Chapter 2: The Simplest Human Situation: Work and Survival
Chapter Objectives
After reading this chapter you ought to understand:
1. The differences between decisions about what to do and decisions about what is true.
2. The relationship between decision and action; what is meant by each of the elements in the formula A---> X+Y indicating action, desired result of the action, and side effects.
3. How modifying any of these elements creates changes in all the others.
4. How circumstances C affect action A.
5. The distinction between rational action and fanatical action.
6. The two basic "factors" or ingredients of all production, and why a third factor, often listed with the other two, is not basic.
7. The relationship between the concept of investment and decisions analyzed in terms of circumstances, actions, goals, and side effects.
8. What is meant by each of the elements in the expression S = Ap/D
Key Terms
capital
materials
costs
principle
of rational ignorance
factors
of production
investment
rational
action
labor
intensive production
satisfaction
I am convinced that political science is an informal discipline and that many, if not most, of its problems are the consequence of linguistic (or, if one would like, conceptual) confusion.*
In the next three chapters we will make use of the strategies suggested in Chapter 1. Starting with the simplest human situation, we will proceed to more complex interactions, introducing useful concepts at the earliest opportunity. This chapter concentrates on an individual adult human being, the basic unit of society, as he or she might exist in total isolation. Taking Robinson Crusoe as our pattern, we will examine cause and effect in nature, most basic economic concepts, and concepts of decision making. Chapter 3 introduces additional individuals, enabling us to consider associations of two or more people, and Chapter 4 brings us up to the level of complexity necessary to discuss government.
Although we will draw examples from American politics, these three chapters will not concentrate on American government. Our government's complexities are a thicket for unsystematic thinkers. It is better to prepare ourselves by examining simpler systems so that we can later master these complexities than to come straight to the point and find ourselves unprepared. In Marxist dialectical terms, then, these chapters are one step backward enabling us to take two steps forward later on. In capitalist terms, they are an investment.
ROBINSON CRUSOE: A "SOCIETY" OF ONE
Perhaps you are already acquainted with Daniel Defoe's fictional character, Robinson Crusoe, that unusual man whose adventures were described in a novel written over 250 years ago. Crusoe is a restless young Englishman. Ignoring wise parental advice to settle down, he goes to sea and, after a number of adventures, establishes a prosperous plantation in Brazil. Then, his restlessness returns and he goes back to sea. This time, Crusoe's ship is caught in a really disastrous storm which kills all of his shipmates and casts him up on a tropical island. For a quarter of a century, Crusoe lives totally isolated from other human beings. During this period he constitutes the smallest possible "society," the simplest human situation.
Two things about Crusoe's circumstances should be noted. First, he had been raised in a culture. Thus he had learned a language and acquired a fund of knowledge not all of which derived from his own efforts. In addition to his personal experiences in England, Brazil, and at sea, Crusoe had the benefit of some book learning. He received the counsel of others, even though he did not always heed it. Crusoe was thus not a "self-made" man and he was not brought up from infancy by wolves. He was not a "noble savage" but a full-fledged product of civilization. Like Mark Twain's Connecticut Yankee, fictionally deposited back in time from nineteenth-century America to the medieval court of King Arthur, Crusoe arrived on his island knowing many things. These proved helpful to his survival in isolation.
Second, the isolated Crusoe was not entirely deprived of the material products of civilization. His wrecked ship remained aground near the island for several days, and Crusoe salvaged provisions and tools from it. He also stripped another wrecked ship some years later. Crusoe helped himself to food, seeds, guns and knives, a Bible, and some money. He thus benefited from civilization even while isolated from it.
Economists have long realized the advantages of simple illustrations, and hypothetical Crusoe societies are common in classical economics. Analysis of Crusoe's experience is useful because many basic concepts apply even to isolated individuals and thinking about an individual minimizes distractions, preventing us from blaming inherent aspects of the human predicament on particular social arrangements. Crusoe societies are conspicuously absent, however, from political analysis. This may be because philosophers have generally portrayed man as a "social" animal. A society of one can have no politics or government. Nor can any such society last very long. Since regularities and continuing social patterns have been central concerns of political philosophers, Crusoe analysis must have seemed useless.
However when we are surrounded by something, as we are by government, it is difficult to understand what it is all about. Some elements of political systems are present even in a one- person society, and we do well to understand these elements first. For example, decision making is obviously an important part of politics. The president of the United States must decide who to appoint to the Supreme Court. He must decide whether to recognize a revolutionary regime that grabs power in South America. He must decide what energy legislation to recommend to Congress. Every congressman, judge, bureaucrat, voter, or person dealing with government must make decisions. Even Crusoe had to make decisions. But his decisions did not consider anticipated reactions of other people. These decisions were accordingly more straightforward than those of a person living among others. A Crusoe society is therefore a good place to begin our study of government.
Economic relations are also an important part of sociopolitical systems. It is impossible to study politics methodically without employing basic economic concepts. As we have already noted, Crusoe analysis is traditional in economic literature. Again, it follows that analysis of a one-person society is an appropriate part of political literature.
Crusoe's Decisions
Decisions on What to Do. Robinson Crusoe faces many choices of action during his isolated life on the island. He must decide where to build his house. Various conflicting considerations occur to him. He wants to avoid the low ground near the sea, believing it unhealthy. He wants a handy source of fresh water. He wants shelter from the sun, for his island is very tropical. He wants security "from ravenous creatures, whether men or beasts," [Footnote 1] for he has not yet learned that he is alone on the island. And he wants a good view of the ocean, "that if God sent any ship in sight I might not lose any advantage for my deliverance." [Footnote 2] Crusoe finds an acceptable location, but later considers moving when another factor arises--security from earthquakes.
Crusoe must also decide what kind of house to build. Debating between a cave and a tent, he opts for both, gaining the advantages of each at the expense of extra labor. He has a few barley and rice seeds, and he must decide when to plant these. Timing can be all-important in agriculture, and some seeds are lost when Crusoe sows them "just before the dry season." [Footnote 3] Fortunately, he has forseen this possibility and reserved some seeds for another try. Even so, it takes some years to multiply the original "ten or twelve" grains until he can stop using the entire crop for more seed. "It was not until the fourth year, that I could allow myself the least grain of this corn to eat." Footnote 4
Crusoe must also consider whether to leave his island and how to do so. He believes that he is close to South America. However, he has doubts about the boat he builds, and is nearly swept out to sea during a test run. He also fears being captured by cannibals even if he makes it to the mainland. Weighing these conflicting considerations, Crusoe stays put, preferring a tolerable though unsociable present to the risks of leaving.
Crusoe enjoys fresh meat. But he knows he cannot replace his gunpowder when it is gone. Accordingly, he encloses some land and grazes captured goats there so he will not have to go hunting. Thanks to his conservation measures, Crusoe still has gunpowder left 25 years later.
Analysis of Crusoe's Decisions on Actions. Crusoe's decision- making exhibits a definite pattern. First he wants something (bread, security, fresh meat, getting back to civilization, etc.). Then he seeks an action that will give him what he wants. Abstractly, we can call what he wants X, and the action which he thinks will give him what he wants, A. The relationship between X and A can be expressed using an arrow to symbolize cause and effect:
A ---> X
Crusoe's beliefs about the actions that will produce a desired effect derive from experience-personal and vicarious-and from reason. He knows that seeds will not grow unless planted, and perhaps not even then. He knows about other people's experience with wild animals and can imagine the consequences of building the wrong kind of shelter in the wrong location.
Crusoe, however, does not think merely of a goal and of actions which will deliver it. He does not think only of X and A. He does not think:
1.
I want X,;
2. Action A will give me X,;
3. Therefore I will
take action A.
Crusoe considers one more thing: what are the side effects of taking this particular action A? What may be the side effects of sowing all my grain at once? What are the side effects of building in an otherwise optimum location where I cannot see the ships that might sail past? What else will happen if I supply all of my meat by hunting with my gun? What side effects do I risk in leaving my island by boat and if I succeed in reaching the mainland?
Thus Crusoe thinks not only about actions necessary to produce a particular desired effect, but also about other effects that will be produced by each action. Full analysis of Crusoe's decisions about what to do therefore requires an additional symbol Y, standing for the side effects of an action A taken in pursuit of goal X.-
A ---> X + Y
Naturally, Crusoe wants to get what he wants. By definition, X stands for something he wants. But he does not necessarily want to take just any action which will give him X. Some actions that will deliver X may also produce side effects that he dislikes. Shooting wild game will deliver desired food. But the side effects are that he will soon run out of irreplaceable gunpowder. This result is doubly unfortunate, for it will deprive Crusoe both of future meat and of the security provided by his guns. What to do?
Abstract A ---> X + Y Level shooting ---> meat + insecurity Concrete (short run) no meat Level (long run)
Regarded abstractly, Crusoe's alternatives obviously fell into three general categories:
First: He can seek a different action that will produce the same goal but different,,hopefully less unsatisfactory side effects:
Al ---> X + Y1
If such an action is available, this is the ideal solution. In Crusoe's case, there is such an option--domestication of animals--and he takes it. But we cannot always find happy answers. Crusoe, for example, could use a wheelbarrow, but he cannot figure out how to produce one, with or without acceptable side effects:
And as to a wheelbarrow, I fancied I could make all but the wheel, but that I had no notion of, neither did I know how to go about it; besides, I had no possible way to make the iron gudgeons for the spindle or axis of the wheel to run in . ..> Footnote 5
Second, Crusoe can modify his original objective to one that can be reached by an action whose side effects are acceptable. Crusoe adopts this approach in the face of his wheelbarrow problems. He makes a hod, a pole with a platform at the top to use to carry heavy loads.
no available action ---> wheelbarrow + side effects A ---> X + Y A2---> X1 + Y2 Fabricating ---> hod + considerable time spent
The hod is different enough from a wheelbarrow that Crusoe is able to make it. Of course, it is not as efficient as a wheelbarrow would be for hauling away dirt from the cave he is digging. But it serves some of the same purposes. Compromising on goals is not always possible. And sometimes even a compromised goal cannot be reached without strongly undesired side effects. Thus, Crusoe's desire to return to civilization is frustrated both by his inability to figure out how to do it without unacceptable risk and by the impossibility of compromising this goal. Either one returns to civilization, or one does not.
Third: Crusoe can "make his bargain with the devil." If no reasonably satisfactory solution can be found, he must ask himself. Do I want this goal badly enough to incur extremely unpleasant side effects? Or do I want to avoid the side effects badly enough to abandon this particular goal? Here, the decision is between:
sail away ---> possible return + possible fatal to civilization shipwreck or cannibals A ---> X + Y not A ---> not X + not Y stay put ---> unlikely to + no danger of return to shipwreck; civilization little danger from cannibals; risks of remaining
Neither available action is completely satisfactory, but Crusoe cannot choose not to choose. As always, he will do what he prefers, that is, he will do what appears most promising, or least unpromising. Here, the circumstances are so unfavorable that the best available action is none too good. In the fictional event, Crusoe remains on his island until rescued unexpectedly by a European ship.
Rational Action and Fanatical Action
The
decision-making approach we have been discussing is often called
"rational action." Fanaticism is its opposite. Fanatic
actors who want X and believe that action A will give them X need
think no further:
X is desired;
A ---> X;
Therefore,
A.
Fanatics may want the same things as people who act more
rationally. They see connections between what they want and possible
actions. All that they lack is the concept of side effects. Rational
actors merely ask one additional question: what are the side effects
of action A? But the changes generated by considering side effects
change also the process:
1. pursuing the same goal with a different action--
Al ---> X + Y12. modifying the goal so it can be reached by a still different action--
A2---> X1 + Y23. making one of two possible "bargains with the devil"--
A ---> X + Y
not A ---> not + not Y
Crusoe, as it turns out, acts very rationally during his lonely sojourn on the island. Footnote 6
Distinctions between Rational and Irrational Actions. Rational actions should not be regarded as the opposite of "emotional" ones. It is an intellectual task to visualize connections between actions and consequences, as symbolized by the arrow -. Our experience, knowledge, and ability to reason by analogy enable us to anticipate consequences. But our emotions are also involved in rational decisions. Metaphorically speaking, we use our "heads" to project the consequences of alternative actions and our "hearts" to evaluate these consequences. If we have no feelings about different consequences, we cannot act rationally any more than if we are unable to predict probable consequences. Both intellect and emotions are therefore necessary when we make decisions.
We should also avoid confusing rationality with morality. An action is rational to the extent it is well-calculated to give the person taking it the greatest possible net amount of what he or she wants. But actions that are rational may be immoral if the actors do not want what they ought to want according to some external or cosmic yardstick. We might agree that Adolf Hitler's campaign to exterminate the Jews was reasonably rational given Hitler's values; few would argue that his actions were moral. Even as the Bible-reading Robinson Crusoe was acting very rationally on his island, he entertained serious doubts about the morality of some actions he was considering.
The Effect of Circumstances Upon Decisions
One additional element must be introduced into our abstract analysis of decisions: the circumstances within which actions occur. Circumstances make some actions completely impossible. In Crusoe's case they made it impossible to build a wheelbarrow. And circumstances may strongly affect the actual results produced by a given action. Crusoe, for example, originally stored all of his precious gunpowder in a single dry location. Under some circumstances this concentration might have been sound enough policy, but it transpired that Crusoe's island was subject to thunderstorms:
I was not so much surprised with the lightning, as I was with a thought which darted into my mind as swift as the lightning itself. 0 my powder! My very heart sunk within me when I thought, that at one blast all my powder might be destroyed, on which, not my defence only, but the providing me food, as I thought, entirely depended. . . . Such impression did this make upon me, that after the storm was over I laid aside all my works, my building, and fortifying, and applied myself to make bags and boxes to separate the powder, and keep it a little and a little in a parcel, in hope that whatever might come it might not all take fire at once, and to keep it so apart, that it should not be possible to make one part fire another. Footnote 7
We can use a large letter C, printed so that it surrounds the capital A standing for actions, to symbolize circumstances. [In this Web-version of this book, the example is omitted to simplify transmission over the Internet.] Sometimes the C may be omitted for simplicity, but it is always present by implication. All actions are under particular circumstances. The letter C is ideal for representing these, and not just because it is the first letter in "circumstances." If we imagine that the C is a semicircular fence observed from a helicopter, limiting the directions in which people located within it can go, we see that basically they can go east, northeast, southeast, or any direction in this range. But the fence prevents them from going north, south, west, and the like. If the circumstances change, thus actions previously possible become impossible, and vice versa. Now the people can go only in westerly directions. Rationality of an action may depend heavily on specific circumstances. Let us say that Crusoe, if the actions were available to him in his circumstances, would prefer Al over A2, A2 over A3, and A3 over A4. If actual circumstances permit only actions 1, 2 and 3, then his rational choice is Al, while A3 will be his worst choice. If, however, circumstances permit only actions 3 and 4, then it is rational for him to choose A3. By analogy, the same reasoning can be applied to questions of morality. Moral action is what we would do if we wanted what we ought to and acted rationally. As circumstances make different actions possible or impossible, the action which is morally best (or least bad) may therefore change.
Decisions on What Is True
Decisions, of course, are not always about what to do, and the formula A ---> X + Y applies only to this type of decision. We also make decisions about what is true. Sometimes we call these "conclusions." Whatever we call them, decisions about what is true are very important. Crusoe, for example, puzzles over a footprint he finds in the sand. Is it the Devil's? Is it evidence of savages visiting from the mainland? Is it possibly a print left by Crusoe himself?
The footprint greatly agitates Crusoe, and his efforts to figure out its true meaning are not just philosophical speculations. Decisions about what to do depend on his decisions about what is true. If it is his own footprint, he can continue living as freely as ever. But Crusoe has to reject this explanation, after comparing the print with his own foot. If the print indicates a visiting cannibal, on the other hand, Crusoe might want to live a more retiring life. Deciding that this is the true explanation, Crusoe fortifies his house and puts guns in strategic places. He moves some goats to other locations where they will not all come to harm at once. He begins carrying a gun everywhere, but does not fire it for two years for fear of attracting attention.
In deciding what to do, we make or assume decisions about what is true, our alternatives under the circumstances, the consequences if we take this action or that action, and so forth. But there are other relations between the two kinds of decision. Decisions about what to do help make certain things true in the future. Sometimes we make experiments, decisions about what to do attempting to determine what is true. Crusoe was doing this when he placed his own foot in the troublesome print in the sand. Knowledge about what is true can thus be the goal X in pursuit of which an action A is taken.
CRUSOE AND THE ECONOMICS OF PRODUCTION AND CONSUMPTION
Robinson Crusoe does not lack all benefits of civilization. He salvages considerable food, drink, clothing, and gunpowder from his ship. He knows, however, that these will not last. He therefore confronts an unfortunate requirement: work or starve! This dilemma is not his fault, but it cannot be blamed on anybody else, either. That Crusoe must work or starve is nobody's fault; it simply describes the circumstances in which he happens to find himself. Crusoe, here, can be seen as a symbol of the human race taken as a whole. In normal society it is not true that every individual must work or starve. Although nothing can be consumed that has not first been produced, it is quite possible for some individuals to consume more than they produce, to consume even if they produce nothing. We can consume more than we produce if some other individuals produce more than they consume. But what is true for individuals in normal society is clearly not true for humanity as a whole. For humanity, there is no "somebody else" to do the necessary work. For humanity, the rule is work or starve. Crusoe's position is thus more like that of the human species than it is of normal individual members of that species. Even so, we can uncover many economic concepts merely by observing him.
Factors of Production: Materials
Crusoe's case provides insights into what economists call the "factors of production." Materials--including land, water, minerals, air, sunlight, and everything else provided to us by "nature" without any expenditure of human effort--are an obvious requirement for producing anything.
What Are Materials? Two things are notable about Crusoe's materials. First, he is free to use anything he can handle to which he has physical access. Lack of proper tools prevents him from putting some resources to work. Having no saw, Crusoe tediously makes boards by hacking away at a downed tree with an ax "till I had brought it to be thin as a plank, and then dub it smooth with my adze." [Footnote 8] However there are no additional limits on Crusoe's use of natural resources. There is no "property," for there is nobody else to claim exclusive rights to particular materials. When Crusoe kills a wild goat or a turtle, he is not a poacher; when he chops down a tree he is not a trespasser. The concepts of property and ownership simply cannot apply to a one-person society.
Are Materials Available? Second, natural resources can be scarce even under Crusoe's circumstances. Seeds, for example, are provided by nature, yet Crusoe begins with only a handful of barley and rice seeds. Commenting on the uselessness of his money, Crusoe observes that
I would have given it all for six-penny-worth of turnip and carrot seed out of England, or for a handful of peas and beans . . . . BFootnote 9
Even Crusoe must, therefore, distribute some resources among conflicting uses. The side effect of using them for one purpose is to make them unavailable for another. Hence, Crusoe makes no bread for four years so he can use all of his initial seeds to produce more seeds.
Weighing Costs and Benefits. Weighing costs and benefits of particular uses of scarce resources, Crusoe necessarily makes value judgments. He compares the value he places on each possible use of the resources and acts to get what he values most. He values plentiful future bread more than the single loaf he could make using all of his initial grain, so he bakes no bread for the time being. No bread now is the cost or side effect of acting to secure large amounts of future bread. Thus, in a society with no property, no money, and no trade, the concept of costs is fully applicable. Crusoe's costs may be merely "opportunity costs," but they are still real. Costs, unlike money and property, are not an inherently social phenomenon.
Still, while natural resource scarcities restrict Crusoe, they are not obnoxious. His island is big, fertile, and well stocked with trees and edible plants and animals. Environmentally, he is well off and well aware of this fact.
Labor
A second factor of production is human labor. Crusoe works long and hard to make a living out of the available materials. Some things come practically ready to consume, but even turtle eggs must be picked up and cooked. These two operations represent two basic things accomplished by human labor: 1) modifying an object's location and 2) modifying its form. Picking the egg up changes its location, adding what economists call a "place utility." It is worth more to Crusoe in his mouth than lying on the ground, hence he willingly reaches down and picks it up. Cooking the egg changes its form, making it more palatable to a person of Crusoe's tastes.
What Kind of Labor? Crusoe endlessly moves things from one place to another. He moves raisins from where the grapes dried to where he stores them. He moves dirt, without benefit of the lamented wheelbarrow. He moves animals that he has killed. He removes valuable items from the wrecked ship before it disappears for good. He moves his gunpowder to protect it from lightning. He moves goats to protect them from the cannibals. Trying to move a giant log hollowed out to make a boat, Crusoe finds that he is not strong enough. He would like to move himself back to civilization, but is unable to do so for 26 years. Likewise, Crusoe changes the form of many things. He digs the cave, changing the local terrain as well as changing the location of the dirt. He converts animal skins into clothing. He hollows out the tree trunk to make a boat, and hacks other trees into boards for use around the house. He plants trees in a pattern to make a hedge.
How Much Labor? How does Crusoe decide how much labor to perform? He has no "boss" to tell him what to do or when, or for how long. Yet these decisions somehow get made, by Crusoe himself. Obviously, he must decide within certain limits. If he works too little or does the wrong things, he may starve. On the other hand, Crusoe can perform a certain maximum amount of labor by working himself to the bone. Within these limits, Crusoe's decisions about how much work to do depend on the things he wants and on the relative importance or value he places on each.
Over the long haul, Crusoe's limited ability to consume appears to be his chief basis for deciding how much to work. Speaking of his barley and rice, after he had gotten the seed problem cleared up, Crusoe notes that
I resolved to see what quantity would be sufficient for me for a whole year, and to sow but once a year. Upon the whole, I found that the forty bushels of barley and rice was much more than I could consume in a year; so I resolved to sow just the same quantity every year that I sowed the last, in hopes that such a quantity would fully provide me with bread, etc. Footnote 10
And he observes later that "all I could make use of was all that was valuable." [Footnote 11] Crusoe does not appear to have been greatly interested in leisure. Time not spent producing basic requirements he devotes to labor with a very low rate of return, like making boards so he can have a shelf in his cave. He admits to the "prodigious deal of time and labor which it took me up to make a plank or board." But, he adds, "my time or labor was little worth, and so it was as well employed one way as another." [Footnote 12] It appears in fact that Crusoe is something of a workaholic! But only when he wants something immediately, as when he is trying to salvage things from his wrecked ship, is his daily labor limited by sheer exhaustion.
Insurance. Interestingly, Crusoe produces a considerable amount of insurance. During his agricultural experiments, he reserves seeds in case the first crop is ruined. The cost of this insurance is the additional production that he would have gotten by planting all the seeds if the crop did not fail. Fearing savages, he increases his crop in case some of it is destroyed or captured by marauders. This too is insurance, for which he pays with increased labor in his fields. Likewise, the labor required to decentralize his gunpowder supply after the electrical storm is an insurance cost.
Capital
The third thing generally considered a factor of production is "capital." Conventionally, the list of factors includes: land (including the things found on or under it), labor, and capital. Labor is perhaps the easiest of these things to understand. Materials present few difficulties, although it is confusing to call this factor as a whole "land," a term literally pointing only to a part of it. Capital, however, seems to be harder for many people to grasp, and perhaps the best approach is to discard it completely as a factor of production. While capital is a necessary concept, we need not place it on the same level with materials and labor in our analysis, for it is merely one possible combination of these.
What is Capital? Capital consists of things that are: 1) produced; 2) but not intended to be consumed as such. Production, as we have seen, requires human labor as well as materials. But human labor is not expended for no reason. As Robinson Crusoe concedes, "[AIII the good things of this world are no further use to us than they are for our use." [Footnote 13] Yet Crusoe produces capital. It follows, then, that consumption is only one possible use of things that we have produced.
Kinds of Capital. Crusoe produces many kinds of capital. One of his earliest efforts is to plant seeds, and his immediate object is to produce more seeds. He does not intend to consume these seeds, but to plant them. These seeds are, therefore, capital. Crusoe produces them in order to increase future grain production so he can use part of the harvest to make bread. When this happy stage is reached, four years later, he divides subsequent grain crops into two parts: most of it he processes further and bakes into bread; the rest he retains as seed for the future. The grain turned into bread is a "consumer good," and that reserved as seed is a "capital good."
Crusoe also produces tools. He spends time and labor making a hod. He does not want to consume the hod, but to use it to haul away dirt extracted from his cave-house. He spends a week making a heavy spade with which to dig up additional land before sowing his enlarged stock of seeds. Again, these are not consumer goods but capital enhancing his future productivity.
Capital vs. Consumer Goods. These kinds of production can be sharply distinguished from Crusoe's other output. The raisins he produces are intended for direct consumption. Other food that he grows, shoots, or raises is destined to be eaten. Crusoe wears the clothing that he manages to make. These are consumer goods, not goods that are used in producing other things.
There is another basic difference between capital goods and consumer goods. The latter are absolutely essential. Crusoe will starve if he does not produce enough of these. Capital goods, however, he can do without. Under his fortunate circumstances, he could probably even manage without seed grain and just eat wild plants. The hod is not essential in digging out his cave. Even his shovel is expendable, for he could dig the cave with his bare hands. And it is the same case with his spade; land could be plowed up without it. Crusoe's expenditure of labor to produce capital is not wasted, however. This work reduces the total labor required to produce a given amount of consumer goods. Days spent making the hod, for example, are more than compensated for by Crusoe's increased efficiency in hauling dirt away from his cave. Work that might take two months without the hod may take only one month with it. If it takes three days to make the hod, he has still accomplished in 33 days what otherwise would have taken 60. The hod is worth making even if it wears completely out and is useless by the end of 30 days' use.
Not every tool will be such a bargain for Crusoe. The time saved using some tools may be less than that necessary for producing them. Crusoe will not make such tools, but will prefer to achieve his objectives using direct labor. The breakeven point, at which Crusoe is indifferent, between making the tool or producing directly will be where the tool takes so much time to make that it exactly cancels out the time saved in using it.
Labor Intensive and Capital Intensive Production. Economists call the approach that uses little or no capital "labor intensive" production and the approach that uses the tool "capital intensive." As Crusoe's story makes clear, there is no one ideal level of labor or capital intensivity for production in general. Rather, the ideal combination of direct and indirect labor depends on the circumstances of each case. For example, capital intensive production may make sense in the United States where labor is relatively scarce and expensive and capital relatively plentiful, but not in China where labor is plentiful and cheap and capital is scarce.
Investment
Viewed abstractly, investment is merely consumption postponed in order to do things that allow us to consume more in the future. Crusoe invested in a hod, in a fence, in seeds, in order to increase his standard of living later on. Investment can also be viewed in terms of our decision-making formulation
A ---> X + Y. One objective X we can pursue is to make future circumstances different from what they would otherwise be. Today's action helps to shape these circumstances, and we are investing to the extent that we do this rather than seeking particular immediate results. If Crusoe produces a hod, his future circumstances will include an enlarged opportunity; now he can choose between using and not using that tool. Since his productivity is enhanced by the hod, his circumstances are improved. As we will see later, investment is a concept with important political as well as economic implications.
Karl Marx maintained that capital was merely stored up labor, and as we have seen this is not completely untrue. Capital is partly stored up labor, labor used indirectly rather than directly in producing goods for consumption. But capital, like all production, is also partly materials. And we will see in due course that the element of value contributed to production by natural resource scarcities has been very troublesome for governments. Under Crusoe's peculiar circumstances, however, resource scarcities are not generally a pressing matter; in these circumstances, Marx's "labor theory of value" probably comes as close as it ever can to being economically correct.
Crusoe's Standard of Living
As we have seen, Robinson Crusoe's standard of living is limited by his natural environment. Within these limits, Crusoe's "income" or ability to consume depends upon his decisions. He must decide what to produce, how much of each thing to produce, and how to produce each thing. A great deal of his ability to produce derives from knowledge brought with him or gained on the island. Thus knowledge itself is a capital good, in a way, as well as being a consumer good to the extent that Crusoe enjoys knowing certain things for their own sake. Attaining knowledge, like all other production and pursuit of goals, has its costs or side effects, as any college student well knows. Indeed, an economist, Fritz Machlup, has written a book on The Production and Distribution of Knowledge,Footnote 14 indicating that it can be treated just like any other commodity. At some point the costs of seeking further knowledge may outweigh its benefits, and at this point it becomes rational to stop seeking extra knowledge. Thus it is not paradoxical to speak of a "principle of rational ignorance."
Crusoe's standard of living is perhaps most notable for those things by which it is not limited. His goods are not sought by human robbers, though he does have problems with birds eating his crops. His living standards are not reduced by competition for the available natural resources from other people. He pays no taxes, and he pays no "protection money" to private extortionists. He gives nothing to the church or to the support of other worthy causes, for there are none on his island. And his personal consumption is not reduced by other people for whose support he is or feels responsible. There is, therefore, a direct relation between Crusoe's standard of living and his labor. But there is also no one to whom Crusoe can turn for support if he becomes unable to work. He must work or starve. If he works, he will not starve. For individuals living in complex societies, things are not always this simple.
POWER, SATISFACTION, AND THE ISOLATED INDIVIDUAL
Power. A society of one solitary human adult is the ideal place to begin considering power, a basic political concept. For a Crusoe, power can consist only of control over the motions of non-human material. Crusoe, for example, has the power necessary to cut down a tree and turn it into a boat. However, he cannot move that boat to the nearby ocean. He lacks the power to do this task.
In this context, power is virtually identical with causation, symbolized with the arrow in the formula: A---> X + Y. To say that Crusoe lacks power to move the boat is to say that he cannot cause that boat to move. Apparently in our dealings with nature power and causation are merely two different words pointing to a single concept. If none of our dealings were with other people, we should therefore abandon one of these two words completely. But, as we will see in the next chapter, "power" and "causation" refer to separate concepts when employed to describe human interactions.
Satisfaction. Satisfaction can be defined as the ratio between an individual's perceived attainments and desires:
Perceived attainments Satisfaction = _____________________ Desires Ap S = ____________ D
Changing Attainments. There are only two ways in which a Crusoe's attainments can be changed: First, by events in the natural environment. For example, Crusoe's attainments were adversely affected by several storms, by an earthquake, and by hungry birds. His very exile from civilization, a great decrease in his attainments, was caused by the mighty storm that smashed his ship and killed its other passengers. Had his gunpowder supply been ignited by lightning, Crusoe's attainments would have been badly set back. The natural course of events can also, of course, increase attainments. Crusoe's are increased when his wrecked ship is swept in close to shore by the tides, for this provides salvage opportunities he otherwise would not have had. Second, the solitary individual's attainments can be modified by his own actions. In the formula
A ---> X + Y, all of the letters except the A refer to actual or potential attainments. While actions are always intended to maximize attainments, their actual consequences are not always positive. Results are never entirely predictable. Crusoe, realizing that he could not be sure of the actual results of sailing to the mainland in a homemade boat, plays it safe and stays put. On his one experimental voyage, unexpected tides nearly sweep him out to sea, which would be a reduced attainment to say the least.
Changing Satisfaction. Just as there are two ways in which a Crusoe's attainments can be increased or decreased, so there are three ways that a given change in satisfaction can be produced. These are quite obviously indicated by the three elements in the definition or equation of satisfaction:
Ap S = ___________________ D
A change in Crusoe's satisfaction can be produced first, by changed attainments, assuming that he is aware of them. Crusoe obviously takes great pleasure in being cast up from the stormy sea onto his island. His attainments have increased, and he is fully aware of that fact. A change in Crusoe's satisfaction can also be produced by a changed perception of his attainments. He panics when he discovers the human footprint. The island is the same as it always has been, that is, subject to periodic visits by parties of cannibals. Crusoe's attainments remain unchanged. But his satisfaction is greatly reduced by his new perception of the continuing fact.
A third way Crusoe's satisfaction can change is by a change in his desires. Once he has gotten used to his peculiar situation and reflected upon it, his satisfaction increases:
I now looked upon the [outside] world as a thing remote, which I had nothing to do with, no expectations from, and, indeed, no desires about. . . . I had now brought my state of life to be much easier in itself than it was at first, and much easier to my mind, as well as to my body. . . . I learned to look more upon the bright side of my condition, and less upon the dark side, and to consider what I enjoyed, rather than what I wanted. . . . All our discontents . . . appeared to me to spring from the want of thankfulness for what we have. Footnote 15
In other words, we can achieve the same satisfaction by wanting what we can get as we do by getting what we want.
Of course changes in the numerator produce changes in satisfaction that are opposite to equivalent changes in the denominator. That is, satisfaction is increased either by increased attainments or by decreased desires. We might parenthetically note here that increasing attainments appears to be the solution of choice in western culture, while decreasing desires is the more typical prescription of the oriental philosophies. Indeed, there is a mathematical validity to Nirvana: when desires are reduced to zero, satisfaction becomes infinite.
Changes need not take place in only one element of satisfaction at one time. Changes in one element produce the indicated changes in satisfaction only if everything else remains equal. When everything else does not remain equal, interesting things can happen. For example, satisfaction can actually fall as perceived attainments increase if increased attainments are more than cancelled out by simultaneously increasing desires. This theoretical conclusion is by no means devoid of practical significance. Political observers are well acquainted with "revolutions of rising expectations." Many sweeping revolutions have followed periods of increasing general prosperity. [Footnote 16] And the urban riots during the mid- 1960s came when more progress was being made by members of the black community than ever before and, perhaps, ever since.
Increased attainments may whet the appetite for more as well as proving that things need not remain the same forever. As attainments improve, desires may increase, thus reducing net satisfaction and increasing frustration. The converse is also true. As prospects for future progress dim, a decrease in the rate at which desires are increasing may allow satisfaction to rise despite a slowdown in improved attainments. Under President Nixon, in whom black people placed few hopes, the riots soon came to an end. There was, therefore, a certain logic to Daniel P. Moynihan's "secret" memo urging Nixon to treat the black community with "benign neglect."
Once again, however, we are anticipating the more complex issues that will be treated in later chapters. The time has come for us to bid farewell to the isolated Robinson Crusoe and turn our attention to a society in which there are human associations.
SUMMARY
By observing a solitary individual, we have identified many elements of a complex society. Decisions must be made in simple as well as in complicated situations. A Crusoe has goals, just as each person in a city, state, or country does. The isolated individual is not alone in having to consider the probable side effects of his actions, and each action's rationality always depends upon the circumstances. Even a Crusoe must give up some desired things in order to get others, seek better ways to attain desired goals, and abandon some other goals. Neighbors, whose reactions we must anticipate and live with, may tighten the limits within which we act, but they do not create them.
Likewise, many basic economic concepts-essential in untangling the baffling complexities of mass societies-are useful even in thinking about Crusoe. In Crusoe, we meet the basic factors of production-materials and labor-as well as capital, a nonbasic factor. Crusoe makes investments and produces some kinds of insurance, and he considers costs as well as benefits in deciding what to do.
Satisfaction can be defined in terms of attainments, perceptions, and desires. Satisfaction clearly is a concept applicable to isolated individuals, but it represents the end of the line for the analysis of the isolated Crusoe. One person's attainments--one of the elements of its definition--may be affected by another's actions. Having gone as far as we can in thinking about Crusoe, we must now therefore sacrifice the advantages of maximum simplicity in order to look at situations involving more than one person: societies, in the full sense of the term.
QUESTIONS FOR DISCUSSION
1. Is it unrealistic to imagine a "society of one," as we have done here? What advantages might this "unrealism" have in developing our ability to think systematically about politics?
2. Are Crusoe's decisions easier or harder to make as a result of his total isolation from other people? Why?
3. Why can't Crusoe have everything he wants, even though he has no neighbors to get in his way?
4. State an example of a decision you have made, or might make, and explain how it can be thought about in terms of C, A, X, and Y.
5. Explain why rational action is not the opposite of emotional action; give an example.
6. What is the difference between the rationality and the morality of an action? How many possible combinations of these types of action can you imagine? Give examples.
7. Why are the circumstances in which we act important?
8. What other kinds of decisions do we make in addition to decisions about what to do? What relation is there between these different types of decisions?
9. According to the text, what are the two things necessary for production to take place? Explain why the third thing commonly cited as a "factor of production" is not included as a separate factor here.
10. Define a capital good, giving both an example and a contrasting example of a non-capital good.
11. Crusoe is surrounded by all sorts of things, both natural and man-made. How, then, can it be said that there is no property on his island?
12. How can there be insurance in a society of one, when there is no one to pay the insurance premium to?
13. Explain what is meant by "labor intensive" production and how it differs from the alternatives.
14. Explain how investments can exist in a society of one in which there is no money.
15. Explain the principle of rational ignorance.
16. State and explain the equation of satisfaction. Then explain how satisfaction can fall at the same time attainments are increasing.
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Footnotes
* A. James Gregor, An Introduction to Metaphysics (New York: Free Press, 1971), p. ix.
1. Daniel Defoe, Robinson Crusoe, New York: National Library Co., 1903, Vol. 1, p. 64.
2. Ibid. p. 64.
3. Ibid., p. 88.
4. Ibid., pp. 87-88.
5. Ibid., p. 81.
6. If your instructor has not devoted a class session to introducing you methodically to the rational action concept and the A X + Y form of analysis, you should read Appendix A before continuing in this chapter.
7. Defoe, p. 67.
8. Ibid., p. 75.
9. Ibid., p. 145.
10. Ibid., p. 138.
11 . Ibid., p. 144.
12. Ibid., p. 75.
13. Ibid., p. 144.
14. Fritz Machlup, The Production and Distribution of Knowledge in the United States, Princeton: Princeton University Press, 1962.
15. Defoe, pp. 143-145.
16. Crane Brinton, The Anatomy of Revolution, New York: Vintage, 1965, p. 30.
