The traditional beginnings of a philosophical treatise on topics in government features a section in which a thought experiment is carried out in order to justify later assertions regarding the social order. This "state of nature" experiment determines which issues will be of primary concern to the treatise at hand. In more modern times it is called by different names, but it seems necessary in one form or another. It provides a focal question or set of questions which the philosopher can then answer, allowing him to transform his work from exposition into argumentation.
The essential question in economics relate to wealth. If and only if levels of wealth are sufficient are economic concerns abated. Failures of economy are always confined to insufficiencies of total production and failures of adequate distribution. The consequences of this failure are deficits of wealth.
If economic regulation is seen as a part of the function of government, it is possible for a state of nature based argument to spawn policy suggestions. As one would expect, economic ramifications are presented by virtually every political philosophy. For some, such as Marx, economic considerations dominate all others. In other words, the production and distribution of wealth is a legitimate concern of the individual in the state of nature, whatever these terms mean.
In order to better understand wealth, visualize the society most adversarial to it. Imagine a communal society having no formal currency or meaningful accumulations of persistent goods, no agreements on ownership of property or rights to land or its use. More precisely, this is is a society where differences in the individuals' physical and mental capacity and social standing are the only measures of these individuals' wealth. Goods acquired are consumed rapidly. Well being is describable only in terms of quality of food, sexual prowess (in the sense of having desirable sexual roles), and amicable social relations within the society. Wealth is thus the descriptor for the situation in which a greater or more secure stream of these goods flows toward a particular individual or group. Furthermore wealth has two other properties that will become important later in this discussion: it may have a conspicuous aspect but it is not bound to be conspicuously presented; and wealth need not be deliberately pursued or even understood in order for an individual to have it or accumulate it.
The philosophers at the base of the economic tradition have typically emphasized the state of nature as being one in which freedom reigns in a more or less unrestricted sense. The function of the state of nature within a philosophy was to serve as some basic state in which man's true nature is clear, or in which action could be analyzed in some pure sense to draw out a basic concept (e.g. Locke's concept of property through labor). The conditions described were not typically representative of any existing cultures, nor were the availability of various resources accurately represented. This - in and of itself - is not problematic because the state of nature is merely a thought experiment, after all. What makes these descriptions problematic is that they don't genuinely escape the culture from which they are conceived: they are given an essence of freedom and assumptions of motivation that are artificially copied from the motivational framework of the author into the thought experiment. The point need not be labored that such a beginning will eventually misguide the entire discipline built upon it.
Individual motivations generally take a highly cultural character. This is a point not easily grasped by philosophy, even eastern philosophies that ostensibly place less emphasis on the individual. The motivation for even selfish acts that we engage in alone is part of a conscious stream the primary function of which is to monitor and develop our social position. To posit humans outside of culture is to separate them from a part of themselves, being that a significant portion of our neurological wiring is dedicated to the perception of others, and that any state of affairs in which this wiring is engaged will have a cultural character. There is no basis that defines what types of interactions are noncultural, nor can the actions of an individual in isolation be seen as natural. Our observations of thought process and motivation all come from within our cultural paradigm. Therefore there is no cause to believe that an individual outside of society will have any particular pattern of thought, or a pattern of thought at all.
Freedom is an object of contrast. It is definable in part because its absence is possible. Supposing a person were living in a state of nature, he would not be any more (or less) free from the laws of nature than any of us. This person would have no cause to define or experience freedom unless he engaged with other individuals who were capable of limiting it. However, in the course of interaction, culture develops, and whatever division comes to exist between individuals is immediately subjected to the very cultural concepts that the state of nature is supposedly filtering out.
Locke gives an example of a person who picks an apple, and who therefore has the apple now as his property. Were another individual present, that individual would have a relationship with the apple-picker that is cultural in nature. It would not be possible to discount cultural considerations offhand, because they might very well define the apple in a way that made it not property of the apple-picker. Conversely, if there were not another individual present, the concept of property is meaningless because it cannot be contrasted with any idea of "not property". The "individual" that Locke has envisioned, having no claim to a thought process or any notions of freedom, can't be viewed as anything but a creature artificially inserted from Locke's own cultural realm, robotically acting out a set of instructions it does not in any way understand.
John Rawls defines the Orginal Position as a thought experiment in which people are separated from their knowledge of their own identity within the society, forcing them to weigh the risk of poverty against the rewards of opulence. In this more modern approach, the culture of the individuals and indeed the very thought processes of the automatons into which the individuals are injected remain and may be subjected to criticism. This thought experiment is far superior to Locke's because it does not rest on an artificial notion of the individual. However, it does rest on an artificial notion of wealth. Since wealth is merely a culturally defined property of individuals, this is a less serious problem.
With the proper lumping, all wealth can be placed into two categories. The first category is connected to the productive talents and abilities of the individual. This is not merely their skills, but their traits that make them interesting or uninteresting to the other members of the society (physical traits like attractiveness, gender, age, etc.). The second category is connected to the standing within the society that the individual has - through money, connections, caste, marriage, legal conveyances, etc. The wealth is not these objects, for instance the money itself, but what it can bring on demand. In other words, wealth is the capacity to bring a thing on demand, and it is talents and privilege that tend to do so (and don't forget that in this schema, pecuniary wealth is merely a privilege).
Returning to the state of nature question, the proper way to begin a description of the state of nature, with regard to economic questions, is to posit a situation where a person has no wealth. This is obviously not possible, as the person must have some talent or ability that can be used to some avail. Nevertheless, this schema is still very useful, as it shows immediately that wealth, in some fashion or other, is needed merely to secure more wealth. It also captures the fate of a human in the "state of nature": starvation, hypothermia, death by exposure, possibly being eaten by a wild animal or perhaps being killed by the actions of another human. At an even more primitive level, a person in a state of nature must not merely be deprived of his ability to survive but of his very ability to enjoy his remaining days. Surely, this is a form of wealth. A person need not have much to enjoy the natural beauty of the earth. This beauty is the most fundamental form of wealth, and all people posessing any of the five senses can demand it at any time.
To measure wealth, in one way or another, is to create a criterion for valuing some demands above others, for the ranking of distributions of privilege (note that educational training, although increasing skills that can't be transferred, is still a privilege in this schema. This is not an altogether accurate description but in the end it will not affect the conclusion). Wealth cannot be measured in any other way. To value only dollars is to value dollar demands and no other demand types. A person in any kind of society obviously has wealth in some form or another. Even a very small group of people, having nobody else to depend on, is capable of survival and even happiness. So long as there are a fair number of hearty women and fertile men, it is possible for this group to survive indefinitely, provided that the natural world continues to supply the necessary resources.
The other aspect of wealth is the existence of resources to which society can apply labor and technology in order to meet demands. The presence of these resources depends on 1) the development and use of technology and 2) the ecology of the environment in which the individual is situated. Together, these two concerns encapsulate the strategy for maximizing the total wealth of a society, at least prior to a more detailed consideration of distributions.
The development of technology is not dependent on any particular or regular factors. It is often erroneously asserted that technological development depends in some way on savings or investment. This is an unsatisfactory and overly abstract, nonmechanistic answer. The real mechanism that motivates technology is the provision of resources to those both interested and capable of developing technologies, and there are myriad ways to allocate resources in this way. In any event, there is a level of privilege that must be assigned to the scientist or the tinkerer to allow him to dedicate a portion of his time to his passions and to make requests for the necessary resources.
Technology is not merely instruments or machines, but the means of using these machines. It is internalized in individuals to a great degree. In truth, the pursuit of knowledge itself is a technology that has unlocked what is best described as "new ways of thinking." Technology should rightfully have a high priority in the valuing of demands - meaning that societal configurations that invest more in technology are generally higher in the ranking of privilege distributions. Technology is also the social structure, institutions, and various public goods that have undergone increasingly beneficial metamorphoses from one age to the next.
Ecological science, itself a product of the pursuit of knowledge as a technology, must be vigorously applied to any question of economic impact. For instance, even if he is starving, a hunter should not be allowed to shoot the last of a species of animal. Ample ecological evidence supports the thesis that species extinction impoverishes future generations. There are many types of ecological damage other than biodiversity loss, but their effect is always to impoverish. The problem is never monetary in nature; it is in changes to the types of demands that future people can make. In fact, it is folly to measure ecological damage in dollars, because the ecological damage hasn't changed the money supply in any way! It merely diminishes what is available for us to enjoy. It follows that distributions of privilege that preserve the natural world to a high degree will also tend to be favored. Preventing every extinction is not possible, of course.
Turning now to the question of distribution of wealth within a society, we can venture back to our minimal wealth village. Supposing that a calamity of some kind struck, and a shortage of food were to suddenly materialize. Would the person who does some other craft without producing food of his own, instead trading for it, be one of the first to be fed, or would he be lucky to be fed at all? It seems that in this case, absent some privilege that allows him to take the bread from the hands of his fellow villager, he would have no means of obtaining food. In other words, there is an order of importance to production. The goods most important are those necessary to survival. Those least important are the ones we can do without. This in turn imposes an order of importance to privileges: those that can be used to obtain the most important resources are the most important. Finally, the importance of each thing is always dependent on context and the subjective tastes of the individual. However, this dependence on subjective taste becomes stronger only as one progresses away from the necessities: all people have similar physical and emotional needs.
The arrangements of labor that are common in my culture are really agglomerations of privileges. Many people who are highly paid are doing work that others would do for very little pecuniary compensation. Furthermore, as Galbraith noted in The Affluent Society, we value our pay much more than we value the products that we produce at our jobs. But, he hasn't quite pierced deeply enough. When the actual material needs of the society can be provided through a small amount of labor, in which the labor itself is not distributed equally through the society, there must be a system of privileges in place to entice the few to work for the welfare of the many. Our society takes two approaches: taxation and consumerism. Marx suggested land reform. This, of course, would undermine our very beneficial economies of scale.
Taxation is a form of coercion when seen in this light. It is justified by the existence of life enriching public goods that game theory has definitively demonstrated cannot be effectively provided by the private sector. In particular, we have benefitted from those that enhance our level of technology and safeguard our environment, ensuring a high level of production in the future. Even so, it is a necessary evil.
Consumerism is a blight. It serves few purposes. Its historical source was conspicuous consumption and the confusion of happiness with luxury. It is perpetuated by ignorance, for a person who consumes heavily must be ignorant of cause and effect. In no way does a person who watches a movie rather than volunteering at a soup kitchen benefit themself. In fact, I would go so far to say that a person who dedicates themself to selfless acts is happier than a selfish consumer. In fact, a person's intake of consumer goods, in a purely maximizing fashion, would be minimal, only enough to allow him or her to appear "normal". He or she would be better off saving the rest. This critique applies sufficient force to argue against consumerism on the basis that it is a mental disease, even as its environmental impacts pause within my pen.
If political debates center around taxation, I support them. That is because the trade off is typically between taxation and consumerism. Americans are not on the verge of starvation (though that could change in 2010...)
But there is an alternative to either taxation or consumerism, and it centers on our culture. Marx was not altogether wrong in his utopian vision. In a sense, he hearkened back to the time of the peasantry in Europe. In those otherwise grim conditions, humans toiled in a way that brought them together. Without trinkets and salesmen to corrupt them, without the financial markets and sophisticated business models to swindle them, they each led a diverse life that exercised every part of the human instinct, just as the life of a hunter-gatherer might. When we walked the path of technology, we were enamoured with the noncontroversial and therefore the nonpolitical, and so our ability to regulate our own creation fell behind our ability to produce. But, now I feel the pendulum has swung back the other way. It is time to truly assess what we are capable of.
What I speak of is a cultural unification of sorts. It is not at all what Marx planned. It is the replacement of consumer goods with local crafts. It is the use of and evolution of art as currency, as a thing of value, and as a meaningful pursuit. It is the wholesale endorsement of science. Our precious class of farmers and laborers should be paid very well, so that there will be no shortage of them. After all, they are the most important members of the society. Working hours will not be long. The rest of us will live frugally, surviving through our arts and through the public system of welfare, but we will make the world rich with philosophy, political activism, art, and literature. The government will be within our control, as we are the ones available to work for it. And its main function will be to ensure that everyone's basic needs are met.
This vision is not inevitable. It is, however, possible, and more equitable than any government existing today.