The entire set of social relations of production can be broadly summarized into two things: production and predation. The less predation a nation has, the wealthier it becomes.
I. The Path to a Strong Nation
How can a nation become wealthy and powerful, dominating the world? By building a new aircraft carrier every month to crush rivals? It’s simple. The first law of economics is dT>0. As long as people are given freedom to engage in voluntary “transactions,” the more transactions occur, the stronger the nation becomes. Invincible.
But why are there so many defeated nations? Why are some countries poor and backward, despite knowing the prescription of dT>0?
Don’t just consider the Qing dynasty in 1840, which was unfamiliar with Western technology. Let’s talk about North Korea in 2015, located on another side of the globe. North Korea has almost all industrial technologies known to mankind. Coal, steel, fertilizer—its technological level is far superior to that of Britain in 1850. Why hasn’t North Korea developed? Why are people starving?
Because within these nations, there is another force at work, destroying production.
II. Production and Predation
From a current perspective, there are only two ways for humans to acquire material wealth: production and predation.
In terms of income, “predation” is undoubtedly much faster than production. The gap is ten times, hundreds, or thousands of times. A farmer works hard for a year to grow crops, but bandits can seize them in two hours.
But from the perspective of the entire society, “production” is the foundation. This is because predation does not create wealth. Robbing one another only makes the total resources of society dwindle. In the end, everyone starves.
Predation causes at least two layers of destruction:
Predation results in the loss of existing wealth, which falls into the hands of those who are not skilled in its use.
Predation reduces future production.
The more people engage in “predation” within a system, the fewer farmers there will be. Robbing back and forth, in the end everyone perishes together. In Wu Si’s The Unspoken Rules, he analyzes the cost-benefit ratio of bandits. Eventually, the proportion of bandits in a chaotic era reaches a certain threshold and will not everyone will become a bandit, but only a certain upper limit can be maintained.
Does predation exist in our modern society? Yes, it does.
III. The Cannibals
A professor traveling in Africa was unexpectedly captured by a tribe of cannibals. Just as he was in despair, he discovered the chief spoke English and had been his student at Cambridge. Overjoyed, the professor asked: “Now that you are civilized, you don’t eat human flesh anymore, do you?” The chief replied: “We do, of course. We just learned to use forks and knives.”
This story vividly tells us the elegance of “civilized people eating human flesh with forks and knives.”
What is predation? Going into a pasture and seizing a herder’s cattle and donkeys. That’s predation. Civilized people don’t do that. We use forks and knives. At most, we just raise the price of alfalfa by +25%.
For “civilized people,” the opportunity to openly rob someone’s home is rare. But this does not mean we don’t engage in predation. Predation is as old as production. It’s just more hidden and clever today.
For example, gasoline is a strategic material essential for daily transportation and food supply. But what if the state mandates that only two oil companies in the country can determine the quality and price of oil? This is effectively skimming money off you every day. Every time you fill your tank, you are “robbed” of a few hundred yuan.
For another example, a single bank like ICBC makes profits equivalent to the combined profits of China’s top 500 private enterprises. The bank’s profit mainly comes from a monopolistic interest rate spread. By slightly lowering your deposit rate and raising the loan rate, hundreds of billions in profit are generated. This is equivalent to “robbing” every Chinese person of a sheep.
These are just macro-level state-sponsored forms of exploitation. At the local level, exploitation is ubiquitous.
To open a company, the fire department requires you to use a specific consulting firm, or you won’t get approval. That’s exploitation. To open a restaurant, you have to appease every department: business, health, and consumer protection. That’s exploitation.
You want to offer a driving service, but the relevant department says you need a “license.” This is a prevention of transactions due to predation. This is a naked example of how predation destroys production.
To make a nation wealthy is easy: dT>0. Just increase the possibilities for transactions and cooperation. The more transactions, the wealthier the nation. When every possible transaction is made, the nation is at its wealthiest.
But how do you make a nation decline? By using predation to destroy production. When a nation is rampant with predation, everyone focuses on robbing others instead of serving others. Then the nation will naturally decline, its resources will be depleted, and its people will be impoverished.
Why are there defeated nations in the world? Why are some countries still unable to feed their people in 2015? Because predation is rampant within these countries! Poverty in a nation inevitably stems from evil within it. Without exception.
IV. The Logic of Government
The formula dT>0 can summarize almost all of economic knowledge. Many people would ask how predation can be included in this formula.
It’s simple. Just remember one thing:
Transactions are voluntary. Both parties are willing, so transactions increase wealth. Predation is involuntary. Because it’s involuntary, it reduces wealth.
Around October of last year (2014), there was a big debate in Chinese social media. It caused a huge stir on Weibo. The main point of contention was:
“A free market can provide everything, all goods and services, except one thing: the very foundation of the free market itself.”
What is the foundation of the free market? It is the absence of violence.
Two people meet voluntarily, agree, and a transaction is concluded. As long as it is “voluntary and non-violent,” social wealth increases. Any commodity, from airplanes to telephones to steam engines, can be invented. But once “violence” is involved, it reduces wealth. The free market cannot be established, and prosperity ends.
“Absence of violence” is the only thing the free market cannot provide. It is external to the market. It is the one solution the function cannot solve.
So how do we achieve “absence of violence”? Through long-term social practice, humans have discovered a way. As Chen Tang said in 36 BC, “I have heard that the great principle of the world should be unified.”
This means, instead of everyone fighting each other like primitive people, the power of violence should be collected and concentrated in one person. There should be a “strongest violence.”
Then everyone else is forbidden from using violence. If someone commits murder or arson, the “strongest violence” will punish them. This “strongest violence” was called the emperor in ancient times and is called the government today.
We know that the more transactions, the better, and the less predation, the better. With the “strongest violence,” the other 1.3 billion people can only do business peacefully. A vendor can only chase after you, “Sir, please buy a pancake.” They can no longer fight among themselves or become kings of the mountain. The degree of predation is greatly reduced.
But this still doesn’t solve a crucial academic question: what happens if the “strongest violence” goes mad and decides to commit predation?
The answer is: there’s nothing you can do.
Humanity has tried dozens of political systems, from monarchies to aristocracies, to democracies, to autocracies, to separation of powers, to Islamic fundamentalism. The final answer is, there is no solution.
Predation is like a demon. The human impulse for predation can be suppressed indefinitely, but it can never be extinguished. Once power is concentrated in a “strongest violence,” while people no longer have to worry about private robbers, the struggle for “supreme power” becomes even more cunning and deceitful.
In the East, this manifests as one court intrigue after another.
In the West, it manifests as the struggle for power among political parties and their voter bases.
When Thaksin Shinawatra came to power in Thailand, he immediately amended telecommunications laws, creating extremely unfair competition rules. The Red Shirts cheered. The Yellow Shirts refused to accept the election results. The two factions fought. This is not production; everyone is engaged in predation.
V. The Solution for the Strongest Government
As a side note, which political system is the best?
We already know the general structure of modern human society: “free market + the strongest violence.” Within this structure, private predation is forbidden. The entire society has only one predator: the ruler. From the people’s perspective, the “strongest violence” should ideally eliminate all violence, including its own.
Unfortunately, this seems to be a paradox. If “the government” cannot be eliminated, then we hope it is as small as possible. After all, it is easier to support 500 families than it is to support 700 million (half of Chinese population) citizens. The ideal solution would be a holy knight holding a shining sword, patrolling the heavens. Wherever he sees violence, he flies down and kills the culprit.
Unfortunately, an undefeated guardian only exists in fanfiction. It does not exist in real life.
In reality, “the ruler” is often a group of people, an association, a political party, a massive organization. It requires a huge amount of energy to sustain itself, and a large part of that energy is used to maintain its own survival and prevent challenges from others.
What is the best political system? This is a cutting-edge scientific question, and the debate continues to this day without a clear conclusion.
Li Ziyang of the Pencil Society once said, “There is one and only one criterion for evaluating a government’s quality: its share of GDP.” Bu Ermo said: “Monarchy is better than autocracy, and autocracy is better than democracy.” At least for these two statements, I tend to agree.