It seems to me, society functions best when the fruits of the economy are distributed by merit, as in capitalism, rather than force, as in anarchy and corruptocracy, or political favor, as in socialism, communism, feudalism, cronyism and corporatism. While the distribution of the goods of society have been a hot topic for well over a century, the functionality and utility of the economy under each system isn’t actually debated. Those who are connivers prefer arbitrary rule, they fall in the camp of the political distribution of the goods of society, while those with a propensity for violence would rather force be the measure of who gets what, and while each has his or her own natural tendencies, the best for everyone is free enterprise, or in other words… Meritocracy.
Take the example of three mansions. The first is owned by the CEO of a fortune 500 company, the second is owned by a US Senator, the third by the founder of a company. Which mansion is justly got? The politician realized the fortune that paid for his mansion by selling the interests of the nation to special interest and delivering on those sales with regulations. Perhaps the CEO, who did nothing of any notoriety, other than have the good fortune to be born into the clique that sends it’s youth to Harvard and Yale, to be groomed for that position. Certainly not the founder of a company, who by founding a company… created jobs for people, delivered some value to the lives of people and created wealth not only for him or herself but for society as a whole, and did all that by thinking of an idea, taking a chance to make it happen. In the case of the senator, the mansion was won by political favor, the second was also political favor but the third, the founder of a company, was won by improving the lot of Man.
Many arguments have been made as to the superiority of the planned economy… by those who seek to plan the economy. They all expect us to think they are angels, or saints who are above the common lot of Man, calculating, self interested, untrustworthy, undependable and backstabbing. They, who are the angels, want to plan the economy for “our” good, they will subsist on the scraps, like Kim Un. His people pick their own feces for corn while he scrapes by on caviar and champagne. While there are no examples of a planned economy that created wealth, rather than destroyed it, devout socialists and progressives will lament… real socialism has never been tried! One thing you will not hear a progressive avow, is that the economy be planned by an AI, unless they are the ones to program that AI. What good is a planned an economy if someone else is the one planning it?
Societal cohesion is negatively effected when the goods of society are distributed by either force or politics. Everyone of us has a little hypocrisy detector in our brains. There was a recent study done on dogs to gauge their morality, and it was found in that study that dogs have a similar sense of morality as human beings. Quite interesting that only dogs and some monkeys tested so close to human reactions when presented with a moral question. In the case of the dogs, one human participant was stingy giving out treats to most but favored some dogs, the other human participants gave treats equally to all the dogs. The dogs then reacted, supposedly as a human would, by preferring the human participant who was more fair. We know in our hearts when someone’s wealth is ill got. Even as we are told to despise the founder of a company for her wealth we are told to ignore the riches of the politician, lawyer and the corporate executive.
The productivity of an economy is directly related to how close to meritocracy an economy is. When talking about a macro economic effect it is the small things that count. Small actions done by many people equate to large changes in macro economic outcomes. People are naturally at rest. It takes a force to move and inanimate object, as it does a human being, that force to move a person is an incentive. Where there is an incentive to come up with a better way, invent a new product, create value, help someone in their daily routine or any other way of improving the lot of Man, there will be a commensurate reward, people will act. Where there is a disincentive, the idea will be stolen, the bureaucracy will crush you for even trying, only certain people are allowed to do that, etc… the small things people do in our daily lives will, in the aggregate, change the macro growth of an economy.
In a more productive economy one’s piece of the pie need not get bigger since the pie itself is expanding. This is especially true when the growth rate of the “pie” exceeds the inflation rate by a large margin. Each sector in a fast growing economy will experience some growth, even if tangential or even competing with, the present central driver of that growth. Demand for employees will grow as will as opportunity’s to make an honest living. Why be a criminal when legitimate sources of money are available? The easier it is to make an honest living the fewer people will be motivated to crime. It is human nature to go the easiest route just as electricity will follow the easiest route to ground. Even more like electricity that follows every route to ground even when there is a large shunt, there will be those who follow crime as a means to wealth, but where the means is easier only the sadly deranged will follow the harder path.
All this is why society operates best that is closest to a meritocracy. The small effects of rewarding merit, rather than political favor or propensity to violence makes the economy on a large scale, (the macro economy), grow faster. The obviously more fair distribution of the goods of society, to those who do the most good for everyone and remains open for anyone to become rich, simply by meriting it, creates far less stress in society and gives everyone a stake in society. That growing economy draws in people who otherwise would be unemployable, giving them incentive to become employable, so they too can gather some of that ever expanding pie. While the crime rate of a meritocracy will naturally be lower due to it being easier to get money from legal activities rather than illegal ones. The trouble is, those who are at the top today, like the way it is, political favor being the arbiter of who gets what, that is why the senator’s mansion is twice the size of the CEO’s, while the founder of a company, the hated bourgeoisie, lives in a nice house in a suburban development, not much different than his employees.