In an ideal economy, all useful tools are produced by a multiplicity of manufacturers, whose benign competition regularly acts to hold prices nearer the cost of tool production than the value-in-use of the tools. In this ideal economy, goods are approximately priced at "just prices" which result in an equality of idleness across society, with little or no disparities of wealth.
In such an ideal economy, those idle people who set themselves to work making and selling luxuries and amusements may well become comparatively wealthy, if their wares are in strong demand for the pleasure they provide. A musician who spends a day recording a song may well sell copies of it to thousands of fans, each one of which is prepared to give up a few minutes or hours of their idle time to possess it. As a result, the musician becomes comparatively wealthy. But this does not disturb the underlying equality of society, because nobody actually needs music to live, and nobody is obliged to buy it or listen to it.
But it may be doubted whether such an economy can ever be anything but an ideal. For a great many forces would appear to act to move an economy away from this ideal, and towards a situation were idle time is unequally distributed across society.
In the first place, the innovator of a new tool always initially has a monopoly. He has no competition. And so he can charge the highest price - the tool value - for it, and in doing so he becomes comparatively idle. It is only when other manufacturers discover how to produce the tool that competition emerges, and drives down prices towards the tool cost, restoring social equality.
But it is in the nature of competition that, as tool prices fall, the manufcturers with the highest cost of production, or the lowest tool value, are driven out of the market, leaving in the end perhaps only one or two manufacturers. And these manufacturers may well combine or unite in some way so as to become a monopoly, and hence to raise prices again. In theory, rising prices should result in competition restarting, and prices being driven back down. But in practice, once a manufacturer goes out of business, his production tools are sold, and his skilled workers dispersed, and competition is not easily regenerated.
Therefore, it would seem that price-reducing competition is the exception rather than the rule, and that monopoly, in some degree or other, is the normal state of affairs. And that accordingly some degree of inequality of idleness in society is the normal state of affairs.
Furthermore, it is in the nature of some public goods - roads, bridges, water supplies, etc - that only one or two of them are needed to serve an entire community, and that they have the character of natural monopolies.
One possible solution, to restore equality, is to take monopolistic industries into public ownership, and manufacture and sell their tools at or near cost price. But since state public ownership is itself a form of monopoly - there being only one state -, it follows that even under public ownership the price of tools is likely to rise. And devoid of competition, state-run industries are unlikely to innovate and improve, and will quite happily allow costs to rise. Under public ownership, it is likely that innovation will all but cease, and the costs of production of tools will rise, and the quality or value of the tools produced will fall.
In addition, the distinction between useful tools - which generate idleness - and amusing luxuries - which consume idleness - is likely to become blurred. A motor car may be a useful tool to rapidly move around in, but it also may be regarded as a status symbol, and fitted out with all sorts of luxuries and chrome and paint and styling. In the extreme, a stretch limo is entirely a status symbol, and almost certainly a luxury which costs more to run and maintain than the value if provides in saving journey time. It may also be an obstruction to other road users, reducing their idleness.
One laissez-faire response might be to declare that some degree of monopoly is inevitable, and that it must simply be lived with, and perfect equality will only be achieved when perfect social idleness is achieved. Or it might be argued that a dynamic and innovative economy requires some degree of inequality as a spur to develop new tools and technologies. And that maybe it was the existence of a monopoly on the sale of horses and saddles that induced innovative engineers to start up an entirely new form of transportation - the motor car.
But the other view might be that whenever monopolies appear, they should be broken up. In this view, the state should intervene to require a monopoly to be divided up into separate competing parts. Either that, or whenever some competitor in an industry goes out of business, its assets should become the property of the state, and retained against the possibility of the emergence of some monopoly. i.e. state-owned manufacturers would compete with privately-owned manufacturers.
And a third possibility is that privately owned companies should become publicly owned, by the members of society owning shares in their profits, such that even if they pay high prices, they in turn receive large dividends.
The problem of monopoly highlights an underlying tension within any economy. And this is the tension between the individual desire to increase personal idleness above the average, and the social desire for a general average equality of idleness across society. It is a tension between the individual and society, between selfishness and selflessness.
If individual desire acts unrestrained, then the result is almost certain to be the appearance of an overclass of rich and idle monopolists and a poor and busy underclass, slaves in all but name, working in their service. One would recreate ancient Greece or Rome. And in the extreme, one might arrive at a society of perfect inequality where all wealth accrued to one single individual, with everyone else the servant or slave of this single tyrant. And were this to happen, one can be sure that it would not be sustained for long, before the tyrant was overthrown by his servants.
But on the other hand, if a the social desire for a general equality of idleness entirely prevails over individual ambition, then the result must be the stifling of all personal initiative. For if, as soon as one person increases his own idleness, even by simply devising some tool or technique for his own use, such a breech of doctrinaire egalitarianism would demand that he desist. Thus social idleness would never increase. And if it cannot increase, then it can only decrease. And so a state of perfect equality is as unsustainable as one of perfect inequality.
The truth that must be recognized is that any technological development of any sort is first going to benefit a very few persons, and only gradually benefit the rest of society. The first manufacturer of a flint axe was himself the beneficiary of its value. It was only when he manufactured and sold it to others that the benefit of the new tool was experienced more widely. And it was only when other people either learned from him, or taught themselves, how to make flint axes that they became widely distributed in human society. And therefore the appearance of new technologies always results in some people getting richer than others, and therefor there to be an inescapable degree of inequality in any society. But at the same time, it ought to be recognized that new technologies must always become as widely dispersed in society as possible, so as to benefit the whole of society.
Author: Chris Davis
First created: 12 Jan 2004