Although people often come to think of symbols as the objects themselves, they are not. You cannot eat a pension; you can eat bread. A pension enables you to purchase bread. Symbols stand for objects; the possession and use of symbols determines who gets what.
Currently, in a formal sense, capitalist societies transfer income from one person to another according to four criteria:
Thus, a `professional' or `laborer', such as an architect or ditch digger, sells his or her services. A potter sells pottery.
A `capitalist' owns `the means of production', and receives income from its ownership. This income will be received only if the government is willing to enforce its transfer.
For example, a person may own a rivalrous product, such as an office building. With the help of police, the owner can exclude others from the property and receive rents.
Or a person may own a non-natural monopoly, such as the copyright on a non-rivalrous product, but have a governmentally enforceable right to prevent others from manufacturing duplicates.
The people who own or work in an industry, such as United States cotton growing, may offer value to a government by maintaining their old community, by continuing purchases, or by political action, that more than compensates for the cost of hurting the country's foreign policy or the extra cost to citizens. Hence, a government may subsidize them. Likewise, a government may subsidize — provide `welfare' to — those who lack income from ownership or work.
Some depend on gifts. Although important to a few and very important rhetorically, the history of the 19th century suggests that the amount of private charity in a society will always be too small for everyday governance, whether the actions of government be driven by compassion or by fear of revolution.
(I am leaving out what many say are larger income transfers in capitalist societies, those from wives to husbands and the like, because those transfers are not measured as a part of a `market economy'. And I am saying nothing about the benefit that derives from being able to breath air.)
This structure of income transfers was developed in capitalist societies over the past few centuries. An alternative mechanism failed in the Soviet Union; in this alternative scheme, a single large bureaucratic organization was supposed to provide official transfers. (The Soviet bureaucratic method is an example of an ordinal mechanism for resource allocation.)
Philip Bobbitt 1 argues that fascism provided yet another mechanism for providing income transfers but I could not find a good quotation summarizing the method. Nor I could not find a good quotation in the book from Robert Paxton 2. Both authors point out that in practice, fascist regimes were economically incompetent. I think the fascist theory was that everyone in existing industries should cooperate, as if they were in Medieval guilds; workers and owners would negotiate their share of income; the government would have the final say.
In any event, both communism as practiced in the Soviet Union and fascism as practiced in Italy and Germany were defeated in the 20th century.
The question at hand is what kinds of income transfers make sense in the 21th century.
There are two major issues: one is demographic, the other technologic.
Unless there is a major die-off from a plague or other catastrophe, many of the currently rich countries of the planet are entering decades in which a far higher portion of their population will be old compared to the past. Generally speaking, older people work less than younger. When possible, older people live on pensions, which are income transfers that come from ownership (usually through pension funds and the like) and from government provided transfers, such as those that in the United States are associated with Social Security and Medicare.
Since people cannot eat the symbols, but only what they provide, people who are producing the objects must produce enough so that a portion of these objects can go to pensions paid privately or governmentally.
One possibility is for the younger workers to accept a lower portion of total output as their take-home wages and salaries. Either taxes are higher, or the portion of output received by pension funds is higher, or both.
Another possibility is for people and governments to purchase claims against the output of people in a society with a different predicted demographic structure. Then the old can live off the work of the foreigners. The Japanese government is doing this in the summer of 2004 by purchasing US government bonds. (Although the amounts are huge in everyday terms, they are small compared to anticipated needs.)
A third possibility is that the old receive less. Many younger people expect this.
Just as a plague may reduce the population of the elderly, technological progress may stop. But the elderly may remain; and technological progress may continue.
In particular, the development of von Neumann Machines illuminates a fundamental issue: how to provide unemployed people with the output of von Neumann machines?
In the natural course of events, von Neumann machines could provide cheap manufactured products, but not humanly provided services nor geographic locations nor attention nor status.
Relative costs change when von Neumann machines are introduced. (Costs also change with manufacturing improvements that are not as dramatic as those produced by von Neumann machines.) Computers have cut the cost of manufacturing duplicates of digital works so much that we no longer refer to the process as `manufacturing' but call it `copying'. Similarly, von Neumann machines could cut the cost of manufacturing more objects.
As I write this in the summer of 2004, we are witnessing a conflict over the consequences of the drop in the cost of making digital duplicates.
For example, one group has persuaded various governments to require manufacturers of DVD players to reduce their capabilities. This is called `Digital Restrictions Management' or `DRM'. In order to prevent a lost of income, the reduction in capability is intended to prevent a four year old child from playing a movie that his or her parents legally purchased in another region.
As Jared Diamond says,
Just as with the reproduction of digital information, the same kind of clashes will occur when it becomes possible to manufacture objects cheaply. Eventually, ordinary people may come to `own the means of production' for reproducing physical objects just as people who now own computers `own the means of production' for reproducing digital objects. More people will become capitalists, unless a government prevents them.
Rather than try to inhibit technological change, we should help it. This way, we need not force younger people to accept a lower portion of total output as their take-home wages and salaries or else reduce the income of the elderly.
But to make such a change possible, we need to focus on opportunity, compassion, and justice as a general guide for governance.
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