The Inevitable Unfairness of the Free Market

I just finished reading Milton Friedman’s book Free to Choose: a plea for the free market. Friedman has some compelling claims against government intervention in economic transactions. Price is – as he claims – the most informative entity there is in communicating individuals’ demand and supply of goods and services, and, in a capitalistic society at least, provides people with the incentive to utilize this information, thereby satisfying the needs of those that demand the goods/services. Furthermore, by acting upon the information, individuals provide themselves with the resources required to live a decent life. But although the free market – as Friedman describes it – seems a beautifully simple and elegant construct, there are some ‘side-effects’ of the system that might run against our intuitions about the notion of fairness.

It seems clear that the free market is the most efficient medium there is for maximizing the value of each of the individuals involved. And that (the ‘maximizing of value of each person involved’) is, according to libertarians, what makes the free market a fair system. After all, if you want to sell a computer, and another person is prepared to pay you the price you charge, then it’s only fair to let this deal take place, isn’t it? There is mutual consent between the parties involved, so what – if anything – could give a third party the right to intervene in this seemingly flawless transaction?

While there indeed might be nothing wrong with the free-market mechanism from the perspective of exchanging value, it might be doubted whether it is fair to make this mechanism the only mechanism for exchanging value. For while it’s no problem – and might even be beneficial – for those parties in a free market that possess the means to participate in the ‘game’ of exchanging value, it might be harder for those that – by nature or environment – have been unfortunate in acquiring the means required for satisfying their needs.

Because what if you’re not as intelligent as the average person, therefore getting a relatively low-income job, such as being a plumber, because of which you are unable to satisfy your needs to the same degree as – let’s say – a banker or lawyer? Of course, a libertarian might say, the plumber can still participate in the free market, just like the banker or lawyer can. But, even though the three parties might have the same needs (for luxury or otherwise), the plumber cannot satisfy as many of his as the banker and the lawyer can of theirs: only because nature happened to endow him – in contrast to the banker and lawyer – with capabilities that apparently are less appreciated (since less demanded) in society. So the question is: is it fair to let nature – and thus chance – play such a drastic role in the ability of any person to satisfy his needs?

A libertarian can answer this question in either of two ways. Either he admits that the extent in which we’re able to satisfy our needs is indeed – in principle – determined by nature’s authority over our capabilities, or he must come up with an ingenious invention for how to solve this negative side-effect of the free market without thereby endangering the libertarian heart of his plan. The first option, although this appears to be mostly ignored by libertarians, seems to imply a notion of ‘fairness’ that I – and I assume many others – find highly questionable. On the other hand, it at least is a notion, and – given that this truly is the libertarian’s view of a fair world – should be accepted for what it is.

The latter option – on the other hand – provides more room for discussion. Because how – if ever – could it be possible to solve nature’s capability-casino by means of a libertarian solution? There are of course many plans one could come up with, all of them mitigating the negative effects, but all of them being either (1) in conflict with the libertarian aspiration of a free market or (2) don’t get down to the root of the problem (that is, the unequal distribution of capabilities over mankind). It seems fair to say that (2) is a kind of unfairness that is inextinguishable – not by socialism nor by libertarianism. We after all cannot redesign our beings in order to endow everyone with the same capabilities. And even if we could do so, it’s high questionable whether this choice would be beneficial to society as a whole. So it seems we’re stuck with (1), pointing us to the possibly unfair consequences of the free market.

The above reflection shows that there seems to be an intuitively unfair side-effect of the free market; a side-effect that is unsolvable by means of the free market-paradigm itself. It either requires us to adopt the libertarian notion of ‘fairness’, or requires some sort of (government) intervention in order to compensate for nature’s ‘unfair’ distribution of capabilities.

What do you think?

A Game of Tetris: That’s All the World of Chemistry Is

“Let’s see; where can we put this fine little atom? Is there still some space left, there, next to the Oxygen element? No hmm…okay; that means we’re done for now! We’ve made ourselves a water molecule.”

That’s the way the world of chemistry works; it’s nothing more than a big game of Tetris, played either by nature or by members of our own kind. Measuring and thinking; pushing and retracting; we build ourselves the little worlds we want to. Of course, we have to comply with the rules nature set for us. We can’t make a water molecule by adding only one Hydrogen element, but that’s merely a side-note, right? A little side-effect of the Tetris kind of game Nintendo’s part of Mother Nature has build for us. And who knows: maybe, when we enter the next level, a can of new possibilities will open.

Incredible, right? The way in which nature works? As if it is made for us to understand. It almost makes you presume the existence of a creator; the Nintendo God of chemistry; the one who determined the compositions and configurations in which we are allowed to put the elements together. But maybe something different is going on; maybe we have created this game of Tetris for ourselves in our own little minds; just to make sure that “we understand” the world. After all, isn’t it suspicious that electrons are “too small to see”? That they “just can’t seem to be reflected by light”? And that we have to come up will all kinds of mind-boggling constructions, like light being both “waves and particles”, in order to keep up this facade of knowledge?

Don’t be silly. Of course atoms and subatomic particles exist. Why else would they be so useful to us? Why else does nuclear energy provide us with the power it does? Are you saying that, only because we cannot “see” everything we’re talking about, these “undetectable” things don’t exist?

Well, we can’t see God can we? And still we can attribute many effects to this “cause”: it is God who has made us; it is God who determines our fate; and it is God who makes sure that you go to heaven and I go tell. That’s an elaborate and simple explanation, right? It would surely pass Occam’s razor because of the absolutely minimal number of assumptions it makes: only God has to exist and all of our sorrows can be explained. But does this make God real? Or is it merely a “useful” construct?

But let’s not take this route; let’s keep it “scientific”. Science is, after all, true; and religion isn’t, right? Right?! And let’s be honest; the predictability of the “it’s God’s will” argument isn’t that high, right? Our subatomic particle theory can at least, although it is by means of probabilities, give us a clue about what might happen when we start messing around in “our” world.

So, what’s the conclusion of this article? The conclusion is that we will keep on playing Tetris; no matter who set the rules of the game: whether is Mother Nature or ourselves.

But what do you think?

The Butterfly Effect: How Small Decisions Can Change Your Life

The butterfly effect: a term often used within the context of ‘unpredictable systems‘ like the weather and other ‘natural’ systems. For those who don’t know it, the butterfly effect refers to a system being ‘(very) sensitive to changes in its initial conditions‘. As the name implies, think about a butterfly flapping his wings and, because of this small flapping, causes a hurricane to occur at a later point in time and possibly an entirely different region in space. The butterfly in this example is the symbol for how small changes in an earlier stage can cause huge changes to occur at a later point in time.

But can’t this concept be applied to life as well? Think about it: have you ever experienced a small phenomenon occurring – like you receiving a mail, you stumbling upon something on the internet or you meeting a person who happens to change the way you think – that, looking back, has influenced your life significantly? Let’s take the example of you talking to a person who made you change your mind. I can only speak for myself, but I definitely have had a couple of such experiences in my life. Let me give you an example of my life that illustrates the effect utter randomness can have on the course of your life:

I didn’t know what kind of Master to attend after finishing my Bachelors. While thinking about studying economics in Rotterdam (the Netherlands), I came in touch with a professor philosophy of science, who – at the time – was supervising my bachelor thesis. I had always though about attending a Master philosophy somewhere at a university, but I had difficulties with the ‘vague touch’ Philosophy masters tend to have; none of them seemed analytic or logical enough to me.

The professor and I – during one of our supervising sessions – accidentally stumbled on the question what I wanted to do after my Bachelor philosophy; so I told him about my plan to go to Rotterdam. When he asked me why I wanted to study Economics there, I didn’t really know what to say. I said, ‘Well, I always dreamed about studying abroad at a nice university; Oxford, Cambridge or something along those lines. But there don’t really seems to be Masters over there that suit my interests. That is: thinking about the world in a “non-vague” manner.’ He responded, `Have you tried the LSE (London School of Economics and Political Science)? They have a Master Philosophy and Economics and a Master Philosophy of Science. Isn’t that something for you?’ ‘Also,’ he added, ‘A good friend of mine – someone I hang out with on a regular basis – is a member of the selection commission of that Master Philosophy of Science. It might be interesting for you.’ I took a look at this Master and I was sold right away. I applied, got accepted and have studied a year in London.

What if I wouldn’t have talked to this professor about my ambitions? What if I would have had a different thesis supervisor? What if I would have had a headache that day and didn’t feel like talking? Then my future would very likely have looked very differently.

So what can we – or what did I – learn from this story: I learned that I shouldn’t hesitate to take opportunities, no matter how small they might seem. Because those small opportunities might cause a stream of new possibilities to arise later on. And the same goes for the opposite: I should avoid bad actions, no matter how small. I remember that – a couple of years ago – I said something mean to my football trainer, and I have regret it ever since. In other words: small actions can have significant consequences.

But what do you think?

How to Interpret the Notion of Chance?

We all think we’re familiar with the notion of ‘chance‘. But are we really? And if so, what are the consequences we should attach to our interpretation of chance? For instance, are chances purely descriptive in nature – in the sense that they refer only to past events – or do they have a predictive power that might be based upon some kind of underlying ‘natural’ force producing the structured data? And why would it even matter how to interpret chance? Let’s take a look behind the curtains of a probabilistic interpretation of chance, right into its philosophical dimensions.

On average, 12,3 per 100.000 inhabitants of the USA get killed in a traffic accident. Also, 45 percent of Canadian men are expected to develop some form of cancer at some point in their lives. So, what do you think about these data? First of all: does the fact that 12.3 out of 100.000 inhabits get killed in traffic tell you anything about the likelihood that you are going to be killed in traffic? I guess not. It is merely a descriptive notion invented to condense a large amount of data into an easy to read figure. It says nothing about your future, or anyone’s future for that matter. After all: you will either die in traffic or you will not, and you will either get cancer or you will not. At this point in your life you are absolutely clueless which way it will turn out to be. For all you know, it might be a 50-50 kind of situation.

Although this interpretation of chance might feel counter-intuitive, it seems a more reasonable position to take than believing you are expected to die in traffic with a probability of 12,3/100.000. You are after all a unique person and you don’t have 100.000 ways to go. You either go one way, or the other. It is only by adding huge amounts of data together that scientists can come to compressed figures (like chances), thereby describing what has happened in the past. But description does not equal prediction, and totality does not equal uniqueness.

What are the implications of this manner of looking at chance for our interpretation of science? What about the inferences scientists make based upon data, like the one about cancer I mentioned above? Are they making unjustified claims by posing that 45 percent of men are expected to die of cancer? I believe this might indeed be the case. In case scientists want to be fully justified in getting at their conclusions, they should do away with any claims regarding the likelihood of any event happening in the future. That seems to be the only manner for staying true for 100 percent to the data available.

But watch it: this is not to say that the scientific enterprise has lost its value. Science can still be the vehicle best-suited for gathering huge amounts of data about the world, and for presenting these data in such a way that we are able to get a decent glimpse of what is going on in the world around us. And that is where – I believe – the value of science resides: in the provision of data in an easy to understand manner. Not in the making of predictions, or inferences of any kind, as many scientists might happen to believe: just the presentation of data, a job which is difficult enough in itself.

You could say that I am not justified in make this claim. You could back up your argument by saying that a difference should be made between the case of ’45 percent of men are expected to get some form of cancer’ and ‘one specific man has a 45 percent chance of getting cancer’. Where the latter might be untrue, because of the fact that one will either get cancer or not, the former might be more justified. That is because it divides a group into units that will either get cancer or not. However, although this might be true to a certain extent, it still seems to be an unjustified manner to make predictions about the way the world will turn out to be. After all, considering 100 men to be the unit of selection is only to replace the level of the individual with the level of a group. On an even higher level of abstraction, one could consider the 100 men to be one unit, which subsequently would make the conclusions reached unjustified again.

Also, when choosing to make predictions on the level of the group, why does one choose the higher- instead instead of the lower level? Why wouldn’t it be okay to say that, instead of human beings, cells are the true units that either get cancer or not? That’s only a difference in the level of analysis, right?

So, next time you read somewhere that 99 of the 100 people fail in achieving something, interpret this for what it is: a description of what has happened in the past that can inform you in making the decision about what you should do right now. So don’t interpret this as meaning that you only have a one percent chance of being able to achieve a certain goal, because that would be a totally unjustified inference to make: an inference that goes way beyond what the data can support. And don’t consider a scientific fact to be a prediction about the future. Consider it for what it is: a useful description of the past, but no legitimate claim about the future.

But what do you think?

The Randomness of Life: Who has Chosen our Families?

I have got a confession to make: I love my family. I love my father, I love my mother, I love my brother and I love everyone else who is part of my bloodline. But why is that exactly? Because they are family of course! That’s true, but then let me ask myself the following question: what if I would have been born in a different family? What if I, let’s say, would have been born two streets away from the actual place I was born? Would I then still have loved my family? Or – to put it more boldly – would I have even known about the existence of my family (read: my “this life” family)? Of course I would, only then it would have been a different family which I would have known and loved.

Life is full of randomness. And one of the many examples in which this randomness shows its face is in the “choice” of who becomes your family. Because think about it: why is my mother the woman who gave birth to me? Why wasn’t it the woman in the grocery store that I say hello to every day? There seems to be no reason for either of these options, besides the fact that the former “just” happens to be true and the latter “just” happens to be false.

But, when you think about it, the situation is even more absurd than “merely” this innocent little sense of randomness. Because imagine that the woman in the grocery store would indeed have been my – or your – mother. Would I – or you – in that case have known about the existence of my “real” (read: “this life”) mother? Probably not. And you know what? I most certainly wouldn’t have cared one single bit about this. After all, why would you care about not having met someone – my “true” mother in this case – whom you don’t even know exists?

As far as I’m concerned, we only live once. And by “we” I am referring to the “yous” – plural of “you” – reading this article: the collections of hair, brains, thoughts etc. A consequence of this presumption is that all what’s happening in our lives is, whether we like it or not, our truth. But although our truth is in fact what is happening in our lives, we have to realize that it might have easily been otherwise. It would have made just as much – or just as little – sense for the woman in the grocery store to have been my mother, instead of the woman that truly “has become” my mother. Thus, although we can describe our “truths” objectively and in utter seriousness, we shouldn’t forget that the reason why our truth is the truth is completely and utterly random: it “just” happens to be so.

But back to the idea of our mothers and families. In our lives as we know it, our families – often – play a hugely important role. And since this is “just the way it is”, and since this is “our truth in this life”, it isn’t unreasonable for us to love them with all our hearts, right? Because although it might be an utterly random state of affairs, it is still our family and it is still our truth, right? So let’s appreciate our truth, and love our families.

But what do you think?