Collective action problems: a pox on the body politic which must be eradicated at any cost - or a big, fluffy, puppy-like animal? You decide!

At the end of the day, a short observation. Something I've been thinking about for years, but which keeps cropping up in conversation these days for some reason, so I feel like writing it down:

I think that the greatest single obstacle that I can think of to the advance of human civilisation is collective action problems in all their forms. The most basic form is, I think, the prisoner's dilemma, in which the solution obviously is honour among thieves - or rather, well-founded trust, the trick of the imagination on which our societies and economies are built, and the sense of collective responsibility which that trust creates. 

If the measurement of value is projected beyond the yardstick of the self into the society surrounding it as a whole, the collective action problems go away, or at the very least become organisational and not existential. This also avoids freeloading, the cause of collective action problems, commonly presented in the form of the Tragedy of the Commons.

In short, the reason we spend more money on weapons than anything else, the reason we can't raise taxes to the proper level across the globe, the reason we can't implement proper work management laws and human rights, the reason we need to put up with populist tabloid newspapers rather than substantial vehicles for public discussion is either:

a. The value system for the change does not yet exist on a large enough scale. (Not a problem e.g. with war - who doesn't oppose war?)
b. We can't organise a change on such a massive scale for reasons of coordination costs.
c. We can't change for fear of competitive oppositional advantage. "Somebody else is doing it, so we can't stop doing it!"

C is the reason that we...

- Have an army. If not, other countries will invade us with their armies which they have for fear that you will invade them. (I still think that standing armies represent the single greatest failure of the human imagination we have.)

- Can't fix the environment. Because if we start having carbon taxes and spending lots of tax money on green infrastructure, other countries will gain a purely temporary competitive advantage which they will later lose again when they are all drowned in the seas of armed refugees, mad with hunger, pouring out of the third world as their ecosystems collapse, a problem which we should maybe have thought about sooner.

- Can't have good labour laws in, say, Malaysia - because other countries might get Malaysian manufacturing jobs.

- Can't raise taxes in states struggling to create welfare societies. If they raise taxes, business will flee.

- Have to keep making bad tv and bad newspapers, or the other tv stations/newspapers will sell more. Because God knows we're not in the business to make good tv/newspapers - we're in the business of making money.

I think that the "solution" to a lot of these issues at the present time, since "...oh, you're such an idealist, Martin! [exasperated sigh, rolling of eyes] It will never happen, dreamer!" is the proliferation of welfare states. People who are hungry and uneducated are generally not capable of projecting value into things or other people, other than their own survival.* I read somewhere recently (I forget where) that the paradox of being poor is that you have less of a buffer, so every decision you make has to be right. But you are also lacking in the resources and personal security which help you make right decisions.  I think this is exactly right. The path towards the decline of collective action problems lies in welfare and education. 

Does any of this make sense? 

* However, the opposite can also be true. Some affluent people invest a lot of personal commitment to ideology which values selfishness. I remember sitting at my computer at University a year and a half ago, seeing the person at the desk in front of me reading Ayn Rand's The Virtue of Selfishness. I was reading an article on child mortality rates in the third world (30.000/day of easily preventable causes) and felt like: 

a. I wanted to smack him in the back of the head for callousness. 

b. I couldn't leave my laptop there when I went to lunch. I just couldn't trust him. 

the Wall Street crash is a failure of the imagination

Yesterday was the 79th anniversary of Black Monday, and today is Black Tuesday, two important days in the 1929 crash on Wall Street. Just, y'know, as an observation.

"Anyone who bought stocks in mid-1929 and held onto them saw most of his or her adult life pass by before getting back to even." said Richard M. Salsman* about the crisis, according to the Wikipedia page. So there's that.

This is one of those classical "prisoner's dilemma" situations we find ourselves in frequently in our society. What this situation makes clear is that if everyone maintains trust in the collective illusion of the market, the market will keep stable. What the stock market crash really is, is something that us literature majors can tell you all about (see? We can be useful - even in a depression! Hire me! Hire me!). It's basically a wavering in suspension of disbelief. Everyone has suddenly realised that their money really is Monopoly money and are panicking. Like Wile E. Coyote going over the cliff, suddenly looking down like an idiot. Stock market crashes, in effect, are simply a colossal, systemic, collective failure of the human imagination. And bright ideas are what's going to get us out of it.**

Society is a consensus reality we choose to participate in. A story that we tell ourselves. But some parts of that story have a really bad plot, bad grammar and poor writing. We need to rewrite those parts of the story without anyone getting hurt. This is the time, in other words, to remember that all money is pretend money. The only thing we get to decide is what kind of game we're playing. Are we playing capitalism or socialism? Monopoly or Junta, so to speak?

In short, if everybody would just hold on to their damned assets and be cool, we would all be fine in a pretty short time, while the "real" economy and the market got back in synch. If we could also reimagine what the world economy is supposed to look like while we're at it, that would be a fantastic added bonus.

* * *

* BONUS TRACK:

But then, Richard M. Salsman's Wikipedia page indicates that he is an objectivist Austrian school eejit. Let me share with you, as a gift, the titles of some of his papers and books:

* "The False Profits of Antitrust", chapter in The Abolition of Antitrust

* “The Cause and Consequences of the Great Depression”:

- “Part 1: What Made the Roaring ’20s Roar”,
- “Part 2: Hoover’s Progressive Assault on Business”
- “Part 3: Roosevelt's Raw Deal”
- “Part 4: Freedom and Prosperity”, January, 2005, pp. 14–23.

* “Bankers as Scapegoats for Government-Created Banking Crises in U.S. History”

* “‘Corporate Environmentalism’ and Other Suicidal Tendencies”

* “Banking without the ‘Too-Big-to-Fail’ Doctrine”

* Breaking the Banks: Central Banking Problems and Free Banking Solutions

Remember, my friends, this is not the time for gloating or schadenfreude. This is a time for honest, serious, dedicated work.

No, I'm just kidding. This is the time for merciless mocking. And it's a good time to put these people out of a job. And also a good time for reading Keynes and Marx.

** Mandatory endorsement: And obviously, that's going to be easier with an imaginative, creative, flexible US president. Like, say, candidate Obama. An inflexible, uncreative, volatile, insecure president like McCain? Not so much.