Mental Mistakes

Chapter 9
Discipline, Easy and Hard

If you look for people who dislike the flea market, you will find them. "Man! I hate those places! A lot of hippies milling around, smoking joints and trading junk. It's anarchy!"

You have to admit the junk part, but you can argue the anarchy. Anarchy is a condition in which rights are not respected. No market can exist in anarchy, because there is nothing to trade and no way to trade it. And no market can exist without freedom, because then also there is nothing to trade and no way to trade it.

When rights are established in a governed society, then people who are reasonable can trade. If reason and property are respected, then markets grow, the division of labor multiplies efficiency, inventors are free to innovate, and the society becomes rich. It has happened often in history. But it has not lasted. Rich societies become poor again as the division of labor shrinks, invention dies out, and social order disintegrates.

It almost happened in California. That state put on so many business taxes and regulations that businesses stopped moving in, and started moving out. The economy of the state went into recession. Only when the pressures on business were eased did the economy recover. Politicians now routinely promise not to "over-regulate".

Does this bit of history give you ideas? Do you wonder why not just take off all the regulations beyond reason and rights? Many people wonder with you. Many more are afraid you'll try it. Those people do not believe in market self-regulation, or in individual self-regulation.

Regulation is based on comparison. You compare to a standard, in order to correct any deviation. Passive minds look for regulations from outside, since they don't know standards, and they don't bother with comparisons. Subjective minds compare everything to one standard: themselves. Self-regulation has no meaning for subjectivity, because it would mean comparing me to me, my life to my life, my wishes to my wishes, my methods to my methods. Since subjectivists reject regulation from outside as well as from inside, they feel out of control, ruled by demons.

Sooner or later, however, the attempt will be made to establish self-regulation. Active minds with the habit of self-regulation will realize that their opponents, no matter how numerous, are rendered impotent by self-imposed deficiencies. They will demand freedom. They will start moving away not just from California, but from America. When politicians realize they mean business, deregulation will proceed. On the business level, it will be swift and relatively painless. On the personal level, it will be slow and agonizing.

Market deregulation can be painless, because the market is self-regulating by nature, and has no habits. Many flea markets, and all black markets, operate now without regulation beyond enforcement of reason and rights. Governmental should committees that conform to market conditions can be abolished and never missed. Those that distort the market can be abolished after a warning period for adjustment and for getting ready to prosper. If the stock market were artificially high at this time, it would go down. If it were artificially low, it would go up. It would begin to tell the truth.

Change is not congenial to passivity, so passive minds would be appalled. If the stock market went down, Passiveman would lose money. If he stayed in the securities market, his gullibility would put him in as much danger as ever. Whatever he did, rapid market growth would leave him behind. It would become more and more clear to him that mental passivity is not a good plan. He would notice this because of the comparisons he was being forced to make. Even a passive mind tends to compare yesterday's bank balance to today's.

In the end, Passiveman will find that the more he thinks, the less he suffers. When he has discovered comparisons, then he will be primed to learn the standard of a reasonable human life, and compare his own life to that. He will learn to regulate himself for himself.

Subjectiman will refuse. He himself is the standard. To him, market self-regulation means only that someone is in control other than himself. He will loudly demand market re-regulation, in the name of justice, sanity, and "the children." But he does acutely feel his personal lack of self-regulation. He feels it as chaos in his life, as a helter-skelter quality, as a lack of direction. The thought that one might use some objective standard of judgment strikes him like a guilty temptation. It is a treasonous idea! Still, what a relief it could be! Imagine not being at the center of the universe, responsible for all that happens.

It is possible to notice a contradiction in the idea that market self-regulation amounts to uncontrolled chaos, but personal lack of self regulation amounts to uncontrolled chaos. Still, people and markets are different. Except that trading is something people do. What is it in the market that provides regulation for people who lack personal self-regulation?

Market self-regulation is not magic, but voluntarism. Trades take place only when they are seen to benefit all traders involved. Everybody must be satisfied. If you demand ten dollars for an old plant, either you keep the plant, or give up that particular subjective demand. A market involves choice. Which item on the wish list will prevail, the wish to get rid of the plant, or the wish to get ten dollars for it?

In dealing with the market, government also must choose. More taxation and less prosperity, or more prosperity and less spending? Regulate, and produce an underground economy, or deregulate, and lose votes?

Government tends right now to make the subjective choice, as do individuals. However, the Internal Revenue Service estimates an underground, untaxed economy one fifth of the total. When that grows to three fifths, the government will deregulate in order to increase tax revenue. Passive and subjective people who want to be kept away from drugs, will have to do that for themselves, by just staying away from drugs.

In the end, even subjective holdouts will try a little objectivity. "So, all right, let me get this straight. I have to compare what I do, not to what I want to do at some moment, but to what I would reasonably want to do to make my life better, taking the long run into account. Is that right? Why does it have to be so hard?"

It is hard when it is not yet a habit. But it can just as well become a habit as anything else. Subjective habits seem to one who has them to be superior because automatic. Actually, they are inferior because mindless. They were learned young, in a thoughtless way. They can be replaced with sophisticated methods, learned by studying real science.

Self-regulation is easy to see at all levels in the market. If your grocer begins to act funny, so you wonder if he is cheating you, your business goes elsewhere. If it was your imagination, you'll eventually go back. If it was real cheating, others will also go elsewhere, and the store will close. If a French wine maker gets government to decree that only his sparkling wine can be called "Champagne", and then charges a monopoly price; those who enjoy paying high prices will drink it, and those who don't will find other wine makers making sure that their "Sparkle Wine" tastes as good. The favored winery will have to raise its prestige even higher, or lower its price.

In economics, it is called "market discipline". In people, it is called "self-discipline". Discipline is action to bring deviance back into line with a standard. Market self-regulation is carried out by the discipline of the market, which is applied by individual traders accepting or rejecting a trade. It brings any deviance back to the standard of market value, as determined by trading. No matter how complex or obscure a market, it is easily understood if you remember that market discipline is not something applied by force from outside, but the result of individual traders accepting or rejecting individual trades. When outside force confirms the discipline of the market, it is not needed. When it distorts market discipline, it turns trade into charade, and makes prices tell lies.

Self-discipline is the effort to keep your own actions in line with the moral standard of reasonable human life. Since values are those things that improve your reasonable human life, you trade for values, and put your self-discipline into the market as market discipline. Subjective thinkers ask, "Where does this miraculous market discipline come from, anyway?" The answer is, "From you."

But that's odd. Subjectiman has no self-discipline at all, and just enough self-regulation to keep his job. His discipline comes from his wife and his boss. One gets him out of bed, the other puts him to work. How can he bring something into the market that he does not have?

Of course, he did bargain for his job. If he did not have a wife, he would have to arrange somehow to get up in the morning and get to work. Since he does have a wife, he delegates this to her. When she goes shopping, she contributes by her choices to market discipline. So does the boss. So does Subjectiman, whenever he does go shopping and make choices.

It works both ways. While you contribute to the discipline of the market by the choices you make in the market, the market contributes to your self-discipline. That is, the choices that other people make tend to keep your self-regulation on track. If you tend to think subjectively, others in the market will frustrate you by ignoring your demands. Their choices will remind you that demands don't work; only trade works. If you tend not to think at all, traders will enrage you by taking advantage of you. Your losses will remind you that trading depends on reasoning, not hoping.

The market is an enemy of mental mistakes. Since it depends on reason and rights, it penalizes unreason and dishonesty alike. Since it is a process of finding objective value by making trades, it reveals how lacking in value mental mistakes are. If those mistakes are your treasured methods, then you will think of the market as cruel, inhuman, even maniacal. If you should decide to get rid of those mistakes, then the market is your best friend. From the act of trading lawn tools with a neighbor, to the act of trading gold futures in Zurich, every trade will involve an act of objective reasoning. The better you get at trading, the better you get at reasoning.

The market as therapist works two ways: it demands not only comparisons but correct comparisons, and it rewards reason with prosperity. It demands straight thinking, and rewards straight thinking. It will even provide diagnosis.

Do you hate the market? You are not alone. Does that mean your thinking is crooked? To find out, analyze what you hate.

"Can I borrow that rake, neighbor? Wait, I'll trade this spade for the rake. My spade will do your digging better, and your rake will gather my leaves better."

Oh sure, that sounds great. But next month when you want to trade back, the neighbor will have lost the rake, ruined the rake, or traded it away. Or, he will notice rust on the spade, and demand a new spade. Or, you will not be on speaking terms for some other reason. Trades with neighbors just never work. People are not rational, and they don't respect property.

That is, reason and rights were on vacation, but you pretended to trade anyway. Should you blame the idea of trade, or the problem of subjectivity? When subjective thinkers exchange things outside the structure of a market, discipline comes neither from within nor without. Lack of self-discipline is the problem, but trading itself gets the blame.

"Did you hear about Jake? Got laid off, and now he's trying to feed his family on minimum wage! How do they expect him to do that?"

That is not a complaint about the labor market, but about the pretend labor market, where "they" set prices. A pretend market is set up to tell lies. A real labor market would tell Jake the truth: try another line of work, or another market. The lying one tells Jake that he is a "wage slave," and must work here for what "they" give him. Lying is the problem, but the market itself gets blamed.

If a trade can only take place voluntarily, when all reasonable traders are satisfied, then how could a reasonable trader hate trading? He would be hating what satisfies him. Market hatred would be self-hatred.

Evil people do exist in the world, who hate markets precisely because they tell the truth and improve life. Most people who claim to hate the market, however, are simply annoyed with its discipline. Free markets tell the truth. If your thinking is more sluggish than is good for you, or more subjective than is good for you, trading in a market will reveal that. Trading will show you what's wrong with your thinking, what's wrong with your neighbor's thinking, what's wrong with your city government's thinking, and what's wrong with the thinking in Washington D.C.

Next Chapter Previous Chapter Contents Home