March 16th, 2010
I recently read an article about the "free traders" of the WWII prison camps. These were the prisoners who would trade with other prisoners to gain economic advantage. It turns out this was pretty common in these camps where chocolate and cigarettes were the typical currency of choice. Just about everything had its price, including a burgeoning service "industry" where laundry was washed or hair cut in exchange for some of the "goods". The salient point of the article, though, was not that such systems of free trade arose—just get a group of people together and watch them start trading with each other spontaneously. The two points the article wanted to make were 1) an inequality rose, where some prisoners wound up with more "wealth" than others—even though everyone started with the same amount of "currency" from the care packages (equally divvied up among them by the prison guards)—and 2) those people who didn't have the ability or desire to be effective traders (or ate all their chocolate!) periodically used violence to "redistribute" the wealth.
It got me thinking about what I learned, 1/2 a lifetime ago, about free markets:
If I remember correctly, the paradox that came out of the free market theory (certainly not the practice!) in the 19th century was precisely how an entrepreneur could ever expect to make any money since, all things being equal, the margins would continue to shrink through competition until they were zero (or, I suppose, they would approach zero—I don't remember the calculus anymore, but I remember the story it told).
I also remember reading how Marx argued that the only way "the bosses" could get this extra value was through "surplus labour" ... that is, making the little guys work a bit longer and a bit harder for no extra pay. Value was got through the labour of The People. I guess Marx never heard of advertising, which has the power to make the same quality item more desirable than your competition's—adding value. There might very well have been something to Marx's idea, though, since even today companies like to encourage their employees to "take ownership" and become company advocates ... work those extra few hours for the winning team, thank God we're not the competition (and all that).
Back to the prison camps: Other inequalities, when properly exploited (I mean that word in the good sense), add value: intelligence, natural sales aptitude, even such small advantages as whose bunk is closest to/furthest from the door, and who has a more trustworthy appearance all contribute to the successful prison-camp entrepreneur.
And the plodding methodical little minds demand—even enforce—the redistribution of wealth, eh? Fascinating. Sometimes smarter and more capable people are more successful. Taxes are the punishment.
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