Chapter 2. Direct Exchange
1. Types of Interpersonal Action
Violence
The analysis in Chapter 1 was based on the logical
implications of the assumption of action, and its results
hold true for all human action. The application
of these principles was confined, however, to
and Economics, where the actions of isolated individuals are considered by themselves.
In these situations, there are no interactions between persons.
Thus, the analysis could easily and directly be applied to N number of isolated crusos
on N islands or other isolated areas.
The next task is to apply and extend the analysis to consider interactions between individual
human beings.
Let us suppose that Crusoe eventually finds that another individual, say Jackson, has
also been living an isolated existence at the other end of the island.
What types of interaction may now take place between them?
One type of action is violence.
Thus, Crusoe may entertain a vigorous hatred toward Jackson and decide to murder or otherwise
injure him.
In that case, Crusoe would gain his end, murder of Jackson, by committing violence.
Or Crusoe may decide that he would like to expropriate Jackson's house and collection
of furs and murder Jackson as a means to that end.
In either case, the result is that Crusoe gains in satisfaction at the expense of Jackson,
who, to say the least, suffers great psychic loss.
Fundamentally similar is action based on a threat of violence or intimidation.
Thus, Crusoe may hold up Jackson at the point of a knife and rob him of his accumulated
furs and provisions.
Both examples are cases of violent action and involve gain for one at the expense of
another.
The following factors, singly or in combination, might work to induce Crusoe or Jackson to
To Refrain From Any Violent Action Against the Other
1.
He may feel that the use of violence against any other human being is immoral, that is,
that refraining from violence against another person is an end in itself, whose rank in
his value scale is higher than that of any advantages in the form of capital or consumers'
goods that he might gain from such action.
2.
He may decide that instituting violent action might well establish an unwelcome precedent
causing the other person to take up arms against him, so that he may end by being the victim
instead of the victor.
If he begins a type of action where one must gain at the expense of another, then he must
face the fact that he might turn out to be the loser as a result of the action.
3.
Even if he feels that his violent action eventually will result in victory over the other, he
may conclude that the costs of the war would exceed his net gain from the victory.
Thus, the disutility of time and labor energy spent in fighting the war, war may be defined
as violent action used by two or more opponents, in accumulating weapons for the war, capital
4. Even if Crusoe feels reasonably certain of victory and believes that the costs of
fighting will be far less than the utility of his spoils of victory, this short-run gain
may well be outweighed in his decision by long-run losses. Thus his conquest of Jackson's
Jackson's furs and house may add to his satisfaction for a while after the period of production,
that is, preparing for the war plus the length of time of the war itself.
But after a time his house will decay and his furs will become worthless.
He may then conclude that by his murder of Jackson he has lost permanently many services
which Jackson's continued existence might have furnished.
This might be companionship or other types of consumers or capital goods.
How Jackson might have served Crusoe without resort to violence will be indicated below,
but at any rate, Crusoe may be detained from using violence by estimating the disutility
of the long-run consequences more highly than the utility of the expected short-run gains.
On the other hand, his time preference may be so high as to cause his short-run gains
to override the long-run losses in his decision.
It is possible that Crusoe may institute violent action without taking into consideration the
costs of the war or the long-run consequences, in which case his actions will turn out to
be erroneous.
That is, the means he used were not the appropriate ones to maximize his psychic revenue.
Instead of murdering his opponent, Crusoe might find it more useful to enslave him,
and under continual threat of violence, to force Jackson to agree to expend his labor
for the satisfaction of Crusoe's wants rather than his own.
Under slavery, the master treats the slaves as he does his livestock, horses and other
and Animals, using them as factors of production to gratify his wants, and feeding, housing
them etc. just enough to enable them to continue in the master's service.
It is true that the slave agrees to this arrangement, but this agreement is the result of a choice
between working for the master and injury through violence.
Labor under these conditions is qualitatively different from labor not under the threat
of Violence, and may be called compulsory labor as compared to free labor or voluntary labor.
If Jackson agrees to continue working as a slave under Crusoe's dictates, it does not
mean that Jackson is an enthusiastic advocate of his own slavery.
It simply means that Jackson does not believe that revolt against his master will better
The Theory of Money and Credit
In this sense, a man's own person and will is inalienable, that is, cannot be given up to someone else for any future period.
Such an arrangement is not a guarantee of security of provisions since no one can guarantee a steady supply of such goods.
It simply means that A believes that B is better able to furnish a supply of these goods than he is himself.
It is clear that the slave is always worse off than he would be without the threat of violence by the master,
and therefore that the master always gains at the expense of the slave.
The interpersonal relation under slavery is known as hegemonic.
The relationship is one of command and obedience, the commands being enforced by threats of violence.
The master uses the slaves as instruments, as factors of production, for gratifying his wants.
Thus slavery, or hegemony, is defined as a system in which one must labor under the orders of another under the threat of violence.
Under hegemony, the man who does the obeying, the slave, serf, ward, or subject, makes only one choice among two alternatives.
One, to subject himself to the master or dictator, or two, to revolt against the regime of violence by use of his own violence, or by refusing to obey orders.
If he chooses the first course, he submits himself to the hegemonic ruler, and all the other decisions and actions are made by that ruler.
The subject chooses once in choosing to obey the ruler. The other choices are made by the ruler.
The subject acts as a passive factor of production for use by the master.
After that one act of continual choice made by the slave, he engages in coerced or compulsory
labor, and the dictator alone is free to choose and act.
Violent action may result in the following developments.
A. Inconclusive fighting, with neither opponent the victor, in which case the war may continue
C. The victor may simply rob the victim and leave, to return to isolation, or perhaps
with Intermittent Violent Forays D. The victor may establish a continuing hegemonic
tyranny over the victim by threats of violence.
In Course A, the violent action has proved abortive and erroneous.
In B, there is no further interpersonal interaction.
In C, there is an alternation between robbery and isolation.
And in D, a continuing hegemonic bond is established.
Of these results, only in D has a continuing pattern of interpersonal relationship been
constituted.
These relations are compulsory, involving the following coerced exchanges.
The slaves are treated as factors of production in exchange for food and other provisions.
The Masters acquire factors of production in exchange for supplying the provisions.
Any continuing pattern of interpersonal exchanges is called a society, and it is clear that
a society has been established only in case D. There is, of course, no judgment at this
point concerning whether the establishment of a society, or such a society, is a good,
bad, or indifferent development.
In the case of Crusoe's enslavement of Jackson, the society established is a totally hegemonic
one.
The term society, then, denotes a pattern of interpersonal exchanges among human beings.
It is obviously absurd to treat society as real with some independent force of its own.
There is no reality to society apart from the individuals who compose it and whose actions
We have seen in Chapter 1 that all action is an exchange, and we may now divide exchanges
into two categories.
One is autistic exchange.
Autistic exchange consists of any exchange that does not involve some form of interpersonal
exchange of services.
Thus, all of isolated Crusoe's exchanges were autistic.
On the other hand, the case of slavery did involve interpersonal exchange, in which each
gives up some goods in order to acquire other goods from the other.
In this form of compulsory exchange, however, only the ruler benefits from the exchange,
since he is the only one who makes it of his own free choice.
Since he must impose the threat of violence in order to induce the subject to make the
exchange, it is clear that the latter loses by the exchange.
The master uses the subject as a factor of production for his own profit at the latter's
expense, and this hegemonic relationship may be called exploitation.
Under hegemonic exchange, the ruler exploits the subject for the ruler's benefit.
This system has sometimes been called compulsory cooperation, but we prefer to limit the term
cooperation to the result of voluntary choices.