CUSTER DECISIONS

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HOW THE PHILOSOPHER KING SAVED AMERICA

Thus we have arrived once again at the Little Big Horn in an endless replay of a classic American drama. In the unusual circumstances of the day, the natives are numerous and restless while the Cavalry is undermanned and ineptly commanded. The Cavalry will go down to defeat in the battle, but, later, the natives will be hounded and humiliated until the few miserable survivors hunker down on a reservation. Later still, but too late, Cavalry camp-followers will understand what was lost in a different light, when the reservation is all that is left.

In the film, Custer came to rely on Crab as a "negative" (contrary) indicator. In making his decisions, Custer reckoned that Crab hated him and desired his demise, so would always try to mislead him. Thus, Custer felt confidant that doing the opposite of what Custer believed Crab wanted would redound to Custer's advantage. That form of reasoning is commonly called "double think," and is also a common investment strategy. The underlying principle is either that the herd is almost always wrong or will soon be proven wrong, so it is usually advantageous to take a contrary position. This principle supports the aphorism, "buy the rumor, sell the news," which is at the heart of speculation. The attitude underlying double-think recognizes that, while the crowd may be wrong, there are many alternatives to what is wrong most of which are also wrong. Thus, choosing a particular future involves risk, which is what double-thinkers abhor. Consequently, double-thinkers are reluctant to take positive positions in the world; i.e., they avoid investing in any particular future.

Another principle related to double-think is Moral Hazard, which is frequently illustrated as the Tragedy of the Commons. Moral Hazard is essentially the notion that a policy might bring about its opposite or some other unintended consequence; i.e., "the best laid plans of mice and men oft go astray." Moral Hazard is usually introduced as an argument against a policy since it emphasizes pitfalls (risk) without offering another solution. It is a form of double-think because it relies on the attitude that things will go wrong.

In the film, Crab traps Custer into doing something foolish - attacking the Indians - by asking whether Custer was "man enough" to ride down the gully. That is, Crab pointed out the Moral Hazard of retreat at a time when Custer was caught in an endless loop of double-thinks based on Custer's perception of Crab's intentions. The Moral Hazard argument makes Custer realize that, after all, he has the advantage of surprise. Crab points out that is not so, as the Indians knows he is there. Custer evades this point by stating he will attack without mercy. It is the merciless attack which is his advantage. Of course, in reality, the Indians pursued the same strategy - merciless attack - resulting in the famous Battle of the Little Big Horn.

Déjà vu, America has arrived at the prelude to that famous battle.

Land of Opportunity

For whatever reasons or none at all, most Americans stubbornly persist in their beliefs about political-economy, including the notion that politics and economy are two different things. This stance amounts to a Custer decision; i.e., a decision which cannot be changed. Why is this?

Until the European discovery of the Americas, the great majority of human beings lived in Europe and Asia. Neither Western nor Eastern civilizations had the inclination and the means to expand too far. Although Mongol tribes repeatedly conquered most of the expanses from China to Eastern Europe, they were unable to hold onto their Empire for long. The Yuan dynasty reached a peak with Genghis Khan and ended with his grandson Kublai, having failed to conquer Japan, European Russia and Western Europe. Kublai Khan's huge army was unsustainable over seas because naval technology of the day could not cope with typhoons. Even the most advanced Chinese ships were not designed for travel on open oceans. The Mongols and Tatars were unable to integrate the territories they conquered into a single, persisting Empire because they lacked the appropriate administrative attitudes and tools. (As in Genghis' famous advice: "You can conquer the world but not rule it from a horse.") Large empires require constant application of rules about everything in order to promote business and urban life, which enables support of the military; i.e., empires necessarily endorse and spread civilization in the form of administration. Until modern times, no government was able to sustain control of peoples basically different from those participating in the ruling culture for very long. Aliens are attracted to the empire by improved living conditions, but usually resist submission to the Imperial culture. (So, "When in Rome, do as the Romans do" but not otherwise.) Thus, there have always been centripetal forces pulling empires apart which require persistent and forceful efforts to overcome.

The key improvements that allowed European conquest of the Americas were ocean going ships and navigational tools. The Chinese and Japanese had most of the same technologies 500 years ago, but they did not share European eagerness to get rich quick. In fact, ordinary Japanese and Chinese people lived more comfortably than their Renaissance European counterparts. It was European deprivations and poverty that drove the more adventuresome (Marco Polo, for example) to seek their fortunes elsewhere. The trade in silk and spices had been going on in Asia a thousand years or more, but silk was scarce and pepper, cinnamon and nutmeg were seductively new in Renaissance Europe. European expansion was fueled by a desire for those exotic, rare luxuries. Once it was learned that Arabs did not produce the goods they sold to the West, traders searched for the sources of those goods in order to increase their profits. Columbus' voyage was ultimately motivated by European intentions to disintermediate the Arabs and avoid many other obstacles by sailing directly to the spice islands.

The American majority is imbued with the opportunistic colonial culture that developed after Columbus' eventual realization that the Caribbean islands were not near or part of Japan. Because the Native Americans, not even the warlike Mayans and Aztecs, were a match for the European invaders, the Americas were a land of opportunity for Conquistadores from the beginning. For Europeans, it seemed every man could be a king, master of his world and his destiny. This was the beginning of the myth that everyone could succeed with persistence and hard work. It was also the beginning of the myths of self-reliance and democracy, as American colonials had no time or reason to consider the wishes and mandates of far-removed aristocracies in their everyday decisions. The colonials were on their own, making whatever they could of the New World without regulation. This philosophy applied in both North and South America to European colonists, but not to the peoples they conquered or enslaved.

Thus, the founding and continuing philosophy of the New World, in all of the Americas, is anything goes, might makes right.

Every Man a King

People who believe they are monarchs or about to become one usually adopt aristocratic manners. An aristocrat is self-willed, thinking it is his right to do whatever he pleases without any restraint. Thus, in the days of the ancien régime, the lord and master could appropriate whatever goods and services lay within reach. There were no moral questions about slavery, serfdom or droit du seigneur. Hereditary possession of lands and titles and the incomes derived from them were assumed. How all the benefits accruing to aristocrats were obtained in some misty past was glossed over in romantic myths. A common story was that nobility was god-given, so undeniable once granted. Thomas Hobbes famously tried to justify the monarchy, thus the principle of aristocracy, by claiming that the monarch's subjects had granted sovereignty. Of course, once the consent of subjects was introduced, it was not long before they became citizens seeking to overthrow the monarchy. (In a subversion of Hobbes' theory, modern democracies also claim to derive their authority from the consent of the governed.)

The difficulty of any aristocratic class is exactly the mythology which justifies its existence, for anyone who manages to assume an aristocratic position according to a similar myth is entitled to what is gained. Since, ultimately, every region and nation has limited resources, newcomers must of necessity overthrow the established ones who control everything. In pre-revolutionary France there were large numbers of pauperized aristocrats who had been displaced by the up and coming: in the jungle, old masters are regularly replaced by new ones. The discovery of new territories changes all that: newcomers can just move in and take over. New lands encourage the notion that settlers are not part of any order except the one they create. Since creation of order is a prerogative of aristocrats and governments, colonists almost always come to see themselves as founding fathers. Thus in the United States we have the Daughters of the American Revolution (DAR), an organization that aims to preserve the status and properties of the original settlers and their descendants.

The ethos of the successful rugged individualist is rampant throughout the Americas. Horatio Alger is not confined to the United States. In South and Central America, it was the descendants of the Portuguese and Spanish Conquistadores who assumed control of the lands and peoples, because they felt it was their right. They reduced the Aztec and Mayan populations of Mexico to serfdom, the effects of which are still smoldering today. Having beaten Native Americans into submission, they went about trapping Africans and importing them as slaves with the willing, all too often eager, assistance of Dutch and English traders. The European settlers created a class of subservient people which further supported their notions of inherent superiority. A slave society is not just a society which happens to have slaves; rather, it is a different kind of society than one without slavery. So European colonists became more and more like the aristocrats they left behind, even in those American colonies which in principle rejected aristocracy. The easy rationalization of the everyday contradiction of freemen surrounded by serfs and slaves was provided by Hobbes: each and every Sovereign is free but their subjects are bound forever after giving their consent to be governed (unless the Sovereign frees them). The clever Europeans also invented in advance a counter-argument to those who might ask when or whether consent was given: the Right of Conquest (might makes right, or trial by battle). Thus, the superiority of Europeans in battle established aristocracy in the Americas which, oddly enough, led to the democratic ideas now prevalent.

Gladiators

An important aspect of the evolution of political and social philosophy in the Americas is its "internal contradictions." The idea that each man is lord unto himself, an aristocrat, is at the heart of American individualism and the theory of democracy. The Hobbesian struggle of Sovereigns arises because they are the only free men. In the Americas, that struggle becomes the dominant business of everyman. This is just a fancy way of saying that the Law of the Jungle applies.

The root of Capitalism is the struggle to survive; i.e., competition. Competition is never benign: its natural result is the production of winners and losers who inevitably adopt the attitudes and manners appropriate to their status. There is a psychology of competition which is not socialized and which demands competitors adopt certain attitudes according to their status. Winners are exalted, proud and arrogant. Losers are humbled, dejected and subservient. The differences are apparent in Capitalist workplaces in the interactions of labor and management. The differences are also apparent in stores where consumers glory in buying something they want at a very low price: buyers feel they have triumphed over sellers, not that the price was set for some other reason. (Clever retailers use those feelings to encourage return business by pretending to be nitwit losers.)

A side effect, but also a primary purpose, of Capitalist competition is the accumulation of capital, presumably in strong hands. The winners are undoubtedly strong in whatever sense the competition assigns to "strong." If that sort of strength continues to prevail, the winners will have the rewards they won at their disposal. Thus, the competition will make the winners ever greater winners by right of conquest. The accumulation of winnings is important because large projects cannot be undertaken without large accumulations of capital. The assumption of the competitive process is that what is won will be useful in winning more. But, here is where the Capitalist philosophy runs into problems. When the winner strips the losers, which it must do to obtain its reward, what is gained are just those things which the loser possessed. That is, since the loser's possessions were insufficient to prevent the loss, those possessions must have a lesser value than the winner's resources, judged by the terms of the competition.

Of course, it can be argued that the winner may put its accumulations to better uses than the losers; i.e., the winner increases the efficiency of operations. In this last case, it is assumed that losers lose because of some inherent deficiency, not because of what is available to them. Thus, the neighborhood bully wins because of the differential use he makes of resources available to competitors. But it is not clear that winners win on account of superior use of resources - skill - rather than the luck of the draw, so this explanation has to be proven, not assumed. Since this sort of explanation is involved in Darwinian selection, it should be clear that the cases alleged to support the theory must be examined closely, even if - and especially when - we believe the theory is true. (In classical natural selection, it is the genes which mutate randomly, making possible winners, not some acquired property which determines winning.) While the winner may indeed win on account of inherent properties (better genes), we cannot assume that. Thus, that competition improves efficiency is not a universal, logical consequence of the competitive process.

In the end, we do not know à priori why the winners win and losers lose. We have to construct a Theory of History to explain the course of events. To do that, we have to examine the particulars of the competition from which we construct the Theory. Such a Theory is not just a blow-by-blow description, but a proposal that connects the sequence of events by a mechanism. (Achilles defeats Hector because the gods have made him invincible unless struck in his heel, which Hector does not or cannot do [strike Achilles' heel] even if he knows about the fatally weak heel.)

Ignoring whether winners use capital more efficiently, it seems true that capital is used more effectively accumulated than dissipated. If a million schoolchildren each have $1 to spend, they are very unlikely to combine it and build a Candy Factory. Far more likely, they will eat all the candy the money buys. While that activity may improve the economic performance of existing candy manufacturers, it is unlikely to motivate any but very smallest manufacturers to increase production. If the micro-factory increases production on account of improved sales, it will be at increased risk relative to larger manufacturers because the expansion requires a comparatively larger proportion of resources. The larger manufacturer can ignore sales lost to the smaller competitor until it is shown that the sales improvement is not a blip on the charts. When sales improvement is seen as an established trend, the larger manufacturer can expand at a lower per unit cost and undercut the small company's prices. The large manufacturer follows Aesop's tale of the cat and monkey in treating the little guys as guinea pigs. This story shows that capital is more effectively used by large operations; i.e., there is an economy of scale, assuming equally capable management.

Thus, the rich get richer. Capitalism puts money and power in the hands of the successful, however success is defined.

And, so ...?

The awful day always comes. In this world, everything changes everyday. One day, we never know when, the rich and powerful die, just like everyone else. Societies come and go, and so do species and kingdoms of living things. No one ever wins it all. Custer decisions have effect only as long as Custer lives. Socrates is a man. So was Custer.

For many, maybe most, white Americans, Custer was a hero. For those who do not consider ourselves "white," Custer was a head strong fool who came to a bad end by setting a bad example. He got what he deserved, but he would have got it whether or not deserving, because that is the way the world works.

Thus my parable ends.

Posted 10/28/2008 10:33:55 AM                Last update: 10/28/2008

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