Utopian Societies – free market vs planned economies
One of the key problems in the world today that prevents the formation of utopian societies is the struggle between the rich and the poor. This conflict is a direct result of the economic model now followed by most of the world. Historically there have been two main competing models, free market capitalism vs government planned socialism. Today’s world economy, dominated and driven by America, attempts to follow the principles of the free market, but adds government regulation and socialist aspects when necessary to prevent abuse and protect national interests. While the American style mixed economy has the potential to be the best of both worlds, the problem is that there is no apparent overall principle guiding this mixed economy. Government regulations come and go on a piecemeal basis depending on what political parties are in office and what the mood of the populace is at the time. The political discourse in America is a day to day debate over individual policies, not an overall fundamental debate over the principles of free market capitalism vs planned economic socialism. To drive this fundamental debate, it is important to think of what ideal utopian societies might consider for their economic models, and the pros and cons of each that ultimately led America to the mixed form we have today.
An economy is simply the method a society uses for dividing up work and resources. Historically, societies have always required people to work in one way or another for the greater good. In a capitalist society, money is the vehicle that forces people to work. Money is required to buy the goods, services, and resources needed in life, and money is only given in exchange for ones own goods, services, and resources. This is a very efficient model that encourages people to find work that is in demand, and hence easy to exchange for money. It can also be very hands off, in which the government allows people to freely pick and choose what they work on and what resources they wish to own, hence the “free market”. Free market theory and laws of supply and demand dictate that this system should be self correcting, and never require much in the way of government intervention. This makes it an appealing candidate for utopian societies, however the resulting competition and conflict within the population is a major drawback.
Stock Ticker - from the Wikimedia Commons
The downside to this model is that it allows vast inequalities in money and resources to develop between people, and this inequality is self-feeding, meaning the more inequality that exists, the faster it grows. If two people wish to perform the same type of work, they must compete with one another for business from the rest of society. Society will naturally favor whoever is “better” at performing the work and reward that person with more money. The person rewarded with more money, now has the ability to convert that money into more resources (land, equipment, etc.) which in turn allows them to perform the work even better than they could before. This further drives society to favor them and reward them with even more money. While this is efficient in the sense that it naturally ensures higher skill and quality in the work products, it leaves those with fewer abilities out in the cold. Furthermore, the person with “better” work products is able to leave their accumulated money and resources to their descendants when they die. Their descendants then start with an advantage over competitors, even without any natural skill on their part. The passing on of inheritance allows for an entire class of “better” workers to emerge who may not actually be better at all, but simply had someone in their ancestry who was better at some point in time. Meanwhile the “worse” workers may not actually be worse, they may simply be the victims of being born into an ancestry that had a “worse” worker at one point in time. The end result is a society naturally divided between the rich and the poor. Traditional American thinking is that if you work hard, you can move from poor to rich on your own accord. While this may happen on occasion to those with extraordinary skills or luck, it has never been demonstrated to be true on a large scale. Furthermore, rich people have innumerable ways of staying rich that do not necessarily involve hard work on their part. The conflict, competition and class segregation within this model makes it unsuitable for utopian societies.
A planned economy is the opposite of the free market. In a planned economy, the government decides how to divvy up resources, and what jobs people are going to perform. Money isn’t even required, although it can still be used as the medium of exchange. People don’t own their own resources (land, equipment, etc), society as a whole owns it, and allocates it to those who need it, deserve it, or can make the best use of it (a.k.a. fairly). Society can quickly adapt to changing needs, plan for future needs, and prevent inequality by altering what goods and services are produced and who produces them. Conversely, free-markets have a hard time proactively avoiding problems since they are unguided and driven by the immediate wants and needs of the individuals in the society. In an ideal world, this model offers much more potential for utopian societies, as it does away with the conflict of the free market, and allows for rapid change as circumstances demand. However, putting this model into practice is very difficult as it goes against peoples natural instincts.
Lorenz curve - from the Wikimedia Commons
While a planned economy eliminates the conflict between rich and poor that would otherwise ruin utopian societies, it encourages the other fundamental problem of human greed and self interest born out of the biological drive for self preservation. People have a natural desire for power and control over other people. This is a form of security, which biologically bolsters their chances of survival and passing on of their genes. When the government is allowed to control all means of production and resources in society, what exactly the “government” is matters a lot. Ideally, the government would be a freely and fairly elected group of representatives that act in the best interests of the population as a whole (the basic idea of democracy and republics). However, a planned economy places so much power in the hands of the government that it becomes much easier to slip into tyranny and dictatorships. With a free market, the general population retains control of work and resources, and any excessive government power could be tempered by economic chaos and collapse. In a planned economy, excessive government control isn’t naturally tempered and could only be stopped through violent civil war. And so, as we’ve seen in practice when societies attempt a planned socialist style economy, dictatorships inevitably emerge. Even in countries that still consider themselves “free”, single party governments that perpetually win re-election are the norm. The concentration of power within a government that no longer supports the best interests of the population is the opposite of what utopian societies desire.
It seems then that neither solution is a fit for utopian societies, and America has wisely chosen neither as well. A mixed economy combines elements from both the free market and planned economy camps in an attempt to get the best of both worlds. In America, government regulations prevent the formation of monopolies that could corner the market and price fixing that could exploit consumers or drive competitors out of business. Other government rules and regulations regarding copyrights and patents protect company’s and inventors from each other. More controversial policies include higher tax brackets for the wealthy and free financial assistance to the poor. Governments with mixed economies such as America don’t directly dictate what products should be produced, but they commonly use taxes and regulations to “strongly encourage or discourage” certain industries, examples include hybrid vehicles and the tobacco industry. The end result is a government that maintains some control and proactive ability to steer long term societal behavior, while not holding so much power as to present a threat to the freedom of its people. America however has not solved the two fundamental problems mentioned earlier. The gap between the rich and the poor is growing while many people constantly worry about unwieldy political power and corruption. China offers another example of a mixed economy in the form of a dirigisme, however their government is not democratically elected. Right now it appears as though there are no examples of suitable economies that could support utopian societies.
The struggle between the rich and the poor is a natural outcome of the free market system and not something that can or even should be “fixed”. Thus this model will never be suitable for utopian societies. Planned economies will never be possible until human nature evolves to the point where people naturally associate their own well being to the well being of society as whole. Once that occurs (if it ever does), planned economies will be able to function without the fear of tyrannical government control. Future planned economies may do away with “work” as we know it altogether. As technology advances, the need for human labor diminishes. The free market capitalist system can’t handle that concept and the result is higher unemployment and large scale shifts in labor to services not yet automated by technology. Once everything is automated however, the system will be forced to change. We need to actively address as a people the greed and power struggles that brought down all previous attempts at planned economies so that one day we will be ready for the emergence of utopian societies.
References / Further Reading:
Robin Hahnel and Michael Albert – multiple publications on market economies and participatory economics
Milton Friedman – multiple publications on Laissez-faire capitalism
Pierre-Joseph Proudhon – The System of Economic Contradictions
Friedrich Engels – Socialsim: Utopian and Scientific
