Restricting Entry

We now turn to the important question of restricting entry to the exploitative sector. That entry must be restricted is clear, for an income differential exists between the productive sector and the exploitative sector. If free entry, the standard assumption made in economics, were allowed into the exploitative sector and into the ruling class from the "retainer" class, a leveling process would continue until incomes were equalized for those position--probably the majority--where incomes do not depend on differential and inalienable resource ownership. The increase in the size of the exploitative sector would permit a greater rate of exploitation, and the fall in the average income in the exploitative sector would generate pressure to do so. Such an increase in the exploitation rate would then generate further movement into the exploitative sector, leading to a repetition of the process. Assuming that the maximum possible exploitation rate was that which took the entire surplus from the productive sector, the proportion of the total population in the exploitative sector is equal to the proportion that the surplus is to total production in the productive sector. A ballpark estimate of the surplus fraction in a typical agrarian society is (at least) 0.5 which means that the exploitative sector can make up 0.5 of the population. Though everyone has tried to maximize their incomes on an individual level just as in standard economics, the inclusion of exploitative activity has meant that the process of individual maximization leads to everyone being reduced to starvation levels. We have chosen to call this a Bradley optimum in honor of a man who clearly noticed that maximizing behavior, even if done by God, resulted in a substantially less than perfect maximum.[xvi] It is just one example, though a clear and important one, of what can be termed the "invisible hand" of harm: men, acting in their own self interest, are led to harm others, though it was no part of their intention. History would seem to indicate that the expansion of the exploitative sector has not been carried this far, with a major reason being that entry into the exploitative sector has been restricted, not free. These restrictions can properly be named barriers to entry, although the term is no longer confined to its usual monopoly/oligopoly context.

Sometimes the restrictions are rather straightforward. Positions with above market rates of payment may simply be filled, with neither the number of positions expanded nor the payment reduced in spite of the numbers of technically qualified applicants exceeding the number of positions. This works best in government perhaps but is evident elsewhere, in part because of the other barriers to entry (e.g., a member of an "inferior" race no matter how technically qualified will be socially unacceptable), in part because the presence of exploitation leaves a "cushion" for such behavior not found in perfect competition.

Entry into the ancient Chinese bureaucracy was on the basis of an examination which required intelligence and long and expensive training. Such requirements will tend to keep the exploited class out even though the position may be one that is fundamentally useless‑a sinecure. Setting aside the restrictive aspect, education and intelligence may be necessary on1y so that paper shuffling, for example, can be undertaken as an art form. As noted, peasants have been tied to the land in various ways. Slaves have had a legal status unconducive to upward mobility. Though illegal slavery is evidently still practiced in India, for example. Skin color, race and nationality are often clear barriers. "Caucasians only need apply."

In obtaining a position in the exploitative structure, one's family, friends and political alignment are crucial. Such groupings should be looked on as coalitions designed to increase the income of their members and thus should be considered by economists as economic units. The importance of these groupings in the typical exploitative economics system is a rational response to a system where "it's not what you know, it's who you know"‑-that is to say not productivity but power, in this manifestations commonly referred to as influence. As noted in the U.S. Army Area Handbook for Bolivia, "Men in positions of power and civic trust do not hesitate to use such positions to further the aims of those loyal to them, nor are they generally expected to do otherwise" [1963, p. 289].

Consequently, relationships are formed so as to increase one's influence or income, or, since they are intertwined, the influence or income of one's group. In marriage, for example, a "good match" is emphasized and the decision does not rest only with those to be married but, importantly, with the family. Those wishes are taken into account implicitly, as through internalization of the family's values in the children, or explicitly, as when the consent of the paterfamilias is needed. Either family would be willing to marry "above its station" but as both families must agree to the decision, it is likely that both will have approximately equal status, with perhaps money on one side compensating for a good name on the other. This "tieing" principle carried out throughout the system of human relations makes social mobility difficult or, in our terms, establishes the barriers to entry.

There is a great deal of evidence that indicates the crucial nature of such alliances. First of all, the people involved take them with the utmost seriousness. In the words of the Handbook for Bolivia, "A refusal to grant personal advantage to friends, relatives and political associates, even at the cost of the common welfare, would be taken by them as a gross breach of the most important trust, that which binds together specific people" [p. 290]. A second indication of the importance of kinship is the creation in many societies, usually in the distant past, of fictitious kinship or compadrazgo (godparent‑hood). The antiquity of the custom should not obscure, but should rather emphasize, the importance of an institution which has maintained its vitality over such a long span. Its economic role is clearly indicated in the following quote from the Handbook for Bolivia:

The only tie between cholos (mestizos) and Indians which even remotely resembled friendship and intimacy was compadrazgo....The Indians frequently made use of this deeply rooted Hispanic social form, seeking cholos as godparents to their children as a means of assuring themselves and their families a measure of political and economic protection. The cholos often happily accepted the honor as a means of establishing trade partnerships [p. 130].

Barriers to entry are substantially reinforced by the nature of the considerations taken into account in forming alliances. The ruling class, especially the upper levels, considers its characteristics to be desirable and, since everything is relative, the characteristics of others are undesirable to the extent that they are different. In what measure this reaction is in response to the need for exclusion, in what measure it is their fear of people different than they, and in what measure it is a human response determined by other factors is not clear. What is clear is the ruling class does have the power to set the standards, fundamentally because of its control over the sources of income and punishment.

Conspicuous consumption and leisure are two ways members of the ruling class have managed to distinguish, in the words of the relevant book title, Who's Who. It is an elegant solution (in the Catch 22‑manner) to the entry problem for only those who have enough money to spend on consumption in the approved style or time to spend on leisure are those already in the ruling class.[xvii]

As an illustration of how these principles of conspicuous leisure are applied we reproduce a few lines from a Bolivian writer of 1905: 

See that little cholo in his green tie, starched collar, with his neck shaven and his bristly mop slicked down; look at the timid way he takes his glass of spirits...how he servilely flatters the wench with him and smirks effeminately at her...[quoted in Handbook for Bolivia, 1963, pp. 115‑6]

We can see that negative (non-elite) characteristics in 1905 Bolivia (or for that matter, today) are being little, Cholo, wearing a green tie, having hair with Indian characteristics which is also improperly trimmed....but it is not necessary to continue in order to make the point that in a society where class has an economic function, class distinctions are carefully and invidiously made.

Also important was one's occupation, the ranking of which has changed remarkably little since ancient times. Cicero says, comparing landowning to all other occupations in Roman times, "none is better..., none more fruitful, none sweeter, none more fitting for a free man" [De officiis 1.150‑1, quoted in Finley, 1973, pp. 41‑2]. Two millenia later, Myrdal observed that for rural Southeast Asia, "To own land is the highest mark of social esteem, to perform manual labor, the lowest" [1968, pp. 1057‑8].

Though what we are describing here and throughout the paper has a very long history, we cannot emphasize too strongly that these traditional practices survive because they are functional to living people in a living system. They are not irrational vestiges of an ancient system that persist without rhyme or reason. Status is necessary to gain employment, and pleasurable in its own right, and so is given to those who have elite characteristics, which, mirable dictu,turn out to be the elite themselves. This function can be recognized by members of the elite (though it is more often not). In Argentina,for example, "one of the anti‑Peronist officers, Vice Admiral Arturo Rial, was reputed to have said to a delegation from the CGT, 'You ought to know that the Liberating Revolution [the 1955 revolution which ousted Peron] was made so that in this country the son of the janitor will die a janitor"' [Epstein, 1975, p. 629].

The application of criteria of what is desirable serve to exclude great numbers from access to positions. This is compensated for to some extent, as a great effort is made by those lower on the scale to adopt characteristics of ruling class, thereby tending to increase their access to positions in the exploitative sector. Peasants leave off their traditional garb and wear business suits, for example. Perhaps the most extreme instance occurred when the lisp of a Spanish king, so it is reported, determined the pronunciation of a whole nation. This adaptation by these lower in the status and economic hierarchy undoubtedly contributes to the development of more elaborate punctilios, more expensive and more frequently changed fashions and newer and more subtle forms of exclusion as the older members of the ruling class find themselves under pressure from parvenues. In Bolivia, law declined in prestige when too many lower class people went into it. The ruling class fights back as well with such weapons as scorn, designed to deprecate the status of arrivistes and other pretenders. In Guatemala, for instance, an expression that might be used if an Indian were to wear conventional shoes is "Que indio tan igualado!" (What an equal Indian!)

There are not only barriers to entry which serve to restrict the size of the exploitative sector, there are also similar "dues" which must be paid if a member of the exploiting sector is to maintain his social class. These operate in basically the same way as barriers to entry. A person who does not keep up the conventional standards with respect to dress, demeanor and so forth is "dropped" out of his social class. Migration, in more or less permanent form, has been another safety valve. The Spanish Conquistadores, the English Foreign Service in the time of Empire (which in the words of James Mill "formed a vast system of outdoor relief for the British upper classes") and the current "brain drain" from the underdeveloped countries are examples of the process of providing, as one English official put it, "employment for those superflous artic1es of the present day, our boys." In spite of everything, the barriers do get breached and population growth does occur in the exploitative sector, with a tendency for population to outstrip income. This can go to striking lengths. In the Indian district of Tanjore, Nair reports that of a total of 574,998 landowners, only 255 possess 100 acres or more; slight1y more than 500,000 possess three acres or less, of which 400,000 possess no more than one acre [1961, pp. 27‑8]. Not only do the landowners not work, but frequently neither do their tenants. The Roman mob supplied with bread and circuses was no common rabble but was composed of people who received their dole as consequence of their status as citizens of Rome. The growth in the size of the exploitative sector is important, because it acts as an unsettling force on society, since when incomes drop, people struggle to maintain them. The alternatives to falling incomes in the exploitative sector, increases in the exploitative rate or the exploitation of new groups, are likely to unsettle the society as well. Though these can be the rends in the social fabric through which genuine revolution may peek, usually there is nothing more than a slight rearrangement in the structure of the exploitative sector.

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