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Abstract: The Impact of Civics (Politics) upon Economics: Free Contract

The 4 legged stool of Anglo-Saxon Civics

  • Representitive Democracy
  • Common Law
  • Bill of Rights
  • Free Contract – all other agencies exist for the purpose of this.

In a Free Contract system, bargaining power is everything. The distribution of wealth reflects the distribution of bargaining power. If you are poor, it is because you have poor bargaining power. If you are rich it is because you have strong bargaining power. The political agency of government is all about the distribution of bargaining power. If you have poor bargaining power it is because too many of the cohorts in your group have not been pursuing their own self interest.

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America civics rest upon four important institutions but it really only has one governing principle: free contract. All the other aspects of American civics exist to support the principle of Free Contract.

Before I go into a discussion upon the principle of Free Contract, let me just touch upon the other three legs upon which American Civics rests.

Bill of Rights: Four over two hundred and fifty years before the creation of the constitution Western Civilization was consumed in cultural religious wars spawned as a result of the reformation which began around 1520. Somehow Protestant religious movement survived, mostly in northern Europe. That survival ended the monopoly Catholicism had on thought, which in turned spawned Europe’s age of enlightenment from which much of American culture and institutions emanate.  But even in the late 18th century and well into the 19th century, legacy of the religious cultural wars continued on. The Bill of Rights quite simply ended the cultural wars and enshrined many of the advances achieved by the enlightenment. Perhaps the most important is the separation of religion and civics, which it does in a most ingenious way.  Collectively, the Bill of Rights, and many subsequent amendments, stress that each individual is free, and that personal freedom ends only where the personal freedom of another’s begins. This is a manifestation of the concept of liberty under the law, freedom circumscribed by fairness – that concept is the single greatest invention in civics and it was born out of the agency of English Common Law (see D-4 The Agency and Mechanisms of Common Law Pragmatism (Common Sense). Under the Bill of Rights, together with the agencies of Common Law, people from long feuding groups in Europe could move to the United States and live as neighbors in perfect peace and tranquility.  I witnessed this myself growing up in University City, Missouri, a very diverse suburb of St. Louis, where I saw Palestinians living next door to Jewish people in perfect peace. This signaled a great advancement in civics.

Common Law: The Common Law provided a system of justice that was fair and pragmatic. It also entailed the involvement of the community. Decisions are rendered not based upon ideology but upon common sense and pragmatism (in the ordinary use of the word, essentially the same thing as common sense). For a greater sense of understandings on what this implies please read D-4 The Agency and Mechanisms of Common Law Pragmatism (Common Sense). Common Law and the Bill of Rights organically work together.

Representative Democracy:  As your are about to find out, in Civics, Free Contract ultimately will lead to a concentration of wealth. The concentration of wealth is the most prominent phenomina in history for the upturning and distruction of great civilizations, empires and countries. Concentrated wealth arguably lead to the destruction of Ancient Egypt’s New Kingdom, the collapse of the Western Roman Empire, the collapse of Byzantium (in the 50 years leading up to the battle of Manzikert om 1071 from which Byzantium never truly recoverd),  Medieval Japan, Hapsburg Spain, Bourbon France, Romanov Russia, and triggered the Great Depression (which paved the way for the rise of Hitler, World War II and the Holocaust), and the Great Recession (which has undermined the cohesion and stability of: Europe,  the American social contract, and the vast global hub and spoke economic and security arrangement centered on the United States which we normally refer to as the First World or the Free World). The founding fathers and the Framers of the constitution presumably knew about this phenomina, perhaps the gift of Edward Gibbons “Decline and Fall of the Roman Empire” circa 1776).  They gave us representative democracy as an automatic stabilizer so that when the playing field upon which free market bargaining becomes too unbalanced, the electorate can initiate its will to interfere and then level the playing field again. Certainly this is how things worked out in the 1930s.  The new social contract that was written in the 1930s, created new institutions and organizational arrangements which in turn gave us the greatest golden age history had ever seen, the period between 1945 and 1973 which saw global GNP double in less than 30 years – in less than 3o years human productivity and wealth increased more than it had the prior 11,000 years of human civilized history. Every spere of human endeavor achieved new heights during that period. Representive democracy then is a stabilizer for American society.

Free Contract:  Essentially all aspects of American civics exist to facilitate the principle of free contract.

Under such a system, bargaining power then is  is everything. What you make, or earn is a function of your bargaining power. Therefore, everything that goes on around us is all about individuals or groups trying to enhance their bargaining power: be it advertising on tv, personal grooming or lobbying in Washington D.C. or banking on Wall Street. The GOP has only 1 prime directive: the ever greater concentration of wealth and power. Despite being a democracy, they have been very effective at this. How? By systematically attacking the agencies of other groups bargaining powers: unions for workers, affordable education for the aspiring middle class, and they even attacked and destroyed ACORN which was a group created by rich old church ladies to help the poor realize the limited bargaining power our system affords them. No agency of bargaining power goes unturned except… The corporation. The modern limited liability corporation, is a form of collective ownership. As such it gives immense bargaining power advantages to the rich. The invention of the modern limited liability corporation in the 1860s resulted in massive wealth concentration by the 1890s. That was not remedied until collective ownership was forced to bargaing with a form of collective labor in the late 1930s. The GOP has spent the next 80 years systematically attempting and slowly succeeding in reversing the achievement of labor. Since 1972 the median wage has remained flat, despite the GNP having growned 150%. All those gains went to the top 1%. The issue then, is not really socialism or even the redistribution of wealth. It is the redistribution of bargaining power. You have to ask yourself, “of all the choices I have before me, who is going to help me enhance my bargaining power the most?” If you are a billionaire the answer is probably going to be in the GOP.