Understanding the Global Economic System and Its Inequities

The concept of an economic system involves the ways in which societies produce, distribute, and consume goods and services. It encompasses a wide range of institutional arrangements and mechanisms that allocate resources and manage economic activities. The fundamental nature of an economy lies in the application of energy to transform raw materials into finished products that people need and want.

The Nature of an Economy

An economy is fundamentally about the production, exchange, and consumption of goods and services, not about money. People generally seek goods and services, and money functions as a means to facilitate these transactions. Thus, the focus of economic discussions and policies should be on production, exchange, and consumption rather than monetary value alone.

The Global Economic System

The global economic system is characterized by the elimination of individual liberty to secure subsistence from nature’s resources without corporate States intervening. This system denies the responsibility to compensate individuals for past disempowerment and perpetuates inequalities. The concept of property rights, particularly in land, plays a significant role in this system, often at the expense of individual liberties.

The Historical Context and Inequities

Historically, land held in common was a viable form of land use and provided subsistence for many. However, over time, avaricious members of society sought to appropriate and privatize these commons. This process was driven by the desire for greater production and control, but it led to increased poverty among the poor who lost their means of self-sufficiency.

The Triumph of Capitalism and Its Discontents

From the late 15th to the early 16th century, England experienced the consolidation of land ownership, a process that significantly reduced the availability of fertile land for the population. By the mid-16th century, the monarchy’s attempts to regulate this process were ignored, leading to further enclosures and dispossession of common lands. This consolidation of land ownership continued, leading to the modern capitalist system where a small privileged class benefits at the expense of the majority.

The tragedy of the commons refers to the depletion of shared resources due to individual self-interest. In medieval England, commons provided a source of livelihood for the poor, but over time, these commons were privatized, leading to a reduction in subsistence options for the rural poor. This process was often facilitated by those with economic and political power, who sought to maximize their own interests.

During this period, the monarchy and Parliament played a significant role in the process of enclosure. Henry VIII’s actions in the 16th century, for example, greatly reduced the monarchy’s ability to regulate land use. By the early 17th century, the landowning elite had consolidated their power, often at the expense of common rights and the well-being of the poor. This consolidation of power led to a system where the majority of individuals had limited rights to subsistence and economic independence.

This consolidation of power and the associated inequalities persist in the present global economic system, where the majority sacrifice their humanity to serve the interests of a small and privileged elite. As Ayn Rand argued, property rights are inextricably linked to human rights. The economic system we have today can be seen as a form of kleptocracy, where a few benefit at the expense of the majority.

In conclusion, understanding the global economic system requires an examination of its historical development and its current inequities. By recognizing the importance of property rights and the interconnectedness of human and property rights, we can work towards a more equitable and sustainable economic system for all.