Harmful economic systems as a cause of hunger and
The standard economic model of how economies work is that
people produce and exchange goods. Governments exist to provide “government
goods”— things that people cannot provide for themselves, such as national
defense. Thus the standard economic view is that activities are
essentially productive. While this view has made for a thriving profession of
economics, it is not a correct view of reality. The
principal difficulty is that there is economic activity that is unproductive and
harmful (from the point of view of those being harmed), and that this is a key
feature of the economic organization of societies. What follows is a brief
analytical description of these societies and how it affects people's welfare
Many societies are run on this basic set of principles. Take and
maintain control of the government. Use powers of the government to obtain
income. Key elements of this process are described in five sections:
1. Production vs. harm basic statement.
The basic idea and activity in productive societies is helping to
produce goods—things that are useful to someone—food, light bulbs,
cars—and then exchanging the income received for goods that are
desirable to you.
fundamental economic mechanism exists in “harmful” economic societies as well.
But these goods (or the resources that produce them) can be reallocated
through force, as well as law backed by force. Simply put you can produce goods, or take them away
from others, which is why we describe these societies as harmful.
The highest stratum—the ruling class—obtains goods through means which may be
described as unproductive or extractive. 2. Conquest and conflict historical overview. Armed conflict, the
fight by groups for control of the government or territory (frequently
possessing natural resources), has been throughout history the principal way in
which harmful economic societies have been established. Its
importance continues today. The results of conflict have been the
domination of the winning side over the losing and the establishment of a pattern of
income and resource allocation favoring the winners.
Examples would be the
Hittite empire (Wikipedia 2013), the
empire (Wikipedia 2013), the
Roman empire (Wikipedia 2013), the
of England (Wikipedia 2013), the conquest of the territory that became the United States by various European powers
and then the government of the United States, the
British empire (Wikipedia 2013) and the Japanese
Greater East Asia Co-prosperity Sphere (Wikipedia 2013).
Control over labor
power is also an important way of using power to obtain income, with
bondage (Wikipedia 2013) as important examples. Forced labor
(ILO 2013) is the general modern term. Also see
Unfree labor (Wikipedia 2013). Caste systems
can also confine people in certain types of work, with the Dalits (Wikipedia 2013) in India being an example. 3. Basic overview. The central idea is that there are winners and losers. To have a
simple model of history and harmful economic societies, we would say that conquest establishes control
by a small group over a large group. Once the conquest is
completed, much fewer ‘domination’ resources are needed, and, in
addition to arms, other resources/methods of control are used, such as
domination of the political and judicial system. Moreover, transfer
of ownership of resources such as land, labor and natural
resources takes place, and more subtle forms of control are employed.
The small group can of course be the elite of another country which has
happened frequently in the past, as the examples above illustrate.
Economists have developed some models that incorporate both
production and conflict.1 When game theory is employed in
models that incorporate both conflict and production those that obtain
resources through conflict are known as the "winning coalition,"
terminology that will also be used here. 4. Other structures of harm. Harm as a means of
obtaining income can exist in other ways as well. These include
theft, robbery, and larger scale
organized crime (Wikipedia 2013), such as the
Mafia (Wikipedia 2013) or
1. Basic statement. The principal ways in which income is obtained in a harmful
economic system are twofold: 1) obtain it through the government, or 2) use the government
to obtain and maintain sources of income that are (apparently)
obtained in other ways. These are not substantially different, but may appear so
at first. 2. Obtaining income from the government. There are a wide variety of
means in which government officials and others obtain revenue from the
government. The first thing to recognize is that people at the top of
government, or those who have significant control over the government but who
are not government officials—often entrepreneurs or corporations—can and do
plunder resources coming into the government. Government revenue is often not
devoted to productive services but siphoned off by those in control of the
government. Such activity is typically referred to as corruption. A nation expects that its national resources will be used for
the benefit of the nation. However, very large amounts of such revenue are often
used to enrich those who control or have influence with the government. People
at lower levels of government can obtain income too, by not providing
services which they are paid to provide, by charging for services which they
should provide, or by taking goods, such as medical supplies or
automobiles/trucks, which should be used for government service. 3. Using the government to obtain resources. Privileged groups can often obtain access to national resources.
The allocation of natural resources such as oil and the income therefrom
frequently go to international corporations, allies of high government
officials, and government officials themselves. These
structures of domination, control and income distribution have been
going on for centuries and have resulted in highly unequal societies.
For example, the Spanish conquest of Latin America resulted in a society
where land and other natural resources and larger scale economic
opportunities were in the hands of a few. This
unequal distribution of land and income has persisted to this day.
See harmful economic
systems: obtaining income for specific current examples of these
practices and further discussion. Behavior of the type described
here has also been referred to as
Kleptocracy (Wikipedia 2013) and
(Wikipedia 2013). Keeping people oppressed/preventing
revolution 1. Basic statement. In essence, there is part of the
population that is living well because of their control of
assets and people. (This in the economic model referred to
above is the winning coalition and it will also be referred to here as
the ruling class.) The people whose assets and income have
been reallocated don’t like this and thus there is the
threat of revolution—overturning the minority in benefit of
the majority. This is prevented in a number of ways.
2. Preventing revolution is at bottom accomplished by
force. Peasant rebellions, a frequent occurrence in history,
illustrate both the discontent of the productive sector and the use of
force in repressing it. One Chinese expert says that there were peasant
rebellions almost every year in China, while a Russian expert says that
in the period between 1801 and 1861 there were no less than 1,467
peasant risings in various parts of the Russian empire [Lenski, 1966, p.
274]. That even more did not take place may be explained in part by
referring to the saying of Aristotle, “If you strike at a King, you had
better kill him,” with its implicit threat of the dire consequences of
a very clear way of keeping people oppressed and unable to move to a
situation that might be characterized as democratic, is terrorizing
subject population, including beatings, murder and torture. Especially
important is killing leaders of the subject population(s) or otherwise
keeping them from being a source of unrest (by such means as
imprisonment, exile, or bribery). Controlling how people are able
to communicate, including tracing what they say for possible reprisal,
is also important. 3. Key groups.
Nonetheless, force is not the complete story of how a winning coalition
establishes and mantains control.
For many countries in relatively recent times, groups who
have been importantly represented in the sector that has
political and economic control are capitalists, both
national and foreign, landlords, the military, a
group that we might refer to as “educated
civilians” including government functionaries and
politicians, foreign governments, and more rarely and more
debatably, organized labor.
was the winning coalition that ended up in control of the
state formed from members of at least some of these groups
who are far from representing a majority of the population?
The central part of the answer seems to be that these groups
have power capabilities useful in capturing, controlling and
operating the state apparatus (Anderson 1967).
The military has control of the largest part of the armed
force. Capitalists and landlords have
resources and organization that they can use to obtain
educated civilians derive their power from a number of
sources. They have the ability to run the "ship of
state." As lawyers and administrators they often
perform crucial functions for capitalists and landowners as
well. As politicians, they have special skills in putting
and keeping a coalition together, and as writers and orators
they can mobilize support for their coalition. This is not
to say that these roles cannot be performed by others, such
as landowners or the military, just that they are often
performed by these educated civilians.
labor, to the extent that it is in the winning coalition,
seems to derive an important part of its power from its
ability to disrupt the functioning of crucial sectors of the
economy and from its potential as an armed force, factors
which tend to put organized labor in opposition to the
military. In addition, they, like landlords and capitalists,
have economic and organizational strength, and where
elections are a factor, some degree of voting power as well.
governments have both organization and control over
financial resources that can be used in such diverse ways as
financing the election of sympathetic nationals or providing
a "carrot" incentive to hard-pressed governments
through foreign aid. As suppliers of modern armaments, often
on generous terms, the large foreign governments also have
an influence through the military, which is no less
important for being derivative. They control, or greatly
influence, major international institutions such as the World Bank, the
International Monetary Fund and the World Trade Organization, whose
decisions affect developing countries. Finally, one or more
developed country governments may use force against a developing
4. Some strategies.
One favorite way of maintaining
oppression is to stay in power for a long time, frequently
by manipulating or subverting an ostensibly democratic legal
framework. Election fraud/rigged elections is a principal
way of staying in power.
A second way—certainly a very
clear way—of keeping people oppressed and unable to move to
a situation that might be characterized as democratic, is
terrorizing the subject population, including beatings,
murder and torture. Especially important is killing leaders
of the subject population(s) or otherwise keeping them from
being a source of unrest (by such means as
imprisonment, exile, or bribery).
people are able to communicate, including tracing what they
say for possible reprisal, is also important.
In essence, there is part of the
population that is living well because of their control of
assets and people. The people whose assets and income have
been reallocated don’t like this and thus there is the
threat of revolution—overturning the minority in benefit of
the majority. This is prevented in a number of ways. There are two powerful ways of changing
a harmful economic system—through revolution, or through
democracy. Both have been common in the past and today. Revolution has been frequently thwarted by
successful opposition by the existing government and its
allies or by a revolutionary movement evolving into an
oppressive government. See the further
Reducing harm below. See
systems: Keeping people oppressed for specific current examples of
1. Basic statement. Avoiding overthrow is very similar to preventing revolution. However, what is emphasized in this
section is preventing overthrow by others who would maintain a
structure of harm.
Two important issue areas are:
the struggle for control of the government
how is a structure of harm maintained?
2. The struggle for control of the
Key ways in which the struggle for control of the government occurs is
through armed conflict, coup d'etats and and other more or less violent,
more or less legal, government reorganizations.
Armed Conflict. There are many examples of armed
conflict in the world today. Examined more closely this conflict is typically
over control of the government or specific territory—often territory with
natural resources. Thus this conflict is over who will establish control over
government/territory and subsequently over control over resources, including the
power to tax, arrange oil leases, and so on. Examples would be conflict
between the more-or-less established government and rebel or other groups,
conflicts between governments, done surreptitiously or openly, and conflicts
between governments, and conflict between government and organized crime.
In conflict, in addition to
the struggle for control over resources or power, there is typically great harm done to
ordinary people, such as murder, amputation of limbs, rape, and taking of
family food and other resources. (This can be so bad that an end to conflict,
even if it then means establishment of an organized system of oppression, is
preferable to people.) Revolution against an unjust government (see section above) also causes
conflict. It is often difficult to decide if armed conflict is a way to
gain resources, or a reasonable reaction against injustice, or a reasonable
reaction by government to what is viewed as dismemberment of its territory.
This in a particular circumstance is usually debatable, however it is possible
to form an opinion based on the evidence.
Coup d'etats, '“revolutions,” and other means There is a
substantial amount of more or less violent, more or less legal,
rearrangements of governments
or attempts to do so. Coup d'etat is where one group, typically
members of the government/winning coalition and also typically
at least a segment of the military, oust those at the top of the
power structure and replace those people with their own. (The
overthrowing group does not want to refer to its seizure of power as a
coup, and thus uses terms such as revolution.) (See
Wikipedia 2013 and Luttwak 1968.) There is also quite a bit of
“jockeying for power” which can involve such actions as removing a
threatening member of the ruling coalition or changing the rules, such
as rewriting the constitution so that the President is not limited in
the number of terms he can stay in office. These actions, if
unsuccessful, can result in a coup. 3. How is a structure of harm maintained?
Ways in which a structure of harm is maintained include the following.
A key use of the revenues of the winning coalition is to pay the members of
the coalition suffficiently so that they will not be tempted to overthrow or
reform the current coalition. The gradiation of rewards and status within
the winning coalition helps keep costs of maintaining the winning coalition
down, and provides 'career paths' for those in the winning coalition.
Installing loyal supporters in key areas is important for those at
the top of the winning coalition.
Terror in its various forms, and controlling means of
communication, can help those at the top of the winning coalition keep
other coalition members in line, just as they are useful in preventing
Various things strengthen the cohesion of the ruling class.
The ruling class can often be a racial or religious minority in society.
This in itself provides cohesion. The threat of overthrow by the
majority can serve to increase cohesion. There can also be the
development of a ruling class ideology to strengthen cohesion (e.g. the
divine right of kings), ideologies which often include the disparagement
of those who the winning coalition needs to control.
See Harmful economic systems:
avoiding overthrow for specific current examples of these practices.
1. Basic statement. Restricting entry to
the harmful sector is necessary, because an income differential exists
between the productive sector and the exploitative sector.
If free entry, the standard assumption made in economics,
were allowed into the harmful sector, incomes in the two
sectors would be equalized. Barriers to entry into the harmful sector include:
being of a different tribe, nationality or religion
racism or other strong prejudice against a given group.
2. How barriers to entry work. The way barriers to entry
work is to limit access to worthwhile employment,
as well as other social advantages such as education and ability to
marry outside of one's class or group. Typically minorities/ordinary
people have been disparaged in some way—for their supposed (lack of)
intelligence, personal appearance or for some other reason. People can
be marginalized because of their skin color, ethnic origin, income level
or indications of same, such as names. For example in the US south
before the 1960s, African Americans were not allowed to drink from the
same water fountains as whites, shop in most stores, eat in the same
resturants, or live in the same neighborhoods. Their personal
characteristics such as intelligence and appearance were disparaged.
They were referred to in insulting ways. Basic justice was denied them. Schools were much worse. Such
discrimination limits peoples opportunities and diminishes their sense of
self-worth. There has
been a reaction against this sort of disparagement and oppression in many ways in many countries, but it
See Harmful economic
systems: restricting entry for specific current examples of
The influence on the welfare of poor people and the development of poor nations is profound. 1. Resources, both governmental and other
resources, such as natural resources, are directed toward
members of the ruling coalition, not to the benefit of all. For
many governments, the government/people in the government
and their allies, in spite of lip service to the contrary, are not
principally engaged in helping the people of the country, but rather in
helping themselves. This has, and continues to have, a disastrous effect
the incomes of poor people and development. 2. Conflict. There is a substantial amount of conflict in the
world, most of it in developing countries. The 2012 Human Security
Report says that there are 30 to 40 state-based armed conflicts per year
on average; there were 23 non-state (neither side was a state) armed
conflicts in 2009; and there were 19 cases of one-sided violence in
2009, the last year for which statistics were available (Human Security
Report Project 2012).
According to the latest estimate by the UN High Commissioner for
Refugees, at the beginning of 2011, 43 million people were forced
to flee their homes with 26 million displaced within their own
15-16 million refugees (displaced to another country) and 1 million
asylum seekers. Conflict is the principal cause of this displacement.
3. There is a very unequal distribution of income and this has persisted over centuries
It is important to remember that harmful economic
systems have existed throughout history, and a key result has been
unequal distribution of income. There is a 'dead hand of the past'
though perhaps most of us, including standard economists, recognize it
only dimly. In the United States, for example, the Native
Americans were almost totally pushed off their land, ending up with a
few small, or if larger, hardscrabble, areas of land. Slavery
oppressed African Americans from the beginning of European settlement
North America, and though ostensibly freed after the Civil War,
severe oppression continued for 100 years or more. This in a country
that many view as a model of democracy. In other areas of the
world control of countries and resources by a minority has also
serious income inequality. [Give Latin America example.] The
result is that poor people have substantially less income. This
lower level of income is not just missing out on a few luxuries.
It is a major cause of malnutrition, which causes greater infant
mortality, stunting and reduced cognitive ability. It is a major
cause of poor health--many basic services such as clean water, waste
disposal, and essential health services are not available at all. It
is a major cause of poor education.
4. Barriers to entry also inhibit people's incomes and life
chances. It is not simply a matter of income as discussed in point
Caste, race, ethnic group, and gender can keep people from education,
from jobs, from having the rights of citizens, and from social
interaction with the “elite” including marriage and other forms of
social inclusion. People cannot rise—they are kept in their “station
See Harmful economic systems: Impact on poor people
for specific current examples of
This section gives a too brief discussion of what people are doing to improve matters.
There has been a struggle for thousands of years by human beings in
many different ways against the sort of subjugation described in this
special report. To name just one very important example, the world's
religions have worked to establish a set of principles for human
relationships that were very much against oppression, and though the
religions were persecuted for doing so, they did manage to establish at
the very least a set of guidelines for human behavior. In all countries
of the world there has been a struggle against injustice, and attempts,
which have met with increasing success, to establish the societal
frameworks for a more just and equitable society. This is a long (and
inspiring) story which we cannot recount here.
The current efforts in the world to reduce harm include reducing
corruption, moving to more democratic governments with established
rights and processes (by means such as reducing the influence of the
military and improving the fairness of elections—and having them! and
reducing police brutality), and, internationally, reducing the
advantages which developed nations have assigned to themselves through
their control of international institutions, such as United Nations, the
World Bank, and the World Trade Organization. In recent years, there
have been important efforts to have elections that express the will of
the people and to implement policies that reflect an electoral mandate.
Nations are evolving from power structures that have been based on some
combination of military, economic and political control to ones that
increasingly reflect the wishes of the (often very poor) people. This
evolution has not been easy,
and it is far from complete.
See Harmful economic systems: reducing
harm for specific current examples of
Lane Vanderslice is the editor of Hunger
End notes:1. Jack Hershleifer appears to have
begun the consideration of conflict and other examples of harm in
standard economics with his 1991 article “The Technology of Conflict as
an Economic Activity.” This article recognized that there are two main
approaches to obtaining income: production and conflict, and provides an
introductory analysis of some key issues when conflict was possible. A
second early, basic article was Stergios Skaperdas’ 1992 article
“Cooperation, Conflict, and Power in the Absence of Property Rights.” Bibliography
Anderson, Charles W. 1967. Politics and
Economic Change in Latin America. New York: Van
Bueno de Mesquita, Bruce and Alistar Smith. 2011.
The Dictator's Handbook: Why Bad Behavior is
Almost Always Good Politics New York: Public
Hershleifer, Jack. 1991. "The Technology of Conflict as an Economic Activity."
American Economic Review 81: 2(130-134).
Human Security Report Project. 2012. Human Security Report 2012.
Vancouver: Human Security Press.
International Labor Organization 2013.
Lenski, Gerhard E. 1966. Power and Privilege.
New York: McGraw-Hill.
Luttwak, Edward. 1968. Coup d'Etat: A Practical Handbook.
Greenwich, Conn.: Fawcett.
Skaperdas, Stergios. 1992. "Cooperation, Conflict, and Power in
the Absence of Property Rights." American Economic Review 81:4(720-734).
United Nations High Commissioner for Refugees. 2012. State of the
World's Refugees 2012.
Greater East Asia Co-prosperity Sphere
_______. 2013. History of the Hittites
_______. 2013. Serfdom
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