Forms of Exploitation and Sources of Inequality within Capitalism

Geoffrey M. Hodgson 한국제도경제학회 2016 제도와 경제 Vol.10 No.1

At least nominally, capitalism embodies and sustains an Enlightenment agenda of freedom and equality1). Typically there is freedom to trade and equality under the law, meaning that most adults – rich or poor – are formally subject to the same legal rules. But with its inequalities of power and wealth, capitalism darkens this legal equivalence. As Anatole France (1894) noted ironically: ‘The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread’. But this does not mean that legal equality is unreal or unimportant. On the contrary, legal systems enshrining such equality have been beacons of prosperity. Evidence gathered by Richard Wilkinson and Kate Pickett (2009) shows multiple deleterious effects of inequalities of income and wealth. Using data from twenty-three developed countries and from the separate states of the United States, they observed negative correlations between inequality and physical health, mental health, education, child wellbeing, social mobility, trust and community life. They also found positive correlations between inequality and drug abuse, imprisonment, obesity, violence, and teenage pregnancies. They suggested, but did not establish in detail, that inequality creates adverse outcomes through psycho-social stresses generated through interactions in an unequal society. A massive literature . too extensive to review here . examines the relationship between inequality and economic performance (Galbraith and Berner, 2001). Some argue that inequality is a necessary foundation for capital accumulation. But Robert J. Barro (2000) found that, after introducing controls for education, fertility, and investment, there is no significant correlation between inequality and economic growth. While some inequality provides high-powered incentives for entrepreneurs and other high-flyers, an unequal society also wastes the talent of many on middle and lower incomes who have less access to high quality education, sub-cultural support, and financial backing2). The development of secure financial institutions, including credit money and the sale of debt, is an historic book-end that conveniently marks the emergence of capitalism in England around the eighteenth century. Capitalism, as its name suggests, is about capital. If we use that word in its longstanding business sense of money, or the money value of collateralizable assets invested in production (and drop the different meanings given to the word by economists and sociologists) then capital-ism points to the institutions of property and finance that make monetized investment and collateralization possible (Hodgson 2014, 2015a). In my book Conceptualizing Capitalism, I propose a definition of capitalism that includes private property, widespread markets, widespread employment contracts and developed financial institutions that involve credit money and the sale of debt. The development of financial institutions was crucial to capitalism’s birth and take-off. Note that neither markets nor private property are sufficient to define capitalism, because they have both existed for thousands of years (Hodgson 2015a). What are the mechanisms within capitalism that exacerbate inequalities of income or wealth? The following section briefly considers the Marxist approach, based on the labour theory of value. The second section considers factor asymmetries between labour power and capital assets. These may be seen as possible types of exploitation within capitalism, and pointers to possible sources of increasing inequality within the system. The third section discusses whether markets are the source of inequality under capitalism. The fourth section argues that the institutional sources of inequality under capitalism are more to do with capital (when appropriately defined) than markets. The fifth section includes some policy suggestions and concludes the essay.

Generic Sources of Inequality in Capitalism

Geoffrey M. Hodgson 한국제도경제학회 2018 제도와 경제 Vol.12 No.1

자본주의 체제에서 무엇이 소득이나 자산의 불평등을 발생시키고 또 악화시키는가? 자본주의 체제에서 불평등이 발생하는 핵심 원천은 시장이 아니라 ‘자본’에 있다. 본 논문은 자본주의 체제 내에서 불평등의 ‘고유의’(내재적) 원천은 담보부 자산의 차별적 소유권에 있음을 주장하고자 한다. 본 논문의 구성은 다음과 같다. 제Ⅱ장에서는 마르크스의 노동가치설을 설명하고, 제Ⅲ장은 노동과 자본 자산 간의 요소의 비대칭성을 고찰한다. 노동과 자본 간의 요소 의 비대칭성은 착취의 한 유형으로서 자본주의 불평등의 원천이 될 수 있음을 지적한 다. 제Ⅳ장은 시장이 과연 자본주의 불평등의 원천인지를 논의한다. 제Ⅴ장은 자본주 의 체제에서 발생하는 불평등의 ‘고유의’ 원천은 시장이 아니라 ‘자본’에 있음을 설명 한다. 마지막 장은 정책적 시사점과 결론을 제시한다. 따라서 본 논문은 자본주의 체제 내에서 일어나는 불평등의 고유의 원천은 시장이 아니라 자본, 즉 담보부 자산의 비대칭적 접근에 있음을 검토하고자 한다. What are the mechanisms within capitalism that exacerbate inequalities of income or wealth? Its core sources of inequality lie elsewhere. The foremost generator of inequality under capitalism is not markets but capital. The arguments here show that the major generic driver of inequality within capitalism is differential ownership of collateralizable assets. The chapter II considers the Marxist approach, based on the labour theory of value. The chapter III considers factor asymmetries between labour and capital assets. These may be seen as possible types of exploitation within capitalism, and pointers to possible sources of increasing inequality within the system. The chapter IV discusses whether markets are the source of inequality under capitalism. The chapter V argues that the generic sources of inequality under capitalism are more to do with capital than markets. The final chapter includes some policy suggestions and conclusion. This paper attempts to examine that the generic source of inequality within capitalism is not its markets, but principally the asymmetric access to collateralizable property, particularly the difference between waged workers and capital owners.

Morality in an Evolutionary Perspective

Geoffrey M. Hodgson 한국공공선택학회 2016 The Korean Public Choice Society Vol.4 No.1

애덤 스미스는 사람들은 이기적 동기(사익 추구)뿐만 아니라 ‘도덕적 동기’에 의해서도 행동한다고 생각하였다. 찰스 다윈은 스미스의 그러한 인간 동기를 ‘진화적으로’ 옹호 하였다. 그러나 대부분의 경제학자들은 스미스와 다원의 주장을 거의 무시해 왔다. 최근 인간은 이기적일 뿐만 아니라 협조적임을 증명하는 실증적 연구들이 자주 제시되 고 있다. 그러나 많은 연구들은 ‘도덕성’(morality)을 이타주의 또는 협조로 인식하고 있다. 반면에 다윈은 도덕성의 특징과 역할을 분명하게 구분하였다. 특히 다윈의 주장 은 순수한 이기심(사익추구)이라는 일반적 생각과 도덕성이 효용 또는 선호의 문제로 축약될 수 있다는 기존 관념에 반대하였다. 도덕 철학자들 간의 보편적 견해에 따르면 도덕적 판단은 순전히 선호나 효용 극대화의 문제로 취급될 수 없다고 주장한다. 다윈 에 의하면 도덕성이란 ‘옳은 일을 하는 것’(doing the right thing)을 말한다. 도덕성 은 선호나 효용에 우선되는 ‘정의’(justice)의 개념을 수반하며, 도덕적 판단은 감적적 느낌이나 이성적 주장에 의해 보강되는 성질을 가지고 있다. 도덕성은 편리, 관습, 순응 등의 문제들과는 근본적으로 다르다. 도덕적 감정은 학습된 문화적 규범이나 규칙에 의해 앙양된다. 또한 도덕성은 사회적으로 감정적 규칙들과 관련된 ‘집단적’ 현상이다. 본 논문은 ‘다윈의 진화론적 관점’에서 도덕성을 고찰해 보고자 한다. 도덕 성은 진화적 기원을 가지고 있으며, 개인적 현상일 뿐만 아니라 사회적 현상이기도 하다. 따라서 본 논문의 핵심적 주장은 ‘도덕성이 진화적·사회적 현상이기 때문에 개인 의 선호나 효용으로 축약될 수 없다’는 점이다. Adam Smith regarded individuals as driven by moral motives as well as self-interest. Charles Darwin also provided an evolutionary vindication of Smith’s view of human motivation. But it was ignored by most economists. There is now an enormous body of empirical research confirming that humans have cooperative as well as self-interested dispositions. But many accounts conflate ‘morality’ with altruism or cooperation. By contrast, Darwin established a distinctive and vital additional role for morality. Darwin’s argument counters the idea of unalloyed self-interest and the notion that morality can be reduced to a matter of utility or preference. A widespread view among moral philosophers is that moral judgments cannot be treated as matters of mere preference or utility maximization. Morality means “doing the right thing”. It entails notions of justice that can over-ride our preferences or interests. Moral judgments are by their nature inescapable, and are buttressed by emotional feelings and reasoned argument. Morality differs fundamentally from matters of mere convenience, convention or conformism. Moral feelings are enhanced by learned cultural norms and rules. Morality is a group phenomenon involving deliberative, emotionallydriven and purportedly inescapable rules that apply to a community. In this paper, I attempt to examine the morality in an evolutionary perspective. Moral motives have evolutionary origins and are sustained through interaction with others: morality is a social as well as an individual phenomenon. Thus, main argument in this paper shows that morality cannot be reduced to individual preferences or utility.