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The Socio-Economic Surplus. Calling Attention to the Shaggy Elephant

The socio-economic surplus is all the goods and services we produce over our basic needs. It has a hefty feel, a weight like the large bull elephant everyone ignores at a garden party. A huge animal hidden in full sight.

There are two ideals that bracket it.

One, the concept of a no-surplus social order. The small hunting and gathering nomadic band that collects exactly what it needs to continue to continue. A hand-to-mouth group, The division of labor is simple and all exchanges are considered equivalent. Money is hardly necessary, but if it existed everyone would have the same amount at the end of a trading day as he/she had at the beginning. Our current family, circle of friends, and rural commune approximate this model.

Two, the concept of maximum productive use of surplus to a purpose. A projection into the near future of our capability as a group/society if we could agree on our goal and on the mobilization of ourselves and of our resources. Compare, for example, the back-to-back decades of the 1930s and 1940s. In the earlier a great depression with low employment and productivity and in the latter the all out mobilization for total war. Essentially the same group of people produce almost unbelievably different socio-economic results.

Surplus is inevitable given the complexity of a large population and a developed division of labor but it is especially associated with the value/motive of advantage. (In the governing ideology it is called socio-economic mobility–the desire and will to get ahead which suggests getting ahead of all the others.) Outside of the altruistic nets of family and friends and such, each exchange interaction involves a measure of advantage, one person or organization getting more and the other less to carry forward to future encounters and opportunities. The collecting of the extra is a constant. It is part of our everyday experience.The rules of advantage are set by acts of government–through legislation, bureaucratic decisions, executive declarations. Commercial firms set merchandise models that give them the required advantage–things like exclusive distribution rights, limits to access, control of patents and copyrights. All these behaviors are legal, sensible, expected.

Surplus is a measure of a society’s success in its work. but the piling up of goods and services and of money is not at random. It has a pattern that is in some part intentional. This pattern us ordered and expressed in at least three social loci: production, trade, and government.

The kinds of social relationship vary with sector and vary further within each. There are wheels within wheels, links to links. I will sketch selected bits only, not go for completeness.

Production. This calls up the famous owner-worker relationship. An organizational linkage sprouts out of this dyad. Management, executives, boards of directors, stock holders on the owner’s side and trade union for the workers. The edifice depends upon the firm’s profits, staying in the black, or appropriating some surplus. If it falls into loss it ceases to exist. This need which is built into the ownership model places pressure against any raise in wages or lowering of prices. The rising standard of living depends upon successful government intervention through legislation leading to recognition of unions, strikes considered legal and not attacked by police and troops, minimum wage laws, improved working conditions. The world-wide struggle against socialism also encouraged bringing the US trade unions into the anti-communist coalition by granting them recognition and a piece of the action.

Trade. The central relationship here is between merchant and customer. Again each side attracts organizational links. The wholesale-retail link is a distribution system for manufactured goods–from production of large numbers of units of a product to the passing down in detail to each single consumer. On the buyer’s side there has been a consumer’s union movement that represents the customer’s interest–understanding the product, assessing its quality, commenting on it’s price. Again the model for this relationship requires that the supplier gain the advantage or go out of business.

All the people of our society are consumers and most of us also are producers. We participate on both sides of the production–distribution system (very like the members of the hunting band). The overlap can extend to the advantage side as well. The stock holders and store keepers can be all in the mix. A lot of us appreciate the total system because we participate in so many of its forms.

The model for the whole, sets up around the private ownership and the potential for profit or loss values. Initiative in production and sale is encouraged. The social order in place implies and demands the socio-economic surplus as it has evolved. How it is shared and used is in part fixed. The elephant at the party has an engraved invitation..

Alternative visions of how to build and share and use this surplus exist. The cooperative movement where the merchant and the consumer are the same set of people. A co-ownership movement in production and service where the ideal is the identity and unity of owners and workers. Socialism in its several forms where the state claiming to represent the people becomes the owner of some part of (up to the whole) the economic system. (This is another kettle of fish to analyse).

There is also the use of the governmental apparatus to balance and supplement and ultimately support the ownership order described. The political action in the USA orbits here–the government as a independent agent (open to influence) that manages, contributes, and protects the socio-economic system in place. It is out in the open–the contending of conservatives, with an emphasis upon the free and independent business firm and the free and mobile individual, against the liberals who emphasize a continual re-balancing by redistributing part of the surplus in the form of services and limited support for worker and consumer redress. There is a constant political battle always stated in vague yet concrete interests like medical treatment, taxes, retirement benefits and so on.

As money the surplus becomes its own engine. That not used immediately by firms and individuals is invested. In a sense it seeks to increase itself. This again is perfectly normal behavior and within the rules and expectations. The interest exchange presupposes the lender refrains from direct use and the borrower as a substitute becomes productive–an action leading to enough additional value in goods and services to cover the interest charge.

Here is the rub. Not all debtors are productive entrepreneurs. And even acts of intended production are not always successful. These opportunities for productivity in fact are limited or approach a limit.

The situation always veers toward crisis. Money for investment constantly increases through the ever present advantage process, the bolus of extra surplus continually grows itself via investments and loans and generates more within itself. The productive opportunities do not keep pace and in market terms the rate of return drops. The constantly accelerating chase for advantage in money terms loses its connect with goods and services. The crisis occurs.

Within the system the urge to advantage leads to greater and greater risk. Default, loss, dissolution, drops in value, use of illegal methods follow. Where the crisis strikes varies by the fashion of where the investment opportunity is. Sub-prime housing, loans to third world countries, the sale of oil reserves, a bubble in new start-ups in a newly discovered product, massively excess inventories, and so on.

The surplus also re-enters the market as demand. The material-survival needs tend to have a fixed quality–so much protein, so much water and etcetera. But the surplus as demand is discretionary–the choice is open. So where the surplus strikes, very like a hurricane, is an open question. Who decides becomes the issue that to some significant extent determines where we as a group/society are going.

The surplus finally tracks back to the social decision of who controls it and to what purpose or result. The government is multifaceted and complex in its several agencies and semi-independent forms–federal, state, city, county. all divided again into legislative, executive and judicial functions. I will introduce only two relationship distinctions. The candidate versus the voter for one. Different political options exist in the society but only two parties are organized to take over and run the governing apparatus. So other political issues–issues that proponents want to resolve by legislation and force–squeeze into these parties and confuse and confound decision. Issues based on morality (as defined by religious doctrine) and of gun control and animal rights and types of punishment permissible and policy toward addictive drugs–all extremely important in themselves–get into the mix and prevent a clear expression of the public will.

Not resolving issues through elections the second line of the relationship of sovereign and supplicant emerges. Once elected the politician who had been the salesman for self during the always lengthening election cycle becomes a person of power and decision. The various public and private interests move to the process of influence–which in action is the universally hated lobbying, always thought of as acts leading to the advantage for the other.

The extent to which the existing socio-economic order (or any of the other value orders) can be revised, revoked, reformed, recovered turns on the actions of these political people while they are in power. The whole center of change and contention and possibility focuses on these sovereign institutions and persons. The question of how far it can change and in what directions is open.

To lift an elephant alone and unaided: first approach the beast cautiously but with confidence and determination. Grasp the psychological advantage. You’re going to need it.

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The Socio-Economic Surplus. Calling Attention to the Shaggy Elephant

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