Socialism, Aeroplanes and Economics

A cargo cult gathering and their constructed idol.

A cargo cult gathering and their constructed idol.

What are these primitive villagers up to you may ask?

Actually they are anarcho-primitivists, but that’s not the point.

A cargo cult aeroplane.

A cargo cult aeroplane.

This is a cargo cult. These people actually believe that somehow the construction of this model aeroplane will cause cargo ( wondrous goods) to appear. This belief system started when US and allied forces arrived in South East Asia and Melanesia to form army bases and airstrips to fight the Japanese imperial army and navy. In setting up bases they did hand out a few trinkets along the way to keep the locals happy. The locals were quite amazed at the wondrous, magical and apparently godlike powers of the cargo and its owners. Eventually the planes and ships stopped coming and with that, the cargo stopped coming also. Seeing the obvious linkage between the vehicles ( aeroplanes, jeeps, and airstrips) and the cargo they formed the belief that if they could make their own airstrips,  aeroplanes and jeeps  from local materials the cargo would return.

So year after year they would create such effigies in hope the cargo would return. It sounds quite silly if you know the fallacy of their thinking. But you must admire their skill and determination. Among cargo cult fetishes that are built are, Aeroplanes, Airstrips, Airport control towers and even Jeeps and machine guns.

Unfortunately none of these effigies are functional, because the builders lack the actual knowledge behind how they actually work. If they did know for example how heavier than air, powered, controlled flight worked, their considerable efforts might have different results.

They have allowed unqualified belief determine they actions, rather than logic and simple experiments.

A modern replica of one of the first aeroplanes, Richard Pearce's invention

A modern replica of one of the first aeroplanes, Richard Pearce’s invention

Richard Pearce's aeroplane, showing struts made from bamboo.

Richard Pearce’s aeroplane, showing struts made from bamboo.

The first true aeroplanes were developed about 110 years ago, only 40 years before cargo cults developed. There are many competing claims as to who actually did it first. But According to some it was not the wright brothers, they give credit to an obscure New Zealander, Richard Pearce and his flying machine, which looks strangely similar to a modern micro-lite. Adding to the kudos of first powered, heavier than air, controlled flight , Pearce created many innovations, aerolons, variable pitch propeller, triangular under carriage with 3 wheels, a joystick for control and an air cooled reciprocating engine.

Amusingly the wing struts of his aeroplane were made from bamboo, just like some cargo cult planes today. Unlike the cargo cult aeroplanes his one actually flew, and with a degree of control also.

Strangely Pearce didn’t use the one really important innovation, aerodynamic lift, his aeroplane simply dragged itself into the air with lots of horsepower and the wings stopped it falling back to the earth.  Pearce used approximately twice the horse power as the Wright brothers used in their flyer. Pearce kept few records and didn’t promote his invention, lived in an isolated corner of the world, so others who worked at the same time and a little later, got the credit. The Wright brothers do deserve credit for a very structured  and documented approach to they way they developed the aeroplane, even determining the viscosity of air to put in their calculations and using aerodynamic lift.

All of this was a progression from hot air balloons, parachutes, gliders and uncontrolled flight to the final goal the modern aeroplane. People learned the phenomenon of flight and the properties of air to accomplish their goal of flight. The men who jumped off cliff flapping their arms were not successful.

Had the cargo cult members been successful in getting plane flying, they might fly to the US in their bamboo aeroplane and land hoping for cargo to magically load itself on their aeroplane. Once again they would be thwarted because there must be surplus or extremely low cost cargo and fuel for this to happen.

This of course brings us to Economics, another poorly understood cargo cult for many people, particularly Socialists and Neo conservatives.

As different as they both seem socialists and neo conservatives either don’t know or don’t want to talk (or think) about where money comes from.

Marx; How can the state provide everything to everyone when the state cannot cannot produce value? Marx argued that only human labour is of value, and therefore the state ( not having its own body) simply cannot create value, and must rob from Peter to pay Paul. Good if you are Paul, bad if you are Peter. Eventually everyone becomes Peter in socialism, apart from a few Pauls’ at the top.

Economics: Read about Zero sum game and tragedy of the commons.

Neo-Cons; How can the market provide, if all the means of exchange are privately controlled debt notes, counterfeited into existence, whose supply and value are arbitrarily manipulated by a self interested third party? In theory Neo-Cons should be screaming for 100% backed, hard money, but seem to think, too big to fail, bail out the incompetent fraud peddling banksters is the way to go.

Economics: Read about properties of money (particularly about how fiat is not real money)

The worst thing about economics is that it seems so abstract, and involves some maths, and that is a really big hurdle to most people.

 The majority of economics can be explained with axioms, short stories, and situations to consider.

A list some basic economic axioms here, trickier ones with a *. Honestly it’s not that hard.

Zero Sum game.

Prisoners dilemma.

Adverse selection.

Tragedy of the commons.

Battle of the sexes game.

Game of chicken.

External costs.

properties of money.

Infinite regret*

chain store paradox.

Principal – agent problem.

Irrationality of price wars*

Moral hazard.

Pareto optimum.

Gresham’s law.

Barriers to growth.

Sensitivity to initial conditions*

Credit paradox.

Nash Equilibrium.

Supply and demand*


If you don’t understand Economics, you might as well build a rough copy of a space ship out of plastic bottles in your back lawn and hope ET will save you.

For captain obvious:

If you don’t understand how something works, there is no point idolizing some aspect of it, thinking it will be a substitute for knowledge.

For all the George Orwell fans, you will remember than in the book 1984 the state claimed to have invented the aeroplane, but Winston Smith remembered from this childhood that this was not true.

Posted on April 4, 2013, in Capitalism, Economics & Finance, Monetary system, Photo, Plutocracy, Socialism and tagged , , , . Bookmark the permalink. 15 Comments.

  1. I reckon those planes built out of bamboo are really cool. They remind me of the Wickerman. You could sacrifice a few banksters, marxists or illuminati in them and restore peace and prosperity to the people I guarantee it would work!

  2. I know this is a little late to comment, but I just want to say that this post was very interesting to read and very informative! I particularly like the analogies that you have made and the difference between belief of how something should happen and the reality that actually happens. Many socialists create this utopian belief of how the state will save and provide for everyone, etc etc.. but in reality the state will eventually function as a tyrannical warlord. This is how it was in the USSR. State controlled everything, from production to manufacturing to education, and general economics. The politicians in the communist party were the ones who got paid the most, were the ones who could afford to buy a car and reserve a nice apartment for themselves whilst everyone else used their labor, produced the goods, and were paid practically the same (it was enough to live on and go on a holiday once every year – but not nearly as much as the politicians who do nothing other than run their mouths). My grandmother had worked as the Accountant of the Department of Transport for USSR and she traveled and had meetings in Moscow with a lot of people at the top so through connections and a lot of battles she got her self a really nice apartment. If you didn’t have huge connections with the people on the top, you would have a very hard time living in the soviet union (especially during the deficits in goods during the late 70’s and early 80’s).

    • I really liked your summary:
      “If you didn’t have huge connections with the people on the top, you would have a very hard time living….”

      This comment seems strangely relevant to a lot of places in the world right now, because we are living in a similar system; a system of privileged and control.

      Think about how many good business ideas (and products) never get off the mark because access to seed capital is tightly (and centrally) controlled.

      while there are claims that finance is s free market it is anything but, it is a closed scam.

      Oh and its never too late to comment on anything.

      It’s never too late.

      • Yeah that is extremely strange that even now a days the state functions in the exact same way. Maybe its this whole idea of “The State” that screws everything up. I am not sure if there is a way for all of this corruption of the state to end whilst still having the state exist in some form. Or maybe this is contradictory: Maybe the state will inevitably be corrupted.
        And I agree, there are so many ideas that are just scrunched up and thrown away into a bin because the capital to fund them is taken to the people on top of this pyramid. Its sad to even think about how many people have thought about a crazy, beautiful and awesome idea and then had their whole life committed to improving it for the benefit of the people and himself only to find out in the end that it isnt worth anything to those people on the top.
        The questions I have is: if this is a true free market, then why dont those ideas make it out there into the market? Why are there people on top centralizing all the capital to themselves? And how do these centralized people make it on the top of their pyramid in the first place?

      • Any “state” is centralization of power by definition, How comprehensive the centralization of power is depends on how large the state is.
        Any state engaged in the redistribution of wealth, by what ever


        mechanism (taxation, confiscation…) is to some degree socialist.
        The larger the state the more resources it must confiscate (tax) in order to fund itself and the redistribution it engages in.

        This is where a State is often worse that a monarch.
        a monarch is often cheaper to support as it grows at a limited rate (i.e children) and as long it the monarch doesn’t get to greedy or offensive (risking mobs with pitchforks and torches).
        Where as a state can grow evermore larger not requiring a ‘birth rite clause’ to enjoy the ‘right to rule’.
        How ever this ‘birth rite to rule’ is morphed into some type of rare skill, at the very least the ability to convince the masses of their importance.

        the reality is we don’t live in a free market we are told the current situation is but we are far from it, a free market by definition is where there are no regulations relating to trade and commerce and we have millions of regulations on trade. All of our statutes are commercial statutes and the number is growing every day, we are actually becoming less free market every day because of this.

        centralizing capital?

        Fiat currency is not actually capital, fiat currency is simply a means of control (or power) and that is heavily centralized.
        So the money is fake and a scam, so who would make it to the top of a scam?
        And how do crooks compete? nepotism, fraud, bribes, threats and force.

        As long as they don’t make people lose faith in the scam, anything is permitted.

        Which brings us to the the word credit, Latin for faith. The entire system is based on credit (faith) and as soon as people loose faith in the system it all collapses.

        The bigger the state becomes the more massive the economic dislocation (chaos and destruction) caused when it all collapses.

      • That makes so much sense!
        Another question I have, this may be a socialist style question, but what happens if (lets say we have a fully functional free market with no state intervention), a person who has a job in some kind of company is suddenly fired for some reason (lets say the boss is a little greedy and doesnt want to pay him holiday fees – or something along those lines), how would this person be able to survive until he finds his next job? (which may take 1 week or maybe 1 month, depends on who is hiring)
        In the currrent system, the government would pay him unemployment benefits. But, in a system of no government intervention in the market, how would this function? Would there be an abundance of jobs in a fully functional free market so that it wouldnt take a long time for him to find a job again?

      • In a free market system the employee would have paid no taxes and generally in free market systems people tend to save more money for these events. People are more able to save with lower or zero taxes also. People also rely on social networks to borrow money in time of need. some of these social support networks morphed into insurance and investment companies. IOOF was originally the International Order of Odd fellows, a somewhat more formalized social/financial support network , an early form of unemployment insurance.
        Generally in free(er) market systems employment is more buoyant and employees are more scares and unemployment rates are much lower and wages are often high.
        Macau ( a former Portuguese colony on the coast of China) is a example of this phenomenon.

        some people dismiss Macau but its actually older that the USA being founded before the Mayflower (1620) arrived in what now is called USA.

        Of course Macau has no foreign debt and wages are high.

        In saying all of this no system is perfect, but does a stranger in another town (the state) know whats right for you better than you know yourself?

      • I agree no system is perfect and I think there will always be a person who wants to mess it all up. But yes I think this is fundamental: No one can possibly know what is better for me other than myself. I mean I think its just common sense – lets say I want an ice cream (for some reason I am craving it), and then someone comes along and says “No, want you actually want is chocolate”. Unless they can convince me somehow why would I want chocolate (maybe its some health benefit), then I wouldnt change my mind. If they force me to have chocolate then that is coercion. Since slavery is abolished (which is like a similar situation – a person forcing another person to work for him), then all types of coercion must also be abolished.
        From my understanding, what your saying is that the state is a group of people forcing the entire population down a specific path that they have chosen to follow.

        Of coarse there are exceptions, like for example, if a person is handicapped (either physically or mentally), then maybe his family member would logically pick the best suitable method of how to handle that person – but even then a handicapped person is still a human being with their own taste, opinion, heart, morals and feelings. No one can take that away from anyone.

      • I think what you are hinting at is that there are two types of people:
        1) those you are able to make decisions for them selves and can deal with the consequences, ie Adults
        2) those who are unable to make decisions for themselves and/or deal with the consequences ie children/dependents

        The state wishes everyone to be in the second group; children/dependents.
        Some people wish to be in the first group; Adults.

        So it’s really as black and white as that.

        Are you able to make decisions for them selves and can deal with the consequences?

        If so you are better off without a state, if not maybe you need the state or something else to take responsibility, but it will cost you everything for this protection.

      • I understand. The problem is is that there aren’t that many people (relatively) that are in the first group. And maybe this is because of parenting, maybe there must be a style of parenting such that it would make the child more independent from the parent but then problems such as disrespect to the parent, fights, and maybe during the process of this style of parenting, the parent would have to sacrifice some characteristics of loving and caring nurture (ie: tough love – do this by yourself without my help because it will be better for you in the future). It is really interesting to connect the ideas of economics to the ideas of parenting and maybe trying to find a way so that the nurture characteristics can still be saved whilst at the same time giving the child a more independant learning and decision making environment.

      • When i studied economics the professor said right at the beginning:
        “Economics is about preferences and scarcity”



        is sometimes a natural limit like how much land there is, sometimes invented by people: how many umbrellas there are in a household.
        All of the rest is


        a human behavior trait.

        At least half of economics (probably almost all) is about human behavior, so without understanding human behavior, economics cannot be understood.

        I’m hardly an expert on parenting but suffice to say some kids never grow up, they just become big kids, and the state swoops upon them as their chattel.

        Chattel being from the same word cattle.

        So you wanna be an Adult or a cattle, that’s what it comes down to, it’s your own choice.

      • That is a very nice, well understood and to-the-point summary of economics! Very interesting. I guess I will now learn and try to comprehend those economics terms. I have watched a lot of videos explaining the different schools of thought (austrian vs. chicago vs. keynesian) and there are a lot of different ideas about how economics should function. There was also this interesting article I read explaining why you can’t use calculus in economics! What would you personally suggest from your perspective the more-or-less best source of information (like some website, book, etc..)?

      • Economics must reflect reality, not the other way around. You could use calculus or not it inly matter you make reasonable assumptions of human behavior in an economic model and accept it is just that a model of reality, not reality, or a template for reality; a model.

  3. I’m not sure not paying taxes would improve things. Salaries would automatically be lower, because taxes are factored into them. Ideally the government is run by the people for the people. I don’t know whether there is a way to make government more accountable and less corrupt. Probably with better leadership it can happen. Look at Iceland! Yes, it is a small place and people are more connected there, but there is no reason it could not happen here.

    I think a solution is to strengthen community connections between people, rather than this competitive environment we are all living under from childhood onwards. Competition is good, if it furthers excellence and benefits the community, but in our society it’s all about individual greed. it’s the wrong paradigm and completely insustainable. We have to understand how completely dependent we are on each other and the environment rather than living this individualistic ego-fantasy .

    • I think part of the reason Iceland jailed the bankers was it incredible small town connectedness. Many people left Iceland rather than face up to their crimes.

      WE must also draw a distinction between individual rights and self obsession, how much is enough for me before i gain pleasure from helping others is a really important concept.

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