The libertarian community is unique on account of its ability to ignore standard political and social conventions. Libertarians value freedom and understand why it needs free markets. However, libertarians do not possess a conservative loyalty to the system as it is today. When the left critiques the system, libertarians are always skeptical about calls to reduce freedom. However, libertarians also listen, and agree that we have many problems. Centralized economic power can hurt the little guy. The hope would be for the little guy to do better by offering him more freedom, rather than taking away the little freedom he has left.
Libertarians are aspirational about the free market. They suppose that, with enough freedom, entrepreneurs will invent or develop ways to solve the little guy’s problem. Leftists are not wrong to critique this attitude for being insufficient; how can we help the little guy here and now? Free market utopianism has the potential to be as meaningless as the dream of the workers’ paradise.
In response to this concern, I have been writing about free market capitalism as a technology, considering improvements it could endure which would make it work better for people. In a recent essay, I addressed the production side of capitalism, highlighting how value signals are processed. In this essay, I will talk about the demand side of the market. How do consumers signal to producers what they want?
If you review the day-to-day life of any representative member of a particular socio-economic class, you would see that their lifestyle, habits, struggles and joys all derive from how the supply side structure of the market intersects with the demand side structure. The habits of modern American life, our chief consumer products, and the layout of our cities and towns shouldn’t be taken for granted. Within free market capitalism, both the supply and demand structures could change, and with them our way of life could go in radical new directions.
Consumer capitalism is a social technology which can evolve. For production, this typically affects cost and scale—fthe quantity of goods. With consumption, consumers focus on priorities and realized value—quality.
Central bank backstopped, competitive barrier, market share capture capitalism is production based, but it needs a particular structure of demand. It needs uniform, atomized consumers who emphasize cost. It needs them to keep buying continuously, just as it needs them to keep working continuously. Demand and labor availability can’t spike in fits and spurts, responsive to consumer priorities and needs. Things need to be smooth. That’s how scale over market share is achieved.
This isn’t the best way and shouldn’t be the only way to organize society. In the left’s supposed ideal, you are free to take breaks, to choose your pace of life. If there was some way to reasonable afford those trade-offs, and some people wanted to work harder for more money, while others wanted a slower pace, wouldn’t that be preferable?
When the production side of the market is improved, it becomes more sensitive to value. That can mean understanding where small but meaningful quality improvements can be added. The production side of the market, however, cannot be fully sensitive to the value of improvements if the demand side itself isn’t sending precise signals. To simplify the discussion, one goal in improving the demand structure of the market would be to orient it towards quality improvements, away from sheer quantity.
Especially in scarce conditions, there’s no denying that quantity has a quality all its own. This has been a lauded feature of American capitalism; cheap canned goods, McDonald’s. It deserves praise when compared to conditions of famine. However, this is also something commonly critiqued about American capitalism. The problem with the quantity-based emphasis is that only ever produces a level of quality that is just good enough. The signals showing demand for higher quality are lost.
How would a process that signals demand for quality work? Considering the discussion so far, one aspect of the structure of demand is how our lifestyles work. Today we have the rat race, the treadmill. Uniform roads, public schools, college, credit scores, IRA 401k. A change in the structure of demand could come from building new lifestyles.
There are many ways to structure life differently. Leftist hippies form communes. There are labor unions which employ collective bargaining. On the right we see groups like the Amish and homeschoolers. These are social structures which might be called mutual aid model societies. These have some structure of both duties given and benefits received, including rules and norms of behavior. These structures create frictions and disrupt the uniformity of demand. They have more bargaining power and can demand quality. They can engage in long-term planning better than individual households. Through most of history, these structures, whose scale corresponds to the extended family, do most of the heavy lifting in taking care the little guy.
Social arrangements with rules should be enforced through economic incentives. Punishments which infringe upon freedom restrict the value these arrangements can provide to individuals. Economic penalties give individuals a way to measure costs against benefits. When the cost of leaving a group is clearly known, an individual can be certain whether it’s worth staying despite rules or obligations. Incidentally, using cost calculations to judge the value of being in a group which provides benefits conforms to available tools of cooperative game theory analysis.
Positive outcomes in a mixed competitive-cooperative game are realized when a market can shift from cooperative to competitive modes freely, using price signals to drive that decision. People will cooperate when it’s clear that it’s for mutual benefit, and when it’s not clear they’ll go their own way. As such, mutual aid arrangements need to be structured assuming people might want to leave. This is what would make them work in a free market, without having to employ leftist politics to enforce them.
A mutual aid arrangement could look like a planned suburban community. Here, a substantial portion of a person’s income goes into community equity before it’s given back or otherwise used for community purposes, as agreed to by community members when they join. When a person leaves the community, they may receive back a portion of their contribution to the equity, but not all of it, representing a penalty. Cooperation is enforced economically. It would be very difficult to preserve freedom if political violence or even social shaming were required to enforce group norms. Economic incentives make cooperation compatible with competition.
Americans today might scoff at the idea of this sort of relationship. Why give up your money if you don’t have to? You may have to. Family life is collapsing in the endgame of uniform consumerist society. There may be a distinct need to use new socio-economic arrangements to continue preserving it. Meanwhile, before central banking, industrial capitalism had been in crisis. In my opinion, the solution would have had to have been a demand structure built with this sort of mutual aid society or family community concept.
When the rug is pulled out from the global American economy, you might not have the ability to hold a bunch of wealth as an independent household in a uniform consumer society, because there won’t be one.
To moderate this view, I should say that another version of the mutual aid arrangement could be highly corporate. Imagine NYC as a city-state. You sign a contract to live there, and life feels much like present-day consumer society. Some people might live this way and others might live other ways. That would seem ideal.
This discussion began by wondering how to emphasize quality over quantity. Mutual aid arrangements are able to send that signal to producers.
I have a friend with a basic pilot’s license. Someone like him could never afford to buy his own airplane. However, he joined an airplane club where many people pool costs and have pseudo-ownership of a plane. He lived in northern Indiana, but worked one weekend a month in central Missouri; both locations were rural. He would book his time with the plane to fly there, it only took one hour. It was a lifestyle he could never achieve with a car.
Concerning our pattern of life, one reason we prefer cheap consumer goods is because we’re used to living that way. We could easily learn to take better care of things. Imagine paying three times as much for a pickup truck, but it lasts 5 times as long. Imagine your community buys it, because not everyone needs to use it every hour of every day. Imagine someone in the community is skilled at maintaining it, multiplying the amount of value realization it provides by making it last longer. Communities have more resources to derive greater amounts of value from products, and to take better care of them. They also have more bargaining and purchasing power. This is how communities could restructure demand toward more quality.
If quality is emphasized over quantity, companies won’t be able to structure their business around pumping out products non-stop. They may have to produce things in discrete, time-limited operations which scale up and scale down again. That would require innovation in infrastructure and management processes. That’s technological improvement to capitalism. Consider the social effects.
If a factory isn’t producing non-stop, its workers might not work every month of the year. How will they live? They might belong to a mutual aid society, structured for laborers knowing that it’s common for labor not to be engaged year-round. They will be provided for, perhaps with a stipend, during a certain number of off months. The community rules will require them to be employed in the community if they can’t get work elsewhere. Gardening. Safety patrols (no cops). Youth development. Music and local entertainment, community theatre groups. Doesn’t that sound like a reasonable trade off which accommodates quality production over sheer quantity?
Many of the problems I’ve highlighted are also being discussed by groups like the World Economic Forum. They propose total central control, constraints, next to zero freedom, AI based economic planning without much of a free market at all, etc. The world is starting to agree there’s a problem with the economy which can’t be fixed by another stimulus package. Consider, at least, flexible and voluntary, economically incentivized mutual aid social arrangement. Whether as corporate city-states, suburban planned communities, families, or ethno-religious groups. We might just find a pace of life that works for everyone.