Monday, 5 July 2010

You Have Two Cows

Oppression, injustice and disasters have existed since times immemorial. Nevertheless, in the bad old days it was always possible to identify the sources of each individual problem with a view to taking appropriate remedial action. The world-wide money economy has given rise to systems of mass communication, so that daily we receive news of individuals and groups in dire need of support. One can, at best, offer financial support or signatures to shore up a selected number of the plights brought to one’s attention by friends and colleagues. But the attempt to view the bigger picture is so mind-boggling that we shrink back into our private comfort zones, seeking to carry on as normal with the sticking-plaster approach.

Realistically, what can be done? Well, you are currently reading a ‘slow read blog’. You are invited to take a little time out to look at the bigger picture by assessing the nature of the world political economy of the second decade of the twenty-first century. The term ‘slow read’ was coined by Tom Raines, editor of the anthroposophical quarterly magazine New View.

In the early twentieth century, would-be statesmen and politicians were sent to study economics at the newly-founded London School of Economics (LSE) so that they would not fall into error by threatening big business and financial interests with ‘uneconomic’ schemes. In the introductory course, students were taught the value of money as an invention. Illustrations featured a farmer in a moneyless society who uses the cattle he owns to trade with his neighbors. A typical example is: "You have two cows; you want chickens; you set out to find another farmer who has chickens and wants a cow". These examples were meant to show the limitations of the barter system, leading to the brilliant invention of money and the financial system. By the early twentieth century it was apparent that without the institutions of finance, the modern political economy could not function. Money has made it possible for ‘you’ – Rational Economic Man – to exchange your ‘two cows’ – the land, labour or capital (plant or finance) – for money. That money will be accepted in exchange for any goods and services you require. Nevertheless, we ordinary individuals often find it very difficult to comprehend the complexity of the institutions governing the political economy under which we live. The following ‘two cow’ parodies, which circulated in the 1990s, demonstrate the dilemma we face in seeking to understand the man-made system under which we all live.

FEUDALISM: You have two cows. Your lord takes some of the milk.

FASCISM: You have two cows. The government takes both, hires you to take care of them, and sells you the milk.

PURE DEMOCRACY: You have two cows. Your neighbours decide who gets the milk.
REPRESENTATIVE DEMOCRACY: You have two cows. Your neighbours pick someone to tell you who gets the milk.
BRITISH DEMOCRACY: You have two cows. You feed them sheep’s brains and they go mad. The government doesn’t do anything.
AMERICAN DEMOCRACY: The government promises to give you two cows if you vote for them. After the election the president is impeached for speculating in cow futures. The press dubs the affair ‘Cowgate’. The cow sues you for breach of contract.
EUROPEAN DEMOCRACY: You have two cows. At first the government regulates what you can feed them and when you can milk them. Then it pays you not to milk them. After that it takes both, shoots one, milks the other and pours the milk down the drain. Then it requires you to fill out forms accounting for the missing cows.

TOTALITARIANISM: You have two cows. The government takes them and denies they ever existed. Milk is banned.
CRONY CAPITALISM: You have two cows. You leverage a hefty campaign contribution to a seat on the State Dairy Board. There you pass a regulation guaranteeing that no one can sell milk in the state cheaper than you. Your son becomes the most influential lobbyist in the State.

COMMUNISM: You have two cows. The government takes them and puts them in a barn with everyone else's cows. They are cared for by ex-chicken farmers. You have to take care of the chickens the government took from the chicken farmers. The government gives you as much milk and eggs as the regulations say you should need.
IDEALISED COMMUNISM: You have two cows. Your neighbors help you take care of them, and you all share the milk.
LENINIST COMMUNISM: You have two cows. Actually, the state owns them, but you have to take care of them. Most of the milk goes to the Revolutionary Vanguard.
STALINIST COMMUNISM: You have two cows. The state kills them and you. Your children and neighbors starve to death waiting for the state to replace the two cows. The state denies you ever existed.
BREZHNEV COMMUNISM: You have two cows. You bribe the local Party Boss to let you sell some of the milk on the black market. With the profits you buy Beatles albums and used Levi jeans.

ENRON CAPITALISM: You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back. You take a tax deduction for five cows. The milk rights for six cows are transferred to a Cayman Islands company secretly owned by a majority shareholder, who sells the rights to all seven cows' milk back to the listed company. The annual report says that the company owns eight cows, with an option on one more. Meanwhile, you kill the two cows in order to report lower overhead and project higher profits. Your stock soars-for a while.
MODERN CHINESE COMMUNISM: You have two cows. You bribe the party boss, sell the milk on an open market, buy a nightclub, deal drugs, and live well so long as you never speak your mind.
SURREALISM: You have two giraffes. The government requires you to take harmonica lessons.
With thanks to the various contributors of entries to these lists, available on the internet.

For an exploration of economic thought see The Archaeology of Economic Thought