as they please. In a communist dictatorship, the government tells you what to believe. In the market, a story becomes true if you can sell it. That is why businesses advertise products that are bad for us. As money represents power, we stare into the moral abyss. That is why communists called their newspapers The Truth.

In a world without someone telling us what the truth is, there is no truth, and communism is just another message on the marketplace. The communists appealed to the workers’ self-interest. And that was a poor sell because workers were worse off under communism. It is why communism was doomed to fail, not because it is impossible to live like communists. Early Christians did. Rather than concluding he had just proven the labour value theory wrong, Marx claimed capitalists stole from their employees.

Silvio Gesell made the astute observation that the problem is not entrepreneurs and profits but passive interest income. Plenty of people live off their capital without contributing anything, except perhaps by bringing in capital to produce things we don’t need. Gesell aimed for a society where capital has no privilege, so where there is no passive capital income, but where people can put their talents to good use and are rewarded for taking risks and making the right decisions. And if we terminate the bullshit economy, which includes status products like €200,000 mousetraps, that could create a fairer economy.

Fulfilling work

Marx further said that producing for markets alienates us from what we make. Many workers experience this. It is why Dilbert comics are so successful. Marx claimed we could be free, creative beings, but the modern, technologically developed world dictates our lives. Marx believed that ending the market mechanism and replacing it with democratic planning would liberate us. So if workers received what they owed and we replaced capitalism with democratic planning, we would live in a paradise where we could do the jobs we like and have everything we need.

That is a silly idea. There will be long lines of people who wish to be actresses, but few want to be cleaners. Likewise, communes don’t attract farmers and construction workers, but artists and Reiki healers. We need food and homes, not art and quacks. Work is doing something useful. If it isn’t useful, it isn’t work, but a hobby. Even if everyone contributes, planning will never do as well as markets. You could live with that if you have enough and have no worries. You might want a pear, but you could settle for an apple. And you have heard of oranges but never tasted one.

Capitalism causing misery

Marxists claim that capitalism causes misery as adding capital means doing more with fewer workers, which reduces the need for labour, pushing wages below the subsistence level and leaving workers to starve. In the 19th century, most economists believed wages would remain close to the subsistence level. If wages increased, more people would survive, expanding the labour supply. That would cause wages to decrease, so that more people would starve. The market would keep population levels in check. Marxists argue that making more stuff with fewer people was impossible because the unemployed couldn’t buy it. So, there would be either underconsumption or overproduction.

Marx himself held a slightly different view. Capitalist production occurs only if it is profitable. The drive for more production undermines the profitability of that production, Marx believed. Capitalists compete against each other to gain market share and a larger share of profits appropriated from workers. To gain an advantage, they resort to labour-saving technology to reduce costs and increase labour productivity. Marx argued that profit comes from labour, so investment in machines replacing labour may increase productivity, but at the expense of profitability. It would eventually lead to the halting of production and the layoff of workers. That didn’t happen because of Say’s Law.

Due to higher production efficiency and increased production, items became cheaper, so consumers had money to spend on other items. And humans can create money from thin air. When capitalists produce more, they must sell their merchandise, and, if necessary, they can encourage people to borrow money. And so, the general level of opulence rose. Marx had vastly underestimated human ingenuity in finance, marketing and job creation in the services sector and government, the so-called bullshit jobs in the bullshit economy. These jobs make sense because they solve problems in an increasingly complex society, but didn’t exist before as people lived simpler lives.

Scientific and rational

Marx believed that his theories were scientific and rational. He devised a theory of history using Hegel’s dialectic, arguing that power structures in society reflect economic conditions. To Marx, it was not new ideas challenging the status quo but economic conditions that drove historical change. He would say that the status quo of serfdom in Europe ended because towns challenged it by providing alternative jobs for serfs. Lords had to compete with them for their labour. And so, employer-employee relationships replaced serfdom, which became the new status quo.

Marx also believed nationalism was a temporary phase, imposed by economic conditions. Industrialisation required larger markets, thus societies rather than communities. Nationalism allowed the elites to divide and rule the working class. And because capitalism would eventually bankrupt itself, Marx predicted, as if it were a logical certainty, communism would replace employer-employee relationships, and everyone would become free and equal. In reality, people weren’t free or equal under communism, and a new elite of party bureaucrats replaced the capitalists.

Marx aimed to violently overturn the existing capitalist order through revolution, whereas Hegel believed that the French Revolution and the Napoleonic Wars had been necessary to replace the feudal or aristocratic order with a new order grounded in European Enlightenment ideals. Karl Marx became the prophet of the most successful cult in recent history. In many ways, Marxism became Christianity without God, by claiming there is a plan behind history, that there will be an End Time, a communist revolution, after which we will live in Paradise. Marx raised concerns that are still valid today:

  • Instead of saying we will enter the communist paradise as a historical necessity, we may argue that the script is that we are about to enter God’s Paradise, which could be a Hegelian synthesis of the Marxist challenge to the existing bourgeois order.
  • Instead of saying capitalists steal value from workers, you can argue that we work to make the rich richer. Despite economic growth in advanced economies, many workers still can hardly get by. And that is not because they are all lazy or stupid.
  • Instead of saying the system alienates us from what we produce, you can argue that we are part of a system over which we have no control. We can’t democratically decide on ending the creative destruction of this planet and humanity.
  • Instead of saying that capitalism causes misery, it has improved billions of lives, at great cost perhaps. Yet it will end in a disaster due to excessive resource consumption or technological development caused by out-of-control competition.

Feature image: A portrait of Karl Marx. Public Domain.

Property Rights

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Property rights play a central role in economic organisations. The concept originates in agricultural societies. To hunter-gatherers, property has little meaning. A hunter-gatherer band carries hardly any items and moves around to find food, so there was no point in owning things. Owning nothing and being happy was the state of humankind in the Garden of Eden. That changed with agriculture. After the Fall, Adam had to toil to make a living. You aren’t going to work hard to plant and grow crops or to raise and feed livestock if someone else takes them. The protection of property from thieves and other tribes is one reason humans organised themselves into tribes and states. Yet traditional societies usually had no private property. In most cases, family groups or villages held ownership, and clan leaders or elders made decisions.

Privately owned property and individualism became commonplace in Western Europe first. The Church wished to inherit the property of Christians who had no heir. That is harder to do if a clan owns the property, so the Church promoted private property to let the Church inherit the property of Christians who had no heirs. Individual property rights and women’s right to own property led to the end of family groups headed by my male clan leaders. And it promoted individualism.1 In the Middle Ages, after clans had disintegrated, feudal lords held most property, which the Church could inherit. Feudalism was, in principle, a voluntary agreement. Lacking a clan, a serf sought the protection of a lord. A serf had rights, like the right to protection by his lord. The development paved the way for modern capitalism, which led Europe to lead the process of modernisation.

The communist experiment has demonstrated that the absence of property rights causes shortages and sometimes famines. Another argument for property ownership is the tragedy of the commons. Individuals who act out their own self-interest deplete or spoil a shared resource, ruining it for everyone. If you share items like tools with your neighbours, you might run into conflicts if some neighbours care less about them or use them more. All pay for these shared items, but some benefit more than others, and some people might not benefit and only pay. A solution is ownership. Either we all own these items individually, or, if that is more efficient, we rent them from someone who owns them. Collective ownership can work better if there is social trust within the group, which requires members’ trustworthiness. It usually works best with family and friends and, in the past, with clans.

You can look at the role of property from different perspectives. One is the competitiveness of societies. Property rights have made societies more competitive, which is why they have prevailed. If someone else takes away what you make, you stop working. If people work harder, there is more to go around. Another perspective is how property rights contribute to an agreeable society. Property ownership may prevent shortages and famine. Property rights are often limited. One reason is to protect other people’s property. If you own a plot of land between other homes, you may not be able to build the home you like. Then you pay property taxes. And so ownership is often incomplete. And somehow, most property ends up in the hands of a few, who come to control society, making it less agreeable to others. Billionaires now determine what happens.

The problem we face is that societies function poorly without property. The pursuit of personal gain motivates us to work and be productive. Yet, property rights as they are now, and the pursuit of profit that comes from them, are among the ingredients in the toxic cocktail that is about to terminate humankind. Working hard to get ahead as we do now is suicide, while removing the incentive to be productive is disastrous. And interest income, so the leeching by the rich, is bleeding societies, while complexity is increasingly weighing on us in the form of rules and taxes, and the costs more often outweigh the benefits. That is why we must make the economic reward system align with the goals of our survival and contribution to society, including the role of property.

Featured image: screenshot from a WEF video promoting sharing items like cars

1. The Origins of Political Order. Francis Fukuyama (2011). Farrar, Straus and Giroux.

The Price of Money

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Interest: the price of money

When a book is €7 in France, what does that mean? If it is $8 in the United States, is it more expensive there than in France? It depends on the exchange rates of the dollar and the euro. If the dollar is worth €0.80, then $8 equals €6.40, which is less than €7. The exchange rates of the euro and the dollar depend on supply and demand in the foreign exchange market. However, the price of money is not the same as the price of currencies.

When economists talk about the price of money, they mean the interest rate. The supply and demand for funds determine the interest rate, as well as the available funds for lending and the demanded funds for borrowing. When many want to borrow and few plan to lend, the interest rate rises. When only a few want to borrow, or when a lot of funds are available for lending, the interest rate drops.

Economists distinguish between money and capital markets. Money markets provide short-term funding, typically less than a year, whereas capital markets provide long-term financing. Several factors affect the supply and demand of funds in the money and capital markets. These are:

  • Ordinary people value the present over the future, and the degree to which we do affects the interest rate. They suffer from time preference.
  • Capitalists are very special people. They save and invest anyway, even at low interest rates. They are endowed with a capitalist spirit.
  • Returns on other investments affect the money and capital markets because they must be attractive relative to alternatives.

Time preference

Suppose you are a hatter and have just sold a hat for €50. You could rush to the nearest phone shop and buy that fancy phone cover you saw yesterday. Alternatively, you could save up to buy a new smartphone later, once you have sold more hats. You could even save for your retirement. The odds are that the money will be gone before the month is over, and that you have acquired a phone cover or some other gewgaw. If this applies to you, economists will diagnose you with a condition called time preference.

Economists assume that we have a time preference, meaning we prefer to satisfy our desires now rather than later. You want the latest smartphone model now rather than later, and you may even wish to borrow money to buy it now. Individual time preferences vary. Your time preference is the degree to which you value the present above the future, which you can express in an interest rate. If the market interest rate is above your time preference, you save, and if it is below, you borrow.

Time preferences differ for different people. Mary may save if interest rates are above 4%, and borrow once they are lower. John may save as long as interest rates are above 6% and borrow when they are below 6%. Alex might save if interest rates are above 5%, but may not borrow if interest rates are below 5%. The result is that as interest rates rise, the supply of funds for lending increases and the demand for funds for borrowing decreases. The market interest rate will be where supply and demand are equal.

Capitalist spirit

Time preference is an ailment plaguing ordinary people. Their designated role in the economy is to consume. Other people think differently. Economists have diagnosed them with a condition called a capitalist spirit, which is the opposite of time preference. They are the capitalists. Capitalists believe that money spent on a frivolous item is money wasted. That is because if you save and invest your money, you will end up with more money to reinvest.

Capitalists don’t suffer from time preference. Their designated role is to invest. And so, they end up with a lot of money when they die. What’s the point of that? Capitalists invest in businesses that make the frivolous items ordinary people consume. Ordinary people wouldn’t have invested their money. They would have spent it on frivolous items instead, so that these items wouldn’t have been there in the first place.

Capitalists have a lot of money. They don’t stop investing when interest rates are lower. They can’t help themselves. They have a capitalist spirit, just as ordinary people can’t help themselves because of their time preference. When they run out of things to invest in, they lend their money at lower interest rates. Again, it is the law of supply and demand at work. If capitalists have a lot of money while other people cannot borrow because they can’t afford to pay the interest, interest rates drop.

Investment returns

There is no point in investing if you don’t get more in return. These returns end up as corporate dividends or as rent from real estate. If these returns are high, you may prefer investing over lending. Investing is risky. If sales are sluggish, corporations may cut their dividends, but lenders still get their interest. When a business goes bankrupt, lenders receive their money first, while investors get what’s left over. And that could be nothing.

When someone wants to borrow money from you, the interest rate must be attractive compared to the investments you can make. Otherwise, you may prefer to invest and receive dividends and rents despite the risks. In this way, interest rates on other investments affect those on loans. Banks dominate the markets for borrowing and lending, so we choose between investing and keeping a deposit at a bank.

Risk

When you lend out your money, the borrower may not repay. So, if a stranger wants to borrow some money from you, she could offer you a high interest rate so that you might think, ‘I don’t know her, but she may pay back, and the interest rate is attractive, so I’ll do it.’ Money can lose value due to inflation, so inflation is another risk for the lender. If the money that buys a smartphone today only buys a phone cover a few years later, you spend that money on a smartphone right now. That is, unless someone wants to borrow your money from you and offers a high enough interest rate, so that you save for a newer model that you expect to need a few years down the line.

A bank’s business is to know its customers, so lending to a bank is usually less risky than lending to an individual or a company. When you have money in a bank account, you have lent it to your bank. Banks are supposed to be good at managing risk, so you accept a lower interest rate on your deposit than you would on a loan to an individual or a corporation. Banks know their customers well and lend to many different customers, so they can manage their risks and lend at lower interest rates than you could. Interest is the price paid for distrust. If investors trust the debtors and the value of the money, they expect inflation to be low, which means interest rates are lower.

The government and the central bank play a central role in limiting banking risk. Banks charge interest on loans, which leaves debtors short of money. That is, unless depositors spend their money or someone else borrows the principal plus the interest. Like other Ponzi schemes, the usury scheme collapsed from time to time, leading to defaults and economic hardship. To prevent that, the government borrows money, and the central bank prints it into existence, bringing it into circulation so debtors can repay their debts with interest. But with governments and central banks propping up the usury scheme, debts continue to grow, which may eventually lead to a usury-financial apocalypse.

Convenience

When you lend your money to someone else, you can’t use it yourself. There may be a new smartphone you want to buy, but alas, you have lent out your money. That is inconvenient. Then you remember with a smile that you will have the phone and a hip phone cover next year because you received interest. So, if you don’t receive interest on your money, you may not bother lending it out because you may need it.

When you deposit money at a bank, you lend it to the bank, but you can still use it at any time. If you use that money to pay for legal advice, it ends up in the lawyer’s account, and the bank borrows it from the lawyer until she uses it to pay the barber. Having cash on hand is convenient. Economists call this liquidity preference. We accept low interest rates on current accounts because they are as convenient as cash.

Properties of money

The properties of money can affect interest rates. Imagine that apples are money, and you save to buy a house. If someone wants to borrow 1,000 apples from you and promises to pay back 1,000 apples after 5 years, when you plan to buy the home, you probably accept this generous offer. You may even accept an offer of 900 apples, since that is better than letting your apples rot. In this case, you would settle for a negative interest rate.

You would only do so if you have no better alternatives. If you can make 10% per year in the stock market with Apple stock because their gadgets are in great demand and outrageously expensive, you would exchange your apples for Apple stock. It doesn’t matter if the apples rot. If someone wants to borrow money from you, you demand interest. Our money rots, even though not as much as apples. We call it inflation.

If the money had been gold, you wouldn’t accept the offer, even when the stock market is doing terribly. You can keep your gold in a safe deposit box, and you have 0% interest. Similarly, you wouldn’t accept negative interest rates on euros or dollars because you can take banknotes and store them in a safe deposit box. If many people do so, that interrupts the circular flows, and the economy may suffer.

Discounting

Discounting is about determining the present value of future money using the interest rate. When interest rates are above zero, one euro in the present is worth more than one in the future. That is because you can receive interest on that euro. If the interest rate is 5%, one euro turns into €1.05 in a year. In other words, €1,050 over a year is worth €1,000 today, so the present value of €1,050 over a year is €1,000.

How much is a cash flow of €1,000 in a year worth in the present? That is the reverse calculation. The formula for the present value of a single future cash flow is:

Present Value = Future Cashflow / (1 + (Interest Rate / 100)) ^ Number of Years

If there are multiple future cash flows, you add up their present values. An example can illustrate this. Assume that the interest rate on government bonds is 3%, and you own a 5% government bond that still has two years to go before the principal of €1,000 will be repaid. You will also receive €50 in interest after one year and another €50 in two years when the principal is due.

If you plan to sell the bond today, you want to know its present value. There are two cash flows. You will first receive €50 after one year. The present value of that cash flow is: €50 / (1 + (3 / 100)) ^ 1 = €48.54. After two years, you will receive an additional €1,050. The present value of that amount is: €1,050 / (1 + (3 / 100)) ^ 2 = €989.73. And so the present value of the bond is €48.54 + €989.73 = €1,038.27.

At higher interest rates, the value of the bond declines. If the interest rate is 5%, its present value is (€50 / (1 + (5 / 100)) ^ 1) + €1,050 / (1 + (5 / 100)) ^ 2 = €47.62 + €952.38 = €1000 exactly, which is to be expected. At lower interest rates, the bond will be worth more. At an interest rate of 2%, the present value is (€50 / (1 + (2 / 100)) ^ 1) + €1,050 / (1 + (2 / 100)) ^ 2 = €49.02 + €1,009.23 = €1,058.25.

At lower interest rates, bonds are worth more. That is also true for other assets that generate cash flows, such as stocks and real estate. The present value of the future dividends and rents increases when interest rates decline. When interest rates are lower, people can borrow more for a home, so that house prices may go up.

Engine of growth

Credit means trust. When you invest, you expect to receive a profit. You anticipate something that isn’t there yet. You imagine that it will be there in the future. In the past five hundred years, trust in the future mostly paid off. If you don’t trust the future, you put your money in a piggy bank or invest in something that keeps its value during an economic collapse, such as gold or land. Banks create money out of thin air, believing that the debtor’s future revenues will pay for the principal and the interest.

That is why the economy must grow. It is the growth imperative promoted by interest charges. When expectations fail to materialise, investors stop investing, and interest payments on existing debt damage the economy by sucking money out of the circular flows. When growth is lacking, governments and central banks keep the economy afloat by going into debt or printing currency and bringing these funds into circulation. When money circulates, businesses profit, employ people, and pay interest.

Interest keeps the economy going by making those with a surplus lend it to those with a deficit. That is why economists think that banning interest will cause an economic disaster. When economic growth is low and expectations aren’t met, investors stop investing, and the money stops flowing. Had the money been perishable like apples, they would still invest, even when returns were low, or lend their money at a negative rate. We see that happening. After accounting for inflation, interest rates are often negative.

Featured image: Ara Economicus. Beverly Lussier (2004). Wikimedia Commons. Public Domain.

El Uruguay a través de un siglo.

Climbing That Hill

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Everything I had once believed in suddenly seemed a lie. That was also true for my religion. Losing faith was a gradual process that took several years. I didn’t give up on it on a whim. I had friends in the Christian student club Alpha, and I could discuss the issue with them. In those years, Losing My Religion by REM became a number-one hit. I turned atheist but not hostile to religion. Some people hate religion because of trauma. But no one had forced me. I had chosen to be religious myself. My mother complained that I didn’t take care of myself. She kept telling me I was too skinny and looked like Jesus. And there was a lot to ponder. What is truth? And can we know it? Can we be sure about anything? Nearly every day, I went to the forest near the campus to ponder these questions. For several months, there was no end to doubt. Logic was the last line of defence.

I had been a simple guy, not aware of much. A******* had reproached me for being naive. It seemed imperative to fix that to fix my life. I followed the metaphysics course to learn what it was. It is about the nature of reality. The lecturer discussed ancient Greek philosophers. Some believed that earth, water, air, and fire were the building blocks of nature. Others addressed the nature of truth and what we can know. Then, the lecturer came up with something interesting. If truth doesn’t exist, then that must be true, so truth must exist. The non-existence of truth is logically impossible. At the time, it seemed the discovery of my lifetime. The truth is out there, somewhere, lurking, and it might one day take us all by surprise, which was somehow comforting rather than unnerving.

The ancient Greek philosopher Socrates sought the truth in his famous dialogues. The sophists were his opponents, the lecturer told us. Using clever tricks, these people made false suggestions. He had an example. A sophist would say to a peasant that he could prove that an empty glass equals a full glass. The peasant wouldn’t believe him. The sophist then challenged him to make a bet. He would ‘prove’ it as follows:

Sophist: ‘A glass half-full is the same as a glass half-empty. Do you agree?’
Peasant: ‘Yes.’
Sophist: ‘If two volumes are equal, and you multiply them both by two, they must still be equal. Do you agree?
Peasant: ‘Yes.’
Sophist: ‘If you multiply half-full by two, you have full, and if you multiply half-empty by two, you have empty, so a full glass is the same as an empty glass.

And so, the peasant lost his money. This sophist lived off defrauding people. The sophists weren’t popular with the general public, the lecturer said. More generally, they were relativists who didn’t believe in absolute truth. They thought the truth merely depends on perspective. Socrates opposed that kind of thinking. The truth is out there. It has always been there, is still there, and will be there. So, what I believed was fickle and could change. If I did my best, I could come closer to the truth. My doubts receded, but the comfortable feeling of certainty was gone forever. Something could always pop up, overthrowing everything I had learned so far. It had happened once. It could happen again.

Socrates believed that investigating matters with an open mind can bring us closer to the truth, and that greater knowledge is progress. In that sense, we have progressed. We can invent things, but forgetting inventions is much harder. That might require measures like burning books and murdering scientists. And we cannot undo our deeds. You can’t return to ignorance or inexperience once you have crossed a line into knowledge or experience. You might call that progress. Somehow, we think we are progressing. But are we? If it all ends in a nuclear Armageddon, it would all be pointless. So,

Making a career before the bomb falls
Working on my future before the bomb falls
I’m running around my schedule before the bomb falls
Safe in the health insurance fund before the bomb falls

And when the bomb falls
I’ll be lying in my suit, diplomas and my cheques in my pocket
My insurance policy and my vocabulary, aww
Under the apartment buildings in the city next to you

Just drop it then, it’ll happen anyway
It doesn’t matter if you run
I never knew you. I want to know who you are
I want to know who you are

Doe Maar, The Bomb

In the second-hand bookstore De Slegte in Enschede, I stumbled upon a booklet about Hegelian dialectic. The cover promised that it would be about progress using arguments. It began by stating that progress arises from a thesis (the current situation), an antithesis (a challenge), and a synthesis (a resolution), so that looked very promising indeed, and that was the reason for buying it. Once I started reading it, and to my great disappointment, it soon turned political. It was about framing questions with particular wording so that the solution would present itself, the book argued.

It looked like a textbook on propaganda, and a communist seemed to have written it. By using words, you define reality. It was also how the sophists operated, so it didn’t seem an honest quest for truth, because the facts don’t depend on the wording. But the question remains: what are the facts? Let’s illustrate the issue with a few examples. You can apply the tactic to the estate tax, like so:

  • You can call it a death tax, thereby implying that governments profit from the death of people, suggesting it is a bad tax, or that the tax is evil.
  • You can call it a parasite tax, thereby implying that the recipients haven’t earned it and suggesting that it is a good tax, or that not having the tax is evil.

People who have worked and saved have already paid taxes on their labour, and if there are wealth taxes, also on their estate. In that sense, it is unfair. Those who receive an inheritance usually haven’t worked for it. In that sense, it is fair. That is the problem with many issues. The opposing sides may seem equally reasonable. And there are practical consequences. Inheritance taxes can ruin family businesses, while not having them can lead to a class of billionaire oligarchs ruling society.

Framing can be misleading. Climate activists label tax breaks that corporations receive on fossil fuels as subsidies. These weren’t subsidies but lower taxes. These tax breaks exist because of competition. Corporations elsewhere don’t pay these taxes either, so a corporation would go bankrupt if it had to pay them. Production would move elsewhere, and nothing would change for the better. Climate is one of the most pressing global issues. The reason to mischaracterise the situation in this manner may be to fire people up by making them angry and inspiring them to take action, but it won’t help.

Hegel’s idea of a hidden truth behind seemingly irreconcilable views greatly helped me. There is a higher truth, and instead of taking a side, you can investigate opposing views and try to resolve them. A resolution is a more profound insight rather than a compromise. It is a brutal process as I have experienced firsthand. We don’t depart from our views unless we have no choice, so we usually do so only after failing utterly and being cornered with no options left but to admit that we are wrong. It is often also unclear who is right, so you can stick to your opinions until you fail. Hegel’s idea is that a competition of ideas drives history, so superior ideas replace inferior ones, and that this may require revolution and warfare. That would be progress, but there can be no progress without a goal.

Hegel envisioned that God’s plan worked like so. We would end up in God’s paradise through progress. That was the goal. In doing so, he laid out the scheme for a dialectical struggle between progressivism and conservatism, leading to achievements such as the end of slavery, workers’ rights, universal suffrage, equality between men and women, equality among races, LGBTQ rights, and the like. That progress came with activism and sometimes with warfare, such as the American Civil War. Marxists and the communists built on Hegel’s scheme and replaced ‘God’s plan’ with ‘historical necessity’, claiming that we would end in a workers’ paradise rather than God’s paradise.

Both sides of an argument represent different realities that can be equally true. One side’s reasoning may appear stupid to the other, and the right choice depends on the weight of the arguments. Hegel was far more important than I realised at the time. His philosophy is a foundational pillar of Western civilisation, and perhaps the only way in which Western civilisation might be universal, as it promises a path towards a world civilisation. At the time, all that eluded me. Still, the idea that opposing arguments both reflect an underlying truth put my mind at ease. I couldn’t live with the idea that there is no truth and only perspective. My previous ideas hadn’t become worthless overnight. They were as true or false as before, and so were my new views. Nothing had changed, except my perspective. The truth exists, and my beliefs are irrelevant. My doubts faded,

You say the hill’s too steep to climb
Chiding
You say you’d like to see me try
Climbing
You pick the place, and I’ll choose the time
And I’ll climb
The hill in my own way
Just wait a while, for the right day
And as I rise above the treeline and the clouds
I look down, hearing the sound of the things you said today

Pink Floyd, Fearless

I came to relate this song to the challenge A******* had given me and conveniently ignored a second part that didn’t seem to fit into the picture,

Fearlessly, the idiot faced the crowd, smiling
Merciless, the magistrate turns ’round, frowning
And who’s the fool who wears the crown
Go down in your own way
And every day is the right day
And as you rise above the fear lines in his brown
You look down
Hear the sound of the faces in the crowd

Pink Floyd, Fearless

For nearly a year, thoughts filled my mind. If I had done this or that differently, then things would have turned out differently. After initially being kind, A******* turned hateful within a few weeks. Having been hated all my life and not knowing any better, I accepted it. Yet, the dormitory felt like the place where I belonged. It was Paradise. Only, I didn’t fit in, and that was because of what my life had been like. Living there made me realise that it didn’t have to be that way. My childhood could have been different. At the time, I blamed my parents, but they had done their best. And that was the past, and the past was gone forever, so there was no point in dwelling on that. The future might be better if I changed my ways.

There were notable differences in backgrounds between A******* and me, and somehow they proved an unbridgeable gap. A******* appeared progressive and had lived a cosmopolitan life, while I was conservative and rural, and had not seen much of the world. Nijverdal was a rural area. Art and literature didn’t interest me. The incident foreshadowed a conflict that you can see today in several Western societies. There is a growing disconnect between leftist city people in intellectual jobs and rural people, like farmers, who lead an entirely different life. And so, came to see these cultural differences as a major contributing cause to the most epic disaster of my lifetime.

Until then, culture had seemed a vague concept debated by academics. Suddenly, it became very real to me, making me feel an urgent need to understand people who were different. I had to adapt and fit into various environments. It didn’t come naturally to me. Years later, I found out that I was autistic. And so, studying culture and human conduct became a conscious effort. My intuition had failed me, so I learned to understand differences and cultures by seeing the relationships between what people said and what they did, and by identifying patterns. People with similar backgrounds or properties display identical behaviour. Over time, it made me as good as, if not better than, others at understanding and predicting behaviour. After a few years, that began to show itself.

After finishing her education, my sister had difficulty finding a job. Yet my first application succeeded, and to a great extent, that was due to my understanding of the company’s culture, which allowed me to provide answers that made it appear as if I fit perfectly within the new corporate vision. That was not the case, but I had succeeded in making it seem that way. Despite applying for dozens of positions and being talented in fashion sales, my sister received no job interviews. My mother then asked me to review one of her application letters. The letter was boastful and without substance. For instance, it claimed that she had excellent commercial skills without any evidence to back it up, followed by more bluster without proof. And so, I asked my sister, ‘Where did you get this letter from?’ It came from a friend who had applied to the Dutch telecommunications company KPN. They hired her as a manager.

That made sense. KPN’s recruitment advertisements suggested they were hiring arrogant, boastful people without substance for management positions, which explained why they hired her friend. Most people would reject unsubstantiated bragging. After all, it was the Netherlands, not the United States. It might have worked in Amsterdam, where the cheeky people lived, but not in Arnhem, where my sister was. I told my sister that she could say she had good commercial skills, but should back it up with evidence. She had done an internship, and the company was very pleased with her, so I said, ‘Mention that to back it up, and tell what your job role was and tell about a few things you did.’ She then revised her letter, got interviews, and was hired soon afterwards. And you can see the consequences of not understanding culture. KPN was in a different league because it wanted to shed its dusty government image and play with the big boys in telecom. That didn’t end well, but that is another story.

Dutch public television featured human interest programmes about people living far away. You could learn about how people lived on the Mongolian steppe and their thoughts and beliefs. Minorities like Muslims and Hindus had airtime on Dutch public television, so that you could learn about them as well. Once at the Utrecht Centraal train station, a few Hindus handed me a book containing some of their Vedas. I had never encountered such a hazy prate, except, perhaps, Hans van Mierlo’s, making me quit reading after a few pages. When discussing what had happened at the dormitory with my best friend Arjen, he said, ‘You do not mince words. You say what you think.’ It is a quality that doesn’t help you in life. It can annoy people. Since then, I spoke my mind less often.

Featured image: El Uruguay a través de un siglo. Carlos M Maeso (1910). Public Domain.

The Golden Age

Unnatural State of Paradise

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The wolf and the lamb

Since time immemorial, people have dreamt of paradises where life was good. The Bible starts with the Garden of Eden, where Eve and Adam lived happily, had enough, and had no worries. Yet a paradise of peace and harmony is unnatural. We may have good places for a while, but they will eventually disappear due to the struggle for existence. Humans, like other organisms, compete and cooperate. The competition comes at the expense of individuals, even when it benefits the species. And so, paradise has remained a pipe-dream. As Isaiah once prophesied (Isaiah 11:6-9),

The wolf will live with the lamb.
The leopard will lie down with the goat,
the calf and the lion and the yearling together.
And a little child will lead them.
The cow will feed with the bear,
their young will lie down together,
and the lion will eat straw like the ox.
The infant will play near the cobra’s den.
And the young child will put its hand into the viper’s nest.
They will neither harm nor destroy
on all of my holy mountain.
For the earth will be filled with the knowledge of the Lord
as the waters cover the sea.

As the enlightened observers of the happenings in the wild may have figured out, the wolf will not let the lamb in peace, nor will the cow and the bear share a meal. It is not in their nature to do so. That would require a miracle of the most unnatural kind, which might only happen in fairy tales. And so, despite our efforts to achieve a utopian society, it still eludes us. We have the means to provide everyone with an acceptable standard of living, but somehow we keep fighting and fail to make it a reality. That is in our nature.

Struggle for existence

The struggle for life in nature is brutal and chaotic. In nature, cells cooperate in organisms to compete with other cells that have also organised themselves in organisms. Organisms, as you might know, are plants and animals, and humans are animals. Organisms can organise themselves into groups to cooperate and compete with other groups. The cooperation schemes of cells and organisms are orders. As organisms compete and cooperate, the best-adapted survive. That can put a premium on organising. Yet simple lifeforms have other advantages, such as self-reliance.

There is a balance in nature, as there is in a market. If foxes prey on rabbits, the fastest rabbits and the smartest foxes survive. When there is a surplus of rabbits, foxes can catch more of them and raise more young. As a result, foxes multiply and eat more rabbits, and the rabbit surplus turns into a deficit, and foxes die off. It is a brutal process in which rabbits get eaten, and foxes starve. The introduction of a new species, such as a viral disease that kills off rabbits, can change the balance.

That indeed happened with the help of human interventions. Foxes, being smart animals, adapted and sought other food sources, often not as quickly as rabbits. The rabbit’s demise sealed the fate of several other animals, such as the Nijverdal grouse, which went extinct. It would have been possible to preserve the grouse by shooting foxes. That would create a paradise for the grouse, an unnatural order without predators, so a park rather than nature. Indeed, a Paradise is like a garden rather than nature unhinged.

Invasive species

Foreign species can disrupt the balance of nature. Many die off, but some thrive, replacing native species and becoming pests. The American red crayfish is an invasive species in the Netherlands that wreaks havoc among native fish and plant species. Invasive species can become a new food source for other species. Crayfish are a good source of protein. Humans are the most disruptive species, murdering countless animals and plants. Humans have now ruined most of nature to create living space for themselves.

It is a matter of competitive advantage. Humans took over because they could. No one stopped them. Their genes, rather than a command in the Bible, drove them to exploit their environments and multiply. And so, the spread of humans resembles the spread of pests. When Europeans gained a competitive advantage over others, their genes multiplied, and they spread across the world, thereby usurping others’ land.

After they had created a paradise for themselves, foreigners came to their lands. While Westerners were busy maximising their utility, the immigrants’ genes took advantage of the situation. Westerners require spacious housing and may forego having children to lead a good life. Immigrants settle for small spaces and simple lives and have more children. In this way, descendants of immigrants replace the native population.

Relative advantages and disadvantages disturb the balance. You can compare both situations to the development of a pest. It promotes unease among the disadvantaged group, making them feel overrun, so that they may resort to violence. The competition between genes generates these feelings. Apart from that, human consumption levels are unsustainable. Yet, nature doesn’t care who survives.

Peace and stability can only be achieved by creating an unnatural state. It becomes possible if everyone lives under a single order, shares a common set of values, norms, and rules, and agrees to a social contract. It must be a stable situation as if time has stopped, to prevent new imbalances. That only happens in fairy tales. Isaiah already knew as he wrote, ‘For the earth will be filled with the knowledge of the Lord.’

Chimpanzees versus bonobos

Chimpanzees are our closest relatives. They live in patriarchal groups. A dominant alpha male leads the group, and males hold higher ranks than females. Male chimpanzees are generally larger and more aggressive, forming dominance hierarchies where they vie for the alpha position. High-ranking males form coalitions to consolidate power, maintain order, and intimidate rivals or lower-ranking females. Chimpanzees can be violent, and they sometimes commit genocide on rival groups.

Also very close to us are the uran utangs and bonobos. Yet, bonobos live in matriarchal groups where females hold the highest ranks and lead through collective power, cooperation, and alliances. Rather than ruling through force, female bonobos secure their dominance by banding together to intimidate or attack males who step out of line. The female-led organisation in bonobo groups works in the following ways:

  • Female bonobos form life-long bonds with one another. When a male tries to assert dominance or steal food, females unite to put him in his place.
  • Males remain with their mothers for life. High-ranking mothers support their sons, allowing them to rise in the hierarchy and mate.
  • As females have the power, they get first access to desirable food sources.
  • Rather than intimidation and violence, bonobo politics involves sex to reduce stress, ease tensions, and form social bonds.

In human societies, male dominance is the norm, but female leadership is possible. The chimpanzees are the closest to us, and patriarchy is their default. Yet, as the bonobos are nearly as close to us. We are programmable, and cultures define the relationships between the sexes. Monogamous relationships may not work for many, but they often work and can promote group success by reducing male fighting for mating opportunities. And it reduces the spread of sexually transmitted diseases.

Garden of Eden

In the original tale of the Garden of Eden, the gods or the Goddess created man as a companion for the woman by making her give birth to him. The rib story is so obviously fake that it is a monument of mass indoctrination and shows the degree to which we are willing to believe fairy tales. The Garden of Eden was a matriarchal society. A man left his parents to live with his wife. Men existed to please their wives. They weren’t even fathers, so children were the women’s seed. And so, Eve could give birth to Adam as a ‘virgin’. To obfuscate that fact, which was a core belief of the first true Christians, the Virgin Mary giving birth to Jesus came to replace it. The Fall made woman the servant of the man, the story goes, because of her desire for him, for which he was created.

The Garden of Eden is not a natural state, but a cultural one, as human organisation defaults to patriarchy. Bands of hunter-gatherers could avoid conflict by moving on, allowing for greater freedom in gender roles, such as matriarchy. With the advent of agriculture and permanent settlements, defence became of the utmost importance. Men fought and murdered to plunder or to protect property. In the Bible, Abel was the first casualty. The story may have been modified for theological reasons. On average, men are more violent than women. About 95% of the prison population consists of men. Still, most men don’t abuse women, and women can be abusive in other ways. Still, men do nearly all the raping, yet culture can go a long way in civilising men.

Men are the way they are because the struggle for survival made them that way. In less civilised conditions, that is an advantage. Yet, in more civilised environments, it can be a problem. And when women don’t need a man to provide for them or to protect them, they can become more picky. So, a female-centred society causes distress with men, as serious as a male-oriented society does to women. Yet, the primary reason humans can’t create a paradise on their own and need God is that they are more like chimpanzees than bonobos, and that men, rather than women, dominate human societies, leading to power struggles and wars. The fall of humankind is the fall of women to a secondary status, or so it was in the original tale of the Garden of Eden. As Paradise is not a natural state, but a cultural one, we can only socially engineer it.

Latest revision: 29 May 2026

Featured image: The Golden Age. Lucas Cranach the Elder (ca. 1530). Wikimedia Commons.