equality, inequality… of wealth… between people in a given society… the gap in wealth between the richest and the poorest people in a society… a lot of people are worried by that. They think it’s a very deep problem that some people have a lot of wealth and some people have a very little wealth.
I don’t see that as a problem. The more wealth there is the better, and yes it would be beneficial if someone has more wealth than if they have less wealth, and that’s true for everybody. And so if there’s poor people that’s detrimental for society in the sense that it would be better if they had more wealth. But the fact that some people have a lot of wealth, that’s not a problem… that’s a benefit. Because they can exchange that wealth for goods and services that other people provide, and they can fund capital investments that will increase productivity, increase the quality of goods and services and lower their prices, as well as increasing wages.
I want to to point out that by wealth I don’t mean money, I mean resources. Resources have to be produced and they have intrinsic value in that they are wanted by other people who will give other resources in exchange for them.
And it’s important to understand how resources are produced. A lot of people think of wealth as a fixed amount, that is not produced, that it’s just up for grabs. And so if some people have a lot then some people necessarily have to have very little. And that’s not how it works. Wealth is produced. If some people have a lot, then everybody can have a lot, or not. But some people having a lot increases the productivity of everyone else, so that it’s easier for them to have a lot too.
And because of genetic, cultural and preference differences between different individuals, some people will always have more than others. And maybe it’s not the same individuals. Maybe at a point in time some people have more and then at another point in time other people have more.
And so wealth is produced, it’s not fixed, it’s not given. But a lot of people do think it’s given. And why do they think that?
I think it’s because we evolved in hunter-gatherer societies. Over 99% of our evolution has been in hunter-gatherer societies, with less than 1% of our evolution happening after the development of agriculture.
In a hunter-gatherer society, wealth really is fixed. Because the most important resource is food, and you can’t increase the amount of resources that are produced in a piece of land. You can gather the edible foods that just happen to grow in that piece of land, and you can hunt the animals that just happen to live there, mostly eating the foods that are inedible to you. But you can’t modify the land so as to produce resources that are more useful to you. So production in a hunter-gatherer society is a zero-sum game. So whatever someone produces is less resources available for everyone else to produce. For example, if someone hunts a zebra or gathers a bunch of berries, that’s one less zebra or bunch of berries available for everybody else.
So tribes form and they defend their territory from other tribes, they prevent other tribes from hunting or gathering in their territory, and they control the behavior of individuals within the tribe so that no one gets too much without sharing. They are egalitarian. Division of labor and production are organized centrally, either by everyone getting together and deciding, or by the tribe leader deciding for them. Some are the hunters and warriors to fight other tribes off, some are the gatherers, some manufacture tools and weapons, some keep the fire going, some take care of the children.
If you understand evolution then you understand that there’s a tendency for individual lifeforms to be selfish. That is, they prefer to reproduce their genes than to reproduce another lifeform’s genes. That doesn’t mean they won’t help each other out, but they will only do that to the extent that it maximizes the likelihood of reproducing their own genes. So humans, like any other animals, are to some degree selfish, but in a hunter-gatherer society there is too much to lose from allowing everyone to produce as much as they can and want, because everything they’re producing diminishes the production of everybody else.
So we evolved as beings that want to control the behavior of others, restrict their production and make sure that no one is taking too much.
And I think this is why it’s so common for people to go back to egalitarianism when they give up the ideology that moved them away from egalitarianism, which in most cases is religion. Religious faith. And that’s a problem because egalitarianism in the post-agricultural environment is chaotic as it restricts production to the level that the least productive people in the society can achieve.
In a post-agricultural society, humans can modify the land so as to maximize the production of resources in that piece of land and they can manufacture tools that will increase the production of that piece of land. And because of all the additional resources that can be invested as capital, they can produce new types of resources that were previously unavailable.
Because humans are selfish, they will maximize their production if they get to keep 100% of their production and decide how to use all of it, as opposed to what will happen if the whole of society gets to decide how to use the resources they have produced. Even if the person just wants to help others, they will maximize their production if they are the ones deciding how the resources they produce will be invested in helping others, than if society at large decides that, because they may have a different idea of how to help others or how to do it in a more efficient way. And so any taxes diminish the incentive to produce resources.
So in a post-agricultural society, the best strategy is to have an economy that is not planned centrally, but individually. Everyone becomes an expert in their area of production, and division of labor is achieved not by everyone getting together and deciding who will do what, or by some leader telling everyone what to do, but by market exchanges. In this way everyone can figure out what they are comparatively better at and focus their energies on producing that resource, and then exchanging for all the other things they want.
Another reason why this strategy becomes the best is because agriculture gives rise to huge populations. From tribes consisting of 40 to 100 people, where everyone knows each other, societies now organize in numbers in the millions. In a group of 40 people, it can be difficult to organize all production and there will always be some conflicts. In a society of millions of people, it’s impossible to organize production centrally. No one can know what everyone else should produce or how they should do it, and any attemps at doing so will only generate chaos.