Economics: The Farm as Economic Metaphor

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Private Property, Police, and the Military

It can be argued that the rise of substantial and concentrated private property came in tandem with an effective executive power, i.e. police and military, which is necessary to enfore property contracts. Just imagine a credit system without any way to enforce the loan contracts: nobody would want to underwrite a loan without sufficient reassurance that the repayment can be enforced. A recent example of this dynamic is the struggle of Peruvian indigenous people against multinational corporations to defend their lands agains oil drilling, logging, and hydroelectric dams. Read more .

The Public-Goods Dilemma

Privatization of public goods, such as water, air, healthcare, and education, creates an inherent conflict of interest: Private corporations' main focus is profit and return on investment for their shareholders, i.e. a healthcare company has no interest in healthy people - they would go broke. Similarly, a utility company has no interest in resource conservation, since its profits are directly connected to the increasing use of resources. The public, in turn, has an interest in fair distribution of public goods to all citizens regardless of their socio-economic status and financial means.

Sewer plants for profit in Marin County

The fight is on in Marin County, California, over the sale of the Novato waste water system to a European corporate conglomerate. Another example where the profit interests of the operator would be in conflict with the goal of providing a public benefit. This argument could not be made if we were dealing with a competitive situation. However, Veolia, the Paris based enterprise, will have a sweet monopoly. Read more.

Water for all or for the highest bidder?

Academic and industry arguments have been for years that a "free" market can distribute resources, in this case water more efficiently than public oversight. However, this economic efficiency lacks the social perspective. In the extreme case, a poor person would have less access to healthcare, water, and education than a rich person. Read for example the devastating effect of Chile's "free" market experiment on a small town in the Atacama desert.

The Tragedy of the Commons

This is a case for public regulation of public goods. The best current example is the destruction of worldwide fisheries. While many species are already being fished unsustainably, i.e. following the current rate of fishing their numbers are declining to extinction, each additional fishing trawler still receives the full proceeds from his boat. However, the overall benefits decline: the total of all fisherpeople catch less. In other words, the same amount of fish needs to be divided between all former plus the new trawler An additional twist of (free market)fate: the less fish their are, the more lucrative it is to fish, i.e. there is a higher financial incentive to enter the fishing market. Here is a current example in a November 2009 NY Times editorial on the dilemma of the Bluefin Tuna quotas.