Section V.3B-V.3C of II.1 (“The Problem of Scale (Part I)”)
Considering “Autonomous Freedom as Self-Correcting” and the Order of Freedom and Prosperity in Adam Smith
Does freedom cause wealth or wealth cause freedom?
…As we’ve been circling, in my view, one of the most important questions in economics is if freedom causes prosperity or if prosperity causes freedom. Yes, it’s clear in free markets that the answer is “both,” for once the “cycle” and “market” get going, more freedom causes more invention and creativity which causes more prosperity, but what gets the “market” going in the first place? This question is reminiscent of our inquiry, “How does anyone leave Plato’s cave on their own?”; here, regarding growth, we are asking if the first step is freedom or is the first step prosperity? This is critical, for we are basically asking “What causes demand?” If demand as Keynes has argued is “the necessary precondition” for free markets to be possible, then free markets cannot operate unless “demand” is first present and maintained. So what creates and maintains demand? Freedom or prosperity? Which comes first?
Many Libertarians suggest that freedom brings about prosperity, but what if the order is reversed? If so, then it cannot be the case that “autonomous freedom” will generate demand and creativity, for it is clear rather that freedom more so follows from creativity and demand, versus the order that often seems to be assumed (which would make our effort to “spread Childhood” much more difficult, for “removing constraints” to “increase freedom” won’t necessarily be enough). Freedom is “free” and prosperity can be associated with the “market,” so to get a “free market” we need both, but either the market leads to the freedom or the freedom leads to the market. And if we order this wrong, we will suffer. Critically, please note that we need to know “which comes first,” because if the market fails or declines, we need to know from a policy standpoint (for example) which to emphasis: increasing prosperity or increasing freedom. If demand is present, there’s reason to assume “free markets” set both up in a symbiotic relationship that feed-off one another prosperously, but if demand fails, so also fails that symbiotic relationship, and we will not be able to get that relationship “started again” unless we know the right order. Furthermore, if freedom doesn’t come first, then “autonomous freedom” is not the way by which Rhetoric could overcome Discourse. Augustine told us long ago that evil was a result of a “disordered good,” and time and time again it seems like the debate always comes down to a matter of order…
Adam Smith argued in Book 3 of The Wealth of Nations that wealth lead to freedom versus freedom lead to wealth, and this is critical, for if consumption and markets broke up the power of the Feudal Lords, then simply making people “more free” will not necessarily increase timenergy and freedom in a creative sense. sure, what Isaiah Berlin called “negative freedom” is important for us to avoid totalitarianism, and Berlin was right to warn that “positive freedom” could lead to oppression, but “the absence of oppression” doesn’t necessitate “the presence of Childhood,” and that is our dilemma. If all we needed to do was increase “negative freedom,” our course would be Libertarian and clear. But if we cannot assume the presence of demand, let alone assume it is shaped by Rhetoric versus Discourse, then we must figure out how to spread certain conditions without being oppressive and totalitarian: we have to help people while leaving them alone, which sounds both impossible and arrogant. Must Discourse win then? Perhaps, but we will not concede yet.
McCloskey argued that a change in virtue and speech is what leads to prosperity, not just freedom, which we had discussed as a spread of Rhetoric. It might sound strange, but I believe Adam Smith agrees with her: the father of the “invisible hand” is perhaps different from how we’ve been traditionally taught. Smith basically argues that the power of the feudal lords was broken up because they wasted their fortunes on trinkets they didn’t need: hence, freedom grew thanks to commerce versus commerce grow thanks to freedom. ‘The security of a landed estate, therefore, the protection which its owner could afford to those who dwelt on it, depended upon its greatness. To divide it was to ruin it,’ and that’s exactly what feudal lords did in spending their fortunes on goods offered by businesses.395 Now, Smith here is writing before 1790, with “The Great Enrichment” taking-off around 1800, but what Smith identifies before “The Great Enrichment” will only be accelerated as of 1800s (and, in my view, decelerated to the degree Discourse overcomes Rhetoric). Smith tells us that ‘[i]t seldom happens, however, that a great proprietor is a great improver,’ and by this he means that many rich people (especially when the wealth is inherited) easily prove incapable of investing and using money well, and business provided a way to move wealth out of their hands into hands which could invest it better (which brings to mind the concerns of Keynes against hoarding).396 This not only benefited the socioeconomic order, but as the feudal lords were bankrupted, it unleashed all the possible productivity and creativity they held back under their rule, for under their rule people were trained into habits against investing, creating, and the like. Smith writes:
‘If little improvement was to be expected from such great proprietors, still less was to be hoped for from those who occupied the land under them. In the ancient state of Europe, the occupiers of land were all tenants at will. They were all or almost all slaves; but their slavery was of a milder kind than that known among the ancient Greeks or Romans, or even in our West Indian colonies.’³⁹⁷
Feudal lords thus proved an impediment to economic growth both in themselves and in holding back others, and it was commerce which freed all this potential in breaking up the “monopolies” (per se) of feudal aristocracies. Freedom followed commerce, and though of course then freedom worked in a feedback with commerce to help wealth-creation, this is evidence that we cannot rely on “autonomous freedom” to do all the “heavily lifting” for us (Rhetoric is needed too, a case that might be easy to grasp if we see how many Third World Nations are “free,” in the sense that people are left alone, and yet stay impoverished).
To make the main point, we turn to Smith and his own words on how the feudal system failed and freedom expanded:
‘For a pair of diamond buckles, perhaps, or for something as frivolous and useless, [the lords] exchanged the maintenance, or what is the same thing, the price of the maintenance of a thousand men for a year, and with it the whole weight and authority which it could give them.’³⁹⁸
It costs a lot of money to run an estate, and because the lords started buying frivolous things, they found themselves in the place where they couldn’t avoid the upkeep (suggesting that materialism isn’t always so bad). ‘[F]or the gratification of the most childish, the meanest and the most sordid of all vanities, they gradually bartered their whole power and authority.’³⁹⁹ With a change in ethics to value business (as we learn from McCloskey), so was incentivized the activities which could breakup feudal power. And so the day came when it could be said about the lords:
‘Having sold their birth-right, not like Esau for a mess of pottage in time of hunger and necessity, but in the wantonness of plenty, for trinkets and baubles, fitter to be the play-things of children than the serious pursuits of men, they became as insignificant as any substantial burgher or tradesman in a city.’⁴⁰⁰
Incredible, unintentional consequences (of “an invisible hand”) — yes? Commerce helped free the world, but Smith notes that neither businesspeople nor lords ‘had either knowledge or foresight of the great revolution which the folly of the one, and the industry of the other, was gradually bringing about.’⁴⁰¹ Since commerce was mainly located in cities and feudal lords in the country, Smith is also arguing here that cities helped liberate country-sides. He writes:
‘commerce and manufactures gradually introduced order and good government, and with them, the liberty and security of individuals among the inhabitants of the country, who had before living almost in a continual state of war with their neighbors, and of servile dependency upon their superiors.’⁴⁰²
Perhaps here we can see how “greed can be good” in funny way, for greed bankrupted feudalism. Here, Smith also suggests that slavery hurts prosperity and holds a country back, which makes sense if prosperity is a result of creating wealth more than stimulating it. Unfortunately, people with power tend to prefer owning slavers to hiring employees, and so if they are not forced somehow to give up their slaves, they easily won’t (hence the virtue of the bankruptcy which commerce brought about on them). Smith writes:
‘The pride of man makes him love to domineer, and nothing mortifies him so much as to be obliged to condescend to persuade his inferiors. Whenever the law allows it, and the nature of the work can afford it, therefore, he will generally prefer the service of slaves to that of freemen.’⁴⁰³
It is existentially difficult to be around people who have say and power and far easier to be around slaves, and so it can be easier for those in power to have slaves than employees (especially in Smith’s day when “moral taste/default” wasn’t so automatically against slavery). This is very problematic both in a moral sense but also in an economic sense for Smith, because the work of slaves isn’t as productive as the work of free people (which suggests that if commerce lessens slavery, it increases productivity). Smith writes:
‘But if great improvements are seldom to be expected from great proprietors, they are least of all to be expected when they employ slaves for their workmen. The experience of all ages and nations, I believe, demonstrates that the work done by slaves, though it appears to cost only their maintenance, is in the end the dearest of any. A person who can acquire no property, can have no other interest but to eat as much, and to labour as little as possible. Whatever work he does beyond what is sufficient to purchase his own maintenance, can be squeezed out of him by violence only, and not by any interest of his own.’⁴⁰⁴
The work of slaves must be Immorally and cruelly “stimulated,” per se; it will not be “created” within and by the slaves themselves (a point which brings to mind The Listening Heart by A.J. Conyers) — a major problem since depends on creation. The same applies to those who have lost their timenergy like McKerracher describes: they cannot “create” and so much be “stimulated,” which Smith suggests is economically devolutionary. When the feudal lords were overturned and workers freed, this benefited prosperity, for:
‘[F]reemen […] are capable of acquiring property, and having a certain proportion of the produce of the land […] have a plain interest that the whole produce should be as great as possible, in order that their own proportion may be so. A slave, on the contrary, who can acquire nothing but his maintenance, consults his own ease by making the land produce as little as possible over and above the maintenance.’⁴⁰⁵
Please note that Smith is not at all saying slaves are lazy; on the contrary, Smith is saying that it is rational for slaves not to work any harder than they must to survive. This suggests that slavery is bad for an economy, but because masters enjoy feeling powerful and having labor they don’t have to face as equals, the upper-classes tend to hinder economic development — at least until commerce bankrupted the lords. ‘As soon, therefore, as the [lords] could find a method of consuming the whole value of their rents themselves, they had no disposition to share them with any other persons,’ and at this point their power over others wanned and weakened away, increasing freedom.⁴⁰⁶ ‘It is thus that through the greater part of Europe the commerce and manufactures of cities, instead of being the effect, have been the cause and occasion of the improvement and cultivation of the country.’⁴⁰⁷
What interests Smith is how freedom changes what it is rational, and in freedom work can become rational, but freedom is unleashed by commerce. Freedom doesn’t just manifest magically in a manner that proves full of timenergy and capable of motivating creative work — that requires something more. Please note thought that if freedom doesn’t necessarily lead to prosperity, this might work against the possibility that “everyone has intrinsic motivation” and that it only needs to be “released” or realized. Perhaps the counter to this is that everyone does but it’s trained out of them by the system which removes and drains timenergy, and that is indeed possible. Still, if we do not see freedom proving a place where “intrinsic motivation” arises, this would suggest we will need to somehow create conditions which emerge to “intrinsic motivation.”
If freedom as self-correcting and self-organizing, then we could basically “stimulate demand” without knowing what it “was” or how to “create demand” simply by increasing freedom; hence, if “self-correcting freedom” was possible, there would be no need to further investigate “demand” or understand its metaphysical character. However, I believe we have made the case that freedom is necessary but not sufficient, that simply increasing freedom will not necessarily increase Rhetoric and help us “spread Childhood,” and this being the case our “practical strategy” must be something more than simply increasing freedom and free time, however much that must still be part of the equation. This will get us into Wordspread, as will be discussed later in this work, which is a step beyond just “increasing negative freedom” (to allude to Berlin) — an effort that will start by describing Marshall McLuhan and William Ong.
If freedom boosted demand, we could also avoid the DEH with more freedom; if the State could always stimulate demand, then we too would be safer from DEH. But neither of these strategies necessarily work — it all depends. Keynes saw economies as more “sticky” than “fluid,” and so for example he did not believe ‘[t]he German economy would […] automatically adjust to make possible the transfer of the resources demanded of it. It would have to be made to adjust by policy; and could be pushed only so far.’⁴⁰⁸ Sure, during good times, perhaps no one needed to do anything to keep Capitalism functional and prosperous, but if this was the case Keynes would claim that ‘circumstance had made possible a degree of indifference by governments to economic outcomes which [could one day be] unthinkable.’⁴⁰⁹ “A gift of circumstance” should never be taken as evidence that “a system works automatically,” but that is exactly the mistake into which Keynes believed many economists had fallen. As a result, when the economy began to fail, it was likely many economists would interpret this failure as only temporary and something “the system would automatically correct,” but Keynes saw this view as dangerous. He believed ‘[t]he short-run instability of capitalism was a greater threat to the social order than any longer-run inequality in the distribution of wealth and income,’ and though perhaps Keynes was mistaken to overlook long-term consequences (due to the conflation of “stimulating demand” with “creating demand”), his emphasis on “the contingency of Capitalism” was insightful, for it suggests that at the heart of Capitalism is a “contingent core” that we are yet to fully understand and organize socioeconomics around accordingly.⁴¹⁰ If we did, we would cease believing that “autonomous freedom” was all we needed, as we’d stop conflating “stimulating demand” with “creating” it.
To review, freedom is not primarily a cause of prosperity in Smith; freedom is a result and, at best, a condition in which prosperity can be realized in if demand is already present. Giving more freedom to the merchant class in cities certainly helped merchants “go about their business,” but if freedom was increased in the city and there were no merchants, the increase in freedom would have hardly made any practical differences in the lives of inhabitants. It was because there were merchants that freedom mattered, which begs the question: What makes merchants? Alluding to “The Creative Concord,” this question is: What makes Artifexians? Furthermore, what makes Children? The answer seems to be Rhetoric, and so we need to figure out how to spread it. This, again, our “problem of scale.”
In addition to helping us realize we cannot always rely on “stimulating demand,” another reason why the question on if freedom leads to prosperity or prosperity to freedom is so critical is because it radically transforms the proper policy response if a market downturn begins. If we believed supply always creates demand, then a lack of demand would be evidence of a lack of supply, and the main reason supply would be lacking in a Classical Model is because freedom was lacking. Hence, the State will easily conclude it needs to do less exactly when Keynes argued the State needs do more. Why Book III of the The Wealth of Nations is so important is because Smith is often believed to favor Austrianism and “free markets,” and though this is true to an extent (“above the event horizon,” at least), we see in Smith a premise that we would expect to find in Keynes. Smith believed prosperity created freedom, as Keynes believed demand created supply, which by extension created employment. ‘When [Keynes] came to argue that employment depend[ed] on aggregate demand, he was simply generalizing the intuition of the automobile worker who remarked: ‘When no one’s buying cars there’s no point in making them.’ ’⁴¹¹ Indeed, supply isn’t produced if there isn’t demand, and yet where does demand come from for a supply which doesn’t exist? Risk-taking, mainly, which means values are needed to incentivize and moralize risk-taking. We can have all the freedom in the world, but without those values, demand will never arise. ‘The mistake Keynes identified was the belief that decisions to save are simultaneously demands for investment goods’: this cannot be assumed, for it cannot be assumed that the saver is also a risk-taker. In fact, the values which often make one a saver also make one risk-averse.⁴¹² Similarly, we cannot save that people would take risk and create value if only they were free to do so; in fact, a reason people might not be free is precisely because they don’t want to be responsible for taking risk and creating value (as is likely the case if Discourse is strong).
To review, we learned in Keynes that the only “real” savings were investments, and so it became critical for Keynes that savers weren’t supported in their emotional dispositions and habits by high interest rates. This might sound strange, for we spend our lives being told that “spenders” are the ones who need to learn morals and restraint, but Keynes here is introducing us to the possibility of “vice savers,” those who save out of fear, trepidation, and a lack of discernment to know what to invest in. Considering the difference between country-people and city-dwell, sounding like Keynes, Adam Smith writes:
‘Those different habits naturally affect their temper and disposition in every sort of business. A merchant is commonly a bold; a country gentleman, a timid undertaker. The one is not afraid to lay out at once a large capital upon the improvement of his land […] The other, if he has any capital, which is not always the case, seldom ventures to employ it in this manner. If he improves at all, it is commonly not with a capital, but with what he can save out of his annual revenue.’⁴¹³
In this, we see where values impact destiny, just as McCloskey argues, and in Smith we see an ally in her thinking. Smith’s point here also suggests Keynes, who once ‘informed his companions that spending was more than a pleasure, it was a duty.’⁴¹⁴ Indeed, if without spending demand falls below the DEH, there is an argument to be made that we have duty to keep demand above the DEH, and that requires spending. But what if “stimulating demand” ceases to be enough to keep above the DEH? Then perhaps it becomes our “duty” to figure out what “is” demand, and in that way we might see a moral thrust to our next consideration.
Critically, though he had sympathizes for socialism, ‘Keynes emphatically rejected socialism as an economic remedy for the ills of laissez-faire. Its doctrines were ideological, obsolete, irrelevant, inimical to wealth-creation, and likely to involve gross interferences with individual liberty.’⁴¹⁵ In the case of Keynes, ‘his conviction, rooted in analysis, [was] that capitalism was not sick but unstable.’⁴¹⁶ In this we see something Hegelian about Keynes, and also we can see his support of FDR not as a move against Capitalism but an effort meant to honor and maintain it in its fundamental instability. Keynes believed in Capitalism, but this means Keynes believed the best system didn’t work “automatically,” that its success was contingent, a point that against seem reminiscent of Hegel’s notion of progress. ‘He never embraced socialism. In the 1930s, he insisted as he had in the 1920s that the state should not try to take over the functions of private enterprise, merely fill its gaps.’⁴¹⁷ Furthermore, he could seem ‘hostil[e] to revolutionary socialism, which [for him] prefer[red] a greater good with a lower probability of attainment to a smaller one with a higher probability of attainment.’⁴¹⁸ Right or wrong about this, Keynes must be seen as arguing for an “Unstable Capitalism,” and that this “Unstable Capitalism” was the best for which we could hope. That being the case, the best Capitalists will perhaps need to be those who are nimble, skillfully, discerning — people who thinkers like Ivan Illich would have liked, perhaps.
After prosperity creates freedom in Smith, freedom could then perhaps generate prosperity which could in turn generate freedom, starting a wonderful feedback loop, but if prosperity dried up “too much,” freedom couldn’t necessarily on its own bring prosperity back. “Something else” would be needed to get the “feedback loop” started again, but what could that be? Well, in Keynes, we learn that what is needed is “demand,” for prosperity cannot arise without demand — no “market equilibrium” will cause prosperity to manifest out of some necessity — but this only begs the question: what is and what creates demand? It would seem freedom can create demand, but Keynes gives us reason that this only happens above a certain “event horizon” where demand isn’t “too low” (a point which Austrians would argue might not be determinable and thus risky to even worry about). Furthermore, freedom doesn’t necessary create demand: if merchants are given freedom by the State to “do what they will,” it’s not guaranteed the merchants will deliver. Alright, but what’s the difference between “merchants who deliver” and “merchants who don’t?” What do some “have” that the other lacks? Creativity. Motivation. Childhood.
If we were to sum up Keynes thinking in an overly-simple notion, we could say that Keynes understood that ‘the economy runs down to a low point and gets stuck there.’⁴¹⁹ Keynes avoided this dangerous point by “stimulating demand,” but I’m afraid that is no longer working effectively as the world complexifies, which means we must “create demand,” and that requires us to know what demand “is” somehow (a point which makes me think of how Keynes warned that if ‘we are tempted to assert that money is the drink which stimulates the system to activity, we must remind ourselves that there must be several slips between the cup and the lip’).⁴²⁰ Keynes viewed his work as ethical, for the sooner ‘the system could be got to deliver on its promise to produce wealth for all, the sooner would mankind be in a position to enjoy the ‘good’ life — to value the present over the future’ (I find it interesting to think of “the good life” as a state of valuing the present as highest).⁴²¹ The more humanity valued life today, Keynes believed the more people could spend and grow demand, which would improve the future: to sacrifice today for the future seemed the right course, but in terms of macro-economics, it could prove counterproductive. If Keynes was right to see his work as ethical, perhaps we too can see an “ethical imperative” in considering “the spread of Childhood” for similar reasons.
In my opinion, it is hard to beat the end of Chapter 8 to outline the perspective of Keynes:
‘Consumption is satisfied partly by objects produced currently and partly by objects produced previously, i.e. by disinvestment. To the extent that consumption is satisfied by the latter, there is a contraction of current demand, since to that extent a part of current expenditure fails to find its way back as a part of net income. Contrariwise whenever an object is produced within the period with a view to satisfying consumption subsequently, an expansion of current demand is set up. Now all capital-investment is destined to result, sooner or later, in capital-disinvestment. Thus the problem of providing that new capital-investment shall always outrun capital-disinvestment sufficiently to fill the gap between net income and consumption, presents a problem which is increasingly difficult as capital increases. New capital-investment can only take place in excess of current capital-disinvestment if future expenditure on consumption is expected to increase. Each time we secure to-day’s equilibrium by increased investment we are aggravating the difficulty of securing equilibrium to-morrow. A diminished propensity to consume to-day can only be accommodate to the public advantage if an increased propensity to consume is expected to exist some day.’⁴²²
Equilibrium today might come at the cost of demand tomorrow. ‘Consumption — to repeat the obvious — is the sole end and object of all economic activity,’ and if what we do today in the name of consumption tomorrow results in their not being consumption tomorrow, we have ironically engaged in economic devolution.⁴²³ ‘Opportunities for employment are necessarily limited by the extent of aggregate demand. Aggregate demand can be derived only from present consumption or from present provision for future consumption.’ So spend today or have nothing to spend tomorrow, but what if there is nothing today worth buying, only junk or what contributes to self-effacement via “The Meta-Crisis?”⁴²⁴ Then we are in trouble, so we best make sure we never end up in this circumstance, but that would require “intrinsic motivation” (I would argue), and that I believe requires us to know what demand “is.” Why? Because “intrinsic motivation” is what assures we keep working no matter what the circumstance, and this assures then that there is always some degree of demand, not only if there is an environment which might “stimulate it” (and furthermore “intrinsic motivation” is of a higher probability I think to be creative and thus “create wealth” while avoiding problematic market forces that cause self-effacement).
“Joy to the World” by O.G. Rose argues “intrinsic motivation” is central for us to smooth out business cycles and help us avoid economic downturns (which could risk us falling below the DEH). To offer a short outline of the argument from that paper:
1. Childhood doesn’t rise with consumption but with “intrinsic motivation.”
2. “Intrinsic motivation” ultimately drives productivity (more reliably at least), while extrinsic motivation ultimately drives credit cycles.
3. Consumption without productivity causes “cycles of booms and busts.”
4. The extrinsically motivated are more likely to consume in a manner that doesn’t drive productivity, while the intrinsically motivated are more likely to consume in a manner that drives productivity.
5. When the economy is good, the extrinsically motivated produce less, having achieved the goals of their labor (financing a home, wants, etc.). They no longer have to work (productively): they can pay for all their costs. If they do still work, they don’t have to work any harder than they already work. Yet during a boom, with credit in the system, the economy needs more productivity to finance that increase in debt. However, the extrinsically motivated have no reason to increase productivity because it doesn’t seem like they need to (because that need is hidden behind credit): they seem to be working enough.
6. When the economy is good, the intrinsically motivated continue working, because their work is not contingent upon their environment, but personal drives.
7. The higher the joy of a nation, the higher its number of intrinsically motivated people. The more intrinsically motivated people, the more likely that a boom isn’t a bubble which will eventually lead to a bust, that “stability doesn’t destabilize.”
This argument must be elaborated on in the paper, but with “joy” we can think “Childhood” and “the creator class,” and the argument is that Children are intrinsically motivated and thus continue to work and create regardless the economic condition. Hence, “good times” are less likely to cause Children to work less in the same way that “good times” can cause the extrinsically motivated to lessen productivity, risking a bubble driven on credit and debt that isn’t backed by productivity. In other words, where creativity wanes, credit and debt will easily be employed to make up for the loss, but this sets us up for perhaps ever-harsher business cycles and downturns. Is this sustainable? Well, if this characterizes Game A, many suggest the answer is negative.
If creativity gives rise to prosperity and demand (if both manifest and/fall together versus “make up for the other,” as can be suggested in equilibrium models), then we can give a society all the freedom in the world, and prosperity and demand won’t necessarily appear, meaning the economy will continue to tumble and fall below the DEH, below which “self-correction” becomes practically unlikely and even impossible. Yes, creative people need freedom to be creative, but just increasing freedom will not necessarily mean creativity will result. This point cannot be overstressed: freedom might be a necessary condition for creativity, but that doesn’t mean it is a cause of creativity. I may need salt to make a cake, but it is not the case that a cake will emerge out of salt if I just leave the salt on the counter long enough, and yet salt is at the same time necessary for the recipe.⁴²⁵
Keynes was correct that demand is more fundamental that supply, but my argument is that creativity is even more fundamental than demand and/or “is” demand if by demand we mean “the demand we set on ourselves” (as will be elaborated on). If it is successfully argued in “Joy to the World” that “creativity” entails “intrinsic motivation,” then we can furthermore say that “intrinsic motivation” is more fundamental demand, which then brings us to a very important question (which I think we must answer if we are going to discuss “how we might leave Plato’s Cave on my own”): What generates “intrinsic motivation” (necessary for/as creativity)? This is not to say that “all intrinsic motivation is creative,” but it is to say that there’s a higher chance “intrinsic motivation” will generate creativity than extrinsic motivation (if one had to bet), which means over a large population, the incubation of “intrinsic motivation” will be more economically valuable than a reliance on extrinsic motivation.⁴²⁶ If this is true and it is the case that our present economy is more motivated by extrinsic motivation than intrinsic motivation, then we have a problem; furthermore, if it is the case that First World Nations tend to arise thanks to creativity but draft into being against creative — if they arise thanks to Rhetoric but then drift into Discourse — perhaps we can start to understand why First World Nations seem to fall into “The Great Stagnation” which Tyler Cowen discusses.
Creativity creates demand; at best, the State stimulates it, which can prove beneficial, but there is likely a limit to how much and for how long.⁴²⁷ Perhaps the State can incentivize and “channel” the creativity already present in the system, but it cannot replace creativity, which in turn means it cannot replace “(intrinsic) motivation” or Rhetoric with anything (they must be present or nothing else will suffice). The State could perhaps erect a school system to teach creativity (assuming that is possible), yes, but the efforts of the State to stimulate absent demand will likely fail if creativity is absent. But as the State cannot replace creativity, neither can freedom (both those on the Left and those on the Right might be off in their thinking). As the State cannot necessarily stimulate demand, the same goes with freedom: we cannot necessarily solve our problems by increasing the presence of the State or by reducing it. “More freedom” will not necessarily be enough (it depends). “Something more” is required, and that is the creativity which accommodates “intrinsic motivation” and help smooth out business cycles.
“The Creative Concord” by O.G. Rose argued that Capitalism will fall into the self-destruction of Marx’s “material dialectic” if the Artifex, or “creative class,” fails to materialize. To put the case very simply, if creativity is lacking, Capitalism will fail, a point we have attempted to reinforce here through an analysis of Keynes. If this paper has successfully argued that Keynes was right that “demand” is more central to “supply,” than I think the case becomes even clearer for why creativity is so central. However, creativity seems to arise after demand, or at least the “demand on the self” which is found in “intrinsic motivation,” which is a product of “intrinsic coordination” (as we discussed regarding Anthony’s work). And so this still leaves open the question of, “What is demand?” — but for a moment more we will try to make clearer why creativity is partly the “something more” which economics needs in addition to “stimulation” and “freedom.”
Keynes showed that Capitalism necessarily lacks any economic safety nets. This is true, but in a sense if human nature was creative, then perhaps the system has a “recovering mechanism” embedded into it insomuch as people participate in it who have a “creative nature” embedded into them? The system, in of itself, is unstable, because the system is creative people. With people, there are no guarantees: one day they are like gods; the next, monsters. Furthermore, might it be a “downturn” that motivates people to become creative? Perhaps, and if so perhaps there’s a “safety net” to that degree? Indeed, history does seem to be a story of Golden Ages coming after declines, declines coming after Golden Ages To allude to Antifragile by Nassim Taleb, humans are made creative by disorder (disorder begets Artifexians), while perhaps comfort trains us out of creativity? This might suggest why emphasizing “intrinsic motivation” in our thinking is preferable, even if creativity and “intrinsic motivation” are profoundly linked. Furthermore, it might suggests that historically creativity has mostly resulted from environments and situations which “stimulated creativity” versus “created creativity,” akin to the topic of demand — a point which might help us understand the emergence of “The Great Stagnation,” evidence of Discourse’s rising over Rhetoric.
To review, we learned from Keynes that there is a “Demand Event Horizon” (DEH), and that “the ethics of savings” is contingent upon the degree those savings are eventually “risked into” investment (savings which are hoarded suggest a vice). The State might be able to “stimulate demand,” but eventually it would seem that we must “create demand,” hence the need for an Artifex and Children. Our focus must then be on the spreading of the Artifex, but we must somehow do it in a way that doesn’t strike the public as strange. Keynes tells us that ‘a monetary policy which strikes public opinion as being experimental in character or easily liable to change may fail in its objective of greatly reducing the long-term rate of interest,’ and so it might go with all efforts of “social engineering.”⁴²⁸ How might we change the world without coming off as experimenting with people’s lives? The change would have to be subtle, I think, and leave plenty of room for people to change and customize things as they see fit. Keynes tells us that he ‘mentioned in passing that the new system might be more favorable to peace than the old has been,’ given how Keynes would interconnect the globe and avoid depressions through “stimulating demand” which tend to lead to war, so for that reason we would want to seriously consider the possibility of “creating demand,” but we must do so without unintentionally causing oppression.⁴²⁹ If Keynes is right, which the world since WWII might suggest he is, then maintaining peace requires us to maintain “the new system,” and its fall into “The Great Stagnation” might suggest it is running out of steam without a change. Yes, ‘if nations can learn to provide themselves with full employment by their domestic policy […] there need be no important economic forces calculated to set the interest of one country against that of its neighbors.’⁴³⁰ Where economies are strong, war becomes less likely, and if no nature ever falls below the DEH, the reasons for war become far less (and the costs of war will likely always be higher than the potential gains).
‘Is the fulfillment of these ideas a visionary hope? Have they insufficient roots in the motives which govern the evolution of political society?’ — in response to these questions of Keynes, I would not entirely disagree, only warn that the hopes will ultimately prove to have an expiration date if we cannot negate/sublate “stimulating demand/creativity” into “creating demand/creativity,” an expiration date I fear we might be approaching.⁴³¹ Keynes tells us that ‘it may well be that the classical theory represents the way in which we should like our economy to behave. But to assume that it actually does so is to assume our difficulties away.’⁴³² Fair enough, and indeed we might want to believe that Capitalism “self-corrects,” but we might make a similar mistake in “wish-fulfillment” if we believe that “stimulating creativity/demand” is all we will ever need to understand. Likewise, how much better the world might be if “low order” Discourse was “high order” Rhetoric, but alas “stimulate” and “create” or not similes.
Bertrand Russel told Bryan Magee that Lord Keynes was the smartest man he ever met, a claim that is believable given that depth of the economic analysis we find in Keynes. Magee recounts his exchange:
‘When I asked him who he regarded as the most intelligent person he had ever met he replied unhesitatingly, ‘Keynes.’ When I asked, ‘Did you honestly regard him as more intelligent than yourself?,’ he said with equal lack of hesitation. ‘Yes. Every time I argued with Keynes I felt I was taking my life in my hands.’ When I said I was surprised by his answer because I had been more than half expecting him to say, ‘Einstein,’ he replied that Einstein did not exhibit pure intelligence in the same way, but rather something akin to the gifts of a great creative artist: Einstein’s work had come from depths of imagination rather than of intellect.’⁴³³
This has always stuck out to me, for it suggests a difference between “rational” and “creative,” and helped me see how “the true wasn’t the rational.” Considering the great genius of Keynes, I think we will need to give an account for why evidence and data make it easy to believe that “stimulating demand” is “practically” the same as “creating demand,” and we will attempt that account when we consider Nassim Taleb (and how genius might not help us avoid “black swans”). For most of history, I think “stimulate” and “create” have been practically the same, and so this “mistake” is not really a mistake, arguably, for it is historically contingent. In this way, we can see why the argument of this book is not a claim against the genius of Keynes, but instead a claim that we are entering a new “historic episode” that requires a clearer distinction between “create” and “demand.”
Alright, all good and well, but what evidence is there that we need to be worried about the presence of creativity in the system (and hence draw a clearer line between “stimulate” and “demand”)? Sure, we have suggested that “The Meta-Crisis” is tied to the question of “spreading Childhood,” but is that all, and isn’t that far off? No, for I would argue that “The Great Stagnation” is evidence that we already deeply being impacted by this problem, which brings us to a description of Cowen’s work, which has roots in Keynes.
³⁹⁵Smith, Adam. The Wealth of Nations, Volume I. The Glasgow Edition. Liberty Fund, as authorized by Oxford University Press, 1981: 383.
³⁹⁶Smith, Adam. The Wealth of Nations, Volume I. The Glasgow Edition. Liberty Fund, as authorized by Oxford University Press, 1981: 385.
³⁹⁷Smith, Adam. The Wealth of Nations, Volume I. The Glasgow Edition. Liberty Fund, as authorized by Oxford University Press, 1981: 386.
³⁹⁸Smith, Adam. The Wealth of Nations, Volume I. The Glasgow Edition. Liberty Fund, as authorized by Oxford University Press, 1981: 418–419.
³⁹⁹Smith, Adam. The Wealth of Nations, Volume I. The Glasgow Edition. Liberty Fund, as authorized by Oxford University Press, 1981: 419.
⁴⁰⁰Smith, Adam. The Wealth of Nations, Volume I. The Glasgow Edition. Liberty Fund, as authorized by Oxford University Press, 1981: 421.
⁴⁰¹Smith, Adam. The Wealth of Nations, Volume I. The Glasgow Edition. Liberty Fund, as authorized by Oxford University Press, 1981: 422.
⁴⁰²Smith, Adam. The Wealth of Nations, Volume I. The Glasgow Edition. Liberty Fund, as authorized by Oxford University Press, 1981: 412.
⁴⁰³Smith, Adam. The Wealth of Nations, Volume I. The Glasgow Edition. Liberty Fund, as authorized by Oxford University Press, 1981: 388.
⁴⁰⁴Smith, Adam. The Wealth of Nations, Volume I. The Glasgow Edition. Liberty Fund, as authorized by Oxford University Press, 1981: 387–388.
⁴⁰⁵Smith, Adam. The Wealth of Nations, Volume I. The Glasgow Edition. Liberty Fund, as authorized by Oxford University Press, 1981: 389.
⁴⁰⁶Smith, Adam. The Wealth of Nations, Volume I. The Glasgow Edition. Liberty Fund, as authorized by Oxford University Press, 1981: 418.
⁴⁰⁷Smith, Adam. The Wealth of Nations, Volume I. The Glasgow Edition. Liberty Fund, as authorized by Oxford University Press, 1981: 422.
⁴⁰⁸Skidelsky, Robert. John Maynard Keynes. New York, NY: Penguin Books, 2003: 248.
⁴⁰⁹Skidelsky, Robert. John Maynard Keynes. New York, NY: Penguin Books, 2003: 364.
⁴¹⁰Skidelsky, Robert. John Maynard Keynes. New York, NY: Penguin Books, 2003: 36.
⁴¹¹Skidelsky, Robert. John Maynard Keynes. New York, NY: Penguin Books, 2003: 469.
⁴¹²Skidelsky, Robert. John Maynard Keynes. New York, NY: Penguin Books, 2003: 484.
⁴¹³Smith, Adam. The Wealth of Nations, Volume I. The Glasgow Edition. Liberty Fund, as authorized by Oxford University Press, 1981: 411.
⁴¹⁴Skidelsky, Robert. John Maynard Keynes. New York, NY: Penguin Books, 2003: 273.
⁴¹⁵Skidelsky, Robert. John Maynard Keynes. New York, NY: Penguin Books, 2003: 371.
⁴¹⁶Skidelsky, Robert. John Maynard Keynes. New York, NY: Penguin Books, 2003: 437.
⁴¹⁷Skidelsky, Robert. John Maynard Keynes. New York, NY: Penguin Books, 2003: 477.
⁴¹⁸Skidelsky, Robert. John Maynard Keynes. New York, NY: Penguin Books, 2003: 286.
⁴¹⁹Skidelsky, Robert. John Maynard Keynes. New York, NY: Penguin Books, 2003: 481.
⁴²⁰Keynes, John Maynard. The General Theory of Employment, Interest, and Money. Orlando, FL: First Harvest/Harcourt, Inc., 1964: 173.
⁴²¹Skidelsky, Robert. John Maynard Keynes. New York, NY: Penguin Books, 2003: xxix.
⁴²²Keynes, John Maynard. The General Theory of Employment, Interest, and Money. Orlando, FL: First Harvest/Harcourt, Inc., 1964: 105–106.
⁴²³Keynes, John Maynard. The General Theory of Employment, Interest, and Money. Orlando, FL: First Harvest/Harcourt, Inc., 1964: 104.
⁴²⁴Keynes, John Maynard. The General Theory of Employment, Interest, and Money. Orlando, FL: First Harvest/Harcourt, Inc., 1964: 104.
⁴²⁵The freest entity of all is “nothingness,” for it is not limited by space, dimensions, time — it’s utterly free, and yet that precisely makes it “utterly nothing.” Freedom is a “state” not a “cause,” and so freedom cannot cause creativity, even if freedom is a necessary “state” for creativity to emerge in. This being the case, the more the “state” of freedom is realized, the more creativity can emerge, making it “seem like” freedom caused the creativity, when really the freedom simply “realized” and/or “unleashed” the already existing creativity. Similarly, freedom may “unleash” demand, productivity, prosperity, and the like — Adam Smith, for one, speaks as if giving more “freedom” to the merchant class in cities was why they were able to increase liberty in the country — and this certainly makes it seem like freedom “created” demand, but really something else was responsible, and that for me is the Artifex. If there is no Artifex, all the freedom in the world won’t bring about prosperity and demand, for no one will have what it takes to create them.
⁴²⁶Do creatives consume as much as non-creatives? If not, isn’t there a risk that a spread of the Artifex could cause the economy to retract? Possibly — if everyone suddenly became Buddha, that might prove problematic — but it should be noticed that creatives must consume in order to have material with which to create. In my experience, creatives occupy a great middle space between “not consuming wastefully” and “not consuming at all”: they spend, but they tend to be more aware of how they are spending and seek to get the most out of every dollar they can. This strikes me as exactly the kind of consumer we should want in our economy, and a prevalence of this kind of person would strike me as increasing the efficiency and effectiveness of Keynes’ “multiplier effect.” Sure, some businesses may fail if everyone becomes Artifexian, but the ones which do are the ones which we are likely better off without. To put the point succinctly: a creative society might have “overall” less consumption, but the consumption it does have is more likely to be investment, and if Keynes is right about the “multiplier effect,” that investment will easily make up for any decline of “noninvestment consumption” which is lost by an increase of the Artifex.
⁴²⁷To review, as technology advances, the conditions we must meet to recognize a “technology that adds value” from “a technology that doesn’t” become greater and more numerous (please keep in mind that the word “technology” includes entities like highways and air conditioners, devices so common today that it’s easy to forget they are “technologies”). As this occurs, the likelihood lessens that FDR Economics proves effective at maintaining and growing demand. Yes, while there is still “low-hanging fruit” for government to invest in and consume, FDR Economics can work, but that era cannot seemingly last forever. Eventually, FDR must aside, and the Artifex, which is always needed to some extent, will need to grow even more to make up for the slack left due to the loss of FDR. There is a time in the life of a nation when the Artifex can be small and the society still prosper, for there are “low-hanging fruits” to be invented, created, and invested in like highways and electricity, entities that’s “value add” is easy for most people to agree on and see. But every technology raises the bar for the next technology: the technologies we discovered in the 1920s requires less specialization and education than the technologies we discover in the 1940s (please note this might not seem the case because what is developed in the 40s “stands on the shoulders” of the 20s, etc.), as what we discover in 2030 will require more creativity than what was discovered in the 90s. Perhaps we develop better tools to ease the process, but the point is that new technologies tend to require increased specialization and education to appreciate and understand. To fill this need, a larger Artifex will be required, for greater complexity makes likely more error, but the greater the Artifex the more error that can be absorbed without slowing down or stopping technological advancement. Additionally, a larger Artifex will have more computational power to handle the rising complexity and to find new creative possibilities when no new possibilities seem to be left.
Unfortunately, making it more difficult to establish a robust Artifex, Capitalism seems to entail a problematic irony: as it increases our free time (thanks to technology) decreasing labor, it simultaneously robs us of the capacity to use that free time well (as McKerracher discusses). This is described extensively in “The Tragedy of Us” by O.G. Rose, and the point is that in order to keep Capitalism from devouring itself, we must fight it. As we have learned from Keynes that the free market doesn’t necessarily “save itself,” so Capitalism likewise doesn’t necessary produce the Artifex it requires to avoid self-destruction (at the hands of Marx’s “material dialectic”). It can, but not necessarily (as I hope is clear, I tend to oppose all deterministic and “non-contingent” thinking). Alright, but what does that mean? It means we have to intentionally produce and develop the Artifex. How do we do that? Is it even possible? Maybe Artifexians can only be born, not made?
⁴²⁸Keynes, John Maynard. The General Theory of Employment, Interest, and Money. Orlando, FL: First Harvest/Harcourt, Inc., 1964: 203.
⁴²⁹Keynes, John Maynard. The General Theory of Employment, Interest, and Money. Orlando, FL: First Harvest/Harcourt, Inc., 1964: 381.
⁴³⁰Keynes, John Maynard. The General Theory of Employment, Interest, and Money. Orlando, FL: First Harvest/Harcourt, Inc., 1964: 382.
⁴³¹Keynes, John Maynard. The General Theory of Employment, Interest, and Money. Orlando, FL: First Harvest/Harcourt, Inc., 1964: 383.
⁴³²Keynes, John Maynard. The General Theory of Employment, Interest, and Money. Orlando, FL: First Harvest/Harcourt, Inc., 1964: 34.
⁴³³Magee, Bryan. Confessions of a Philosopher. New York, NY: Random House, Inc., 1997: 208.