The Concept Of Government Is An Outgrowth Of Our Genetic, Tribal Instincts
Prior to democracy, governments were run by the rich and powerful primarily for the benefit of the rich and powerful.
By David Grace
Instead of arguing about liberal or conservative theories, let’s look at the basic concept of “government” from 30,000 feet.
Government Is The End Result Of The Human Tribal Imperative
We start with the understanding that humans are tribal animals. It’s genetic.
Sometimes, the tribes are family or race based. More often they’re geographically based. But whatever the common thread, humans always, always, form tribes.
In addition to our genetic, tribal heritage, we’ve learned that groups are always more powerful than individuals, that there is strength in numbers. Ten people acting as a group can kill a thousand individual people if they attack them one-by-one.
Ten people working together can do many things no single person working alone can ever accomplish.
You can call the tribe a gang or a community or a government, but you can’t escape it. We are a tribal species. Tribes are in our blood.
All Tribes Make Rules
What’s the first thing a tribe does? It adopts a set of rules. They may be written or unwritten rules, codified rules or cultural rules, but every tribe has rules.
Go into the deepest jungles, the most remote wilderness and find the most primitive tribe. It won’t matter. That tribe will have rules and any member who violates those rules will find themselves either banished or dead.
Tribes Consolidate
Another thing that tribes do is consolidate.
For reasons of more power, protection, pursuit of wealth, etc., adjacent small tribes become absorbed by bigger tribes. This baron conquers that neighboring baron and takes over his land. The city expands its power and takes over the entire valley.
The Italian city-states merge into a country. Wales, England, Scotland and Ireland end up merging into the United Kingdom. The thirteen colonies become the United States.
Gangs evolve into tribes. Tribes evolve into warlords. Warlords evolve into kings. Kings build governments. The form of those governments may be monarchies, oligarchies, dictatorships or representative democracies.
Human tribal instincts combined with the massive increase in power and wealth provided by coordinated, group action make the formation of governments inevitable.
The bigger the tribe, the more complicated a governmental structure it creates.
Historically, Governments Protect Power & Wealth
Historically, governments were run by and for the benefit of the powerful and the wealthy people who run the tribe. Tribal leaders took the best women and the first joint of meat for themselves, and then for their relatives and then for their supporters.
Kings and barons and earls ran the country primarily for the benefit of themselves.
King so-and-so didn’t get up one morning and say, “You know, my barons have all this money and the serfs have nothing. I’m going to take that land away from the nobles and give it to the serfs.”
If he had, he wouldn’t have lived to see the next sunrise.
Until the creation of representative democracies, nobody thought that the purpose of the government was to increase the welfare of the ordinary citizen. They may have given lip-service to that notion from time to time, but from the ruler’s point of view, on a day-to-day basis the purpose of the government was to protect and enhance the power and wealth of the people who controlled the government — the nobles, the wealthy, the industrialists, the princes of the church.
Everybody else in the tribe was just along for the ride.
Communism’s Radical Approach
That’s why communism was such a radical philosophy. It’s idea was that the purpose of the government shouldn’t be the protection of the wealth and power of wealthy and powerful people and institutions who ran the country, but rather the purpose of the government should be increasing the wealth and power of ordinary citizens.
But they screwed it up in several ways: (1) Their system discouraged talented people; (2) They wrongly assumed that an economy could be actively planned and (3) They thought that if the government owned everything that that would make the average citizen richer and more powerful.
The Soviet government grabbed all the wealth and power and put it in the hands of the people who controlled the government, namely, members of the Party and the military. They just exchanged one group of insiders running the government for their own benefit for another.
All in all, a completely stupid idea.
Transferring Some Power To Ordinary Citizens
The western democracies had a different idea. They created a system where some of the citizens would elect some of the members of the government. They started out only allowing people who owned land to vote. Then they only allowed people who paid a fee to vote. Then they only allowed males to vote. Then they only allowed white people to vote. But eventually, every non-criminal citizen was allowed to vote.
It didn’t take long for those voters to figure out that they could use the power of the government to counterbalance the power of the rich and powerful.
Instead of a relatively small group — land owners, members of the Party, nobles — controlling the government for their own benefit, you had a system where everybody got the chance to try to control the government by electing representatives who would use the machinery of the government to limit the power of the insiders.
Bargaining Power Resides In The Side Of The Table With The Fewest Members
Everything is about bargaining power. One mine owner has vastly more bargaining power than the thousand people who actually dig the coal.
For every product and service, one side of the bargaining table has vastly fewer members than the other. Usually, it’s the seller’s side. There are a few dozen auto manufacturers and tens of millions of auto purchasers.
The greater the imbalance between the number of sellers and the number of buyers for any particular product or service, the easier it is for the side with the fewer members to coordinate their actions and thus increase their bargaining power, and the more difficult it is for the side with the most members to coordinate their actions and counter the other side’s bargaining power.
That’s the reality that gave rise to unions.
This massive imbalance of bargaining power in manufacturers, banks, insurance companies, drug companies, and employers of unskilled labor vis-a-vis the people on the other side of the table allows the side with the fewest members to massively increase their wealth and power in relation to those on the other side of the table.
That’s how it worked until the people on the weaker side of the table got access to the tools of government.
Government Regulations Are A Thumb On The Scale Of Bargaining Power
The new idea was to use the power of government to increase the bargaining power of the miners and consumers and ordinary citizens versus that of the mine owners and manufacturers.
In this new system the miners could elect representatives who would pass laws that would require the mine owners to do what the miners as individuals did not have the bargaining power to accomplish directly — require safety equipment, limit exposure to coal dust, require the mine owner to pay the medical bills of people injured on the job, pay overtime, pay a minimum wage, abolish child labor, etc.
For the first time in the history of tribes, a tribal system was converted from one where the power was concentrated in and for the benefit of those who already had wealth and power and ran the tribe, from one whose purpose was the protection of that existing wealth and power into one where the poorest and least powerful members of the group could use the group’s power to counterbalance the bargaining power of the already wealthy and powerful.
It allowed tribal leaders to be changed by the vote of a group of members instead of the wealth and power of a group of members.
For the first time in the history of tribes, people who had no wealth and no individual power were able to gain some access to the machinery of the tribe and use it to tell the wealthy and powerful:
“You can’t cut down all the redwoods. You can’t belch smoke and ash into the air I breathe. You can’t dump acid into the rivers. You can’t just throw away people who are injured in your factory. You can’t sell tainted food and toxic medicines and dangerous equipment.”
Wealthy & Powerful People Want A Return To The Law Of The Jungle
And the wealthy and powerful people didn’t like that. Their idea was that wealthy people and powerful institutions should be free to do whatever their power and wealth allowed them to get away with. They want to go back to the system where they crack the whip and everyone else makes the trip.
If they had the bargaining power to hire workers for a dollar and hour and pay no overtime and throw out people who were injured on the job then that’s what they thought they should be able to do.
They firmly believed that any deal you were strong enough to force the other side to accept was the right deal, essentially, that might ought to make right.
If they had the bargaining power to be able to refuse to sell to people who had religions or skin colors they didn’t like and still make a profit then that’s what they should be able to do.
Organizing Sellers Is Easy. Organizing Buyers Is Next To Impossible
They liked the fact that while it’s extremely easy for the relatively small group of people who make widgets to get together as a sellers’ group and control how the widgets would be made and priced that it is next to impossible for the huge group of people people who buy widgets to form a cohesive buyer’s group that has the bargaining power to be able counter the united sellers’ bargaining power.
In short, their idea was that the wealthy and the powerful should be able to do anything and everything they could get away with short of murder, rape and robbery without anyone being able to use the power of the tribe to stop them.
The Law Of The Jungle Is Not About Fairness
Might makes right isn’t about fairness. The indentured servant doesn’t deserve to be treated like a virtual slave.
The Law Of The Jungle Is Not About Freedom
Might makes right isn’t about freedom. You can’t fairly say you’re promoting freedom by a policy that leaves one person free to keep ten thousand other people in virtual servitude.
Might makes right is about protecting the law of the jungle.
Gov’t Regulations Are An Inefficient Solution
None of that means that using legislation to increase the bargaining power of consumers and employees is always an efficient, effective tactic to counter the power of sellers and employers.
Fixing a massive imbalance in bargaining power with laws is more like trying to perform open-heart surgery with a chain saw.
When you think about it from a systems point of view, you realize that the fundamental problem with the competition between the philosophy of the law of the jungle and the philosophy of counterbalancing one side’s overwhelming bargaining power with government regulations is that the foundation for the problem is there there is a conflict of bargaining power at all, that there is an adversarial relationship between buyers and sellers, employers and employees.
In the adversarial system between buyers and sellers, employers and employees, there will inevitably be massive imbalances of bargaining power which will lead to undesirable results on one side of the transaction or the other.
Having a complicated, slow, bureaucratic third party try to come in and reduce that imbalance in bargaining power is bound to result in far less than optimal results.
One Answer Is To Put Both Parties On The Same Side
But what if the two parties to the transaction were not adversarial? If the buyer and the seller were not adversaries, if they were motivated by a common purpose instead of adversarial goals, then any imbalances in their bargaining power be irrelevant.
But how can buyers and sellers not be natural adversaries? When there is a unity of interest and ownership between the two.
A Customer Controlled Company
The typical seller is an investor-controlled company, and ICC. It’s primary goal is to spend as little money as possible and get as much money as possible in the shortest period of time. But what if the seller was controlled by the buyer instead of an investor? What if the buyers controlled the seller?
In my column “A New Form Of Business Organization–Replacing The Public Corporation With A Customer Controlled Company” I described how a Customer Controlled Company, a CCC, would work.
In a customer controlled company the purchasers of the company’s products would each get one vote for each dollar they’ve spent on the company’s products in the twelve months immediately prior to the vote.
In a CCC there are no shares of stock and no board of directors. The customers elect three CEO’s with staggered terms and the decisions of at least two of the three CEOs decide what the company does. One or more of the CEOs can be removed at any time by a vote of the customers.
The executives would not receive any stock options because there would be no stock, nor would they receive any performance bonuses because the benchmark for success would be customer satisfaction, not profit.
In fact, the executives’ goals would be to reduce prices and increase quality such that there were no profits.
The executives’ goals would be solely to keep the customers happy. Happy customers keep the executives in their jobs and unhappy customers fire the executives.
A CCC’s primary motivation is exactly the opposite of that of an ICC, namely less profits and happy customers rather than more profits and unhappy customers.
When bargaining power between buyer and seller becomes irrelevant, government regulations designed to equalize that bargaining power become irrelevant as well.
Reducing Adversarial Employer-Employee Relations
How do you reduce the adversarial relationship between employers and employees?
One way would be to give the employer a financial incentive to pay employees more rather than less.
We can motivate corporations to increase wages by giving them an additional tax deduction equal to 50% to 100% of the wages they pay to employees who earn less than twice the national median income.
For example, let’s say that BigCompany had sales of $1 billion and profits of $200 million. It paid labor costs of $100 million to employees earning less than $118,000 (twice the median annual income). Under this rule BigCompany would get an extra deduction of another $50 million to $100 million top of the $100 million it’s already deducting for wage expenses.
$200 million profits — $50 million qualifying-wages additional deduction = taxable profits of $150 million instead of $200 million.
This would be a big incentive for BigCompany to pay middle-level and low-level workers more. The more they’re paid, the bigger the company’s tax deduction.
You would also apply a similar tax disincentive for payments to highly compensated employees.
There Is No Magic Bullet
You’re not going to be able to eliminate all government regulations. But you can reduce government bureaucracy and interference by giving businesses an incentive to make better products at lower prices with higher-paid workers.
The alternative is a Law Of The Jungle society which, in turn, will spawn a reaction from the losers in that jungle in the form of a massive level of government regulations, in other words, the situation we have right now.
–David Grace
