This chapter will explain the eight stage system through which all four spheres, the state, religion, the economy, and science must past. The fourth chapter will explain how the eight stages described here lead the state to democracy. Similarly the fifth, sixth, and seventh chapters use the same eight stages to establish civil liberty in the religious sphere, socialism in the economic sphere and optimalism in the scientific sphere.

This chapter should be used in the same manner as the basic motif and the three criteria of chapter two: check to make sure that each historical development described in the following chapters fits the theoretical descriptions given in this chapter.

As mentioned earlier the system developed here is very different from the system of chapter two. The system described in this chapter is built in layers with each layer smaller that the ones below, thus if diagrammed it would give the impression of a Mayan pyramid, three levels high.

The first level is the specialist-institution transformation. Exactly what this is will be explained later in the chapter. The point here is that this system is repeated four times, thus laying the base of out pyramid.

The second level is the educational institution- ownership institution. The first specialist-institutional transformation produces an educational institution while the second specialist-institution transformation produces an ownership institution. Thus the second level of theory is formed by the relationship between the institutional stages of the first level. Within the eight stage system the educational institution-ownership institution transformation is carried out twice.

The third level is the individual ownership institution- egalitarian ownership institution. The first educational institution-ownership institution transformation produces the individual ownership institution. So the third level is built on the second just as the second was built on the first.

Below is a table listing the stages within the system and illustrating how they fit into the three layers of theory, (1) specialist-institution, (2) education-ownership (3) individual-egalitarian. Do not expect to understand the meaning of this until after you have read this chapter. In fact it may not become really clear until you have seen it applied in the following chapters. This is presented here as an introduction to the structure which should be kept in mind when examining the system.

A LIST OF STAGES AND THE CATEGORIES INTO WHICH THEY FIT

1. Specialist

(A) Specialist

2. Educational Institution

(A) Institution (B) Educational

3. Independent Competitive Specialist

(A) Specialist

4. Individual Ownership Institution

(A) Institution (B) Ownership (C) Individual

5. Dependent Competitive Specialist

(A) Specialist

6. Educational Institution for Dependent Competitive Specialist

(A) Institution (B) Educational

7. Despecialization

(A) Specialist

8. Egalitarian Ownership Institution

(A) Institution (B) Ownership (C) Collective

1. Specialist

In the discussion of civilization in Chapter Two there was a discussion of specialist. Here we will more completely explain this important element of the theory. But before looking at the specialist we must examine the utility maximizing individual. The individual maximizes utility subject to his perception of reality.

The specialist tries to manipulate other individuals through their perception of reality. This can be done by manipulating either the reality or the perception. Two of the spheres mentioned earlier, the state and the economy, control the individual by manipulating reality. The other two spheres, Religion and Science, control by manipulating the perception. Those spheres that control by changing reality, the State and the Economy, will be called physical spheres. Those spheres that control by changing the perception will be called intellectual spheres.

The spheres can also be divided into spheres that exercise control by destroying resources and preaching unverified concepts and those spheres that exercise control by creating resources and discovering verified information. The former, the State and Religion, will be labeled nonproductive, the latter, the Economy and Science will be labeled productive.

Below is a chart summing up the classification of the four spheres.

Using one and in some cases several of these methods the Specialist establishes sufficient control over other individuals to make the activity worthwhile. Before proceeding to a discussion of Institutions, it is important to emphasize that the specialist establishes and follows a strategy. For example the state specialist must consistently carry out violence against uncooperative individuals and the economic specialist must consistently sell products.

If either specialist is unreliable then the cost of re- establishing his strategy is likely to be high.

2. Educational Institution

Focusing first on the latter word, institutions establish a set of rules which their members follow and enforce. An institution is seen here as a common strategy declared by a group of specialists. Therefore the salient difference between the specialist and the institution is that the specialization is an individual strategy and the institution is a group strategy. Declaring individual strategies, as specialists do, leads to competition. If the relevant specialists are state specialists this leads to violence, if they are religious specialists religious beliefs lose credibility in the clash, if they are economic specialists prices fall, if they are scientific specialists the limited funding for research is harder to obtain. Thus competition generally leads to results unfavorable for specialists, so there is a strong tendency to institutionalize. Therefore there are four specializations, each of which leads to an institutional form.

The first institution in each of the four systems is an educational institution. When the specialists form the institution and establish the rules they gain a monopoly status in that they are more or less insulated from competition. This means that the members of the institution gain the equivalent of monopoly profits, a surplus gain based on the lack of competition. Entrance in such a system must be rationed if the benefits are to be maintained. One way to limit entrance is on the basis of family. This has the difficulty that the family is a competing form of organization. Thus an institution that uses only family heritage as an entry qualification is likely to split up along family lines. An alternative is education and certification.

Education has several advantages. First education acts as an institutional family, raising the young and thus diverting the natural family loyalty to the institution. The young are generally raised in cohorts thus establishing ties of loyalty among the individuals who will eventually hold power together. Secondly, testing selects not just the most able but also those that show loyalty to the rules and policies of the organization. Thirdly, individuals are asked to make investments in human capital that can not be easily used outside the organization. Thus they are further bound to the institution. Finally the trainees can be exploited transferring the next generation's monopoly profits to the present generation. For example, apprentices in a medieval craft guild receive part of their pay in the form of the possibility that they may one day become Masters. Thus it is possible for one generation of Masters to exploit the monopoly benefits of the next.

The four advantages listed here are not exhaustive but they give some idea of the importance of education in building a strong organization.

In conclusion, the educational monopoly institution gains strength not only because individuals compete for its services but also because individuals compete to enter the organization. By placing itself at the nexus between specialists or potential specialists, and their subjects (consumers, believers, etc.), the institution gains wealth and power with which it firmly establishes itself.

Ah, but competition is not so easily cheated. Eventually individuals resort to means outside the rules to take control of the institution. This is discussed in the next section on a new form of specialist.

3. IndependentCompetitive Specialist

The monopoly power of the Educational Institution establishes the traditions of the institution. If these institutions had to compete in their first fragile years, the institution would dissolve back to a set of unorganized specialists. But as the institution becomes established expansion becomes possible. As institutions expand the local monopoly is broken and competition, institutional competition, enters the picture.

This competition creates opportunities for a new class of specialists skilled at conducting that competition. At first these competitive specialists arise from within the ranks of the Educational Institution. Eventually, however, individuals outside the institution tend to predominate, seizing control through extra institutional means. For example, the theocratic state, the educational institution that founded civilization in Mesopotamia, Egypt, etc., was eventually replaced by the military state. In many cases uncivilized invaders seized control. They did this through force of arms not by passing institutionally approved tests. In a second example, another educational system, the medieval guild, was replaced by the capitalist and the putting out system. The capitalist moved the productive process out of the towns and cities, into the countryside. The capitalists used the cheap labor of the villagers to undersell and destroy the guild's monopoly. The capitalist takes control with capital, not by producing an exceptional masterpiece.

In conclusion the transformation from Educational Institution to Independent Competitive Specialist is characterized by (a) breakdown in the educational institution and therefore a more fluid environment, (b) the rise to power of individuals lacking educational credentials, (c) rapid expansion of the size institutions.

4. Individual Ownership Institution

The breakdown of educational requirements and institutionally approved methods for distributing power makes the coordination of institutional activity difficult. This is particularly crucial because of the intense competition among institutions. Without strong and purposeful leadership the institution will often be swallowed by more aggressive neighbors. More effective coordination can be achieved if competition is suppressed, and a common strategy of allowing one individual to rule is established. This common strategy of allowing one individual to set the rules is the Individual Ownership Institution.

The Individual Ownership Institution creates an identity between the interests of the institution and the interests of the owner. This feeds the trend toward competition between institutions as the individual attempts to make his institution stronger. Expansion of the institution brings more power to the owner and makes it easier for the owner to defend his institution.

Thus, the independent competitive specialists cooperate and turn over power to a coordinating intellectual decision making system, the mind of the owner. Of course in this case, the intellectual decision making system is not further removed from the genetic because it is nothing but an individual. Thus the cooperation in this case leads to more intense inter-institutional competition.

In conclusion, the individual ownership institution establishes the right of certain individuals to make the rules. This right is not earned. For example, the dollar in your pocket may be earned but your right to own dollars is not earned. The acceptance of unearned individual ownership rights encourages effective organization of the relevant institutions.

The paper has now established the first four steps within this system. The first group of specialists established an educational institution that was eventually taken over by independent competitive specialists. The independent competitive specialists in turn set up the individual ownership institution. Thus the system has gone through the specialist to institution transition twice and the educational institution to ownership institution transition once.

All of these transitions must be gone through again to complete the system, but one more transition individual ownership to egalitarian ownership must also be completed. With the first transition, specialist to institution, an individual strategy is superseded by a common strategy. In this last transition, individual ownership to egalitarian ownership, an individual right is superseded by a common right. Thus the specialist to institution transition and the individual ownership to egalitarian ownership rights transition are analogous, the difference being, one involves specialists strategies and the other ownership rights.

5. Dependent Competitive Specialist

The establishment of ownership rights substitutes cooperation for control inside the institution but as mentioned in the previous section ownership intensifies competition between institutions. Thus the competitive specialist is still necessary. The difference is that where before the competitive specialist was relatively independent now he is dependant. An example, is the difference between the independent businessman and the executive working for ownership. The activities are similar but their roles in relation to the institution differ.

6. Educational Institution for Dependent Competitive Specialists

In each sphere some group of dependent competitive specialists find it advantageous to set up an educational monopoly. The ownership rights of the individual begin to break down under the collective nature of the educational monopoly; but while the individual ownership rights are breaking down the basis for egalitarian ownership is being established. The educational monopoly for the dependent competitive specialist has a tendency of increasing the understanding of the competitive activity thus preparing the way for its eventual despecialization.

7. Despecialization

Eventually technological and organizational changes make possible the despecialization of the competitive specialists role. Non-specialists are eager to participate in the activity at least in part because they desire the rights and privileges given to members of the educational monopoly. When these rights and privileges are effectively distributed among the masses the result is the egalitarian ownership institution.

8. The Egalitarian Ownership Institution

The Egalitarian Ownership Institution is the final development in the system. The group establishes a common strategy to respect a group decision making mechanism that affords each citizen collective ownership rights. For example, democracy, the egalitarian ownership institution for the state, gives the individual citizen the right to participate in the collective rule of the state. Another example, civil liberty, the egalitarian ownership institution for religion, gives each individual the right to collectively determine the religion and philosophy of his fellow citizens through free communication.

The collective and egalitarian nature of the decision making greatly enhances the power of the intellectual over the genetic. The atomization of power prevents the use of power for self-interest. Ethical considerations can play a greater role because of the breakdown of the relation between power and self-interest. Democracy provides a clear example. as mentioned in Chapter 2, because the individual voter is so unlikely to decide the election he is safe to vote his conscience rather than his pocket book. The collective nature of the decision dilutes the relationship between the decision of the voter and its affect on his pocketbook. Thus in conclusion, each of the four egalitarian ownership institutions represents a major development in the program from genetic reproduction to intellectual decision making.

The system developed in this chapter no doubt seems theoretical. As it is applied to each of the four spheres it will become more concrete. This chapter serves a similar role to the section in Chapter Two that describes the three criterion for a major development. In reading the next four chapters the reader should refer (at least mentally) back to this chapter to see that the systems described for each sphere do indeed fit the motif developed in this chapter. Before plunging into the system proper, let us take another look at the structure of this system. The specialists cooperate to establish a common strategy thus forming an institution. This is the first transformation discussed and it occurs four times. In the second transformation, the educational institution acts as a haven for an infant institutional form. The traditions and techniques established by the educational institutions lay the base for the ownership institutions. Finally on the third level of the system the individual ownership rights are distributed to the group. On the first level the transformation was from individual strategy to group strategy. On the third level the transformation was from individual ownership rights to group ownership rights. Thus even through individual ownership is an institutional form the development of an egalitarian ownership institution can be thought of as the institutionalization of the owner. With the institutionalization of the owner and the specialist the system is complete.

Chapter 4 The State to Democracy Tell me what you think in my guest book.