chapter 12 details of epoch m5 - mrc.uidaho.edurwells/techdocs/the idea of...proletariat. this is...

Critique of the American Institution of Education Richard B. Wells © 2013

Chapter 12 Details of Epoch M5

§ 1. The Epoch of Stagnation and Breakdown

According to the 2010 census, in the year 2010 there were 166.1 million Americans below the age of 40 out of a total population of 308.7 million. This means that for 53.8% of Americans alive in 2010, epoch M5 is the only one they have ever known. For them M5 defines normality, and for many of them the thought that conditions were ever otherwise than those they have known all their lives is a thought that never occurs to them. For the rest, most assume that the times they have known, if really different from "the old days," are better than those days. In part this is due to human egocentrism and in part it is due to a ceaseless barrage of propaganda telling them times are better now than they were for their old sires of yesteryear.

Another 43.6 million Americans (about 14.1%) had no memory of a time before 1960. Of these, roughly half have no memory of an America prior to the civil war of the mid-1960s. Only about 42 million Americans (13.6%) can possibly remember any part of the 1950s. Fewer than 57.1 million Americans (18.5%) might remember a time before M4, and of these only 18.6 million (6.0%) were 5 years of age or older in 1940.

I tell you this because I anticipate many readers will greet the findings of this chapter with a subjective judgment of disbelief. The mental physics of satisficing behavior and the process of human judgmentation [Wells (2009)] incline people towards type-α compensation behavior (ignoring disturbances) because this is the quickest route to re-equilibration after experiencing a disturbance. The process of practical Reason regulates human Self-determination, but this process knows no objects and feels no feelings. Human practical Reason regulates for equilibrium and nothing else, and it is an impatient process that invariably chooses the most expedient means of restoring equilibrium that the person can find. As you read about the details of epoch M5 and the findings they point to, I think you are likely to experience a feeling of disturbance if you are a citizen of the United States. If your prior experience has not prepared you by development of more robust practical maxims, denial is the most likely reaction to disturbing facts. A sizable fraction of the readership may experience hostility toward the findings that follow, and I expect many of them to direct this hostility at me. That can't be helped. I do not expect human beings to act otherwise than as human beings, but I will not mislead you by dressing up facts in sheep's clothing – or, for that matter, in wolf's clothing. To do either would be a dereliction of my Duty as a scientist and as an American. I wish the facts were otherwise but they aren't.

M5 is an epoch of arrested Progress, economic stagnation, and developing Societal break-down. At the moment Order is being maintained in our Society, but events like the recent Occupy Wall Street movement and the reaction by government to suppress it are similar to events that immediately preceded the eruption of civil war in the 1960s. Occupy Wall Street was a non-violent protest, and government acts to suppress it were mild compared to the counteractions by government to the first civil rights protests in the late 1950s and early 1960s; but I remind you that non-violence was the first casualty when civil war rioting began in 1965.

I think it likely that among the readers of this treatise there are some, already members of the great Toynbee proletariat who make up on the order of about one-third of the U.S. population, who would welcome another civil war. Recently groups from seven states sent Email messages to the White House announcing their desire to secede from the Union. Some state legislators and state governors also make noise to this effect from time to time. To them I say, "You are a damned fool. You have no concept how murderous and destructive another civil war would be, or how chaotic and violent its aftermath would be." None of these people can express what sort of Society they would see take the place of the United States; in listening to their propaganda, I hear nothing but a call for a deadly state-of-nature environment of every man against every other man.

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Chapter 12: Details of Epoch M5 Richard B. Wells © 2013

Figure 12.1: U.S. population from 1880 to 2010 in millions of people. Source: U.S. Census Bureau (2011).

Figure 12.2: U.S. Civilian labor force (in millions) from 1880 to 2010. Sources: Bureau of the Census

(1976) Series D 16-17; U.S. Census Bureau (2011) Table 586.

Let us begin with a quick review. Figure 12.1 graphs U.S. population in the decennial years from 1880 to 2010. The scale is millions of people. During M5 (1970 to 2010), U.S. population followed a natural growth process dynamic with correlation coefficient R = 0.9991620 and fitting function

( ) ( ) [ ].2010,1970,million010581.013134.203 1970 ∈+⋅= − yyp y

The population growth rate of 1.06% is the second-slowest in U.S. history. Only the decade of the Great Depression, when population grew at rate of only 0.7% per year, witnessed a slower rate of growth. Nonetheless, the M5 growth chart implies a natural growth process, and this implies that the United States is still a Community as well as a Society, although this does not mean it is a civil Community.

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Figure 12.3: Unemployment rate as per cent of civilian labor force from 1891 to 2010. Source: Bureau of

the Census (1976) Series D 86; Bureau of Labor Statistics, published by Time, Inc. (2012), pp. 635-6.

The macroeconomic indicators are less good. Figure 12.2 graphs the non-agricultural labor force and the unemployed population from 1880 to 2010.1 Looking first at the unemployment statistics, the raw number of unemployed Americans during M5 is the second-highest in the 20th century, topped only by the number of unemployed in the Great Depression. This does not take into account the general population growth, but it does point to people, the social atoms. It would be a very broad-minded unemployed person who would not be inclined to morally secede from the U.S. Community and its social contract, opting instead to become a member of the Toynbee proletariat. This is because the person's membership in the body politic united by social contract is failing to benefit the tangible power of his person – one of the most fundamental reasons why any person consents to join with others in civil Community and be bound by a Community social contract. I am dubious there are all that many such broad-minded unemployed people. It would require a commitment to patriotism and Community of nearly superhuman proportion.

Figure 12.3 graphs unemployment as per cent of civilian labor force. M5 exhibits the second-highest unemployment rate in the 20th century, again topped only by the Great Depression and, if we go back a little further, the unemployment rates seen after the Panic of 1893. The average unemployment rate over M5 is 6.3%, compared to 4.5% during M4 and 4.8% in M2. Not only is the raw number of unemployed persons increasing, but they also comprise a larger fraction of the population overall. These are people American Society is pushing out of the Community and forcing to assume reciprocal outlaw relationships between themselves and Society-at-large. Here I must emphasize a point I made in an earlier work [Wells (2012a)]: the outlaw relationship is a reciprocal relationship. Society-at-large is equally outlaw with respect to relationships with the disaffected members of a Toynbee proletariat. You cannot say, with objective validity, that one group is outlaw and the other is not; they are both mutually outlaw to one another. Neither faction has "right" on its side because where there is no social contract there are also no civil rights and the concept of justice has no real meaning2.

The non-agricultural labor force exhibited unbroken natural growth from 1950 to 1980. Its model fit is

( ) ( ) [ ).1980,1950,million020782.0199342.48;9999017.0 1950 ∈+⋅== − yyNALFR y

1 It also graphs the agricultural labor force, but for now the discussion is not aimed at this population. 2 These are all theorems following directly from the first principles of deontological moral science.

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Figure 12.4: Per capita income, public debts, and consumer credit debt, 1930 to 2010, in 1967 dollars. PI =

per capita income; F = federal per capita public debt; SL = state and local per capita public debt; C = consumer credit debt per capita; D = F + SL + C. Debt figures do not include home mortgage debt.

Sources: see earlier references in chapter 11, figure 11.8.

In 1980 non-agricultural employment hit a breakpoint and the rate of growth in this population decreased from 2.08% to 1.70% per year. This new trend continued from 1980 to 2000. The fitting function is

( ) ( ) [ ).2000,1980,million017008.0149974.96;9982078.0 1980 ∈+⋅== − yyNALFR y

From 2000 to 2010 the non-agricultural labor force hit a decade of essentially zero growth with the population showing only an anemic increase from 134.4 million to 136.9 million people or a mathematical average of less than 0.2% per year. During this decade the unemployed population jumped from 5.7 million to 14.8 million people. The agricultural labor force decreased by only about 260 thousand people. In 2012 the two dominant political parties squared off against each other in the United States Congress on the subject of jobs and unemployment. They made a great many speeches – all of which seemed to be in favor of the idea of reducing employment – and did absolutely nothing. If, watching this spectacle, you got the idea neither political party gives a damn about you – well, you'll get no argument about it from me. Talk is cheap.

In point of fact, the general government, as matters stand, cannot actually afford to do any-thing about it. Most likely, barring some innovation, there is little either individuals or corporations can probably afford to do about it either, as the rest of the data will show.

§ 2. Private Income and Public Debt

Figure 12.4 graphs per capita personal income, total public plus consumer credit debt, federal, state & local public debt, and consumer credit per capita debt in 1967 dollars. Per capita personal income is what each individual's share of national personal income would be if this were divided up evenly among the U.S. population. The figure is therefore a statistical fiction but it does provide a measure of the increase or decrease in the general level of personal wealth assets. Per capita public debt, on the other hand, is each individual's share of the debt load accrued by government (federal as well as state and local). By definition, federal debt is apportioned to every U.S. resident because the general government's expenses are national expenses. Per capita state and local debt, on the other hand, has a significant variance from one place to another because

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here it is the total state (or local) debt divided by the state (or local) population. As an illustration of this variance, in the year 2008 the following seven states had per capita state debts, expressed in 1967 dollars, of

National Average State & Local Debt: $1300 Alabama: 929 California: 1446 Idaho: 582 Illinois: 1499 Massachusetts: 2200 New York 2149 Washington (state): 1525.

Public debt has a direct bearing on the level of taxation required in order to keep the government financially solvent. When state or local government accrues debt, you get billed for its payment.

Through the decade of the 1970s, the gap between per capita personal income and total per capita debt widened in favor of income. In effect, this means that on the average the nation was growing wealthier despite a decrease in the rate of growth of GNP that began in 1970. In the decade of the 1980s there was a sharp increase in total per capita debt, almost all of which was due to a sharp increase in federal debt. This was a consequence of the policy of the Reagan administration to undertake deficit spending to fund increases in the military budget while at the same time reducing federal income taxes in an attempt to stimulate business growth. As the data will show a little further on, business profits did increase in the 1980s but business revenue did not (after adjusting out the factor of inflation). As a consequence, per capita personal income did not show an increase in its growth rate, and by the end of the decade total per capita debt came to equal per capita personal income for the first time since 1961. This is a clear economic symptom demonstrating that the theory of "supply side economics," used by the administration to justify its policies, failed. Throughout the 1980s the majority party in the U.S. House of Representatives was the Democratic Party. In the Senate, the Republican Party was a the majority party from 1981-87, and the Democratic Party was the majority party from 1988 until 1995. So-called "Reaganomics" was a bipartisan policy despite political propaganda to the contrary.

In the 1990s during the administrations of the first President Bush and President Clinton, the growth rate in per capita federal debt was slowed down significantly (from approximately a 7.3% annualized rate over the 1980s to an approximately 1.7% annualized rate over the 1990s), with the result that total debt more or less kept even pace with per capita personal income throughout the decade. The Democratic Party was the majority party in both houses of Congress from 1991-95, and the Republican Party was the majority party in both houses from 1995-2001. Federal debt policy was, therefore, again a bipartisan policy. A significant factor in decreasing the rate of increase of federal debt was the end of the cold war brought about by the sudden and dramatic disintegration of the Soviet Union at the end of the 1980s. The decade saw a modest growth in corporate business receipts, mostly from 1996 to 2000, and a dramatic increase in business receipts for partnerships, accompanied by a strong profit recovery for partnership Enterprises. However, neither of these were matched by a like growth in either number of employed workers or in average earnings by workers.

The decade of the '90s was, economically, a watershed decade. With per capita debt keeping pace stride for stride with per capita income, this implies that half the U.S. population was able to sustain its standard of living and tangible Personfähigkeit, while the other half lost ground. How-ever, the fact that the growth rate in per capita personal income did not change and average earnings remained flat along with the population level of the employed labor force means that the distribution of personal income during the decade was not uniform. Some minority segment of

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the U.S. population saw gains in their personal wealth assets and tangible Personfähigkeit, but a larger segment of the U.S. population saw diminution of theirs. The data published by the Census Bureau does not make it possible to identify the groups who were benefitting, or by how much, but it does point to the groups who were not. The latter groups are in the supermajority of the nation's population. I call the 1990s a watershed decade because it marks a period beginning a new economic caste system in the United States.

In the decade from 2000 to 2010 federal debt accelerated once more to an annualized rate of about 5.6%. This was primarily due in part to large tax cuts and to a large jump in military expenditures brought on by the terrorist attack by Al Qaeda on the United States on September 11, 2001. It was exacerbated by the decision of the second Bush administration to expand the nation's military response beyond a war with those who had attacked the United States, especially in the case of the Iraq War. The war against Al Qaeda was justified and, indeed, was and is a Duty of the general government under the Constitutional general objective to provide for the common defense. The war with Iraq was not justifiable on these grounds because it was a war of aggression against a foreign power that had not attacked the United States. From 2001-2003, the Republican Party controlled the House of Representatives while control of the Senate was evenly split between the two parties. From 2003-2007 the Republican Party controlled both chambers of the Congress. From 2007-2009 control of the Senate was evenly split between the parties while the Democratic Party controlled the House of Representatives. From 2009-2011, the Democratic Party controlled both chambers. Debt policy during the first decade of the 21st century was, once again, a bipartisan product although for most of the decade (until 2007) it was dominated by the Republican Party.

Coincidentally with the upsurge in federal debt level, per capita personal income flattened and saw effectively no growth during the entire decade. Per capita federal debt surpassed per capita personal income for the first time since 1949 (the Korean War and initial phase of the cold war). Since the beginning of the 21st century, the gap between total per capita debt and per capita personal income has been steadily widening. This means that a growing majority of Americans are now in the position of seeing their level of real personal wealth and tangible Personfähigkeit in the decline. It also means that the government cannot resort to across-the-board increases in taxes without pushing the majority of Americans deeper into economic hard times.

It also means the United States can no longer afford to style itself a "superpower." From the day that total per capita debt surpassed per capita personal income, the United States has been a debtor nation. The words economist John Maynard Keynes had used to describe Great Britain at the end of World War II now also apply to the United States: "We are a poor nation, and we must learn to live accordingly."

§ 3. Corporations and Taylorism

If across-the-board tax increases are fiscally unsound for the wealth of the nation, what about raising corporate taxes? Here, too, the option is unsound. Figure 12.5 graphs total corporate debt in comparison to gross national product (GNP) in billions of 1967 dollars. Figure 12.6 graphs the portion of corporate debt due to credit market instruments (commercial paper, industrial revenue bonds, corporate bonds, some bank loans, other loans and advances, and mortgages). During M5 debt accrued through credit market instruments historically ran at about 50% ± 7% of total corporate debt. Census data does not clarify where the other half came from.

As I commented earlier in this treatise, in general the managers of corporations have behaved irresponsibly insofar as their policies of debt financing are concerned. During periods of growing GNP, corporate total debt has accelerated at a rate faster than GNP growth can support. In each case, when total corporate debt approached GNP this was followed by a prolonged period of hard

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Figure 12.5: Total corporate debt compared to GNP in billions of 1967 dollars.

Figure 12.6: Corporate credit market instruments debt in billions of 1967 dollars. Sources: Bureau of the

Census (1990, '93, '98, '04, '11) nos. 865, 854, 862, table 723, and table 751, respectively.

economic times for U.S. businesses. This occurred in 1930, again in 1970, and again in 2000. In 2000 total corporate debt surpassed GNP for the second time since records have been kept (the first was in 1935). As a consequence, the U.S. economy is now in uncharted waters.

Many but not all corporate credit market instruments involve long-term debt commitments. The figures published by the Census Bureau from one edition of the Statistical Abstracts to the next tend to show large variations ("revisions") in the data from year to year, and so figure 12.6 must be used only as a qualitative and semi-quantitative measure of corporate indebtedness. The figure shows that most of the increase in corporate debt due to these instruments during M5 came

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in two major installments of new debt acquisition: from 1983 to 1990 and from 1996 to 2000. The first coincides with the so-called "Reagan rally" in the stock market, which followed a recovery period in corporate bonds that saw bond prices rise and interest rates paid on bonds fall. The second coincides with the so-called "Clinton rally" in the latter half of the 90s, a period Chairman of the Federal Reserve Alan Greenspan called "a period of irrational exuberance." It appears, then, that corporate debt financing decisions are based upon speculation and emotion rather than on careful and rational economic planning by corporate so-called managers.

Corporate debt speculations generally failed to pay off for the borrowers during M5. Figure 12.7 graphs business receipts and net profits for corporations, proprietorships, and partnerships during M5. Corporate business revenues eked out an irregular and undulating series of gains from 1971 to 2008, rising from $1.57 trillion in 1971 to $4.23 trillion in 2008, an average of 2.7% per year. Net profits, however, oscillated in a range between $53.3 billion to $197 billion up to 2004 before taking a brief and unsustained spurt to a high of $333 billion in 2005 (all in 1967 dollars). The periods in which profit growth did occur were periods when corporate credit market instrument debt levels were more or less constant. Profits tended to fall during periods when corporations were engaged in acquiring new debt.

In contrast, proprietorships sustained consistent levels in both business receipts and net profits after adjustment for inflation. This is indicated by the sideway, flat movement of both in the figure. Partnerships exhibited by far the wildest dynamics during M5. For most of the period prior to 1990, partnerships maintained a ragged but more or less constant level of business receipts. From 1981 until 1987 they incurred net losses in profits before returning to profitability in 1988 and entering a dramatic and enormous surge in profitability from 1991 all the way to 2007 and the start of the "financial meltdown" in the financial markets in 2008.

Measured in terms of the ratio of net profit to business receipts, proprietorships again greatly outperformed corporations, as did partnerships except during the stretch from '81 to '87 when partnerships sustained net losses. Figure 12.8 graphs profits to receipts percentages during M5.

Figure 12.7: Business receipts and net profits for corporations, proprietorships, and partnerships from 1971 to 2008, expressed in billions of 1967 dollars. Note: In 1981 the Census Bureau changed its definition and

reporting of proprietorships. Therefore proprietorship data prior to and including 1980 is not strictly comparable to that from 1981 and beyond. The 1981 drop in proprietorship receipts is illusory.

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Figure 12.8: Ratio of net profit to business receipts, expressed as percentages, for proprietorships,

partnerships, and corporations from 1971 to 2008.

From 1979 to 1982 corporate profits-to-receipts ratio ranged from 5.1% to 2.2%. The ratio struggled back up to 3.8% in 1988 before dipping once more. From 1971 to 2008 corporate profit to receipts ratio averaged 4.41% within a range from a low of 2.2% to a high of 8.1%. In its best year (2005), the ratio was lower than the worst year for proprietorships (1980). In contrast, pro-prietorships turned in ratios ranging from a low of 10.9% (1980) to a high of 22.1% (2005). As a capitalist, I look at the corporations' performance and see wasted capital and misused resources.

Part of this waste is in salaries for those individuals whose lack of business acumen produces these pitiful results. Table 12.1 lists the median annual earnings of executive, administrative and managerial personnel from 1985 to 2010, both in current and in 1967 dollars. For comparison this group is set against professional specialty (non-management) employees, who constitute a second high-earnings group of people. Median annual earnings is the appropriate average to use here because the range of earnings in both groups is quite broad with the highest earners in the managerial group earning – well, being paid – up to twenty times or more the median earnings figures. Census Bureau data does not distinguish among first-level, middle level, and executive managers and administrators, but the hired-help EAM group took good care of themselves first.

Table 12.1

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Table 12.2

To help put these figures into perspective, Table 12.2 shows the U.S. distribution of after tax income strata for 1999 in 1999 and 1967 dollars and in terms of the per cent of total income. The data source is the Center On Budget and Policy Priorities, published in the Time Almanac 2000, pg. 838. The sources for table 12.1 are the Census Bureau Statistical Abstracts for 1998 (table no. 696) and 2012 (table 648). This places the groups in table 12.1 at or above the middle 5th strata of U.S. wage earners as this stood in 1999.

Table 12.2 tells you how the money is distributed but it does not tell you how the people are distributed. Table 12.3 provides this data for the year 2009 in both 2009 dollars and 1967 dollars. You can probably appreciate from these tables why this treatise normalizes economic figures to a reference year (namely, 1967). Inflation can be, and for many people is, a comforting narcotic when they look at their own economic situations in comparison, say, to how their fathers did. If you have such a habit, you might want to check your six o'clock in regard to inflationary effects.

The tabulated groups in table 12.1 fall into the upper 16% of the adult U.S. population. Those in the managerial group who hold executive positions in large corporations often fall into the upper 0.5% of U.S. citizens. A strong case can be argued that skillful first-level managers and administrators are well placed according to table 12.1 and their remuneration is appropriate. I'm afraid I can't say the same thing about the top-tier managers and administrators considering the profit performance results depicted above for U.S. corporations. It is the rulership of these individuals that is primarily responsible for the way corporations behave and for the performance they achieve. To put these seven-figure-income wage earners in perspective, the President of the United States currently is paid $400,000 per year ($61,240 in 1967 dollars). Do corporate chief executive officers or division general managers have a bigger, harder job than he does? I don't think so. Does the corporation make effective use of its capital under their rulership? No.

The phenomenon of the modern corporate manager is a predictable outcome of an uncivic paradigm of free enterprise and capitalism. In the first place, most of these individuals are not Carnegie-style capitalists; they have zero or very little of their own wealth assets invested in the companies they run. They might, and often do, have stock options as a part of their compensation package, but many of them turn around and sell this stock when they exercise those options. These are not the actions of a capitalist-owner; they are those of a wage earner entrepreneur.

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Table 12.3

If these managers and administrators were less than successful in the 1980s and 1990s, when their companies had the benefits of the Reagan-era tax cuts and those which followed in the years afterward, they won't be successful if corporate taxes are raised. It is much more likely they will babysit the corporate balance sheet and, since they apparently do not know how to raise a profit from success in the marketplace, they will raise apparent profits by laying off employees – precisely the opposite of the desired effect of revitalizing the economy of the United States. The paradigm they use is a ruler's paradigm, and kings and nobles do not voluntarily abdicate.

The simple fact is that the majority of corporate managers do not know how to lead their companies or even know what leadership is. There are, of course, exceptions to the general trend. I am acquainted with one still-fairly-small corporation in Pullman, Washington, whose CEO has so far proven to be a very capable corporate manager. But he is also the founder of the company and a true capitalist. It is also the case that his company is employee-owned. Schweitzer Engineering Laboratory is an Enterprise of capitalist entrepreneurs. I expect this company to remain successful for as long as it continues to be this sort of Enterprise. At another company with which I am acquainted – this one a Dow Jones Industrials company – the new CEO (they have been playing musical chairs for the past several years at this struggling company) sent out an employee questionnaire not too long ago asking, among other things, if the employees were happy and satisfied to be working at this company. The answer was, "no." His response was to scold the employees. This man is a putz. The company is failing; he doesn't know how to stop it.

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In the latter half of the 1980s and continuing up to the present a fad overtook American cor-porate managements. It involves exercises in setting so-called "visions and values" statements, "mission" statements, and "continuous process improvement" processes, "metrics," and "rubrics." These quickly became enshrined as "best management practices" throughout corporate America and from there leaked out into the government agencies as these tried to "act more like business does." What most of the enthusiasts of these lame and useless exercises apparently do not know is that all this has been tried before – specifically, from 1911 to the early 1930s. It was officially called "scientific management" and less officially called "Taylorism" (after Frederick Taylor, the guy who came up with it). By the mid-1930s it had been scientifically discredited. This pseudo-science failed the first time, and it is failing just as expensively this time. It does make a splendid example of wasting and misusing resources. Taylorism is the ruler's paradigm I spoke of above.

The so-called "best management practices" government agencies are so eager to try these days can be described in many terms, but "best" isn't one of them. "Ineffective" fits. In some corporate (and now government) cases, "stupid" is also an appropriate term. The best practices of management come from knowing your business, not from the folklore of ignórance spun by those who are merely eulogizing their own practices. The first fallacy is that appalling performances such as depicted in figure 12.8 are the result of "best practices."

Knowledge of the business is something most big-corporation managers lack. The now-classic study by Peters and Waterman, In Search of Excellence, provides a much fuller coverage of this topic than space or objective allows for in this treatise, and I refer you to it. The pertinent points of all this for this treatise are simply: incompetent corporate management is the product of inadequate tangible education; and incompetent corporate leadership [Wells (2010)] is the product of inadequate persuasion education [Wells (2012b)]. A slogan is not an education.

Proprietorships outnumber corporations by over a 3:1 ratio (figure 12.9), but corporations employ by far the greater number of Americans. Figure 12.10 graphs the number of business establishments according to class ranges of number of employees at the firm. Figure 12.11 graphs the total number of Americans (in thousands) employed in the different classes of business firms. There are around 1 million class 6 establishments (> 500 employees) vs. approximately 60 million class 1 establishments (0-4 employees), but the class 6 firms account for around 60 million American workers. (A firm is an entity comprised of one or more establishments).

Figure 12.9: Number of proprietorships, partnerships, and corporations, 1971 to 2008. Source: Census

Bureau Statistical Abstracts for 1977 (table no. 892), 1985 (no. 868), 1989 (no. 846), 1990 (no. 858), 1991 (no. 860), 1993-'94 (no. 847) and 2012 (table 744). Note the data break between 1980 and 1981.

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Figure 12.10: Number of U.S. businesses grouped according to employment class. Class 1: 0-4 employees; Class 2: 5-9 employees; Class 3: 10-19 employees; Class 4: 20-99 employees; Class 5: 100-499 employees;

Class 6: 500 or more employees. An establishment is a business entity at a specific geographical location with an active payroll. Source: Census Bureau Statistical Abstract 2012, table 762.

Figure 12.11: Number of employees (in thousands) employed by establishment classes.

It is the dominant economic position of Class 6 as an employer of wage-earner entrepreneurs that makes lack of sound economics education such a ominous threat to the nation. The nearly universal attitudes and prejudices of Taylorism cannot be argued to be proven practices because the establishment of industrial America was not accomplished by hired-help managers. It was done by capitalists. Of these, there were a few large-capital so-called "captains of industry" who set the U.S. firmly into the habits and prejudices of uncivic free enterprise – Carnegie, Rockefeller, J.P. Morgan, Pullman, et al – and, in a sense, the uncivic corporate manager was the pupil of the uncivic capitalist. Taylorism in the form of vision statements, rubrics & metrics, and the like is merely the annoying, unproductive, and tangibly visible tip of so-called rationalism in the failed theories of Max Weber and Frederick Taylor. The destructive prejudices of Taylorism run deeper than these childish and annoying fad practices. Peters and Waterman present a list of the prejudicial maxims that typify and define the Taylorite in business enterprise:

The old rationality is, in our opinion, a direct descendent of Frederick Taylor's school of

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scientific management and has ceased to be a useful discipline. Judging from the actions of managers who seem to operate under this paradigm, some of the shared beliefs include:

• Big is better because you can always get economies of scale. When in doubt, consolidate things; eliminate overlap, duplication, and waste. Incidentally, as you get big, make sure everything is carefully and formally coordinated.

• Low-cost producers are the only sure-fire winners. Customer utility functions lead them to focus on cost in the final analysis. Survivors always make it cheaper.

• Analyze everything. We've learned that we can avoid the big dumb decisions through good market research, discounted cash-flow analysis, and good budgeting. If a little is good, then more must be better, so apply things like discounted cash flow to risky investments like research and development. Use budgeting as a model for long-range planning. Make forecasts. Set hard numerical targets on the basis of those forecasts. Produce fat planning volumes whose main content is numbers. (Incidentally, forget the fact that most long-range forecasts are bound to be wrong the day they are made. Forget that the course of invention is, by definition, unpredictable.)

• Get rid of the disturbers of the peace – i.e., fanatical champions. After all, we've got a plan. We want one new product development activity to produce the needed breakthrough, and we'll put 500 engineers on it if necessary, because we've got a better idea.

• The manager's job is decision making. Make the right calls. Make the tough calls. Balance the portfolio. Buy into the attractive industries. Implementation, or execution, is of secondary importance. Replace the whole management team if you have to to get implementation right.

• Control everything. A manager's job is to keep things tidy and under control. Specify the organization structure in great detail. Write long job descriptions. Develop complicated matrix organizations to ensure that every possible contingency is accounted for. Issue orders. Make black and white decisions. Treat people as factors of production.

• Get the incentives right and productivity will follow. If we give people big, straightforward monetary incentives to do right and work smart, the productivity problem will go away. Over-reward the top performers. Weed out the 30 to 40 per cent dead wood who don't want to work.

• Inspect to control quality. Quality is like everything else; order it done. Triple the quality control department if necessary (forget that the QC force per unit of production in Japanese auto companies is just a third the size of ours). Have it report to the president. We'll show them (i.e., workers) that we mean business.

• A business is a business is a business. If you can read the financial statements, you can manage anything. The people, the products, and the services are simply those resources you have to align to get good financial results.

• Top executives are smarter than the market. Carefully manage the cosmetics of the income statement and balance sheet, and you will look good to outsiders. Above all, don't let quarterly earnings stop growing.

• It's all over if we stop growing. When we run out of opportunities in our industry, buy into industries we don't understand. At least then we can continue growing.

Much as the conventional business rationality seems to drive the engine of business today, it simply does not explain most of what makes the excellent companies work. [Peters & Waterman (1982), pp. 42-44]

Every single one of the maxims Peters & Waterman document in this list is wrong. By this I mean every one of them fails to work in the real world of people and enterprises. The prejudices of Taylorism lead individuals, appointed to authority figure positions as managers, into deluding themselves with a false belief they are rulers of a petty realm; in reality the job is just another specialized contributor in an intricate division of labor. It is, psychologically, not surprising that a

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great many corporate managers behave as if they were kings of petty Mesopotamian despotisms. Followers of the Taylorite prejudices waste capital and kill productive enterprise.

I discuss the Critical aspects of organization governance and company management elsewhere [Wells (2010)]. Peters & Waterman go on to describe where the Taylorite prejudices go wrong and why they fail in the business world [Peters & Waterman (1982), pp. 44-54]. The points they make can be summarized as follows:

1. Its numerical, analytical component has an in-built conservative bias. Cost reduction becomes priority number one and revenue enhancement takes a back seat; (Taylorites blow at least 1 out of every 2 dollars of what should be profit);

2. Exclusively analytic approaches-run-wild lead to an antisocial philosophy; Taylorite rulers disintegrate Enterprise Communities into Toynbee proletariats;

3. Taylorism is predominantly negative; Taylorites blame others for their failures;

4. Taylorism does not value experimentation and abhors mistakes; micromanagement is a symptom of this;

5. Its anti-experimentation bias leads inevitably to over-complexity and inflexibility;

6. Taylorism does not celebrate informality and leads to management by edict ("control everything; make the tough decisions; issue orders; tell, don't ask");

7. Taylorism denigrates the importance of values; without values you have nothing;

8. There is little place in Taylorism for internal competition (i.e., peer pressure);

9. The analyze-the-analyzable bias is ultimately fatal; it ignores essential intangibles.

It is not capitalism that brings discredit to free enterprise nor which, per se, perpetuates uncivic free enterprise. The prejudices of Taylorism – the underlying premises of which are as ancient as the first bandit kings of prehistory – do that. It is Taylorism that gives business a bad name among some. It is Taylorism that poisons and kills civic Enterprise Community. It is Taylorism that blocks the reversal of the ominous economic trends of M5 – trends which, if not reversed, will eventually lead to the collapse of the American economy and the fall of American civilization. Curing Taylorism is, among many challenges, one of the most important and urgent immediate goals for public education because, like plague, its attitudes infect nearly everyone of every political persuasion who comes into contact with it.

Taylorism is perhaps the dominant crisis issue of M5, all the more because, overwhelmingly, those who are honestly trying to better the U.S. socio-economic condition are, without knowing they are doing so, presuming and attempting to apply the failed tenets of Taylorism. I encounter this everywhere I look in big-corporation entities and, now, in agencies of government at the state and federal level. The magnitude of the crisis can perhaps be better appreciated by examining on a percentage rather than a headcount basis the number of U.S. employees who are trapped into having to participate in Taylorite uncivic enterprises. Figure 12.12 graphs the percentage of the U.S. labor force by workforce size class (classes 1 through 6 of the earlier figures). Fifty percent of working Americans are employed in class 6 corporation entities – and these are the rotting core of Taylorism in the United States.

§ 4. The Self-Employed Entrepreneur

Of the 139 million people age 16 and above in the 2010 U.S. civilian labor force, 9.68 million people were self-employed. This figure will include both proprietors who list themselves as such on their income tax forms and people who simply engage in their own private enterprises without

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Figure 12.12: Percentage distribution of U.S. workers by size-of-workforce classes of business

establishments in the United States. For key see figure caption for figure 12.10.

Figure 12.13: Self-employed persons, their occupational distribution in the U.S. civilian labor force, and total civilian labor force (black diamonds) 1970 to 2010. Source: U.S. Census Bureau Statistical Abstracts

of 1993-'94 (table no. 637), 1998 (no. 661), 2004-'05 (no. 586), and 2012 (table 606).

bothering to give themselves the title of "proprietor" on their tax forms. Figure 12.13 graphs the population of self-employed entrepreneurs from 1970 to 2010 and their distribution among divers occupational classifications according to the Census Bureau's classification system. I think it would be valuable to know similar figures for self-employed entrepreneurs for the years prior to 1970 but, unfortunately, this is not a statistic the Census Bureau was attending to prior to the 1990s. These people are, however, the latter day heirs to the "rugged individualist" free enterprise

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entrepreneur of the American Colonial period. It is they, and not hired-help corporate managers, who still embody this icon of American folklore.

The census figures do not, and in practicality cannot, number all Americans who are engaged in the exercise of private free enterprise commerce. Many Americans – the number is not known to any reliable level of accuracy – simultaneously engage in both self-employed private enterprise and wage-earner joint enterprises. Your author belonged to this group. It is not difficult, as I said earlier in this treatise, to be a capitalist entrepreneur but in order to be one you must have capital to invest. For all those people who have none when they are starting out – which is the case of the vastly overwhelming majority of all people – wage-earning joint enterprise is the single most common tactic for acquiring startup capital.

I cannot emphasize too strongly that debt capital is not your capital. It is someone else's, and when you borrow their capital you morally commit yourself to a subtle form of indentured servitude to your creditor because the debt you incur limits your civil liberty of action. No one makes you do this. It is always your choice. The only debt an American incurs by indirect choice is the public debt his government incurs in his name, and here the choice most often comes, at the state and local levels, through bond elections. If you happen to live in the state of Idaho, there's a fair chance some of your share of the public debt is owed to me. Thanks. Please pay on time.

Federal public debt is another matter altogether. The indirection is far greater because the decisions to incur public debt rest not with America's allegedly-Sovereign citizens but, instead, with the ruling political party factions, neither of whom have shown any hesitation since 1980 about increasing your public debt burden. It has become popular in the past several years for opponents of raising the federal debt to use the propaganda line that the (pick your preferred) Party is "mortgaging the future of our grandchildren." No, this is not so. They are mortgaging your future. You cope with your public debt by selling your children and grandchildren into indentured servitude when you pass your debt on to them. It is up to you whether or not you are going to be a responsible citizen and face this unpleasant fact. Between 372 and 378 AD, starving Goths living within the borders of the Roman Empire sold their children into slavery for crusts of bread and joints of dog meat. In contrast, you are likely not starving and face the choice of selling yours, or not, for pieces of eight.

Some fraction of self-employed Americans – the number is not known but it would not be surprising if it is a large fraction – are people whose self-developed personalities lie on and between the individualistic and tectly processive axes of the D-PIPOS circumplex (reproduced for convenience of reference as figure 12.14), a region of personality that includes the antisocial axis. Based on a limited number of such individuals I have studied, I hypothesize that a majority of them tend to have self-developed practical maxims of Self-respect that preclude willingness to be perceived as working to serve other people, who have a more narrowly-structured manifold of rules of practical Reason in regard to maxims that compel them to seek to control their external situation with respect to other people, and whose self-developed personal moral codes are heavily biased in favor of those people they include in their personal societies with an accompanying lack of moral concern for those excluded from their societies. This does not make them "bad people"; on the contrary, when their self-interests harmonize with the self-interests of others, they tend to be among the most deontologically moral members of selected mini-Societies and form strong if generally more abstract tenets of Self-Obligation to reciprocal Duties and relationships. If you take the trouble to understand and respect their personal moral codes, they can be among your strongest and most reliable friends. Benjamin Franklin can serve as the poster boy for this class of personality types. By contrast, interpersonal operationalizations in the workplace displayed by Taylorites are clustered more tightly around the antisocial axis of the D-PIPOS circumplex, regardless of these individuals' personality style and characteristics outside the workplace. Andrew Carnegie was a public Expressive but as a businessman he had a Driver personality.

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Figure 12.14: The D-PIPOS circumplex model of personality-interpersonal-operationalizations styles.

Refer to chapter 1 and to Wells (2012a), chapter 8, for technical details.

There were 22.6 million proprietorships reported for 2008 (figure 12.9); the number of self-employed persons reported for that year was 10.1 million. I have not been able to untangle the data presented by the Census Bureau to the point where a relationship between proprietorship businesses and self-employed entrepreneurs can be reliably established. A cross correlation calculation between the number of proprietorship businesses reported and self-reported self-employed individuals covering the period from 1985 to 2008 returns a correlation coefficient of only 0.4297710, from which we can conclude only that there is no linear relationship function relating non-farm proprietorships and individuals who report being self-employed. In some ways this is a counterintuitive outcome but there are some possible mediating factors. One is that self-employed individuals are likely to occupy only the smallest class (class 1) of business enterprises, employing few to no other people, whereas proprietorships do contain businesses falling into some of the other smaller business classes. Another is that some unknown fraction of self-employed individuals are known to practice handyman-like occupations doing miscellaneous jobs for hire, a category census statistics do not cover. A third possible factor is that many self-employed enterprises net only a modest to low earnings level, which might prompt instability in the self-employed population pool by which the appearance of a steady-state population level from 1988 to 2008 is merely illusory (as many newly self-employed individuals entering the pool as former self-employed individuals forced to leave it take employed wage-earner employment). All in all, the phenomenon of self-employment raises a number of pertinent and possibly very important economic questions that current data collection is inadequate to answer.

It is, however, almost beyond reasonable doubt that some number of proprietorships are owned by individuals who either report themselves as self-employed or who share personality traits with self-employed individuals. Inasmuch as proprietorships have exhibited an unbroken record throughout M5 of outperforming corporations in capital and resource utilizations, there is a

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Figure 12.15: Wage-earner population (in thousands) categorized by occupational population groups, 1970

to 1997. Sources: Census Bureau Statistical Abstracts for 1993-'94 (table no. 660) and 1998 (no. 685).

significant possibility that thorough social-natural scientific study of proprietors and self-employed individuals might yield information of high educational value for public instructional education purposes, including adult education. Public school teachers are likely providing their pupils with valuable educational Self-development opportunities when they invite local small businessmen to come into the classroom and talk with the children. I cannot say the same thing about bringing in corporate managers except perhaps those in first- or second-level management or supervisory occupations. Exposing children to CEOs or general managers is civically unwise.

§ 5. Earnings in M5 (1970-1997)

Earnings data for M5 must be analyzed in two installments, the first covering the years 1970 to 1997 and the second covering 1998 to 2010. This is because in 1998 the national classification system for industries was changed. The change was significant enough that earnings series data from 1998 forward are not comparable with earnings series data from 1997 backward in time. Thus earnings information is dealt with in two phases, with this section covering the 1970-1997 period and the next section covering 1998-2010.

Figure 12.15 graphs the number of employees working in different industries based on sizes of populations. Group A, the most highly populated group, is composed of the manufacturing, retail trade, services, and government sectors of employment. This stratum encompasses those industries in which the workforces exceed 10 million employees each. Group B is composed of the finance, insurance & real estate (FIRE), wholesale trade, construction, and transportation & public utilities sectors. The industrial populations in Group B are those between 1 million and 10 million employees. As figure 12.15 further shows, the sectors in Group B stratify in a narrow band with a width of about two million people. Group C, major industrial sectors employing fewer than 1 million people, is comprised of just one sector, namely the mining industry. Mining is one of the oldest industrial classifications. But, because the population of mine workers as a percentage of the total employed civilian labor force has become so small, you might think this

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classification should cease to be individually distinguished as a major economic sector. In point of fact, that is precisely what happened when the 1998 classification system was put into effect. This is the last time you will be seeing miners treated as a separately identified class of workers. They are now an officially ignored mini-Community3.

The employed civilian labor force covered by these industry groups totals to 122.7 million people out of a total employed civilian labor force of 129.6 million people in the year 1997 [Bureau of the Census (1998), table no. 644]. Total U.S. non-institutional population that year was 203.1 million out of an overall U.S. population of 267.9 million people [ibid., no. 2]4.

The first thing to notice in figure 12.15 is that, although growth in the employed population was not rapid from 1970 to 1997, there was growth taking place. Close examination of year-by-year data shows this tended to happen in brief spurts of three to four years followed by three-to-four years of flat levels (no or near-no growth or decline). There is not much peak to peak variation from year to year, and so the "filtering effect" that arises in decennial sampling is not large. In the decennial years of 1975, '85', and '95 the overall employed population is well fit by the decennial modeling function

( ) ( ) million021259.0163373.77;9973578.0:19951975 1975−+⋅==− yyER .

Closer examination on a year-to-year basis nets only slight changes to the picture this fit function presents, with 1985-'89 giving an R = 0.9981221 and a growth rate of 2.67% vs. the decennial average of 2.13%. In comparison, decennial growth rate in overall U.S. population from 1970 to 2010 shows a fit function with R = 0.9962770 and an annual growth rate of 1.49% per year. Thus, the overall civilian labor force was growing at a rate slightly but significantly faster than the rate of overall population increase in the U.S.

In Group A, all sectors except manufacturing showed some growth at irregular rates with "growth spurt" and "flat" years. The service sector showed the most growth over the entire period from 1970 to 1997, increasing by a statistical (not natural-process) annualized growth of 4.3%. Retail trade and government exhibited annualized statistical growth rates of 2.6% and 1.7%, respectively. Manufacturing jobs showed a decline at an annualized statistical rate of 1.4%. One can see in these numbers the shift from a manufacturing toward a service economy discussed in the previous chapter. As you will see shortly, this does indeed correspond to declining economic welfare (reduced real earnings) for the U.S. population – precisely as Adam Smith said it would in Wealth of Nations.

Group B exhibited a similar but more undulating history. Populations in this group stayed tightly bunched throughout the period and, statistically, this group is to be treated as a pooled whole. Group B's annualized statistical growth rate from 1970 to 1997 was 1.8% per year. As you will see shortly, all constituent sectors of Group B saw declines in real earnings over this period.

Finally, population Group C undulated in a range with no overall net growth or decline over the period. However, and alone among the three groups, miners saw an increase in real earnings. 3 The concept of mini-Communities is one born of the new social-natural science theory. It is for this reason, and not for reasons of willful neglect, that the Census Bureau and other agencies do not organize their data by mini-Community factors. However, because the challenges posed by mini-Communities are the most formidable ones any Society faces, a new paradigm is needed for reporting national statistics. 4 The non-institutional population excludes children under age 16, prison inmates, and other individuals "not available for work." In 1997 there were 66.8 million people "not in the labor force" and 6.7 million unemployed people who were "in the labor force" but are not counted as being in the employed labor force. If you look carefully, you will find that people counts reported in different tables in Statistical Abstracts do not always total up to the same number, with discrepancies having an about 1% measurement noise.

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Figure 12.16: Average weekly earnings in 1967 dollars for the Group A population by industry. Also shown is the mean weekly earnings for all groups in the employed civilian labor force. Government

workers are not shown in this graph because earnings for this sector is not reported in weekly terms and some government occupations (e.g. teachers) cannot be meaningfully stated in terms of weekly earnings

because the work is seasonal. Teachers, for example, typically are employed only 9 months out of 12. State legislators are paid a salary only for when the legislature is in session. Data sources: Bureau of the Census

Statistical Abstracts for 1977 (table no. 668), 1982-'83 (no. 665) and 1993-'94 (no. 660)

Figure 12.17: Estimated equivalent weekly earnings for state and local government employees calculated as total payroll divided by total number of employees. This data is only approximate because it is based on a one month snapshot of state and local payrolls in each year (specifically, October). Data includes salaries of elected and appointed officials of government as well as regular government employees. Source: Bureau

of the Census Statistical Abstract for 1998 (table no. 530).

Figure 12.16 graphs estimated average weekly earnings for Group A employees, excluding government employees, in 1967 dollars. Also shown is the average weekly earnings for the civilian labor force as a whole. The first thing of note is that, overall, non-government wage earners failed to keep up with inflation over the period with real earnings declining by roughly 10% from 1970 to 1997. Two of the three constituents earned less than the national average.

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Figure 12.18: Estimated equivalent weekly earnings for federal employees in 1967 dollars. These

statistics are slightly overstated because the average includes the salary of the President of the United States, Cabinet and other officers, Supreme Court Justices, and members of the U.S. Congress. Source:

Bureau of the Census Statistical Abstract for 1998 (table no. 560).

Manufacturing workers lost the least ground in inflation-adjusted earnings while employees in retail trade lost the most ground. Changes in employee earnings in the services industry more or less matched those in manufacturing at roughly $35 dollars per week less (in 1967 dollars).

Estimating earnings for government employees are much more speculative because these are not reported in equivalent weekly figures and the published statistics treat government employees far differently from how earnings are reported for the private sector. Figure 12.17 provides a rough estimate of equivalent weekly earnings for state and local government employees. The figure is probably biased slightly high because it includes the salaries paid to elected and appointed state and local officials (governors, mayors, legislators, department heads, etc.). As an overall trend, state and local wage earners eked out a slight gain in real earnings in the 1970s to late 1980s and thereafter maintained real earnings power after adjustment for inflation. Earnings for this segment were comparable to those of manufacturing employees.

Federal employees had the highest equivalent weekly earnings. Figure 12.18 graphs this data. However, again, you must be cautioned that these statistics are biased by inclusion of the salaries of elected and appointed top officials in the Executive, Legislative, and Judicial branches of the federal government. Like for state and local employees, federal earnings data are reported in a different (and not always clearly consistent) way than data for other groups in the Statistical Abstracts. Nonetheless, it is almost beyond reasonable doubt that this group of wage earners is much better off than those of the other sectors. Federal employee earnings oscillated up and down over the period but, on the average, held their level in the face of inflation.

Average weekly earnings for Group B from 1971 to 1997 are displayed in figure 12.19. This group fared relatively worse than employees in Group A. Real earnings declined for this group, with the exception of the finance, insurance and real estate sector, although all four constituents ended the period with real earnings above the national average. Construction workers fared the worst, with real earnings declining about 27% from 1972 to 1997 (an annualized statistical rate of about 1.2% decline per year). From 1991 all sectors were able to maintain earnings, keeping up with inflation, and the finance, insurance, and real estate sector managed a 10% gain in real earnings between 1990 and 1997.

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Figure 12.19: Average weekly earnings in 1967 dollars for the Group B population by industry.

Figure 12.20: Average weekly earnings in 1967 dollars for the Group C population.

Finally, figure 12.20 displays real weekly earnings for the miners' group. This population had the strongest earnings performance of all sectors with the exception of federal employees. It was, however, the smallest population group, comprised of fewer than 1 million wage earners or about one-half of one percent of the civilian labor pool.

The first two and a half decades of M5 was generally a period of real earnings stagnation for the great majority of the U.S. population. It was, at the same time, a period of high inflation such that the average wage earner would have seen his dollar earnings rise steeply but without the sort of improvement in his purchasing power the typical person would have been expecting his higher apparent income to have provided. For a full 50% of the employed civilian labor force, real earnings actually declined in this period by more than 10% between 1971 and 1997. At the same time, the average unemployment rate had climbed 1.8% from its M4 average rate to 6.3%. During the years from 1971 to 1997 the short term average was even higher, at roughly 7%.

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Figure 12.21: Employed civilian labor force population (in thousands) in Group AA. Sources: U.S. Census

Bureau Statistical Abstracts for 2004-'05 (table no. 611) and 2012 (table no. 630).

Speculatively, it is likely the stagnant, and for many worsening, economic picture played a major factor in the Democratic Party's recapture of control of the Senate in 1987 and the surprise defeat of President G.H.W. Bush by Arkansas governor Bill Clinton in the 1992 general election, despite Bush's successful conduct of the first Iraq war in 1991. Speculatively but reasonably, the failure of any general improvement to the U.S. economy in the first two years of the Clinton administration very likely was a major factor in the solid defeat of the Democratic Party in the 1994 midterm elections, when the Republican Party recaptured control of both houses of Congress. This, however, failed to produce any improvement in the economic picture.

§ 6. Earnings in M5 (1998-2009)

In 1998 the classification system used by the Census Bureau was changed and it is not possible to continue a direct comparison based on the old industry classes for the remaining years of M5. However, industry sectors in the new classification system can still be grouped according to population strata and the Census Bureau did provide some backward-looking data by which it is possible to "splice" the two parts of the M5 economy together on both sides of 1998 to obtain a general picture of the last two decades of M5. I call the three major population strata Groups AA, BB, and CC, respectively by population levels in the employed civilian labor force. These three groups account for 70.7% of the employed civilian labor force. Government employees account for an addition 17.4% of the employed labor force and constitute a fourth Group.

Figure 12.21 illustrates population levels in Group AA, the highest population stratum. This Group is comprised of wage earners in the manufacturing, retail trade, accommodation and food service sectors, and the health care and social services sector. Also shown in the figure is the total employed civilian labor force population from 1990 to 2010. The total employed labor force eked out a slow rise from 109 million to 130 million workers from 1990 to 2010, a statistical annualized increase of 1.0% per year.

Over the 20 year period shown, the manufacturing sector decreased in population, falling from

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Figure 12.22: Employed civilian labor force population in Group BB.

a high of 17.7 million people to 11.5 million in 2010. Retail trade underwent a slow oscillating stagnation in population with a sharp decline from 15.3 million workers in 2008 to 14.4 million in 2010. Health care & social services was the "growth industry" of the period, rising from 9.3 million people in 1990 to 16.4 million in 2010, a 3% per year statistical increase. As you will see shortly, average earnings for this sector matched the national average earnings for the period. Accommodations and food service also witnessed an increase in population, rising from 8.16 million in 1990 to 11.1 million in 2010, a statistical increase of 1.6% per year. Neither sector exhibits the characteristics of a natural growth process. As you might have already guessed, the accommodations and food service sector is comprised of food preparers, cooks, bartenders, fast food restaurant counter attendants, dishwashers, waiters and waitresses, and similar types of occupations. It is the lowest-earning sector in all four groups with average weekly earnings of less than 50% of the national average. The health care sector is primarily comprised of medical, dental, and other health care office personnel, hospital and nursing staffs, and residential mental health and community care services. It does not include physicians or dentists. The social services sector is comprised of social assistance occupations including emergency and relief services, vocational rehabilitation services, and child day care center services.

Figure 12.22 graphs populations by sector for the medium population stratum, Group BB (the construction industry, professional and technical services, finance and insurance, and ad-ministrative and waste management services). The populations for all four sectors of this group is tightly bunched with effectively no overall job growth. With the exception of the administrative and waste management sector (office administration services, employment services, travel and reservation services, investigation and security services, waste collection, and waste treatment and disposal), this Group contains the highest-earning occupational sectors. The group as a whole accounts for 20% of the employed civilian labor force.

Figure 12.23 graphs populations by sector for the lowest population stratum, Group CC (the transportation and warehouse sector, the information sector, and the wholesale trade sector). Two of these three sectors are familiar enough from the previous epochs. The new sector, information, is a collection of the non-internet publishing, entertainment, telecommunications, data processing,

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Figure 12.23: Employed civilian labor force population in Group CC.

Figure 12.24: Average weekly earnings in 1967 dollars for Group AA wage and salary earners. Source:

U.S. Census Bureau (2011), Statistical Abstract of the United States 2012, table 630.

and hosting services (e.g., dating services). Beginning in 1999, the population has fallen in all three sectors, with the most rapid decline coming in the information sector. Like Group BB, this Group also represents occupations with higher-than-national-average earnings. This Group comprises 9.5% of the employed civilian labor force.

Figure 12.24 graphs the average weekly earnings for Group AA wage earners from 1990 to 2010. Real earnings for the manufacturing and the accommodations and food service sectors remained flat from 1999 to 2010, while those of retail trade workers declined. Only the health care and social services sector saw an increase in real earnings in the last decade. The represented

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Figure 12.25: Average weekly earnings in 1967 dollars for Group BB wage and salary earners.

population totals 53.4 million people in 2010, all of whom earned less than $120 per week in 1967 dollars and only 27.9 million of whom earned more than the average weekly earnings for all industries. (Industry average real weekly earnings did increase from $87.50 in 1995 to $92.70 in 1999, and again from $94.30 2008 to $97.50 in 2010 despite the 2008 financial crisis that began in the mortgage lending industry.) All members of this group who do not own current-money-income5 producing capital assets fall into the lower 70th percentile of Americans, age 16 years and older (see table 12.3). A precise count is unavailable, but it would include most of this Group.

Figure 12.25 graphs average weekly earnings in 1967 dollars for Group BB. Except for the ad-ministrative & waste management sector, the sectors in this Group outperformed industry average earnings. (Data after 2003 for the finance & insurance sector was unavailable from the source). This Group accounts for 18.6 million Americans earning more than the industry average. For the three higher-earnings sectors, earnings put them in the upper 30th percentile of the distribution of

5 In addition to wages and salaries and/or net self-employment income, money-income assets and sources include: social security payments; dividend, interest and trust income; rental income; public assistance or welfare payments; unemployment compensation; pensions and annuities paid out to the individual; and alimony income [Bureau of the Census (1976), pg. 286]. By "current" money income, I exclude tax deferred retirement accounts for non-retired persons (because these do not produce actual money income accounted to the individual, thus incur no income tax liability). Excluding checking accounts, savings accounts, money market deposit accounts, money market mutual accounts (because their interest income is not significant relative to earnings), and retirement accounts (because they do not produce current income), in 2007 fewer than 24% of all Americans owned any money-income producing capital assets. 16.1% owned certificates of deposits; 14.9% owned savings bonds; 17.9% owned stocks and bonds, personally or held in street name at a brokerage; 11.4% owned pooled investment funds (e.g. "stock clubs"); 23.0% owned insurance policies with current cash value (a rather dubious capital asset); and 5.8% owned other managed assets (personal annuities or trusts with equity interest payments; managed investment accounts). These percentages are non-accumulative (they can not be added together). Source: U.S. Census Bureau (2011), Statistical Abstract of the United States 2012, table no. 1170. By the way, the house you live in is not a capital investment asset; it is a consumption asset unless you sell it and go live in a tent or under a bridge or in rented property somewhere. Your equity in it, however, is part of your financial net worth.

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Figure 12.26: Average weekly earnings in 1967 dollars for Group CC wage and salary earners.

money income (table 12.3)6. Earnings for the construction industry sector were more or less flat over the period but did increase for the other sectors with the finance and insurance sector making the largest percentage gain (so far as can be ascertained from the available data; the Census Bureau provided no explanation for why data on this sector was unavailable after 2003). The 7.4 million people in the professional and technical sector clearly outpaced the other sectors by the end of the 2nd decade. This sector includes: legal services; accounting and bookkeeping services; architectural and engineering services; specialized design services; computer system design and computer related services; management and technical consulting services; scientific research and development services; and advertising services. In 2010 these 7.4 million people were part of the top 20th percentile of the American money income distribution. Because of the seasonal nature of construction work, the 5.5 million construction workers are part of the lower 75th percentile (with the possible exception of any among them with significant money income from capital investments), and the 7.4 million administrative and waste management sector are in the lower 60th percentile of the money income distribution (again, with the possible exception of those who have significant money income from capital investments).

Figure 12.26 presents weekly earnings data for Group CC. This is the only non-government Group that finished the first decade of the 21st century with all sectors above the industry average for earnings. The 2.7 million people in the information sector (publishing, etc.) are placed, as an upper bound, in the lower 80th percentile of the money income distribution (again with the usual exception of those who have sufficient significant capital investment income). The wholesale trade sector's 5.5 million people likewise fall into this percentile. The 4.2 million people in trans-

6 This is a very rough approximation. As you know, half of the population counted in any average are below the mean value (which is what these figures present) and half are above it. Where I estimate the position of industry sectors within the money income distribution, the estimate is accurate only to the degree that the distribution of earnings in the sector is a tight distribution. The Census Bureau does not provide range data, but I think it is likely that the earnings distributions in each sector are broad enough that the estimate represents only an upper bound on the number of people within a stated percentile. The technical term "upper bound" means "it cannot be more than this number." It is an optimist's statistic.

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Figure 12.27: Estimated equivalent weekly earnings in 1967 dollars for wage earners in the federal, state,

and local government sectors. Source: U.S. Census Bureau (2011), table 461.

Figure 12.28: Number of people employed in the federal, state, and local government sectors. Key: FE =

federal civilian employee; SE = state government employee; LE = local government employee.

portation and warehousing are, again with the usual exceptions noted, placed in the lower 70th percentile of the money income distribution (as an upper bound). Earnings for this group were flat over the period except for gains by the 2.7 million member information sector.

Average approximate equivalent weekly earnings for state government and local government employees were tightly bunched (figure 12.27). Both sectors showed a mild uptrend in earnings from 1982 to 2009. The state employees sector in 2009 contained 5.3 million people (figure 12.28) while, understandably, local government employees added up to about 14.5 million people – the largest of any sector population except health care & social services. The highest earnings performance of any sector came in the federal employees sector (2.8 million people). However, I decline to make any estimation here of the money income percentiles for any of these sectors

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because the range of earnings in all three is known to be very broad. These sectors include elected officials and department heads paid at industry-executive salary levels, especially in state and federal government, alongside a fairly good-sized fraction of employees who earn only slightly more than minimum wage7. As I'm sure you can appreciate, the earnings differential between a state governor and the guy who cleans the toilets at the statehouse is, shall we say, enormous. It is an unfortunate, if strange, fact that the Census Bureau does not provide nearly as thorough a break-out of statistics in the case of government employees as it does for private sector industries and occupations. This is advantageous for anti-big-government propagandists, but it makes it very difficult to objectively assess the cost effectiveness of government and its agencies. Is there any wastage of public money by government agencies? Almost certainly the answer is "yes." Is there excessive wastage? That is an entirely different question and at present the available data supports no clear objectively-valid answer.

However, the large increase in earnings registered by the federal government sector between the years 2000 and 2005 does stand out as peculiar since this is the only sector that exhibited such a significant jump in earnings (10%) during a single lustrum in the last decade of M5. Whatever else one might care to say about the first term of the G.W. Bush administration, the data presents at least the appearance that it was a rewarding time to be a federal employee.

§ 7. Challenge and Crisis

That American Society is facing a Toynbee challenge is beyond reasonable doubt. The presence of a Toynbee challenge is always marked by perceptible and controversial changes in the mores and folkways of a Society. The same old ways of doing things and the same old ways by which people get along with other people in a common Society work with less and less effect until either these ways are changed or the Society disintegrates. If these ways are changed through non-violent adaptation and in such a way that the common Community is preserved, the Toynbee challenge is successfully met. If, on the other hand, it is effected by means of violence, civil war, and the perpetration of enormities upon some parts of the body politic by other parts of it, the challenge is not met, social breakdown ensues, and the Society falls from within. American Colonial Society fell and in its place the United States of America was established. Colonials who had remained loyal to Great Britain were violently driven out of the United States or persecuted to extinction. Societies never fall without somebody getting hurt.

American Colonial commercial Society broke down and fell in the 18th century during what I have called the Economy revolution. The old ways whereby all Americans (slaves excepted) could and did look forward to a future when they would be proprietors or independent farmers were gone in the aftermath of the Economy revolution, giving rise to an employer-wage earner class distinction. In many ways today's U.S. economy resembles that of Philadelphia at the time of the Economy revolution. This augurs that a major economic change of some sort is pending.

The landscape of history is littered with the corpses of once-thriving Societies that failed to meet their Toynbee challenges and are today as extinct as the passenger pigeon. Business and economics are not traditionally viewed from the same perspectives historians apply to ancient civilizations, but there is no doubt that the landscape of economic history is likewise littered with enterprises that once existed and thrived but are no longer around. Companies can and do decline and fall just as Societies do.

This should not surprise you. Think about why a company was originally called a "company"

7 The same is, of course, also true in the private sector. However, the number of general managers or CEOs is much smaller in comparison to non-supervisory workers than is the typical case in government sectors. In most government agencies, Taylorism has long been adopted with an enthusiasm that is almost fanatical.

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in the first place: because it was a common Society of entrepreneurs who chose to associate with one another for a common purpose (namely, to earn a living). That, my friend, is the essence of a Society. Commercial entities behave like Societies because they are Societies.

All folkways and moral customs are nothing more and nothing less than behavioral habits of interpersonal interactions that people have become comfortable with and which furnish satisficing rituals of behavior for maintaining a social state of equilibrium. Underlying every action taken by a human being is a practical choice determined by the person's process of practical Reason and judged in his process of practical judgment to be not-contrary and not-contradictory to the system of practical rules each person constructs for himself out of his past experiences. All specific possible acts of sensorimotor expression are adjudicated by the person's subjectively impetuous process of reflective judgment. Practical judgment merely compares the possible action with the person's manifold of rules to judge whether or not that action is lawful under the formula of the fundamental law of pure practical Reason. If it is not, the action is vetoed by practical Reason; if it does not violate the person's practical system of Self-legislation (his Self-constructed value system), motoregulatory expression of the action is permitted. One can say human beings do not so much possess free will as they do free won't. All this is a simple matter of the basic mental physics of human nature [Wells (2009)].

Folkways are those near-unthinking responses to stimuli that reflect similarity and practical compatibility in the practical laws Self-constructed by the greater majority of the members of a given Society. Those which are peculiar to particular mini-Communities can be properly called mini-folkways. A trivial example is the substitution of the phrase "How's it going?" in place of the older and more traditional greeting, "hello." The person who greets you with this phrase rarely wants you to actually tell him how things are going for you, just as in earlier times a person who greeted a stranger with "Good morning to you!" rarely cared if the stranger had a good morning or not.

We call this sort of behavior "being polite" and being polite is one of the more enduring mores8 in most Societies. In caste-riddled feudal Japan, when a social superior and a social inferior were interacting with each other, "politeness" dictated that the superior caste member would address the inferior rudely, while the inferior would address the superior with exquisite obsequiousness. If you were a feudal-age Japanese and you wanted to ask your social inferior, "What is happening?" you would use the insulting phrase, "Nan ja?" Expecting this, your social inferior would not feel insulted. If you were asking this of your social equal, you would use the polite phrase, "Nan desu ka?" If you wished to ask this of your social superior, you would first very humbly ask for permission to ask. Violating these customs could get you killed very quickly, and others would condone your killing. Such were the mores of politeness in feudal Japan9.

Every Society comes to adopt a usually-complicated tangle of more and folkway rituals. The observance of these promotes domestic tranquility and lubricates effective social intercourse. During times of Toynbee challenge, some significant portion of these begin to alter and the 8 One of the principal differences between a folkway and a more is this: If you violate a folkway, people tend to think you're odd or peculiar. If you violate a more, people tend to react with hostility. The former is judged contrary to lower-level practical maxims of behavior, the latter to those high-level tenets which go into constituting a person's private moral code. Every human being Self-constructs his own personal and unique moral code in his manifold of practical rules. This, too, is basic mental physics of human nature and it is why only a system of deontological ethics can be made objectively valid in any Society. 9 A fair-sized fraction of the student body attending American universities is comprised of students from other countries. One of the trickier challenges for a professor, if he wishes to be an effective teacher, is to learn how to adapt his professor-and-student intercourse to fit the different mores and folkways of the student's homeland. A typical foreign student knows as little about American mores and folkways as most Americans know about those of the student's country. For new professors it is a big learning experience.

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appearance of these alterations signals that some deeply rooted social change is happening. These do not, however, happen at a whim but, rather, because some part of the population experiences greater hindrances to satisfying their practical Duties-to-themselves. In a large Society where the individuals do not know most of its other members, the economics of that Society is its principal conveyor of mass interactions, most of which are always invisible to any particular person. New economic conditions tend nearly always to disturb large numbers of people in the conduct of their daily lives, and these disturbances eventually lead to alterations of how individuals bejudge10 their treatment by the rest of the Society.

If an individual judges that he is being hindered in his civil liberty to fulfill Duties-to-himself and Duties-to-others who make up the parts of his personal society he values most, he will hold these hindrances to be unjust, regardless of whether or not the action to which he attributes the hindrance is legal. If whatever-it-is-he-blames is not currently illegal, he will seek to have it made illegal. If it is currently illegal, he will accuse agents of his government of dereliction of Duty. If he thinks their transgression of Duty is intentional he will hold them to be criminals. If a law is passed making whatever-it-is-he-blames explicitly legal, he will accuse his Society of violation of the social contract (however he privately understands this contract); he will regard the law as an unjust law; and he will hold himself under no Duty-to-Society to obey it. This is the beginning of his moral secession from his Society and a nucleating event in the formation of a Toynbee proletariat. Understand this very clearly: to that individual, the issue has become a moral issue.

Economic conditions pertain immediately to the individual's capability of sustaining and perfecting the tangible power of his person (tangible Personfähigkeit). His tangible power always has an immediate bearing on his Self-constructed Duties-to-himself with regard to his situation. When his understanding of these Duties is grounded in his judgments about mores and folkways, changes in economic conditions produce changes in individuals' judgments about Society as a whole, about its mores and folkways, and about its social contract (as the individual holds this contract to be). Changing economic conditions, therefore, always have a great potential to bring on Toynbee challenges that threaten the continuation of the Society-as-a-whole.

Epoch M5 is such a time of challenge. In and of itself, stagnation in earnings, personal income, and business profits is neither socially good nor bad. It is contrary to social Progress but not to social Order, and social Order is the one sine qua non for the continued Existenz of a Society. It permits the Society to continue while its members seek for means to reinitiate Progress – which they will always seek because Progress is essential to the perfection of Personfähigkeit, and the drive to perfect Personfähigkeit is a primitive drive of pure speculative human Reason11. We call this drive "the pursuit of happiness."

The Toynbee challenge we are encountering in M5 is, therefore, not essentially an economic one. As an Object, the economy of a Society is merely a situation. It does not become a condition unless people judge it to be one. In the current context this more or less means "unless people judge the cause of their personal dissatisfaction to be 'the economy' or substitutes they hold culpable for causing the economic situation ('politicians,' 'the capitalists,' 'labor,' 'big business,' 'big government,' 'the Liberals,' 'the Republicans,' 'the unions,' 'the lawyers,' 'the Congress,' 'the President,' etc.)." They lay blame for causing disturbances to the blamer's state of equilibrium and the feelings of Unlust that accompany disequilibrium. Feelings of Unlust provoke counteractions.

10 to bejudge is to make an overall judgment about or concerning something. 11 Metaphysical note: "Perfection" is not a state one achieves but, rather, a goal that is pursued. To perfect means "to make more complete" and only absolute perfection – which no human being can expect to achieve with practical objective validity – would be a final condition. Absolute perfection means "complete in every respect and lacking nothing." But absolute perfection is an Hegelian fantasy. When I speak of perfecting Personfähigkeit, I mean making Progress in it, not bringing it to a state of absolute completion.

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It is a plain historical fact that large groups of human beings have tolerated situations of economic stagnation over very long periods of time provided they thought this was the common situation of everyone. Probably the premier extant example today is the Society of the BaMbuti Pygmies – a hunter-gatherer Society that, so far as we know, has remained unchanged for thousands of years and is probably the oldest Society on earth. We know, for example, that the Egyptians of the Fourth Dynasty circa 2500 BC knew about the existence of the BaMbuti because the tomb of Pharaoh Nefrikare contained a report from an expedition that had been sent out to discover the source of the Nile. The report wrote of the discovery of "a people of the trees, a tiny people who sing and dance to their god, a dance such as had never been seen before" [a reference to the BaMbuti's molimo ritual]. Homer, too, refers to them in The Iliad, where he calls them "the Pygmaean race."

An economy, therefore, is never the objective cause of a Toynbee challenge nor its real condition. It is always how people experiencing a time of challenge come to judge their situations that produces, or fails to produce, a Toynbee challenge. In 20th century America, one of the chief factors acting to turn M5's economic circumstances into a Toynbee challenge is a basic precept of Taylorite prejudice, namely, "It's all over if we stop growing." This and the other maxims of Taylorism are acting to turn economic circumstances into a full-blown Toynbee challenge, and these maxims are highly likely to turn the challenge into a crisis. A committed Taylorite who thinks "it's all over if we stop growing" ought to shudder to his core at the thought of what might happen to him if his fellow wage earners perceive that their personal profit has stopped growing.

What is a 'crisis'? Webster's Dictionary (1962) lists three definitions of the word, and the one that is pertinent here is, "a crucial situation whose outcome decides whether possible bad consequences will follow; as, an economic crisis." A crisis is a situation plus courses of actions taken because of the situation that produce some outcome – either an intended one or an anticipated one the action-takers had hoped to avoid by means of their actions. A situation does not "have" outcomes; ontologically, it is an Unsache-thing – a happening – and produces nothing in and of itself. Only actions of human agency have social outcomes, and economics is entirely a human social phenomenon.

Has America entered into a Society crisis already? I am inclined to think we have not if only because the agencies of government are currently paralyzed by inaction. However, I also think that there is not much time left to avoid entering into crisis and, as matters stand, any course of action made likely by traditional economic paradigms that I can foresee all lead to social disaster. Let me be very clear about the situation. We are already in a situation of economic stagnation, which means a circumstance of arrested Progress. By "social disaster" I mean the breakdown of social Order. Every remedy I have heard or read about now being discussed, whether it is coming out of a local coffee shop or Washington, D.C., is a traditional recipe based on historical and economic circumstances that are no longer present in the United States. It is the fact that the economic circumstances are different in M5 that will be the cause of the remedy's failure.

In M3 action by the federal government could be, and was, effective because there was a large gap between personal real income and public debt that provided sufficient flexibility for debt-based strategies to be employed over the short term to relieve the immediate circumstances presented during the Great Depression. Some Americans today, therefore, think that something like this will work again. It won't because during M5 public debt surpassed per capita personal income and the gap between the public debt and per capita personal income is widening. Again, debt limits civil liberty of action. Europe, which is sunk deeper into this circumstance than America is, is already painting us a picture of what 1930's paradigms will produce if responsible and socially just debt management and reduction is not effected. If even one mini-Community is singled out for sacrifice by the rest of them, the likelihood of civil war and a breakdown of Order is dangerously high. My friend, we are all in the same boat. Would you shoot a hole in its hull?

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General tax increases – another traditional tactic – will not work either and for the same reason. Debt is the great crippler of civil liberty of action, and when it is combined with the stubbornly adhered to failed precepts of Taylorism, increasing taxes on businesses or individuals-across-the-board will only act to reduce tangible Personfähigkeit for individual Americans and American mini-Communities and ignite internecine destructive competitions. This will mean that many people will be unable fulfill their Duties to themselves and to those closest to them in their respective personal societies – and that will produce breakdown in social Order. If the situation becomes too desperate for even a sizable minority of Americans, civil war is the nearly-inevitable outcome. And about one-third of Americans already belong, politically, to a Toynbee proletariat.

Attempting to spend our way out of the situation by increasing the money supply will not work either. That traditional tactic will only ignite further rapid inflation without increasing the economic stocks of the nation. Inflation is in one metaphorical sense a narcotic; individuals feel like they are making tangible Progress. But when they discover this is not so, because the cost of living is rising as fast or faster than their apparent incomes, the inevitable result is frustration and this is more than ample grounds to touch off a search for scapegoats – most of whom will in fact be entirely innocent. It will also destroy the asset value of personal savings and plunge many people – especially retired people – into desperate economic circumstances. The malignant effect will not remain confined to retired persons, either, because either they will call upon their personal family mini-Communities for assistance or else those family members will take it as Duty-to-themselves with regard to their persons (i.e., the deepest and most powerful sort of moral Duty) to come to the aid of their struggling parents and other elders, even at the expense of the welfare of their own children. In that case, don't expect them to care about your children. Or you. Drowning people in the water tend to overturn the nearby lifeboats holding other people.

Arching over all of this is the traditional tolerance of Americans for uncivic free enterprise. It is the uncivic character of this political prejudice that promotes and practically is a near-guarantee of breakdown in social Order. Uncivic free enterprise is an economic state-of-nature environment that is only partially moderated by the common mores of Society. But these mores will be among the first casualties if Order breaks down because they are at root founded in ontology-centered precepts of ethics. Such precepts are incapable of gaining the assent of every member of a Society, but where the common mores tear into shreds there is where civil wars begin. Uncivic free enterprise has been a tolerated circumstance since the time of the Economy revolution in the 18th century. Here in the 21st the bank account of toleration is almost drained. Uncivic free enterprise is, in the long run, incompatible with free and civil Society under a social contract. Need I say that America's tryst with uncivic free enterprise has had a long run? Civic free enterprise, on the other hand, is an entirely different matter and the only economic form that is not prima facie contrary to civil Community.

Traditional recipes also include an inclination for the members of a Society to call upon their government to "do something about" undesirable economic circumstances. The simple fact is: the professional politicians of political parties don't know what to do about the circumstances of M5. All they know are political recipes for gaining and maintaining the power to rule (rather than serve) the nation's citizens. This is why neither the Republican Party nor the Democratic Party has come forward with any plan acceptable to the general public, and it is why they take recourse to vilifying each other and launching propaganda campaigns against each other rather than "discussing the issues and finding workable compromises." They offer no solutions because neither party has any solutions to offer. For 189 years American political parties have been devoted to just one thing: acquiring and holding the power to rule. This they have done to a level of success that would have appalled George Washington. They control the mechanisms of elections, the rules of procedure in state legislatures and Congress, and have written into the laws of the country measures protecting their power to rule. They are, and have been since their

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inception in the 1820s, the principal antisocial factor of American Society, feared by Washington, Madison, Adams, and the Framers of the U.S. Constitution in Philadelphia in 1787.

If the United States is to avoid turning the Toynbee challenges of M5 into a full-blown national crisis – the likes of which have not been seen in this country since colonial times – it is going to require non-traditional solutions. Furthermore, these solutions must preserve social Order while means are being sought to reinitiate Progress because these latter means are unknown today. Traditional economics, and even much of what Adam Smith wrote about in Wealth of Nations, tends to lead some people into thinking that "the problem" is "scarcity of resources." Indeed, one modern era definition of economics is "the science of society's use of its scarce resources with reference to the extent to which they are used, how efficiently they are used, the choice between competing alternative uses, and the nature and consequence of changes in productive power of resources over time" [Lipsey & Steiner (1969), pg. 9].

But there is an unexamined presupposition one finds in how many people, including some economists, restrict this definition. This is the presupposition that "economic resources" are fixed natural things of some kind – an ontology-centered supposition. They are "scarce" because "there are only so many of them" and when the supply is used up, "that's all there is." This is the presupposition behind the commonly-found attitude of Taylorites that business is a zero-sum game. Adam Smith wrote about the following example circumstance:

In a country which had acquired that full complement of riches which the nature of its soil and climate, and its situation with respect to other countries, allowed it to acquire; which could, therefore, advance no further, and which was not going backwards, both the wages of labor and the profits of stock would probably be very low. In a country fully peopled in proportion to what either its territory could maintain or its stock employ, the competition for employment would necessarily be so great as to reduce the wages of labor to what was barely sufficient to keep up the number of laborers, and, the country being already fully peopled, that number could never be augmented. In a country fully stocked in proportion to all the business it had to transact, as great a quantity of stock would be employed in every particular branch as the nature and extent of the trade would admit. The competition, therefore, would be everywhere as great, and consequently the ordinary profit as low as possible. [Smith (1776), pg. 84]

To some people, this circumstance would seem to describe M5 with chilling precision. But does it? I will admit that under traditional paradigms and satisficing habits of thinking, it does. However, note that there is a subtle presupposition – what a mathematician would call a lemma – in front of Smith's situational theory. It is this: that some "full complement of riches which the nature of a country could acquire" is the concept of a real object of Nature. This would be so if an economic good were, as ontology-centered metaphysics has it, an object of physical-nature. But it is not and there are no objects of physical-nature that are economic goods per se. Any thing is an economic good if and only if human beings decide that it is.

Some economic goods, like food, water, shelter, and clothing, are so necessary to the maintenance of human life that they are called "necessities" for that reason. Look, however, at the astonishing variety of things that have served as food-objects, shelter-objects, or clothing-objects throughout human history12. The same thing is found, in even greater degree, with economic goods that do not fall into the classification division of being "necessities." Look at human history

12 There does appear to be, at least at present, no substitute for water. On the other hand, there has never been any scientific endeavor I have ever heard about whatsoever seeking to find a substitute for it. Water, for all its characteristics of necessity, has never been a profitable commodity, although systems for its transportation and distribution have been. Water was not one of the commodities forthcoming with the invention of agriculture. What about other kinds of drinks, you ask? Try making beer without water.

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instead of only economic history and you will quickly discover one important thing: economic goods are invented goods and always the product of technological developments. Smith's scenario quoted above only comes to pass when technology ceases to produce economic goods as an outcome. Not many people see a buggy whip as an economic good today; in the 18th century the livery of any prominent aristocrat's coach driver would not have been complete without one.

There is one fundamental grounding factor found in every fecund enterprise of science and of technology throughout human history. It is a primary social factor that is invisible or nearly invisible under ontology-centered precepts of economics but which becomes starkly clear and apparent under epistemology-centered metaphysics: The fundamental social purpose of science and technology is to provide a never-ending series of objects employable as economic goods and in such quantity that 'the full complement of riches a country can acquire' is never achieved. In the Middle Ages the concept that something called "information" was an economic good would have been dismissed out of hand. In 1998 a government agency decided there was an entire industry devoted to its production and distribution.

This is why I say corrective action to the Toynbee challenge of M5, if we are not to make the challenge into a real and quite likely deadly crisis, must discard traditional paradigms and be an approach using phased-in tactics. These must be aimed initially at maintaining Order to buy time to turn the efforts of science and technology to the task of restoring Progress. They must involve compromises. They must avoid authoritarian measures. Taylorite centralized control will fail and must not be attempted. Taylorite theories will fail and must not be used. Government actions must provoke constructive acts of leadership by ordinary citizens and associations of citizens. The actions must be broadly cooperative and enlist the active efforts of mini-Communities. My friend, there is no American so dull of mind that he does not know what is acceptable to him if a proposal is made in good faith, without deceptive propaganda, and with his active participation in designing those elements of it directly pertinent to his situation. The political party factions must set their antisocial competition aside, surrender their antisocial pretensions to rule, and act in the roles of statesmen, diplomats, and moderators in cooperation with and at the service of the Sovereign citizens of America. If they will not, if they persist in being part of the problem and not part of the solution, then let them be cast down for outlaws and enemies of the country.

If all this is to be achieved, there are formidable education challenges to be mastered. For this, we must first better understand: (1) why the institution of public education failed to provide needed educational Self-development experiences for the 20th century; (2) where the flaws of institution are to be found; and (3) what must be done differently for the 21st century.

Let this serve as my segue into chapter 13 and 20th century institution of education. What I will first show you is that the 20th century reforms were socially disastrous. They had a role in setting the stage for developments leading to epoch M5.

§ 8. References

Bureau of the Census (1976), The Statistical History of the United States from Colonial Times to the Present, NY: Basic Books, Inc.

Bureau of the Census (1977), Statistical Abstract of the United States: 1977, 98th ed., Washington, DC: U.S. Government Printing Office.

Bureau of the Census (1982), Statistical Abstract of the United States: 1982-1983, 103rd ed., Washington, DC: U.S. Government Printing Office.


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Bureau of the Census (1993), The American Almanac 1993-1994 Statistical Abstract of the United States, 113th ed., Austin, TX: The Reference Press.

Bureau of the Census (1998), Statistical Abstract of the United States: 1998, 118th ed., Austin, TX: Hoover's Business Press.

Lipsey, Richard G. and Peter O. Steiner (1969), Economics, 2nd ed., NY: Harper & Row.

Peters, Thomas J. and Robert H. Waterman, Jr. (1982), In Search of Excellence, NY: Warner Books.

Smith, Adam (1776), An Inquiry into the Nature and Causes of the Wealth of Nations, NY: Everyman's Library, 1991.

U.S. Census Bureau (2005), Statistical Abstract of the United States: 2004-2005, 124th ed., Washington, D.C.: U.S. Government Printing Office, 2005.

U.S. Census Bureau (2011), Statistical Abstract of the United States: 2012, 131st ed., Washington, D.C.: U.S. Government Printing Office, Aug., 2011.

Time, Inc. (2011), Time Almanac 2012, Chicago, IL: Encyclopædia Britannica, 2011.

Toynbee, Arnold (1946), A Study of History, abridgment of volumes I-VI by D.C. Somervell, NY: Oxford University Press, 1947.

Webster (1962), Webster's New Twentieth Century Dictionary of the English Language, Unabridged 2nd ed., Jean L. McKechnie (ed. in chief), Cleveland and NY: The World Publishing Co.

Wells, Richard B. (2009), The Principles of Mental Physics, available free of charge from the author's web site.

Wells, Richard B. (2010), Leadership, available free of charge from the author's web site.

Wells, Richard B. (2012a), The Idea of the Social Contract, available free of charge from the author's web site.

Wells, Richard B. (2012b), Education and Society, vol. I of The Idea of Public Education, available free of charge from the author's web site.

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chapter 12 details of epoch m5 - mrc.uidaho.edurwells/techdocs/the idea of...proletariat. this is...

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