Characteristics of Harm

Harm(exploitation) may be distinguished from other types of behavior relevant to economics by the characteristics that follow. Though a given characteristic may not serve to distinguish harm from all other possibilities, taken together they do serve to distinguish harm from the major concepts of economic theory, and may serve as a definition, with perhaps the fourth characteristic being most crucial. The characteristics are important as well in understanding the effect that harmful activity has in shaping the larger system of which it is a part.

(1) Harm is economic activity. By economic we wish to emphasize that it obtains (earns?) a return. It is economic in another sense, too, in that it typically utilizes scarce resources.

(2) It is unproductive economic activity. Even though harm is economic activity, it is not productive economic activity in that it does not turn out a good--that is, something which benefits those who provide the return.

(3) Harm is redistributive. This is essentially a deduction from what has already been said. If A's activities are unproductive they do not result in the production of goods and services. Yet they do result in income, the control over goods and services. These goods and services must come from others, hence redistribution.

(4) The why of the redistribution is more important than the fact of the redistribution itself. In the standard model of exchange, B interacts with A only when it is favorable to both. In exploitative economic activity, A has his utility increased, while B has it reduced. What is surprising is B's action. How can a utility maximizer choose to have his utility lowered? A possible way of answering this, and thereby describing exploitative economic activity, is to say that there is some meaningful sense in which exploitative economic activity represents involuntary exchange. If A hits B over the head and takes his money, B clearly did not relinquish the money voluntarily. If A gives B the choice "your money or your life" we may still feel that there is not much of a real choice. Yet, in some sense, B's action was voluntary in the second case. He had a choice, his money or his life, and he took the one that offered the highest utility. What distinguishes exploitative economic activity is that it obtains income by using resources not to produce goods, but to reduce the attractiveness of the alternatives offered to others in such a way as to profit by their new behavior. So, for example, a thief who knocks a man over the head and takes his money profits by providing that man with only that alternative, less attractive than he would have in the thief's absence. Con games overstate the utility to the victim of the alternative the con man hopes will be chose. Conquerors benefit by reducing the value of the alternatives open to the conquered. Slavery reduces the attractiveness of the alternatives open to the enslaved, and to his children, if they remain in slavery, to the benefit of others. Producers banding together to raise the price of their product reduces the attractiveness of the alternative, purchase of the good, chosen by many. In discrimination, one group benefits by restricting another group's access to certain alternatives, be they jobs, industries, or chances to acquire productive characteristics. To summarize the matter as simply as possible: participants in harmful economic activity obtain income by reducing the benefits going to other people.[iii]

(5) Harm provokes special reactions. Exploitative activity is viewed differently than productive activity. In general we may say that harm does, and productive activity does not, provoke "disapproval reactions." Seeing a thief at work, we call the police, a reaction not generated by seeing a farmer at work. These disapproval reactions vary according to the circumstances. There is an agency to deal with thievery and so it is phoned. A slave, with no agency to handle the type of harmful activity that he confronts may react by "dragging his feet" or with "acts of sabotage." Indeed, as often occurs in human affairs, there is a definite tendency to reply in kind and so those who constrict others' alternatives are likely to face retaliation. The law puts criminals in jail, the oppressed take up arms against their oppressors, and the strategy of spending millions for defense and not one red cent for tribute is widely approved. This sort of action against harm will be referred to as counter-exploitative activity.[iv]

(6) Why is harmful activity disapproved? Economics has two reasons for disapproving of one situation related to another: inefficiency, as judged by the Pareto criterion, and income distribution, as translated into utility and evaluated by a social welfare function. Economics thus captures two reasons why harm provokes disapproval.[v] Harm is inefficient, since, among other reasons, carrying it out requires resources that could be turned to productive ends. Harm may also worsen the income distribution, and, depending on the specific social welfare function employed, may result in a lowered evaluation by this function than would have occurred in the absence of harm. Considering the overall impact of harm, we would say that harm not only may, but in fact does, worsen the income distribution.

Thus, in summary we see that exploitation is an inefficient, unproductive, redistributive economic activity that harms other people by restructuring their alternatives, unfavorably provoking further reactions on their part. While one might want to pare this definition down even further if he or she is looking for an "essential" definition in the Aristotelian sense, we have not done so, in part to avoid misunderstanding through too laconic a statement.

Two points before closing this section. First, it is worth mentioning that the distinction between productive and harmful activity often must be made on a conceptual level as production and harm are intertwined. Monopoly provides a familiar illustration of this point. Monopolists do produce goods. However, their monopoly profits--their exploitative return--are distinguished by economists from normal profits and other expenses, which are returns to productive activity. Similarly, slavery, for example, can be divided into a harmful part, "holding people in bondage," and a productive part, "the production of some economic good." It is this sort of separation that we want to make for each form of harm and overall, when we refer to a harmful sector which receives the rewards of harm like monopoly profits, and a productive sector which receives the credit (though not all of the income) for undertaking the production. Similarly, when members of the harmful sector are referred to--individuals who receive harmful returns--we do not mean to deny that they may also receive income from productive activity. It is clear that productive relations are intertwined with harmful ones.

Secondly, one important characteristic of the general economic system should be considered: Is it likely to be entirely productive, or not? As we know, standard economists posit a model where production is a function of land, labor and capital, where goods are produced in line with the dictates of technology, and where people consume in accordance with their tastes and the incomes generated by the factors of production that they own. But economists provide little or no justification for introducing an extraordinarily crucial and implausible assumption about a system characteristic: that people will confine themselves solely to productive activity. It would seem that people, as individuals or in groups, clearly might be able to better themselves by harming others. This means maximizing behavior in the face of restraints of technology and limited resources results in harmful behavior as well as productive; the pattern of harm as well as the pattern of production is determined by the interplay of the same variables.

Profitability is the key to understanding why harm appears in an economic system. With productive activity, of course, something actually has to be created. If it were supposed for a moment that people do not mind being exploited, then harm would not involve much more than going around and taking things, much like shopping, and obviously a much lower cost way of getting things than productive activity. The resistance to being exploited does impose a cost to the exploiter that productive activity does not face. People go to a store for groceries, but not to get mugged. Overcoming counter-exploitative activity is a major cost of exploitative economic activity. There is of course no supposition that counter-exploitative activity even if undertaken would eliminate harmful activity completely. The most casual observation of the empirical evidence would suggest that it does not. Not only is the undertaking of effective counter-exploitative active not likely to wipe out all harmful activity, an ability to respond adequately to harmful activity might not be present, as the next section indicates.

Harmful economic systems  Hunger Notes Home Page

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