Fuzziness, Democracy, Control and Collective Decision-choice System: A Theory on Political Economy of Rent-Seeking and Profit-Harvesting

273 Pages·2014·8.017 MB·English

by  Kofi Kissi Dompere (auth.)

Studies in Systems, Decision and Control 5
Kofi Kissi Dompere
Fuzziness, Democracy,
Control and Collective
Decision-Choice System:
A Theory on Political
Economy of Rent-Seeking
and Profit-Harvesting
Studies in Systems, Decision and Control
Volume 5
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Kofi Kissi Dompere
Fuzziness, Democracy,
Control and Collective
Decision-Choice System:
A Theory on Political
Economy of Rent-Seeking
and Profit-Harvesting
ABC
KofiKissiDompere
DepartmentofEconomics
HowardUniversity
WashingtonDistrictofColumbia
USA
ISSN2198-4182 ISSN2198-4190 (electronic)
ISBN978-3-319-05328-8 ISBN978-3-319-05329-5 (eBook)
DOI10.1007/978-3-319-05329-5
SpringerChamHeidelbergNewYorkDordrechtLondon
LibraryofCongressControlNumber:2014932426
(cid:2)c SpringerInternationalPublishingSwitzerland2014
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Dedication
To the global children whose future Rests firmly in the hands of social thinkers
And practitioners of thinking system of just order for peace;

To Mother Earth whose past, present and future glory
Lies in the uniting forces of your children in mind, body and sprit and
In triumph of peace over war; Justice over injustice and collectivity over
individualism;
To the global poor whose struggle against Imperial oppression, neocolonial
injustice and racism
Is a constant reminder of never-ending search for global golden tomorrow
through the strength of Human spirit.

To all scholars who are hard at work for the construction of thought system
For justice and reconciliation without which Peace has no anchorage; and for
the Understanding of political deception and destruction of sovereignty
That is the core of true democracy and the people’s participation.
To all the media persons who are working hard to expose corruption of the
practices of the members of the governing to enrich themselves; and to all persons
working hard
In order to strengthening democracy and rescue it from the mirage of the desert;

As a strategy of full spectrum resistance against a full spectrum dominance
Of bureaucratic capitalism and bureaucratic imperialism that seek
The destruction of human strength, courage, hope and wisdom;
AND
To all those seeking to emancipate themselves from cognitive imbecility,
And the zone of the familiar with the practice of methodological doubt and
hope.
Acknowledgements
I wish to express my thanks to all my friends, who one way or the other, have
given me encouragement and emotional support as I tried to clear some logical
haze surrounding domestic and global political economy and foundations of
economic theory. My special thanks also go to my graduate students who accepted
the challenges of the development of critical thinking by developing the power to
question the accepted in other to avoid being shut out from emerging possibilities
as well as being victimized by the intellectual walls of the familiar. I hope I have
been able to instill the principle of cognitive audacity, curiosity and creativity in at
least some of them. I give my gratitude to Professor Kwabena Osafo-gyimah for
his continual encouragement. I give thanks to the Hall Masters of Akuafo Hall at
the University of Ghana and the staff for their generosity in hosting me during my
visits to Accra to write and tighten some ends of the development of the theories
on political economy. I also express great thanks to all authors who have been
referenced and to those authors who have enriched my philosophical,
mathematical and analytical skills. Thanks to Ms. Jasmine Blackman for her
editorial suggestions.
Controversial ideas and terminologies are intentional, and intentionally directed
to restructure the paradigm of contemporary theories on political economy under
collective democratic decision-choice system where defective information
structure, composed of vagueness and incompleteness, and deceptive information
structures, composed of disinformation and misinformation, are the characteristic
inputs of individual and collective thinking that has become problematic in
democratic decision-choice space whose outcomes invariably define the path of
peoples’ progress and history.
I hope the introduction of deceptive information structure into optimal
collective decision-choice activities in the political economy will be useful in
explaining decision-choice outcomes in political economies and the cultivation of
secrecy and the use of principles of fear and public safety by the governing class
to dismantle popular discontent. I also hope that the use of fuzzy paradigm, its
logic, laws of thought and mathematics will offer an approach to the use of
qualitative mathematics in theory construction and reduction in socio-political
transformations including economic development. I accept responsibility for any
error that may arise in the arguments.
Preface
And I came before the Master and I said, “What can I do to be saved?” And he
said to me “SEEK YE FIRST THE POLITICAL KINGDOM AND ALL OTHERS
SHALL BE ADDED UNTO IT.” And I said to the Master, “Jesus Christ said ‘Seek
ye FIRST the kingdom of God, and all others shall be added to it.’ Which came
FIRST?” And the Master said to me, “Jesus also said ‘Render unto Caesar the
things that are Caesar’s and unto God the things that are God’s.’”
And wisdom of the Master unfolded before me…

Kofi Ghanaba (Guy Warren of Ghana) in I Have Story to Tell, Accra, Ghana 1962,
p.2

In the advanced capitalist nations, new elites based on science and technology
are gradually displacing the older elites based on wealth.

(Robert L. Heilbroner : The New York Times Magazine)

The notion that power in the modern economy lies increasingly with the great
organizations and increasingly less with the supposedly sovereign consumer and
citizen has also been making its way into the text books. Something here is owing
to a vacuum. In recent years there has been a rapidly growing discontent with the
established or neoclassical model of economic and political life. The way was
open for an alternative. Still the inertial forces are great. The textbook writer is
naturally a cautious fellow. Like liberal candidates for public office he must
always have one eye for what is reputable and salable as distinct from what is
true. John Kenneth Galbraith [R11.23 p. xii].
Some of these organizations are very large; as few would doubt, they have
power, which is to say they can command the efforts of individuals and the state.
John Kenneth Galbraith [R11.23, p.3]

The rationally casually ignorant voter is a very slender reed on which to build
the foundations of democratic politics. He is much more likely to be the recipient
of the dispersed costs than of the concentrated benefits of the legislative process.
He is much more likely to suffer the net costs of random prisoners’ dilemmas than
to enjoy the systematic gains-from-trade outlined in the “Calculus of Consent”. Is
it legitimate, in such circumstances to infer that the forces of supply and demand
in political markets are driven not by individual voters but by interest groups; that
X Preface

collective action replaces individual action in the battle over the spoils of politics
that is the raison d’être of democratic politics? If so, what predictions can be
made about the rent-seeking consequences of competition among pressure groups
for political influence? Gordon Tullock, [R13.6, p.46]
The fundamental category of economic activity is power. It is equally (because
in both cases completely) essential to any good activity to have power and to
direct its use “rightly” – and in particular not to treat the acquisition of power as
an end or purpose on its own account.

Frank H. Knight (On the History and Method of Economics, p. 30.)

Great and irresponsible power is a threat to any civil society, and the processes
by means of which this power is gained and exercised tend to corrupt the
democratic institutions of government. B.S. Keirstead, [R15.21, p.445]
I: The Monograph
This is a second volume in my treatment on the problems in a political economy
where the social decision-choice actions are framed in terms of a democratic
collective decision-choice system and where the political economy is seen to stand
on the three legs of economic, political and legal structures. The first volume was
devoted to examining the problems of the political economy of social goal-
objective formation under democratically majoritarian principles, and how the
problems are related to the relative private-public sector provision of goods and
services in the society through the goal-objective formation. The central focus
accorded to the social goal-objective formation is due to an analytical position that
the contemporary social systems are organized to accomplish national interest and
implicit or explicit social vision which are supported by the outcomes of the goal-
objective formation. The relative public-private sector provision of goods and
services and the nature of social income distribution are instruments for
administering the elements in the social goal-objective set under market or non-
market institutions.
The problem of the relative public-private sector provision of goods and
services and the nature of social income distribution is an integral part of the
theory of organizational efficiency and justice in cost-benefit distribution. In
traditional economic theory and analysis, the social vision, national interest and
social goal-objective set are implicitly assumed on the basis of which the quality
of the social organism and social welfare are determined. Given this foundational
assumption, the economic decision problem is simply what are the best allocation
of the resource endowment, best production of goods and services, and the best
distribution of costs and benefits of goods and services to the people on the
fundamental principles of a democratic collective decision-choice system. The
political decision problem is what should be the best institutional configuration
that will support the solution to the economic problem.
The current volume is about the analysis of the problems and solutions of the
market mockery of the democratic collective decision-choice system under a
Preface XI

public information constraint where the voters dwell in the sphere of phantom
power. The market mockery is related to the nature of the power distribution of
productive factors in the political, economic and legal structures which form the
foundation of the political economy operating under a market mechanism. The
market mockery is seen in terms of the formation of the social goal-objective set
and how the elements are related to private-public sector provision of goods and
services and its connections to private-public-sector conflicts which generate
conditions of rent-seeking in the political structure, rent protection in the legal
structure and rent harvesting for profit enhancement in the economic structure.
The monograph is essentially about the political economy of rent-seeking, rent-
protection and rent-harvesting to enhance profits under a democratic collective
decision-choice system, and the market mechanism where the relative private-
public sector production of goods and services, income distribution and wealth
distribution through prices, taxes and consumption of goods and services are the
instruments of social policies in the political, legal and economic structures for
income transfers.
The political structure, the economic structure and the legal structure with their
corresponding markets and powers are analytically distinguished and examined in
relation to the democratic collective decision-choice system of the political
economy. The roles that individual and group resources, money and information
play in the decision-choice outcomes are examined analyzed and related to the
political economy of rent-seeking which is then formulated as a game played
between powerful private concerns and the government. The rent-seeking game is
partitioned into a rent-creating game with a creating strategy, rent-protection game
with a protection strategy and a rent-harvesting game with a rent-harvesting
strategy. The environment of these gaming processes is defined by an imperfect
information structure composed of defective and deceptive information sub-
structures leading to a systemic risk that is composed of fuzzy and stochastic risks
of an aggregative behavior. Two classes of rent-seekers are identified. They are
rent-seeking innovators with rent-creating investments to create rent-seeking
environments of opportunities in the political and legal structures, and rent-
harvesters with rent-extracting investments that abstract rent in the economic
structure and deplete the rent opportunities in the political and legal structures.
The continual interaction between the two classes maintains the dynamics of the
rent-seeking process. The rent-seeking game continually changes or endorses the
governors that use the state power. The umpire of the rent-seeking games is the
national constitution which is also under the control of the political structure.
These games are specified and analyzed around the elements in the social goal-
objective formation, national interest and social vision. The collective decision is
related to the problems of establishing the appropriate government size and the
required relative private-public sector combination in the provision of goods and
services in the political economy.
The nature of the rent-seeking games and activities are amplified by examining
them in terms of Schumpeterian and Marxian socio-political dynamics along the
private-public-sector efficiency frontier that is connected to continual conflicts of
freedoms in individual-collective duality. The properties of Schumpeterian and