Monday, June 12, 2017

Market formalism solves the civilizational cycle


Good times create weak men.
Weak men create hard times.
Hard times create strong men.
Strong men create good times.

Rise and repeat.

In the economy this is called the business cycle; in government the cycle of civilization. One might even say that since democracy is a marketplace for the purchasing of laws, the collapse of a democracy is simply the business cycle in government.

Why?

Because hardship must be supplied from the outside. In the absence of physical labor the human body becomes fat. In the absence of hardship the human mind becomes out of touch. Man evolved in the presence of both physical and mental hardship; his mind is not destined to function well without it.

One way to solve the civilizational cycle is to simply give everyone a minimum amount of pain; think mandatory national service. Everyone goes to boot camp. But other than the fact that this is basically universal slavery, it suffers from the practical flaw of being a political program, and thus, subject to abolishment.

A better way is to program respect for reality into the state itself. By subordinating the bureaucracy to a competitive market, state functions are forced to compete for survival, and thus, maintain realism. The trick is never to let anything get too big to fail. Size limitations must be imposed.

Assuming that a market formalist state still has a business cycle, it is better than the civilizational cycle. Economic depression is better than civil war. If the state staggers its finances by investing all of its income in its own bonds in such a way that the redemption times are spread over several years into the future, then any shock to its budget from recession is mitigated. Instead of exacerbating the market cycle it stabilizes it, and without debt or weird Keynesian economics. Since the cushion of consistent state spending is normal and not based on monetary manipulation, it accomplishes stabilization of the market without distorting it.


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