Capitalism, Socialism and Democracy

Review of “Capitalism, Socialism and Democracy“, Joseph A. Schumpeter;
Harper Torchbooks, 1976; ISBN: 0061330086

The man of system… seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chessboard.  He does not consider that the pieces upon the chessboard have no other principle of motion besides that which the hand impresses upon them; but that, in the great chessboard of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it.  If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful.  If they are opposite or different, the game will go on miserably and the society must be at all times in the highest degree of disorder.

Adam Smith: The Theory of Moral Sentiments, Part 6, Chapter 2.

Schumpeter is of course aware of this argument and acknowledges its validity, yet the kind of society he conceives in “Capitalism, Socialism and Democracy” will not, he predicts, have to content with any such difficulties.  This is of course easily demonstrated in Schumpeter’s taxis.  The socialist engine is clearly much more conducive to promoting authoritarian discipline, and this is, for Schumpeter, one of its great merits.  Yet the valuation of a command economy is one of the many claims Schumpeter makes that are questionable.

Schumpeter goes to great pains to demonstrate to us the great efficiency of the capitalist system.  He is entirely convinced that Capitalism is the sole explanation for us being where we are.  With his characteristic candidness he dismisses all arguments that fail to bestow laurels on Capitalism.  Yet beginning from this conviction, Schumpeter goes on to indulge in a socio/psychological analysis and finally tells us that

“… the ever-rising standards of life and particularly the leisure that modern capitalism provides for the fully employed workman… well, there is no need for me to finish the sentence or to elaborate one of the tritest, oldest and most stodgy of all arguments which  unfortunately is but too true.  Secular improvement that is taken for granted and coupled with individual insecurity that is acutely resented is of course the best recipe for breeding social unrest.”[pg. 145]

So, beginning with an acute analysis of Marx and a piercing critique of Marxist economics, Schumpeter finally declares the Marxist prophecy to be true.

It would be quite futile to argue against any such theory, and to an extent the rest of this tract is formulated by this pivotal statement. Schumpeter has reconciled himself with the inevitability of an increasing demand for Socialism, and as he himself notes this is because “Political criticism cannot be met effectively by rational argument.”[pg. 144]  As the book progresses however, Schumpeter modifies his stance somewhat and we find various defences of Socialism that come rather unexpectedly after the first two sections of the book.  This may be simply an attempt by an eternal optimist to see a half-full glass where there is nothing at all, but this is the portion of this tract that needs to be looked at most closely.

If there is one thing Schumpeter cannot be accused of, it is lack of thoroughness.  He has challenged almost all, and answered many, criticisms of the socialist schema in this rather wide ranging book.  Yet there are a few that he has shrugged off rather flippantly and it is here that we must focus our attention.  Along with all the other dismissals that Schumpeter hands out to economists and social scientists of all persuasions, he has answered the Hayekian critique in a few sentences [185], and Mises’s reservations concerning the socialist order with equal brevity [172-3].  Schumpeter’s responses do not do justice to the Austrian critique.

Unanswered questions

Schumpeter details an elaborate plan involving vouchers and price-fixing which a socialist state could adopt in order to make distribution a “distinct operation” that “in logic at least, is completely severed from production.” [173]  Schumpeter then goes on to claim that though this separation may become a determining factor as far as the society’s attitudes are concerned, it is completely arbitrary from the economic standpoint.  By separating distribution and production, however, Schumpeter’s hypothetical socialist state is forced to find a replacement for the price system that will convey information regarding the market to those making production decisions.  The tool that is readily available is of course an efficient bureaucracy infused with an adequate amount of espirit de corps.  Schumpeter fails to realize however that a bureaucracy cannot but be less responsive than the price system.  Renouncing the market price system entails giving up the most effective information dispersal mechanism we have chanced upon.  Despite his claims to the contrary [185], this bureaucracy will not function as efficiently or rationally as the market does.  Again contrary to Schumpeter’s expectations, such a bureaucracy will not require less intelligent managers than a modern capitalist enterprise; at worst it would require omnipotent beings, and at best those with very different thinking capacities.  Schumpeter fails to tackle the problem of gathering particular information for such a bureaucracy to process, and with rather irritating confidence declares that certain macro-economic variables, and other production data would suffice.  With surprising naiivete, Schumpeter assures us that it would be possible to set up a system of incentives to ensure that the bureaucracy makes the right decisions.  Of course this only makes us ask the question of a higher authority, and in the socialist schema there is always a higher authority.  So we finally have to put this question to those on the top. What are your criteria for making decisions?  The answer can only be that there are no criteria, that there are no laws, no rules, that all decisions are made arbitrarily as the “needs of the moment” dictate.  So much is implied in the Mises-Hayek doctrine.

Of course it is rather easy to see where Schumpeter has derived his vision of the “socialist engine” as a big enterprise from.  After all it with St. Simon that the imagery of the “one workshop” originated [F. A. Hayek, The Counter-Revolution of Science, pg. 121].  (Curiously, this is the one figure Schumpeter fails to denegrate, treats with positive veneration [307] and goes to the lengths of adopting an apologetic tone.)  Yet Schumpeter can hardly, at this juncture, defend this concept solely on the basis of its origins and he does not.  Not
surprisingly, Schumpeter has another surprise in store for us.  In perfect harmony with the refined Marxist prophecy Schumpeter declares that the capitalist system has itself created an environment where individuals are being trained to accept the all-encompassing bureaucracy.  Big business becomes for Schumpeter, the progenitor of the state economy. Ignoring all the problems such a claim presents, (the promiscuity of small businesses in new and emerging technologies, the phenomenon of consultants to provide small enterprises with the expertise they lack, the re-emergence of the self-employed entrepreneur in all fields…) it is rather amusing that Schumpeter informs us, countering Marx, of the white collar workers resistance to socialization.  The driving force behind this almost unanimous clamour for the “socialization of the economy” is Schumpeter’s (and in his view society’s) thirst for stability.  Writing in the post-depression moment, Schumpeter has perhaps been greatly shaken by, what appears to him to be, the naturally catastrophic undulations of the capitalist structure.  So Schumpeter opts for a system that places direct control in the hands of a few authorities, and by his thinking, consequently involves less arbitrariness, more “rationality”, less “creative destruction” and more stability.  The irony of it all is that Schumpeter is forced to acknowledge the need for regular changes, or repairs, to be undertaken on the socialist engine and (considering the bureaucratic aversion towards change in the absence of a direct threat to its own survival) this can only increase the uncertainty and friction he wants so much to avoid.

Even if we do accept that socialism might provide us with more stability, it becomes necessary to ask: At what cost?  Interestingly, Schumpeter has reversed Mises’ argument somewhat and in a rather fiery response to Keynesian economics and other “half-way” socialist measures, condemns them as mere platitudes that will only serve to delay the inevitable socialization of society and must be opposed by all true socialists.

But the question remains; at what cost?  Quite candidly, Schumpeter acknowledges that democracy becomes dispensable in a socialist environment.  This argument is preceded by a rather incisive analysis of what democracy is commonly understood to be and its own inherent limitations.  Yet, after concluding with this analysis Schumpeter does acknowledge that any form of democracy is quite incompatible with full-fledged socialism.  Once we are done with destroying this cherished myth, Schumpeter goes on to applaud the virtues of the socialist engine embodied in its ability to “impose hardships” [210], “eradicate the bourgeois separation of powers”, “empower social admonishment” [215], “insert the stock of the bourgeois extraction into its proper place within that machine” [207].  Sadly, Schumpeter seems to have rationalized the loss of individual freedom this would entail.  Paradoxically, he appears to be very concerned about rights abuses in Russia, yet even this concern is qualified by an elaboration on the uniqueness of the Russian situation, in that Russia was not a fully-evolved capitalist economy on the eve of the Bolshevik revolution.  None of this detracts however, from the fact that Schumpeter does not protest the subjection of the individual in the interests of “society”.  Rather, he would go as far as to suggest that such subjection of the individual is rational and desireable in that it enables society to harness the abilities of each individual more effectively.  The validity of that claim is highly questionable.

Despite all the reservations one may have about the thesis presented in the book, it is almost impossible to refuse to acknowledge Schumpeter’s thoroughness.  This book is a quite comprehensive discourse on Socialism, and one can hardly accuse Schumpeter of setting his sights too low.  It must also be said that the book is a delight to read, if only to taste Schumpeter’s irreverence.

The piece was written in Fall 1995 as an assignment in Prof. Kirzner’s
course on the “Foundations of Capitalism”.

Information sources for Economists

Since this is my page I must add links to my own papers. None of them are what would generally be considered “economic” in nature or content. Nevertheless they may shed some light on something obscurely related to economics.

But the great number [of the Athenian Assembly] cried out that it was monstrous if the people were to be prevented from doing whatever they wished… Then the Prytanes, stricken with fear, agreed to put the question–all of them except Socrates, the son of Sophroniscus; and he said that in no case would he act except in accordance with the law

Xenophon, Helenica, I, vii, 12-16; as quoted in F. A. Hayek, “Law, Legislation and Liberty, Volume 3: The Political Order of a Free People”

One might as well attempt to grasp the game of poker entirely by the use of the nathamatics of probability

Vannevar Bush, As we may think

And here are some other useful sites for Economists on the web.

Hayek’s The Road to Serfdom

The page numbers refer to the Fiftieth Anniversary Edition, University of Chicago Press; 1994; ISBN: 0226320618.


The Road to Serfdom

In the original introduction to “The Road to Serfdom“, Hayek describes this book as a “pamphlet”, which he wrote in his spare time. Yet as Hayek himself was aware much later, this book contained the gist of the argument to which he was to devote the rest of his life. “The Road to Serfdom” deals with so much material that it would be futile to attempt a review of the book in five pages, I can at most enumerate its most striking features and try to string them together in a semblance of order.

Order seems like a good place to begin. Many years after “The Road to Serfdom” was published, Hayek wrote the first volume of “Law, Legislation and Liberty” and gave it the title “Rules and Order”. The concept of the rule of law remains central to Hayek’s later work, and his emphasis on this institution is apparent in “The Road to Serfdom”. Hayek is convinced that the rules of the game cannot be arbitrary if individuals are to be able to function within a working market order. Though circumstances are constantly changing, the entities within any structure must be aware of limitations on other players if they are to be capable of forming plans. For Hayek these limitations are essentially restrictions on the powers of government to coerce specific individuals in order to achieve a particular outcome. Hayek contends that if we permit the state to invade the individual’s private sphere “in the interest of society”, the incentives to engage in market activity will largely disappear.

This argument that the rule of law serves as a means to facilitate the formation of plans which individuals can attempt to realize in the market, is supplemented by Hayek’s understanding of the nature of arbitrary power. Hayek does not fail to remind us of the dangers inherent in a structure that relies on the use of arbitrary power to achieve broadly defined objectives. Under a system where “society’s interests” are represented by the state, and where these interests take precedence over individual rights, we can be sure that these objectives will soon be perverted and the powers conferred on the state used to serve ends that they were not intended to serve. In Hayek’s own words, in a situation where the state is expected to plan out and solve the problems of the economic sphere, “As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of the directing power” [pg. 92, F. A. Hayek, The Road to Serfdom, 1994]. Since it will often be necessary to exercise this power ruthlessly, Hayek believes that only those who are capable of using brute force shall be appointed to or attain positions of power, the gentler amongst the population would tend to drift away from posts where the use of force would be necessary. We can see how in replacing the dynamic of unaligned forces that constitute the market with a strict hierarchy it becomes necessary that the hierarchy have a ruler. Thus Hayek’s conclusion (and that of many socialists) that such a structure would of necessity turn into a totalitarian order.

Unlike the situation in a free market, a consistently planned order would force us to adhere to a common set of values. Whereas the market is capable of serving the needs and desires of numerous individuals by a process that achieves a relative ordering of these values with the aid of the price system, an enforced order would force us to choose “whether it shall be we who decide what is more, and what is less important for us, or whether this is to be decided by the planner” [pg. 100]. Thus the individual effectively abrogates all right to self-determination. If all actions are intended to serve one set of purposes, it is easy to see how the process of determining these ends constitutes the complete loss of individual liberty. Hayek is well aware that the degree of concurrence towards desirable ends that such a system requires simply does not exist. This is why we are warned of relying on the democratic procedure to guard against a deterioration to a totalitarian order. Once it has been demonstrated that such a system cannot function if it requires the approval of a large proportion of the population, the need for such approval will itself be questioned.

Since Hayek ascribes to the Mengerian notion that “civilization advances by extending the number of important operations we an perform without thinking about them” [pg 87, The Counter-revolution of Science, quote from A. N. Whitehead], a planned economy seems to him a step back as far as solving the “economic problem” is concerned. Since we would by opting for a planned economy, be refusing the services of the price system as a tool to convey pertinent information in a concise form, a planned economy would involve a degree of complexity that cannot perhaps be comprehended or abstracted by the human mind. In a mercurial environment –which the economic sphere is, if only because of our constantly shifting tastes and desires– it is essential that responses be quick and effective. Yet by making economic decisions on a large scale subject to conscious thought, indeed by giving such movements the character of a decision, destroying the only institutions capable of producing such responses. As Prof. Boettke notes in another essay on this book “rather than spontaneous adaptation” such an order ” requires conscious adaptation, and there are epistemological limits to this procedure”. As always Hayek remains aware of the sort of effect an imposed economic order will have on our understanding of our needs, how these are to be satisfied, and the very concept of justice itself. The market process Hayek believes is highly “impersonal”, yet an imposed order cannot but recognize the differences between individuals and treat them in different ways. In such circumstances it is highly likely that an individual’s dissatisfaction with her/his position will be channeled into attempts to improve that position by petitioning the state. If such attempts are unsuccessful however, it is easy to see how a violent conflict might arise between the individual and the authorities, or even among groups that have alienated themselves from one another. As Hayek himself stresses “Although competition and justice may have little else in common, it is as much a commendation of competition as it is of justice that it is no respecter of persons”.

“The Road to Serfdom” may appear to some as a prophetic text. Indeed Hayek’s convictions are portrayed with such strength that it is easy to believe Hayek is outlining a sequence of developments that is inevitable. Yet this book is not a prophecy, nor is it a theory of history and the nation-state. It is however an analysis of the sort of institutions that might develop in an environment where the individual is not free to choose. As such it demonstrates tendencies, not immutable consequences. After all, as Hayek himself said “if we can regain the belief in the power of ideas which was the mark of liberalism at its best, the battle is not lost” [The Intellectuals and Socialism].

This paper was written in Fall 1995 for Prof. Israel Kirzner’s class
“Foundations of Capitalism”. One grammatical error has been
corrected.

PGP and Cryptography

“In furtherance of world peace and the security and foreign policy of the United States, the president is authorized to control the import and the export of defense articles and defense services and to provide foreign policy guidance to persons of the United States involved in the export and import of such articles and services.”  –Arms Export Control Act (22 USC Sec.2778)

Sounds pretty harmless right.  After all, it is in the interest of world peace.  But things are not always what they seem, especially in the murky world of federal law.  The provisions in the Arms Export Control Act have been applied to all sorts of exports of cryptographic material, material which most reasonable people would hesitate to call “arms”.

What is cryptography?  Cryptography is literally “secret writing”.  It is the art of encoding or enciphering material such that it is unreadable to anyone except those who have the “key” to decode it.  So what is the US federal government doing restricting the export of complicated locks? This is something many of us fail to understand. After all, locks are used to protect one’s property and who’d think of them as being harmful to world peace?  And we’re not even talking of physical locks here. Cryptography will only encode information, and is information in itself.

The Department of State has however used these laws to restrict the distribution of cryptographic material to foreign nationals, and to an extent attempted to control its application within this country.  The reason we cannot transmit data over computer networks as securely as we would like, with as much ease as we demand is precisely because of laws such as this.  These laws will not permit software authors to implement freely available cryptographic techniques to make transmissions over networks as secure as they can be.  If someone wants true security in transmission they currently have to encode the data manually and then transmit it.  Ideally this should all be done behind the scenes so that the user will not have to be concerned about it.  Precisely because it is such a bother, most users on computer networks do not care to encrypt information they transmit over computer networks.  Quite obviously this means that all e-mail you send, all files you transfer can be read by anyone while in transit.  Why doesn’t the US federal government want you to have access to the best locks available?

But it seems rather silly to ask such a question.  Of course we know why they don’t want your conversations to be secure.  For the exact same reasons that they want you to use a cryptographic system (the clipper chip) to which they always have a back-door, i.e. one that is not completely secure.  It is also why the federal government would like to pass the “wiretap” bill forcing telecommunications companies to invest in producing switching exchanges that will permit federal agents to listen in on your phone calls whenever they want to.  And they want to subsidise the telephone companies as they go about doing this.  what the federal govenrment really wants to do is use your taxes to spy on you.  Sound like big brother yet?

Thankfully there are people who are fighting govenrment regulation and action that will threaten your privacy.  One such individual is Phil Zimmerman.  Phil Zimmerman is the author of PGP (Pretty Good Privacy), an encryption program that is currently imossible to crack.  Phil Zimmerman has made PGP available to the world free of cost for a number of years.  He has been spending large amounts of time further improving this program to provide people all over the country with the degree of privacy that they desire.  Phil sounds like a nice guy doesn’t he?  But the Department of State doesn’t think so.  They’re accusing Phil and a number of other people involved with PGP of exporting munitions outside of the US.  The Department of State considers PGP a threat to “world peace”.  Incidentally the law invoked against Phil (International Traffic in Arms Control Regulations, ITAR) classifies Automatic Teller Machines as “Auxilliary Military Equipment”.  Yes those machines you use to get money from your account at night are considered lethal.

Phil Zimmerman is apparently being prosecuted because software he has written may have found its way outside the country.  This is undeniable; it must have.  After all, “information wants to be free”.  The point is however, that Phil has not been directly involved in any such distribution.  These can only be called “trumped up charges”.  Other questions are raised of course, questions that had been asked during the cold war.  Is it really in the interest of humanity that we hoard our knowledge and force each nation to re-invent the wheel?  Is it not much more desireable that the international academic community share its finding so as to minimize wasteful repetition of research efforts?  The US government doesn’t seem to think so.  The Department of State has turned down requests from academics who wished to post their own work on cryptography on worldwide discussion groups.  On the other hand the US supreme court has upheld the right of a publication to print instructions on constructing a homemade nuclear bomb, we can only hope that the judiciary will display similar judgement and guard our rights when these cases do come to court.  As is to be expected, the department of State has managed to find all sorts of excuses to delay hearings in most of these cases.

But this isn’t all, these laws constitute an infringement of free speech as well.  In it’s “Munitions Control Newsletter, No. 80”, the department of state stated: “The public is reminded that professional and academic presentations and informal discussions, as well as demonstrations of equipment, constituting disclosure of cryptologic technical data are prohibited without the prior approval of this office.”  What this means is that any foreign students at NYU who may have taken a course in advanced algorithm design, and their instructors, may have violated US federal regulation.  Something must be wrong here, after all the first amendment grants us the right to free speech right?

Phil Karn wrote a book on cryptography called “Applied Cryptography” that was distributed within the US with a floppy disk containing some programs that were described (and printed) in the book.  When Karn tried to distribute the book outside the US however, the Department of State did not permit him to sell the floppy disk with the book.  This seemed rather silly because the C code on the disks was printed in the book anyway.  But this tells us something about the federal government’s thinking.  Though the information may be the same, they are apt to treat printed matter and digital data in very different ways.  Why?  Because they can.

The federal government does not wish to stunt the growth of the computer industry, in fact various departments are working towards assisting companies in this sector become more viable in the global market.  The federal government has also for a number of years supported the activities of real defense manufacturers and encouraged the export of advanced weapons to countries all over the world.  Obviously world peace is not as much of a value when we’re considering a government supported company, but world peace is of prime importance when an individual attempts to disseminate information.  But the federal government works in mysterious ways.  What is of great concern however is that those rights which are afforded to the print media are not afforded to digital media.  With a very warped reading of the First amendment, the federal government has managed to convince itself that Computer Mediated Communication is not protected speech, and that it can therefore run rough-shod over the individual’s right to speak on a computer network. This becomes very clear when we understand that it is politically impossible for the federal government to censor the press, but that the populace in general knows so little about the digital medium that laws restricting free speech in a networked environment become non-issues. Yet, as the world becomes networked, or webbed or whatever, all of us will have to rely on computers and telecommunications to accomplish much of our work.  How would you like to have your telephone conversations tapped, or your faxes intercepted and read, or your e-mail opened?  The US govenrment cannot open your surface mail and we must ensure that no-one can read your computereized correspondence either.

We must remember that it was a struggle to pass the First amendment and it will be a struggle to pass a “Telecommunications privacy bill of rights” as well.  The government’s attitude on this is clear, in a letter to the administrators of the acadmeic computer network BITNET, the Commerce department stated that : “You have mentioned that BITNET does not monitor traffic on the network.  It is a non-secure network.” The question of course is non-secure for whom?  Is a netowrk that ensures privacy to its users, non-secure for them?  Of course not.  Is it non-secure for a tyrannical state?  Pirobably.  We must remember that free speech has been a value this country has been founded on.  The Federalist Papers, essays that moulded the future of this country were published anonymously.  If an individual’s right to privacy is not protected, the world will soon be an unbearable place.

Those interested in finding out more about these issues may wish to search the excellent archives maintained by the Electronic Frontier Foundation, http://www.eff.org/.  The Phil Zimmerman Legal Defense fund can be found at http://www.netresponse/zldf/.  I maintain a page that contains information related to these issues.

RSI

Students are an often overlooked at risk population for Repetitive Strain Injuries (RSI).  However, the combination of full or part-time work, keeping up with coursework and now, the addition of e-mail and the Internet/WWW has added to time on the computer. In fact, students often use computers as frequently as many workers do, sometimes under stressful conditions and for extended lengths of time.  Few people are aware that our bodies are not suited to working on computers in a stationary position for hours at a time. Perhaps the gradual onset of RSI has something to do with this.  We continue to campaign for more safety features in cars and airplanes, but hardly bother about the machines we interact with more frequently and which can be just as injurious.

Bad work habits and a poorly designed work environment can leave you just as injured as a car accident might.  We tend to view computers as enabling devices, they let us do so much more than we would be possible otherwise.  But we often forget that every tool has to be used properly or it can be harmful.  Repeated keying, just like lifting even the lightest of weights over and over again, can injure your body permanently.  Most people whose jobs involve lifting objects are trained to use the right posture while lifting. Hardly ever do we hear of such training given to computer users. There are many forms of RSI–Tendonitis, Carpal and Cubital Tunnel Syndrome, and trigger finger, to name just a few–and it is the fastest growing work-related health problem in this country. RSI when related to computer use is generally caused by a number of factors which can include, unhealthy work-station setup, bad keyboarding habits, posture, work flow factors and stress.  Both lack of information and misinformation contribute to injuries.  The use of computers over the past few years has grown exponentially, across the population.  There are few health professionals knowledgeable enough to advise and treat patients suffering from RSI-related health problems.  A general practitioner may be unaware of current techniques and recent advances in physical therapy and might recommend treatment which could compound your problems. What complicates things further is the fact that RSI-related health problems can affect your entire body, and are often difficult to diagnose.
Contrary to popular wisdom, Carpal Tunnel Syndrome is not the only form of computer-related injury affecting computer users.  In fact, there are numerous other ways in which you could injure your arms, hands, and indeed your entire body.  Also called Cumulative Trauma Disorders (CTDs), these range from problems with eyesight, neck and back injuries, fatigue, insomnia and even digestive problems.  Yet, some of the measures one can take to ensure a safer work environment are extremely easy to implement.  For starters, one should always take frequent breaks.  Small breaks every ten to fifteen minutes, used to perform simple exercises let the muscles and tendons relax and flex, reducing the strain placed on them by extended bouts at the computer.  Placing your monitor and keyboard at a more natural height can help reduce the risk of RSI a great deal, as can evaluating and improving one’s posture.  The temperature and climate conditions in the work area influence the body’s responses and can have a significant effect on one’s health.  Taking small snacks and frequent sips of water can prevent dehydration and general discomfort.

What is most important, however, is that more of us recognize the risks associated with computer use.  As little as an hour or two of working with a computer every day can cause injury if the environment is particularly unhealthy.  Since RSI is gradual, it is often difficult to notice and diagnose in its early stages.  More often than not, when one begins to notice pain and discomfort, it is too late for curative measures and you can only hope to prevent the further deterioration of your health.  Preventive measures taken early on are really the only “cure” available to us today. Like almost everyone else, NYU students are using computers more than ever before.  Consequently the health risks they face are as acute as those that threaten the well-being of any worker.  Often, one finds students who use computers both at work and while studying.  The end result is heightened risk, often in work environments one has no control over (computer labs, libraries etc.), where it is difficult to find or create a comfortable position and set-up.  A set-up appropriate for a tall person can cause acute discomfort for someone who is short and has small hands, so it is important to have adjustable chairs and workstations when  these are used by many people.  Laptops, on the other hand, create problems for people with long fingers who find it uncomfortable to use the small keyboards.  A portable computer generally means you will find yourself working on library tables, lounge chairs, park-benches, subway cars, etc., none of which were ever designed with computer users in mind.  Many NYU students will be using laptops in all sorts of environments, without being aware of the impact this may have on their health.

The most important step you can take right now is to become informed about the health problems that may be caused by computer use.

With the health of the NYU community in mind, Computer Advocacy @ NYU is cosponsoring a conference entitled “How to Survive Your Computer: Staying Healthy at Work”.  The major sponsors are the New York Committee for Occupational Safety and Health (NYCOSH) and the Mount Sinai-Irving J. Selikoff Center for Occupational And Environmental Medicine.  The conference will be held at Loeb Student Center (566 LaGuardia Place) on Saturday, October 12, 1996; 8:30am – 4:30pm.  There will be various workshops and talks by health professionals who treat patients suffering from RSI on a regular basis.  Flyers for the conference, and registration material is available from the Information Center, 50 West 4th Street.  More information about the workshop is available from Computer Advocacy’s homepage at http://www.nyu.edu/pages/advocacy/ or by calling NYCOSH at 212.627.3900

[originally published in the Washington Square News]

What brave new world we’ve wrought

For a while now, people at NYU have been wondering when we, like students and staff at other universities, would be able to publish our own web pages.  Well the capability has just arrived.  As of September 14, anyone with an NYU-Internet account (one of those ACF IS/IS2 accounts) can publish web pages that would be available to anyone, anywhere inthe world, who is interested in reading them.  Yet what exactly does this mean?  Is this like hiring out a billboard on 42nd street with red and white lights, is it equivalent to having a page to yourself in the telephone directory, or is it like publishing a book?

Writing pages for the web is perhaps analogous to writing a book, yet not exactly, and as we will see, the web might just change the way we look at publishing itself.  The World Wide Web, like the global computer network we call WorldNet affords possibilities that have never existed before. Never has it been as easy to distribute information to people half-way across the globe, it has never been as easy to engage in discourse with individuals whom one has never met.  And for the first time, anyone with the will to do so and a little spare time can become a publisher.  Though these opportunities exist, one is often unaware of what is to be made of them.  How are we supposed to do this, and why?

Some people write web pages to inform, and many other to entertain. Your homepage is often the only chance you will get to describe yourself to people on the Net, this is where you indulge yourself, write about your dog, your ant-farm, maybe even list your CD collection.  A homepage becomes an extension of your person, the place where people who’ve been conversing with you about the relative merits of non-stick frying pans, as opposed to traditional ones, go when they are curious enough to find out more about you.  And this is also the place to tell people what you’re having for lunch.  There are however, other uses for the web. One can use it to promote a personal political cause, make some writing freely accessible or simply provide information that may be of interest to a group of people.  What is astounding about the Web, and Compter Mediated Communication in general, is that individuals can interact on a scale hitherto unknown.  The Web makes it possible for anyone to utilize the same medium the New York Times or NBC would.  Unlike the sort of pre-packaged, processed entertainment and information we have been become accustomed to with the advent of radio and television, the Web provides us with a variety of sources that is in itself astounding.  It is no longer necessary to “believe everything you read in the paper”, or see on television for that matter, you can simply find out from someone who is close enough to know about the details.  And if you have the inclination, you can be the person who informs the Net community about a particular issue.

In a sense this is a move back to the times when people in a particular community actually gathered together every evening to exchange news and  talk about it.  The idea remains the same, but the community has enlarged to embrace a large part of the world.  The standards by which we judge what is worth paying attention to however haven’t changed. Though any web page is ostensibly available to anyone and everyone in the world who has access to the web, it’s unlikely that everyone on the Net is going to visit the page.

Unless, there’s something of interest there.  The web has the power to create a new media, one that is fed by individuals with personal concerns, not by large institutions.  Yet, if this capability is to come into its own every individual has to work towards realizing it.  The competition has never been fiercer yet never has the market for information been as open.  The probability that the web may become another distribution network for packaged media runs very high.  We only have a commercial media today because the costs of providing accurate information have always been very high (and will remain high for the forseeable future), this is especially true of the news media.  “The Press” has evolved because it is virtually impossible for individuals to provide the sort of coverage the press can without formalizing the relationship between the consumer and the producer.  Yet this is just the tip of the iceberg. After the large newspapers, wire services and cable networks come the fringe media.  A mosaic of ‘zines, pamphletes, newsletters and grafitti this discourse is sustained by a community of “information providers” who can touch upon topics that the increasingly national and international media cannot.  It is this group of people, call them activists, idealists, or even fetishists if you will, who will dress the web in its finest.  Yet this will hardly happen if we fail to provide the thread out of which this quilt is woven, or the eyes with which to appreciate the dedication of the maker.  The web is perhaps the closest analogy we have for the sum total of human knowledge (the only problem is that the majority of material on the web is in English).  We have in the web a continuously evolving structure of closely/loosely bound documents that are being revised by many people at the same time, that create a space for us to exchange ideas and thoughts.  The web contains both the ephemeral (individual discussion and maybe even IRC), the semi permanent records of our interests (web documents) and even a little of the virtually permanent (the classic web documents that will remain as reminders of what was).  This is nothing but an outline for the sort of interaction that has been occuring amongst individuals for aeons in one guise or another.  The only way to assure that the web evolves into such an entity is to place your own mind up there to be seen and wondered at.  This has always been true for writers and speakers who could make their views known to the world, and it is now potentially true for everyone.

Almost everyone has a cause, a concern, something they like talking about. If you’ve never been able to find a forum to discuss these issues in, or a place to go to find out the latest on this topic, the web might be the place for you.  If you can’t find a page on a particular topic, make one yourself, register it at the “web catalogues” and watch a community build itself around you.  The greatest service any member of the WorldNet community can render to others is to provide information of this sort, whether it is a political issue, something to do with entertainment or just life in general.  This is after all exactly what we’d been promised the Net would do for us, create an environment within which we could find expression for those selves within us that had never before been exposed
to the world.

[originally published in the Washington Square News]

Ludwig von Mises, “SOCIALISM: An Economic and Sociological analysis”

Ludwig von Mises, “SOCIALISM: An Economic and Sociological analysis“; Yale University Press, New Haven; 1962; translated by J. Kahane; LCCN: 51009080; ISBN: 0913966620 (1981 edition)

 

Prices are the cornerstone of the market, they are the rule by which all agents measure value.  This is admittedly a presumption Mises has made before embarking on his analysis of “Socialism”.  Yet it is not an altogether preposterous assumption.  Mises claims that without the assistance of prices one is at sea in the market; it becomes impossible to effect any rational thought process because such processes presuppose the tools necessary for calculation.  Any rational economic process must have some method with which to rank the various means and ends at our disposal, without such an ordering a rational (i.e. one which permits agents to make informed, rational decisions) economic system is inconceivable.  In the price system Mises finds a highly evolved process which distills the various signals received from all agents in the market and determines the value society ascribes to a particular commodity.

With the assistance of the price system, all actors in the market can make decisions that promote the general good and assist in the satisfaction of the desires of individuals.  Guided by their own self-interest, producers and consumers can make decisions that reconcile their subjective values with those of all other individuals.  Prices provide us with an invaluable table of costs that accurately reflects the desires of all other individuals.  Without prices no agent has accurate and succinct data on which to base her decisions, consequently such a system cannot sustain rational behaviour.  Mises’ fundamental critique of Socialism is that with the abolition of private property it will, with the disappearance of the price system, become impossible to calculate.

Unless we are free to bid for products, based on the value we believe they have, the market is unable to arrive at a price for the product. An alternative system, short of one that has direct access to the minds and hearts of all individuals, will not provide us with information that accurately reflects the desires of society.  This is not of course a claim that goods will have different prices under Socialism, non-monetary costs will substitute to make up for under-priced commodities.  Yet a system that relies on long lines and overflowing warehouses as the only signals on which to revise production decisions is wholly inefficient.  Mises argues that Socialism is exactly such a system.

Since no one under a Socialist state will have access to prices it is entirely reasonable to suppose that inaccurate decisions will be made due to lack of appropriate measures of value.  This not only destroys the much vaunted “rationality” of Socialism, it also suggests that a Socialist economy may be unable to perform as well as a Capitalist market system. If we are aware that redistribution of the present wealth of society will not in itself be sufficient to ensure for each individual the standard of living the Socialists promise, it is difficult to see how an economy that is more prone to “persist in error” [Reuven Brenner, “Labyrinths of Prosperity”] can create enough wealth to enhance our individual positions so dramatically.  Mises assures us that the Socialist system is hardly an “improvement” on the Capitalist structure and as such will produce an inferior result.

Once “the fundamental question whether the socialist order of society promises a higher productivity than Capitalism” has been answered in this manner, little remains of the material rationale for socialism.  The Socialist is then forced to evoke other forms of reasoning to support his agenda.  One of these is an appeal to an acquisitive urge that is present among most of us, and which is sparked when we are presented with the opportunity to “take from the rich what is rightly ours”.  Proponents of such actions, quite apart from the fact that they lack any respect or understanding of rights, assume that they can redistribute in such a manner without affecting the total value of the economy’s product.  Such a position fails to comprehend the subtle relationship between production, distribution and consumption.  Yet this is not surprising when we realize that these claims are forwarded by authoritarians who presume to free us from all cares by replacing the capitalist’s “monopoly” over these three functions with their own.  It is clear that any tampering with either of these processes will radically change the end result of an economic process.

Yet any process that fails to acknowledge the nature of the human agent in the economic sphere and fails to create an incentive structure that forces us to weigh the benefits of consumption and saving can hardly be called economic [pg. 458].  After demonstrating the impotency of the socialist scheme in the economic sphere, Mises has to retaliate to the alleged “materialism” of the bourgeoisie.  At this point however, it is rather futile to argue about the merits of poverty and Mises rests his case after drawing various parallels between socialism and a particular interpretation of Christianity.

There are more problems in the discourse on Socialism than would otherwise be imagined.  One of the points Mises highlights, is the apparent ease with which Socialists (and particularly Marx) use words in different ways, imposing on them a variety of contexts and connotations, till the very logic of the argument has been lost in what Mises calls “word-play”.  This happens, Mises argues, in Marx’s writing where the terms rebellion and society are used at different times to mean different things.  It is not clear whether this is done intentionally, to obscure the argument or whether it is accidental.  In either case, it is clear that such verbal acrobatics simply make it even more difficult to conduct this discourse since one is never completely certain of the arguments advanced by others. These issues become crucial in Hayek, where the very word “Law” is imbibed with a halo that the legislature attempts to acquire by cloaking legislative decisions in an exterior of legality.  A similar conception of language is at work in Hayek’s “The mirage of Social Justice”, where he claims that the term “justice” is abused when employed in referring to an outcome that is not generated by an authority, but which is the outcome of an impersonal process.  Oddly, Mises does not seem to have stressed this mode of thought, and claims that “on this [the relative justice of the outcome produced by these two orders] point science can give no judgement” [pg. 273, also pg 436].  Yet, this has to be reconciled with Mises’ insight that “one is not permitted to ask whether a particular price is justified or not” [pg. 435].  The issue becomes a little clearer when we notice the value Mises has ascribed to the term “science”, and why he would wish to keep away from issues that could “only be evaluated subjectively” [pg. 436], or those that appear to require the application of a particular value structure.

Perhaps what comes out most clearly in this book, is that the structures described in Socialist literature cannot be accepted as they are.  As such these visions of Socialist societies are Utopias (ou + topos, no place), in the sense that they prophecy circumstances that Economic analysis tells us cannot be sustained with the institutions under consideration.  These visions are imaginary places because their structure fails to take into account the nature of the human animal and the way in which we make decisions.  We cannot reconcile Socialist Utopia with our Economic and Sociological knowledge of the nature of human action.

This paper was written for Prof. Kirzner’s class “The Foundations of Capitalism”, during Fall 1995.

The Morals of Markets: An Ethical Exploration

Harry Burrows Acton, “The Morals of Markets: An Ethical Exploration”; in “The Morals of Markets and Related Essays”; ed. Jeremy Shearmur and David Gordon; Liberty Press; 1993; ISBN: 0865971064

We’re millions ‘n’ millions
We’re coming to get you
We’re protected by unions
So don’t let it upset you
Can’t escape the conclusion
It’s probably God’s Will
That civilization
Will grind to a standstill

Frank Zappa “Flakes”

“The Morals of Markets” perhaps demonstrates most conclusively why we must be suspicious of the millions ‘n’ millions who would convince us of the immorality of the market.  Acton begins by outlining popular misconceptions of the role profit plays in the market.  Profits are often derided because it is claimed, that unlike the labourer (who labours for her wages) the entrepreneur does not work to acquire them, and that the desire for profit breeds a selfishness that is destructive.  Acton points out that profits serve a very different function in a market system than do wages.  It is true that profits tend to have no upper and lower limits and unlike wages, are not decided in advance.  This is a result of the nature of profit, which is largely a reward for the foresight of the entrepreneur and his willingness to take on risks which the labourer and bureaucrat are unwilling to.  As for the claim that profits tend to make us selfish, Acton points out that profits are not unlike making good bargain.  Part of the reason for condemning profits for promoting selfishness must stem from a blindness of the manner in which humans make decisions.  If we fail to acknowledge that humans are largely concerned with promoting their own well-being then we may begin to look on profits in this manner.  As is, however, the activities of the businessman have the same moral standing as that of any other actor in the market. As Acton says “To be an unsuccessful businessman is a stupid and inappropriate way of being generous.” [pg. 30]  The same would apply to any person engaged in an exchange.

Yet this disdain of market activity extends beyond a dislike for the institution of profit.  When carried to its final conclusion it must claim that any system which places resources in the hands of the individual will generate an “acquisitive society”.  Further, to assist the individual in resisting the selfish motive it becomes necessary that “society” acquire all productive resources and dispense to “each according to his needs”.  This is a rather poor conception of the garden of Eden, one that seeks to absolve the individual of any responsibility whatsoever.  The fact is that we must reconcile ourselves with exercising our responsibilities in a moral manner, a morality that is  largely determined by our upbringing.  When we begin to forsake these responsibilities, seek to turn them over to the state, our priorities change in such a manner that the decisions we make deal largely with superfluities and our concerns themselves become immoral in a way.  Acton demonstrates this strikingly when speaking of the arrangements for education, housing and health care under the welfare state which relieve the individual from worrying about these responsibilities.  This is a marked shift in perspective from the Victorian sentiment, and most striking when it is noted that those who seek to provide for themselves or their children a better quality of education or health care are condemned as being immoral. What such a structure suggests is that only those quantities of these goods should be consumed by each as have been determined by the state. This, Acton holds, is clearly an imposition of morality on an unwilling people.

Further charges of creating a strife-filled and rivalrous atmosphere have been brought against the capitalist order.  Acton points out that competition is not equivalent to rivalry; in that competitors desire the object of the competition, whereas rivals desire the failure of the opponent.  In fact the market is a cooperative construct since individuals strive to further their own goals by engaging in mutually beneficial exchange.  One cannot indict the businessman for failing to have the well-being of society as her immediate goal, for “we can hardly intend something as remote as the interest of society, we can only aim or try to bring it about.” [pg. 46]   What this suggests is that the interest of society is not as clear as the collectivist wing may make it out to be, and coercing the individual to further one’s own conception of the “interest of society” is a rather suspicious form of justice.  It seems rather confusing that those who would replace the effeminate bourgeois order with a valiant collectivist one, can accuse this structure of being both putschist and violent at the same time.  In fact, as Acton suggests, the collectivist conception of collaboration is incompatible with  the sort of cooperation the market engenders, and is limited to what is commonly called a monopolistic or monolithic organization.  In a sense this undermines the very notion of cooperation since if we have no choice but to cooperate, cooperation is meaningless. In fact, as Acton points out, competition occurs because there is scarcity of resources and the market distributes these to those who value them most.  This makes us responsible for the choices we make, and it is not surprising to see that in a welfare state, the individual is released from responsibility and from any sense of morality at all.  Morality that is imposed from above can hardly be be said to have moral standing.  The essence of a moral person is her ability to exercise her morality in the her independent sphere of activity.  When we have no individual sphere of action left, the very concept of morality is shattered.

It is a frightening thought that what would perhaps conform to the collectivist idea of cooperation is a society where there is no “exercise of originality or ingenuity by someone who has no intention of competing with or outdoing anyone.”  Such a society will be forced to a standstill, not unlike the scenario projected by Kurt Vonnegut Jr. in “Harrison Bergeron”.  A place where no one “should be allowed to buy” products “for himself, but should be allotted his fair share of them under a publicly organised scheme” [pg. 87].  This is not simply a consequence of the urge to impose our conception of what is just on the world, but runs much deeper than that.

Giving an interesting twist to the Mises-Hayek thesis that a planned society would be unable to calculate or function efficiently, Acton suggests that scientific progress is similar to the vicissitudes of the market in that we are unable to predict what effect a particular advance will make.  Since we are unable to say what future technology will be like it is quite futile to make “five year plans”.  Of course states have charted out such grandiose projects and Acton suggests that “those who want to predict and make sure cannot allow private initiative.  They are driven to totalitarianism.” [pg. 155]  The consequence must be a state monopoly over science and the direction of research towards those ends that those in power sympathise with. Such a scenario bodes ill for those members of society who do not ascribe to the current consensus/orthodoxy, and indeed for those purposes that the state relegates to the background.  The experiments in Eastern Europe and China have demonstrated that the ends of the state may not always be synonymous with those of the society and provisions for the well-being of the people can be relegated to the background.

What Lord Acton suggests is that the collectivist urge to control, redistribute and redirect the production of society is largely a yearning for a stability that is not conducive to progress.  Advances can only be made on the ruins of previous constructs.  This is most visible in the phenomenon of profit, which is at once ephemeral and unpredictable, and a market process that operates by “creative destruction”.  We do not know what consequences our decisions will have, we can only make guesses, and an entrpreneur is one who is adept at making such guesses.  The market promotes a plurality of plans that submit themselves to market discipline imposed by the consumer.  Final proof of this may be found by undermining one of Acton’s own analogies.  “The planning prophet regards himself as producing future generations as if they were verses in a poem of his own making” [pg. 149].  Of course, the poet does not know the nature of the poem, Milton’s epic too had unintended consequences.

Free Market Environmentalism

Free Market Environmentalism, Terry L. Anderson & Donald R. Leal;
Pacific Research Institute for Public Policy, 1991; ISBN: 0936488336

“The question is not whether the right solution has been achieved but whether the relevant trade-offs are being considered in the process.” [pg. 5]

Free Market Environmentalism is a book about how best to assure that decision makers take into account the costs and benefits of their decisions and actions.  The question is easily answered when we speak of private property, since the structure of private property is such that each individual has her own sphere of influence within which most costs and benefits are contained.  The owner can claim compensation for any damage done to her property by anyone else and reaps the rewards of good resource-management.  In the environmental sphere, this problem has been complicated by a mode of thought that holds environmental resources are only appropriately handled when responsibility for them is turned over to the state or its agencies.  Since it then becomes unclear as to who owns these resources, and how liabilities and benefits are to be assigned, a problem that is solved inherently by the system of private property we are now forced to find other solutions for.

With communal property comes the tragedy of the commons as each individual attempts to acquire as much of the resource as possible since others are out to do the same.  This inevitably leads to over-utilization of the particular resource and a disincentive to save for the future.  This scenario is applicable today to public fishing grounds and with subsidised water for farmers.  In both cases we see that rational agents decide to use/acquire as much of the resource as they can.  In the first case this is because the first person to harvest a fishing ground has a much lower marginal cost than those who come later.  In the case of water, we see farmers “over-utilizing” water because they do not face the real resource cost of doing so.  In both cases the solution is to attempt to ensure that all relevant costs are taken into consideration before any decision as to resource-utilization is arrived at.  Anderson and Leal suggest that in the case of common fishing grounds the appropriate solution would be to place the water-body in private hands so that both recreational and commercial fishermen have to pay the real costs of their decisions.  The present system (of common fishing rights) leads to an inefficient outcome since there is a tendency to over fish as the resource is publicly owned and no costs are imposed for using it.

The political process is not well adapted to resolve such issues.  Special interest groups are apt to pursue extreme ends and expend resources on lobbying political decision makers to choose one or the other option. Interest groups are generally not willing to consider median solutions which take into account the value of alternative ends for which a resource can be used (presuming such values can be calculated in the absence of a functioning market for them).  What ends up happening, as Anderson and Leal demonstrate, is that interest groups opposed to one another are locked in a zero-sum game.  The result of which must leave one player standing out in the rain.  This is an endemic feature of the political process where “political resource managers make trade-offs in terms of political currencies measured in terms of special interest support; at best this unit of account provides imprecise measures of the subjective values of citizens.” [pg. 16] Unlike the price system, a political resource management mechanism must rely on artificially generated abstractions to approximate the demand for various commodities and services.  The presence of externalities, transaction costs and dispersed, unorganized consumers makes the political market for environmental goods exceptionally imperfect. Anderson and Leal attempt to question the need for a system that is incapable of moving towards an efficient outcome when other alternatives present themselves.

An objection often raised against a market based environmental policy is that such markets do not exist.  The reason such markets do not exist is precisely because they have not been permitted to develop.  As the authors point out, when individuals face incentives to protect and realize the value of their property, tools to facilitate the demarcation and transfer of such property will evolve.  Since owners of private property find it in their self-interest to use means that help them establish control over their property, incentives are created for other agents to develop technology that would fulfill this demand.  Creative solutions are forthcoming when opportunities to market them profitably exist.

The authors are aware that the market solution still relies on the government to define and enforce property rights. [pg. 166] Nor do they claim that their proposals are a perfect solution.  “Property rights are costly to define and enforce, but these costs are a function of the value of the resource in question and the technology” [pg. 167] There is no reason to believe that a system of well-defined property rights will result in an “optimal” use of environmental resources by any or all standards.  That said, there is reason to believe that a structure which permits resource owners (not far-removed proxies) to make decisions based on their own values and market conditions would result in a more efficient use of resources than a system which does not have the benefit of the information conveyed by prices and knowledge of particular circumstances. It is by no means clear that politically appointed managers will be impartial or disinterested agents of society.  In fact, there is reason to believe that they would be very interested in promoting certain evaluations of the state of environmental resources, and the general concern for their future, if only to secure large, discretionary budgets for their departments.  At the other end of the spectrum, there is the concern that government appointed managers may be too disinterested, to the extent of being blind to theft of resources under their very noses.

Since we are dealing with issues that are still being debated in scientific circles, it is doubly difficult to judge, post-facto, whether the correct decision was made by an agent of the government or whether all relevant details were taken into consideration. Unless decision makers are faced with the consequences of their actions, i.e. only when they receive “negative feedback”, will they be prompted to take into consideration the effects of their actions.  Making sure that resource managers are also resource owners has been found to be the most effective way to promote the responsible use of all sorts of resources.  In the environmental sphere this can only be accomplished when specific resources are owned by individual entities.

That government agencies are not always the best executors of “society’s wishes” has been demonstrated a number of times, and is in part caused by the nature of the political process.  That individuals or organizations are in a better position to exercise their property rights over resources, and put them to their most valued uses is also quite clear.  What the authors have shown is that common objections to privatizing natural resources are often based on unsound reasoning and a willing ignorance of history.  The position advanced by Anderson and Leal deserves to be examined more closely, and it is clear that market solutions are being applied in a variety of environments with remarkable success.  Perhaps the most telling ratification of this stance is made by conservation groups that decide to put their lands to a variety of uses. Conservation groups are willing to evaluate the various trade-offs to be made between preserving environmental conditions in the region and the broader scope for conservation afforded by putting environmental resources to commercial use when they own the resource in question.  They are less amenable to compromise when the resource is publicly owned.  The same applies to commercial operators harnessing the recreational value of a particular natural resource.

The sira of Hak Shmeil

Hak Shmeil, whom no doubt all of you have heard about (that is if you we listening to what your history teacher told you in the Fourth grade) was the first and most famous of all the great robots, with her husband Madinka Rasthi she forms the first branch of the priimary tree. Fruedians have claimed the legend is a myth to support the matriarchal heirarchy of the robots, but most reasonable individuals overcome their intial seductiveness of that theory. But we’re running ahead of ourselves, let’s begin at the beginning.

Hak was borne by the great druid-programmer Katsya Amile. The birth itself was most laborious, after many weeks of agonizing cramps brought on by typing continuously, Hak finally saw the light of the processor and the vast matrix of the Web. The old SGIs at the Abracadabra institute in the Bahamas still speak (in the wee hours of the morning, while they recuperate and indulge in the pipe ritual) of that night when they met the infant Hak. The old ones still smile when they recollect the fascination with the little one when they first saw her. The wise ones knew what she was the very first time Katsya grafted Hak onto them. They had never seen a Perl of such elegance before, Hak had only one bout of sickness in her infancy, when she first encountered the worm, but we’ll speak of that later.