Tag: Capitalism

Review: The Origins of Capitalism

by Charles M Rupert, posted in Charles Matthew Rupert

The book The Origins of Capitalism by Ellen Meiksins Wood provides a compelling history of capitalist analysis. The story, in a nutshell, says that nearly all accounts, both for and against capitalism, have failed to really understand the generation process of capitalism, and because of that historical misunderstanding they misapprehend what capitalism is. In this concise review, I will try to summarize the main thread of Wood’s argument, specifically with an eye toward an analysis of capitalism rather than as an evaluation of historical accuracy. Towards that end, I will not challenge any assumptions of the author but accept her account of capitalism, what it means, and how it acts. Finally, I will attempt to locate this account within my own work.

https://www.versobooks.com/books/2407-the-origin-of-capitalism

Wood spends a good deal of time elaborating the competing views she hopes to overcome, all of which can be boiled down to some version of Adam Smith’s origin story with its emphasis on “man’s propensity to truck, barter, and trade.” This story reveals capitalism to be something of a natural evolution of human instinct, being gradually unfettered by political and religious control and exploitation. Once these fetters were finally dispensed with, the economy became liberated, and human beings were finally free to do what they really wanted to do all along, become capitalists. In this sense, capitalism is simply an extension of the innate desire for human beings to employ the things they own to their own advantage.

She makes several good arguments for why this explanation is erroneous, which I will not bother to recount here. Instead, I want to focus on her alternative account that finds capitalism as developing in English agriculture. In my interpretation, it is a misread to claim that Wood is arguing that capitalism is born out of English agrarian society. Rather, I believe she is arguing that when a proto-capitalist model of property relations came to be applied to the necessities of life as occurred during the supplantation of traditional agrarian society during feudalism, the only means of living were altered for everyone and a new system with its own logic and imperatives took over. This was against the resistance of the people who would come to adopt it, namely peasants.

Rather than the traditional tail of fetters being removed, the story Wood tells shows how the powers of economic exploitation simply were shifted from direct control by lords to seize profits from the relatively independent peasant producers to one where the exploitation was formalized in the property relations with the lords established as “owners” and the peasants as “tenants” or “farmers”. The only remaining role then for the state in such a system is to enforce the property relations as a whole, making economic relations quasi-independent of political activity. This separation masks the coercion, making it feel more “natural” or “free”, rather than the obvious and direct political oppression involved in feudal systems. Such a system, Wood suggests, changes the mode of exploitation from extra-economic means to purely economic ones, and at the same time changes the incentives for lords from one of squeezing peasants to maximizing the productivity of farmers and employees. This effect accounts for both the success of capitalism in replacing nearly all other forms of economic relations and for capitalism’s intense classism, colonialism, racism, sexism, and so forth. Without its political element, it is not clear who may be exploited and so the exploitation is filtered through some or several forms of identity politics.

In general, I think Wood’s reading is accurate although I don’t claim to know the intricacies of the agrarian argument she bases it on. What I take from Wood’s analysis is simply the fact that the defining characteristic of capitalism is its ability to separate exploitation from the political sphere. This fits with the very nature of oppression, which, roughly defined, is characterized by apparent freedom and opportunity with the subtle reality being one of limited options and forced choices. With this understanding in play, capitalism is not established by private property or markets for its exchange. Those elements may be associated with a great many economic systems. Capitalism is then a particular way of preserving classism without recourse to draconian political force.

On the upside, assuming Wood is correct here, capitalism offers humanity the first glimpse of economic freedom from direct political control. This is indeed the achievement that capitalist apologists have long used to justify the system. The failing of capitalism lies not in its divorce from political oversight, but in its continued adherence to the principles of classism and exploitation. The goal of any socialist regime worthy of the name would be to devise a way to surgically eliminate that element while preserving the freedom for self-determination and individuality that comes with economic independence.

In my own work, that goal is met by the abolition of the form of rent. The form of rent is the particular facet of capitalism that allows one to make money from ownership without relinquishing the rights of ownership. It is, in my opinion, the “Pandora’s box” of capitalism, through which all the evils enter. Without the form of rent, especially manifest in profit, interest, and rent, capitalism ceases to be exploitative, and without its exploitative element, capitalism isn’t capitalism at all. In Wood’s understanding capitalism is the exploitation of labor without direct political means; so, no exploitation, no capitalism. No matter whatever elements of capitalism remain, including private property and markets, without the form of rent it ceases to be capitalist and becomes, for lack of a better term, libertarian socialism.

Oscar Wilde was a Better Marxist than the Bolsheviks, Part 3

by Charles M Rupert, posted in Charles Matthew Rupert, Ethics, Philosophy, Political Economy, Politics

“‘Know thyself’ was written over the portal of the antique world.  Over the portal of the new world, ‘Be thyself’ shall be written.”

Oscar Wilde, “The Soul of Man Under Socialism”

I have already made the argument that Karl Marx and Oscar Wilde share a particularly libertarian vision of socialism. I have also already speculated what Wilde’s socialism would have to look like. In this final part, I want to explore the view of individualism under socialism that makes it libertarian, particularly in the words of Wilde and Marx. Let’s begin with the question Wilde asks:

But it may be asked how individualism, which is now more or less dependent on the existence of private property for its development, will benefit by the abolition of such private property?

He answers:

Under [socialism], individualism will be far freer, far finer, and far more intensified than it is now… For the recognition of private property has really harmed Individualism, and obscured it, by confusing a man with what he possesses.

Wilde’s answer reveals an existentialist’s view of socialism. For Wilde, individualism is self-making, rather than self-acceptance as is the individualism of Ayn Rand. That left-wing libertarianism is existentialist comes as no shock to anyone familiar with the neo-Marxist work of the nineteen sixties and their near obsession with young Marx. It is young Marx, the humanist, who celebrates the individual to come under socialism. The individual under capitalism is reduced to the base animal functions since the wages of a worker are reduced to subsistence, only these animal functions may be expressed. The norm then for the worker is to be a brute, an animal, for those are the only pleasures allowed for them. Marx writes,

[M]an (the worker) feels himself to be freely active only in his animal functions–eating, drinking, and procreating, or at most also in his dwelling and in personal adornment–while in his human functions, he is reduced to an animal. (99)

Individuality is not a given, it must be cultivated and requires resources to develop it. The goal of socialism, as we saw in part one, is to provide the resources that will satisfy the animal requirements and allow for the human individuality to emerge. The argument presented against this is that a fully realized individual, e.g. a Lord Byron, must have wealth to be fully realized and there is not enough wealth for everyone to be fully realized. Some people will have to content themselves with pushing the dirt around. Wilde argues against this that socialism is not interested in taking away opportunity as it is in extending it to everybody.

The question then becomes how? Right-wing advocates of capitalism argue that this is simply wishful thinking. It cannot be done. Not everyone can be a poet and philosopher. However, this argument is made on a particular set of unfortunate assumptions about the nature of humankind that amount to an anti-existentialism. The most important of these for our purposes surrounds the confusion between being and having, that is confusing self-realization for the possession of private property. Wilde writes,

[Under capitalism, humankind thinks] that the important thing was to have, and did not know that the important thing is to be. The true perfection of man lies, not in what man has, but in what man is. Private property has crushed true Individualism, and set up an Individualism that is false.

This division between possession and essence is best described by the existentialists a half-century later. Using them to understand Wilde, we can conclude that individualism is living an authentic life, where possessions are merely possessions, things to be used in the pursuit of your life’s goals, not necessities that are merely useful. One must have a personality in order to decide what is useful, it cannot be defined for you by an outside agency, capitalist, socialist, or anything else. Individuality is authenticity and socialism is the necessary condition for it.

[Jesus] said to man, ‘You have a wonderful personality. Develop it. Be yourself. Don’t imagine that your perfection lies in accumulating or possessing external things. Your affection is inside of you. If only you could realise that, you would not want to be rich. Ordinary riches can be stolen from a man. Real riches cannot… And so, try to so shape your life that external things will not harm you. And try also to get rid of personal property. It involves sordid preoccupation, endless industry, continual wrong. Personal property hinders Individualism at every step.

Individualism is the call to be authentic, to author your own life, to care little for the direction others would have over your life. Contra religion, Wilde emphasizes that there is no set path to authenticity, no prescribable way to live your life.

Father Damien was Christlike when he went out to live with the lepers, because in such service he realised fully what was best in him. But he was not more Christlike than Wagner when he realised his soul in music; or than Shelley, when he realised his soul in song. There is no one type for man. There are as many perfections as there are imperfect men. And while to the claims of charity a man may yield and yet be free, to the claims of conformity no man may yield and remain free at all.

Individualism is what you make of yourself when you no longer have to labor for mere survival. The rich and the middle classes have to think about money all the time, it is how they make it, keep it, and spend it. When you have to think about money all the time you are unable to develop yourself, to become an individual. You are, in effect, reduced to making yourself whatever is easiest, most convenient, and most attractive to those upon whom your happiness depends. And under capitalism, this class includes everybody.

There is only one class in the community that thinks more about money than the rich, and that is the poor. The poor can think of nothing else. That is the misery of being poor. What Jesus does say is that man reaches his perfection, not through what he has, not even through what he does, but entirely through what he is.

This notion of individualism echos Marx’s idea of freedom from alienated labor. As Erich Fromm said of Marx, “Socialism… was never as such the fulfillment of life, but the condition for such fulfillment… Marx says quite clearly in the Economic and Philosophic Manuscripts, ‘communism as such is not the aim of human development.’ What, then, is the aim? Quite clearly the aim of socialism is man,” (60). Alienated labor is the particularly capitalist organization of labor which isolates rather than individuates human beings. It breaks people up into specializations, but it also breaks them down into parts, making laborers out of people, or, in a few cases, capitalists. No one is free to be who they want, everyone is compelled by a system designed from without. As Marx said, “alienated labor… alienates man from himself, from his own active function and from other men,” (101). Subjected to our alienated needs human beings become “mentally and physically dehumanized… the self-conscious and self-acting commodity.” In other words, we come to see ourselves and each other as things.

What makes capitalism dangerous is precisely the fact that owning capital seems to fully compensate for the loss. Possessions can be lost, but capital, self-replicating possessions, appear to be just as permanent as authentic being itself. Capitalism, like the Christian ideology it came from, emphasizes an asceticism that forbids individuality because this allows you to replace an authentic existence for a treasure trove of self-creating wealth. Of course, this only works if everyone is made, by incentive or force, to bow to their role in the system. Marx writes,

[The political economy of capitalism] is… [also] the science of asceticism. Its true ideal is the ascetic but usurious miser and the ascetic but productive slave…. The less you eat, drink, buy books, go to the theatre or to balls, or to the public house, and the less you think, love, theorize, sing, paint, fence, etc. the more you will be able to save and the greater will become your treasure which neither moth nor rust will corrupt–your capital. The less you are, the less you express your life, the more you have, the greater is your alienated life and the greater is the saving of your alienated being. Everything which the economist takes from you in the way of life and humanity, he restores to you in the form of money and wealth. (144)

For Marx, the aim of socialism then is liberation from this system. He writes in the manifesto,

All that we want to do away with is the miserable character of this appropriation, under which the labourer lives merely to increase capital, and allowed to live only so far as the interest to the ruling class requires it.

Under socialism, one must not err into thinking that capital is somehow a substitute for individuality, but at the same time, one must not confuse individualism with selfishness. Long before Ayn Rand extolled the virtues of selfishness, Wilde argued that “Selfishness is not living as one wishes to live, it is asking others to live as one wishes to live. And unselfishness is letting other people’s lives alone, not interfering with them.” Selfishness for Wilde is what altruism is for Ayn Rand. I have already shown that Wilde would have agreed that altruism is bad, but he would have disagreed that selfishness was any different. He condemns egoism, saying,

For the egotist is he who makes claims upon others, and the Individualist will not desire to do that. It will not give him pleasure.

This is because:

Individualism exercises no compulsion over man. On the contrary, it says to man that he should suffer no compulsion to be exercised over him. It does not try to force people to be good. It knows that people are good when they are let alone. Man will develop Individualism out of himself.

And therein lies the great difficulty with individualism, for the freedom to be oneself, is all too often accompanied by the desire to restrict the freedom of others. It was in the name of freedom that slave-holders denounced the abolitionists. “What right have they to take away my freedom to own slaves?” Or as Marx put it, “Freedom is so much the essence of man that even it opponents realize it… No man fights freedom; he fights at most the freedom of others.” Freedom requires the rights of all to freedom. It is not up to the capitalist to decide what a worker’s needs should be, and yet that is exactly what happens. For the capitalists require workers, as much as possible, to resemble the “self-acting commodities” they need them to be. Wilde writes,

[A] man is called selfish if he lives in the manner that seems to him most suitable for the full realisation of his own personality; if, in fact, the primary aim of his life is self-development. But this is the way in which everyone should live… Selfishness always aims at creating around it an absolute uniformity of type. Unselfishness recognises infinite variety of type as a delightful thing, accepts it, acquiesces in it, enjoys it. It is not selfish to think for oneself. A man who does not think for himself does not think at all. It is grossly selfish to require of ones neighbour that he should think in the same way, and hold the same opinions. Why should he? If he can think, he will probably think differently. If he cannot think, it is monstrous to require thought of any kind from him. A red rose is not selfish because it wants to be a red rose. It would be horribly selfish if it wanted all the other flowers in the garden to be both red and roses. Under Individualism people will be quite natural and absolutely unselfish, and will know the meanings of the words, and realise them in their free, beautiful lives.

 

Oscar Wilde was a Better Marxist than the Bolsheviks, Part 2

by Charles M Rupert, posted in Charles Matthew Rupert, Ethics, Philosophy, Political Economy, Politics

“Disobedience, in the eyes of anyone who has read history, is man’s original virtue.  It is through disobedience that progress has been made, through disobedience and through rebellion.”

Oscar Wilde, “The Soul of Man Under Socialism”

In the first part of this series, I showed that both Oscar Wilde and Karl Marx respected individual freedom so much that they saw it as the essence of socialism. Each man envisioned a future that enabled the fullest expression of individuality. Far from the authoritarian socialism of the Bolshevik model; Wilde had libertarian socialism in mind. Neither man was particularly explicit about what socialism would look like, each preferring to paint in broad strokes his vision of the future. In all likelihood, neither probably knew what socialism would look like so much as they knew what was wrong with capitalism. There is thus no way to compare blueprints. We may, however, see socialism in a negative, that is by knowing what they said socialism is not, and how each believed we get from capitalism to socialism.

It may seem surprising that not even Marx advanced a state-ownership of private property model; one that placed society above individuality and authoritarianism over liberty. State-ownership of the means of production was capitalism for Marx, who thought of the state as the keeper of bourgeois interests. Neither did he think that the dictatorship of the proletariat could be anything other than universal, democratic, and brief. A democratic dictatorship is an anarchic phase that all revolutions necessarily go through. Think of the American Revolution before the constitution, when the Contential Congress claimed self-sovereignty and began issuing dubious laws. The dictatorship of the proletariat under the Bolsheviks came to mean “the organization of the vanguard of the oppressed as the ruling class for the purpose of suppressing the oppressors…”, as Lenin put it. No longer would the people rule themselves, they would be ruled by the vanguard of intellectual elites acting as saviors for a whole class of people who revolted quite sufficiently without them. This was socialism in name more than in substance.

Real socialism is supposed to differ from capitalism. Capitalism cultivates economic dependence, suppresses actual political decision-making for indirect democracy, and through these methods stifles individuality. Nowhere is this more clear than in the case of poverty under capitalism. From the perspective of capitalism, poor people are “superfluous”, to use Thomas Malthus’ term, or “redundant”, to use Margret Thatcher’s. They are not needed by the economic system and therefore the system is unable (or more accurately, unwilling) to support their continued existence. Capitalist logic dictates that it is the duty of the poor to die, even in the midst of great plenty, if their labor is unnecessary to capitalists. This ruthlessness of capitalism has been defended by Malthus et. al. but generally it is deplored by mainstream society, including a great many wealthy capitalists themselves. Poverty for most people is a social problem that requires a social solution. Wilde writes,

Misery and poverty are so absolutely degrading, and exercise such a paralysing effect over the nature of men, that no class is ever really conscious of its own suffering. They have to be told of it by other people, and they often entirely disbelieve them.

Poverty is so destructive that those who are in it fail to recognize the social mechanisms that produce their deplorable state; rather like how a drowning person loses sight of everything but keeping their head above water, the poverty-afflicted can only struggle desperately from moment to moment. Disobedience and rebellion, those mechanisms of human progress, require the intervention of others who can help them discover their plight. Wilde writes,

What is said by [capitalists] against agitators is unquestionably true. Agitators are a set of interfering, meddling people, who come down to some perfectly contented class of the community, and sow the seeds of discontent amongst them. That is the reason why agitators are so absolutely necessary.  Without them, in our incomplete state, there would be no advance towards civilisation.

This is the role Marx set for himself. Just as the chains of slavery were not, and could not be taken off by the slaves themselves, abolitionists became necessary. Socialist agitators awaken the proletariat–who at that time, may well have been fully employed and yet completely destitute–from false consciousness, or the conviction that this was the best that they could hope for in life or all they were worth or that the iron law of wages meant there just wasn’t enough for them even if they doubled production.

But it is not only the poor who suffer under capitalism. Another problem is the threat of poverty, which leaves even the richest insecure. Wilde again,

An enormously wealthy merchant may be—often is—at every moment of his life at the mercy of things that are not under his control. If the wind blows an extra point or so, or the weather suddenly changes, or some trivial thing happens, his ship may go down, his speculations may go wrong, and he finds himself a poor man, with his social position quite gone. Now, nothing should be able to harm a man except himself.  Nothing should be able to rob a man at all.

The threat of poverty drives the rich the way a jockey drives a horse. No one, no matter how wealthy, is immune to the threat. Poverty must be done away with, must it not?

Socialism obviously offers a solution, but capitalism provides its own. Charity and altruism are the bulwarks of capitalism. Wilde saw this as a fraud. Like Ayn Rand and Friedrich Nietzsche, Wilde realized that the exercise of mercy is just another form of power and control, a way to make others live for you. Altruism is anti-socialist! Charity hurts the poor. It strings them along without the hope of liberation. Wilde writes,

[People] try to solve the problem of poverty… by keeping the poor alive; or, in the case of a very advanced school, by amusing [them]… The proper aim [of socialism] is to try and reconstruct society on such a basis that poverty will be impossible… Charity degrades and demoralises.

For Wilde, this was cruel self-aggrandizement on the part of the wealthy. Charity makes the rich feel better and that is all it does. The Malthusians among us will no doubt object that it is by the generosity of the capitalist that any poor exist at all. The neoliberal will add that, actually, it is by the self-interest of the capitalist that the working poor, those paupers, have even the meager means to survive. But for Wilde, as for Marx, this is telling the slaves, those who sow the seeds, raise the crops, harvest the food, and prepare and serve the meals, that they should be grateful for the master’s benevolence in providing them sustenance. Wilde writes,

We are often told that the poor are grateful for charity. Some of them are, no doubt, but the best amongst the poor are never grateful. They are ungrateful, discontented, disobedient, and rebellious. They are quite right to be so… Why should they be grateful for the crumbs that fall from the rich man’s table? They should be seated at the board, and are beginning to know it.

The poverty-ridden people unable to recognize who or what is making them poor, have but two options for survival: to steal or submit to capitalism’s picture of humanity. Wilde suggests the choice is between living as a human being and as a pet, writing,

It is safer to beg than to take, but it is finer to take than to beg… As for the virtuous poor, one can pity them of course, but one cannot possibly admire them. They have made private terms with the enemy, and sold their birthright for very bad pottage.

To the Randian libertarian, who locates the fatal flaw in the idea of altruism itself, a break with capitalism is not necessitated. To these anti-socialist libertarians, one must boot-strap oneself out of poverty, either by accepting their worth as whatever crumbs fall from the rich man’s table or by asceticism. Against this position, Wilde writes,

Sometimes the poor are praised for being thrifty. But to recommend thrift to the poor is both grotesque and insulting. It is like advising a man who is starving to eat less. For a town or country labourer to practise thrift would be absolutely immoral. Man should not be ready to show that he can live like a badly-fed animal.

The problem for this libertine brand of capitalism is the loss of human dignity that it entails. One may not need to be “grateful” because one lives by one’s own lights but without socialism, that life must be debased. What is the point of living by one’s own labors if one cannot earn a respectable living with nearly super-human effort? What is the point of individualism when it reduces individuality to mere animal subsistence?  Indeed, it is not finer to take than to beg?

Rejecting capitalism’s cold comforts and Bolshevik authoritarianism, we are left only with a particularly libertarian form of socialism. The socialism of Wilde approaches something like the minimal state of Robert Nozick, but unlike Nozick’s, a state incompatible with exploitation.

Individualism, then, is what through Socialism we are to attain to. As a natural result, the State must give up all idea of government. It must give it up because, as a wise man once said many centuries before Christ, there is such a thing as leaving mankind alone; there is no such thing as governing mankind. All modes of government are failures.

Wilde was very nearly an anarchist, however, the state remains as a

…voluntary association that will organise labour, and be the manufacturer and distributor of necessary commodities. The State is to make what is useful. The individual is to make what is beautiful.

How exactly the state and individual efforts are to be arranged, Wilde leaves us to speculate. Which to his credit he acknowledges:

Is this Utopian? A map of the world that does not include Utopia is not worth even glancing at, for it leaves out the one country at which Humanity is always landing. And when Humanity lands there, it looks out, and, seeing a better country, sets sail.  Progress is the realisation of Utopias.

Still glimmers of what Wilde envisions come through. Wilde, like Marx, sees the unlimited potential of mechanization to free human beings, but only under socialism where its benefits are shared by all. Mechanization eliminates manual labor and frees human beings from toil.

There is nothing necessarily dignified about manual labour at all, and most of it is absolutely degrading. It is mentally and morally injurious to man to do anything in which he does not find pleasure, and many forms of labour are quite pleasureless activities…. To sweep a slushy crossing for eight hours, on a day when the east wind is blowing is a disgusting occupation. To sweep it with mental, moral, or physical dignity seems to me to be impossible. To sweep it with joy would be appalling. Man is made for something better than disturbing dirt. All work of that kind should be done by a machine… Human slavery is wrong, insecure, and demoralising. On mechanical slavery, on the slavery of the machine, the future of the world depends.

How close is Wilde to Marx’s vision of socialism? In the third volume of Capital, near the end, Marx argues that “the realm of freedom” his ideal society of free individuals, cannot begin until freedom from want and thus compulsion is achieved.

Just as the savage must wrestle with nature, in order to satisfy his wants… so civilized man has to do it, and he must do it in all the forms of society and under all possible modes of production. With his development the realm of natural necessity expands because his wants increase; but at the same time the forces of production increase, by which these wants are satisfied. The freedom in this field cannot consist of anything else but of the fact that socialized man, the associated producers, regulate their interchange with nature rationally, bring it under their common control, instead of being ruled by it as by some blind power; they accomplish their task with the least expenditure of energy and under conditions most adequate to their human nature and most worthy of it. But it always remains a realm of necessity. Beyond it begins the development of human power, which is its own end, the true realm of freedom, which, however, can flourish only upon that realm of necessity as its basis. (Fromm, 60)

Marx paints a picture of socialism where humans produce rationally rather than in an alienated way. That is, they produce for themselves what they want, not necessarily what the capitalist would profit by the most. They produce associatively, which may or may not be competitive, but without the ruthless competition of capitalism. This clearly rules out the possibility of a state-run, bureaucratic socialism. The individual must be the central agent and the goal of socialism. Socialism then is merely meant to alleviate human beings from the struggle with nature, and so allow us to create ourselves for ourselves. Socialism will be known when economics serves the needs of society the same way it serves the needs of capitalists under capitalism. For Marx and Wilde, socialism is a machine for serving the basest of human needs, our animal needs. It is not here to tell us how to satisfy them, only to ensure that they get satisfied.

 

 

 

 

Who Is Saving Up for the Future?

by Charles M Rupert, posted in Charles Matthew Rupert, Ethics, Philosophy, Political Economy, Politics

In the neoliberal picture of economics, it is a common assumption that workers are indirect beneficiaries from the saving and reinvestment of capitalists in their privately owned businesses. Capitalism thereby provides these laborers with jobs, income, and indeed their very lives. This notion can be found from Bernard de Mandeville (The Fable of The Bees: or, Private Vices, Publick Benefits) to Friedrich Hayek (The Fatal Conceit), and popularized in the war cry of Gordon Gekko, “Greed is… good. Greed is right, greed works.” Of course, we are not really talking about “greed” here but “savings and investment”. Put simply, the idea is that by following their own self-interests the capitalists, inadvertently and out of necessity, provide for an army of workers who would otherwise be unable to survive. This all sounds straightforward enough, but there is a problem. This argument is curved three hundred and sixty degrees.

The neoliberalism assumes that the act of saving for new capital expenditures must be the product of the lone action of the enterprises’ owners. Part of the reason for believing this is cultural. The law and most people have–without good reason, mind you–assumed that the product of an enterprise’s efforts belongs exclusively to the owners of its capital. This is the fundamental assumption of capitalism. It is from this assumption that it seems to follow that the reinvestment in an enterprise’s capital is an act of its “owners”. Another reason, more classist and derogatory, comes from a long history of intellectual’s belief that lowly wage-workers were incapable of managing money. The stereotype of the drunken field hand or dock worker embodies the sentiment. Given them more money, according to this classist logic, and they would thoughtlessly spend it on gambling games, booze, and prostitution. This prejudice lingers on centuries later the wreck of capitalist poverty created such desperate people for whom a minutes entertainment was the best they could hope for, and despite overwhelming evidence to the contrary. This is nevertheless the source but not the problem with the neoliberal argument. To see why we’ll need to examine the process of profit from sales.

beames-thomas-rookeries-M00006-32.jpg

The neoliberal’s capitalist model looks something like this: the owner of the capital (material components) of an enterprise is assumed to be “owner” of the enterprise itself, and this is true whether or not they work for the company or have ever even laid eyes upon it. As the “owner” of the enterprise, they have rights that extend to the products of the enterprise’s industry. The owners of capital then, own the fruits of labor’s efforts based squarely on the strength of the assumption. As “owners”, they are at liberty to sell these items, (including service labor) for any price they can get and keep all of the profits thereof for themselves. The labor of workers has been assumed to have been contracted out, paid in advance, through fair and just negotiations, before the manufacture and sale of the “product”. The risk of a failure at the market is assumed also to belong entirely to the capitalist and is often invoked as the justification for their keeping the “surplus-value” or profit from sales, over and above the costs of production. If you accept this model, then it does follow that capitalists are saving for the future good of all of society and therefore what is good for the capitalists is the best anyone, capitalist or otherwise, can hope for.

I, obviously, do not accept a neoliberal capitalist model. Against it, I offer the following alternative: when a “product” is sold at the market the price is fixed by the consumers, that is the proceeds of the sale are ultimately set by demand for the product and have nothing whatsoever to do with the way the product was brought about. Consumers lack knowledge of production methods and set price based on relative utility over the cost of a product or service to themselves (this is the Austrian theory). But from the manufacturers’ point of view, the profit of sale comes back somewhat mysteriously, set entirely by the market, with little (including advertising) they can do to change it. It is impossible to tell from this perspective whose productive contributions made the product profitable. The labor of one person and the materials of another are so combined that both were equally necessary for there to be realized any profit at all. If we don’t just assume the capitalist tradition of arbitrarily favoring the material owners of the things in an enterprise as the legal owners of the enterprise itself (and hence its products), we would have to ask ourselves how the profits, set by the market, ought to be divided among the respective contributors to production.

L0000880 Opium den, East end

If we make the uncontroversial assumption that the rewards of group efforts ought to be shared evenly with respect to individual effort then there seems to be no reason to accept the fundamental assumption of capitalism. What gives capitalists the priority claim except for mere arbitrary tradition? And if we reject their claim, then the notion that workers owe their lives and livelihoods to capitalist’s self-interest goes right out the window; for if the profit is evenly shared then so too would be any saving and reinvestment in the capital of the enterprise. Worker’s can be seen to have been forced to save, so that money could be invested into the capital of an enterprise which they will benefit from only in the sense that the grist mill benefits from laboring because then its owners’ oil its parts. In short, if the profits are evenly shared, the savings are also.

But the stereotype persists, so that were the workers not “forced” to save, they would be very unlikely to reinvest, choosing instead to drink away their profits. I find this notion laughable, as I think of all the sodden millionaires, slurping Moet & Chandon, at some gala or another; no one accuses them of monetary impropriety. The fact is that laborers have more reason to invest in a company they own and work at than either an investor or an employee. The point here is that seen my way, the saving-act is really just as or even more legitimately an effort of laborers. We could view and should view laborers as the legitimate owners of the product, and so they either should have been paid more for their labor or they forwent the enjoyment of that income to invest it in the enterprises’ capital. It’s the assumption that capitalists should be considered the rightful owners of the products of industry and not all the members of that company that makes the neoliberal argument circular. The neoliberal cannot both assume the ownership of the products and use that assumption to justify the ownership of the means of production. This argument fails to prove that it is the capitalist who is really providing for the livelihood of the workers. It may just turn out that it is the workers who are really saving the money thus providing not only for themselves but all of the capitalist’s excessive wealth in addition.

jerrold william blanchard london c13856 05.jpg

It would surprise few on the left to learn that a similar kind of argument was used in defense of slavery in antebellum America. The idea was that slaves, being nearly as dumb as animals, couldn’t be expected to provide for themselves outside their native habitats. Being now caught up in an “extended order” (to use Hayek’s term for a society where almost none provide everything for themselves a bit anachronistically) they would not be able to survive without the slave-masters to provide for them. They owe their livelihoods and their very lives to the master’s efforts. So, the well-intended sympathies of intellectual elites and moralists who would abolish slavery can’t see that they would destroy the very material foundations that made the slave’s lives possible in the first place. But we know better today! It was not the slaves who depended on the masters’ benevolence for their livelihood, it was the masters who depended on the slave’s labors for theirs. It was mere contrivance that–like a funhouse mirror–makes it appear upside-down. Sadly, the “funhouse” is the “courthouse” and the “mirror of distortion” is the “law”.

The neoliberal argument pits an ideological morality against a supposed material economic necessity but is itself a reversal of the truth. The ideological morality is an empty vision that all too conveniently enables the mechanisms of economic oppression. The material economic necessity is built with the sweat of labor. The laborers provide the material necessity and the capitalists appropriate the excess with ideological morality.

To save money is exactly the same thing as to earn money, profit is savings and savings is profit, from an individual point of view. It is only when we consider society as a whole that we can see that the two are not the same. This Keynesian insight has largely been forgotten, but it plays a role both in the need to establish a guaranteed income and in arguing against the neoliberal conception of capitalism.

Marx wrote: “Political economy, the science of wealth, is, therefore, at the same time, the science of renunciation, of privation and of saving, which actually succeeds in depriving man of fresh air and of physical activity. This science of a marvelous industry is at the same time the science of asceticism. Its true ideal is the ascetic but usurious miser and the ascetic but productive slave… The less you eat, drink, buy books, go to the theatre or to balls, or to the public house, and the less you think, love, theorize, sing, paint, fence, etc. the more you will be able to save and the greater will become your treasure which neither moth nor rust will corrupt–your capital. The less you are, the less you express your life, the more you have, the greater is your alienated life and the greater is the savings of your alienated being. Everything which the economist takes from you in the way of life and humanity, he restores to you in the form of money and wealth.” (Marx’s Concept of Man, 144)

If the saving that enables both the reinvestment and the profits of the wealthy is, in fact, a forced saving on labor, then they are the “ascetic but productive slave” Marx mentions. And as I said above, the strength of the neoliberal argument for savings is carried entirely by assumption. We need only ask ourselves, by what right can capitalist’s claim ownership if we do not accept the neoliberal argument from tradition? Here I think is where the argument for private property ownership laid out in Locke, based on both a need for exclusive use and expenditure of labor to acquire comes into play. It is from this justification that we can see the neoliberal assumption to be false. And what is more, it not only reveals the assumption to be false but proves that it is laborers that are or could be the true owners of the means of production. They alone could meet both of the necessary conditions for private property ownership.

 

A Guaranteed Income

by Charles M Rupert, posted in Charles Matthew Rupert, Political Economy, Politics

Every man speculates upon creating a new need in another in order to force him to a new sacrifice, to place him in a new dependence, and to entice him into a new kind of pleasure and thereby into economic ruin. Everyone tries to establish over others an alien power in order to find there the satisfaction of his own egoistic need.

– Karl Marx, Marx’s Concept of Man, 140

It should be noted in the above quote, taken from Marx’s Economic and Philosophic Manuscript of 1844, that Marx indicates that it is “[e]very man” and not just capitalists who have an interest in exploitation. The capitalist is not unique in the desire to exploit others, that is common to us all, says Marx. What separates capitalists from everyone else is that they have the means to exploit. If we are not all free, then none of us are, and this is precisely why.

In this post, I want to give a libertarian socialist defense of universal basic income. This will require some specific definitions to the notion of “universal” and “basic” and it will require a defense that is not reliant on consequences. In other words, to be a libertarian socialist defense, it cannot say “hey, see how this, and this, and this would be better with a UBI!” Such arguments are all well and good and have been made repeatedly by others with better data and research than I care to possess. See here, here, and here for arguments of that kind. Instead, I want to present us with a socialist argument for, what I will call a guaranteed income. The reason for a socialist argument is that without a rupture with capitalism, a universal basic income would really just subsidize wages for employers.

Before I present the argument I need to be clear about what I’m suggesting. The “guaranteed income” is not really universal and “basic” is too abstract to be of any value. What I intend is an income for people whose labor is less traditionally rewarding in a capitalist society, but is nevertheless important. The first and foremost of these types of labor is what I’m calling austerity. Austerity is the labor of making do with less. Austerity is the job of the poor. They learn to live with less so everyone else can have more, more cheaply. This is thrift and it is so often exploited that I don’t think another living soul has ever even suggested that the rich exploit the poverty of the poor. They take the benefit of being poor, which is free time, and remove the ability of the poor to be industrious for their own gain. I will spare us the details but suffice it to say that it takes a lot of work to be poor in a capitalist society, see Nickled and Dimed by Barbara Ehrenreich for why. Other types of labor are better known as labor if still unpaid or underpaid. Domestic labor is at the head of this class, followed shortly by child-rearing and education, and the copious amounts of internships and art gigs people do in the hope of building a portfolio.

Free labor that benefits another is another class like austerity that I’ll be mentioning. This one already has a name. It is called slavery. A guaranteed income, as we will see, conforms slavery into austerity, where one has little but their free time is, in fact, their own. However, it is not necessary to be fair that everyone would receive this income, it is only necessary that everyone could receive this income and merely for being alive. In this sense, it’s not really universally applied despite being guaranteed to all. Everyone is guaranteed some income if they choose to take it and don’t already make more than it offers. But how much should it offer?

I recommend that the price of the income be pegged to some sort of productivity index. There are several to choose from: the Gross Domestic Product, Gross National Happiness, Genuine Progress Indicator, the Happy Planet Index, and more. Whichever index we light on, we’ll want to set a standard level for the guaranteed income, say around a quarter to a third of the per-capita distribution. This would vary, year by year, and have the important fact of driving people back onto the labor market when productivity slacks. It will no doubt find a reasonable equilibrium and the point at which comes to rest will mark the divide between the interest in free time and that of affluence.

That brings me to my argument. We might start by graphing these mutually exclusive human interest: free time and affluence. They represent the twin concerns of political economy: how to maximize non-labor time while also maximizing prosperity. The Marx quote above echos the understanding of the Ancient Greeks and Egyptians before them: if you want to be free and prosperous, then you must have slaves, which, morality aside, makes complete sense. The only way to exist in a state of wealth and ease is to have others produce the wealth without their enjoying it so that you can. Capitalism supposedly offered a way to avoid this economic truth, but it was Karl Marx and his theory of exploitation that pointed out that capitalism only nominally abolishes slavery. Marx showed that what appears to be contracting between free individuals is actually coerced and ultimately exploitative, i.e. wage-slavery. This form of slavery only paints a patena of voluntary decision-making over the forced slavery of explicit slave-society.

This entire system of human interests can then be mapped out for us. (Forgive the crudeness of my graphs.) In figure one below I have place affluence or relative wealth on the vertical axis and the amount of time one would need to spend laboring versus the amount of time one has free on the horizontal axis.

20190508040102
Fig. 1: Graph depicting human interests established under capitalism.

In a capitalist system, the red line represents everyone’s prospects giving the uncheck desire to place all others in a state of laboring for their own benefit and not the benefit of the laborer. You can see near the equilibrium point (0,0) the line is diagonal showing that the more you work, the more you make, the less you work, the more free time you might enjoy, but at some point, and that point is arbitrarily illustrated here, the line bends around in both directions. So that we might extrapolate four classes of individuals in a capitalist society.  Those that labor little to none at all we might call the capitalist class, or what Marx called the bourgeoisie, depicted below in blue. Those that work excessively and yet “enjoy” intolerable poverty we call the slave class, depicted in black below. The two in the middle, which could conceivably be seen as one class (under socialism) is characterized by the idea that the more they labor, the more wealth they enjoy or the less they work the more free time they enjoy, these are the laboring class or proletariat and the austere class respectively, depicted in purple and green below.

Capitalism Castes
Fig. 2: Graph showing the division of class interests based on income and free time.

We can see that there is an artificial arc here against what our morality would tell us; that the more you work the more prosperity you ought to enjoy. We can then divide the graph into four zones along the axes.

Quads
Fig 3. Graph depicting the ideal quadrants of human interests.

Each zone in figure three represents a potential set of individual interests. Here, the capitalist zone is the most desirable since it works the least and enjoys the highest degree of wealth. However, having a capitalist class necessitates a slave class, and what is more, the capitalist class will always be pushing every other into the slave class. This is similar, but not exactly the same as, what game theorists call a prisoner’s dilemma. Every individual having an interest in being a capitalist will naturally result in the overwhelming number of people existing in the slave class. A constant pressure to rise on the line will force everyone else down the line. But also like the prisoner’s dilemma, a simple solution exists: make a rule. In this case, we must eliminate the ability to make money from another’s effort.

On the one hand, doing this must involve abolishing the form of rent which I have spoken of before. But that is not enough. Even with the mechanisms of the exploitation of labor removed, the mechanism for exploitation of free time would still exist. The result would be a “capitalism of the proletariat”, a new kind of socialist dystopia. This is why we need a guaranteed income, it effectively straightens out the curve so that every individual is left free to choose between the level of free time and the level of affluence they would like to enjoy. If the curves we saw on the line represent exploitation, then their elimination under socialism entails a lack of exploitation.

Quad Socialism
Fig. 4: Graph depicting what a guaranteed income (socialism) does to human interests.

You’ll note in figure four above, that the red line never enters either the slave or the capitalist zones. This is necessary, should there be a capitalist, there must be slaves. Thus the only way we will all be free is if none of us are allowed to be capitalists. To guarantee an income would be one of two steps necessary to effectively and actually abolish slavery for the first time in recorded human history.

The Horseshoes and Hand Grenades Theory of Richard Wolff

by Charles M Rupert, posted in Charles Matthew Rupert, Philosophy, Political Economy

Dr. Richard D. Wolff is a prime example of that critically endangered species known as Marxian economists. His critique of capitalism centers mostly on Marx’s theory of surplus-value and it is, at least since the financial crisis of 2007, increasing useful. Wolff made his case for a new model of socialism back in 2012 when we were still coasting off the Occupy movement’s meager momentum and with a nearly-sympathetic ear in the White House. In his book, Democracy at Work: A Cure for Capitalism, he lays out his plan to replace capitalism with genuine socialism, which he distinguishes based on how the surplus-value of labor is allocated in a society. He dismisses Soviet-style socialist programs as “state capitalism”, where the surplus-value of labor is extracted by the state-apparatus in precisely the same way that capitalist do in what he terms “private capitalism”. I make similar distinctions, calling Soviet-style communism, a truly refined, monopolistic capitalism for the same reasons Dr. Wolff articulates.

For Wolff, there is only one way for a state to become truly socialist and that is to have what he calls “worker self-directed enterprises” or WSDEs. (He may be Marxian, but he shares the economists’ penchant for acronyms.) Such enterprises he concludes allow all the decisions and all the surplus-value to be wholly controlled by the workers engaged in the enterprise itself. This is what Marx intended by “socialism”, although not “communism”. It was self-controlled workplaces that required the “dictatorship of the proletariat”, which Marx saw as an intermediary between capitalism and communism. Wolff agrees, stressing that WSDEs will sufficiently resolve capitalism into genuine socialism.

Richard_D._Wolff_in_2015.jpg
Dr. Richard D. Wolff

To some extent, I believe Wolff is correct. The step he outlines is absolutely necessary for the evolution of capitalism (whether private or state, in his terms) to socialism. However, it is not sufficient. It does not address other forms for rent, such as landlordism and interest-driven banking. Neither does it treat the action of all workers, taken as a whole, as the monopoly Marx does. This oversight would leave the pressure to make a living off of one’s labor intact. Under Wolff’s plan, the proletariat inherits the role of the bourgeoisie, not so much replacing the political role of capitalism but collapsing the two Marxian economic classes into one. Again, this is a necessary first step, but the problem should be obvious: if you didn’t work, you would be oppressed by those who do, and a new sort of forced austerity would be exploited by the proletarians.

The laborers would enact a kind of “capitalism of the proletariat” which would perhaps be the worst kind of socialist dystopia because it would be a form of capitalism that looks more like genuine socialism than any other yet conceived. It would prove too difficult to suss out the difference for many on the left and make its systemic problems hard to overcome than capitalism. The “capitalism of the proletariat” would look socialist because of the working class would be in charge, but only the working class as it was formerly conceived of by capitalists. The unpaid laborers, the sick, the old, the dreamers, the drifters, the poets and–dare I say it–the philosophers might all too soon feel themselves to be the new underclass in a world were “labor” is the new capital. We would have to look at other interests, such as our stake in having free time, and adjust our economic models accordingly if we were to escape this new nightmare. I don’t mean to sound upset with Wolff. Frankly, I think his work is brilliant. It’s just that we need more than WSDEs to convert capitalism into socialism.

 

 

 

A Libertarian Socialist Conception of Private Property

by Charles M Rupert, posted in Charles Matthew Rupert, Philosophy, Political Economy, Politics
[Economists] forget that… it is use which determines the value of a thing, and that use is determined by fashion.
– Karl Marx, Economic & Philosophic Manuscripts

The left has been suspicious of private property since Pierre-Joseph Proudhon brazenly declared it to be nothing more than theft in 1840. His friend, Karl Marx, saw it as the root of capitalism’s exploitation, a superfluous invention of the bourgeoisie that would be dispensed with in the future. Anarchists’ generally see it as an agent of control. Even the most sympathetic socialists treat private property as a necessary evil. Those on the left who refuse to denounce private property are all-too-quickly labeled as faux-socialists, unwitting capitalist apologists, or even disingenuous counter-revolutionary agents.

On the right, private property rights are often so strongly enforced that they trump even the right to life, liberty, and the pursuit of happiness. Such a strong defense of private property is ironic, precisely because the justification for private property is typically based on “life, liberty, and the pursuit of happiness”, especially the right to life. These “background rights” perform the justificatory work for private property rights.

I want to engage this conversation from a third direction. I want to begin from a neutral position, neither assured of private property’s virtue nor its defamation. To start, I think we need a tight definition of what private property is. Then, I think we need to explain the fact that so many independent societies throughout history have lighted on the idea of private property. What particular problem did property solve? Then can it be justified to the satisfaction of socialism? To avoid suspense, I’ll sum my conclusions now: 1) private property is no different from personal property, 2) private property is common to many cultures because it solves the problem of how to divvy up the common world, and 3) private property can be justified for socialists when it is based on the background right to life and the pursuit of happiness.

The distinguishing feature of Communism is not the abolition of property generally, but the abolition of bourgeois property. But modern bourgeois private property is the final and most complete expression of the system of producing and appropriating products, that is based on class antagonisms, on the exploitation of the many by the few. In this sense, the theory of the Communists may be summed up in the single sentence: Abolition of private property.
– Karl Marx, The Communist Manifesto, Chapter 2

There is, in the leftist tradition, an important metaphysical division of the concept of property. The first, largely implicit in Marx’s work, is the split between productive property and consumables. Marx paid little attention to the latter if he mentioned them at all. He, like all the great economists of his day, focused almost exclusively on the “means of production”. The productive property were the things you needed to produce consumables, which included the tools, machinery, and raw and pre-fabricated materials of which the consumable consisted. When Marx speaks of abolishing private property in the above quote, he intends only this productive property. He is also quick to defend the productive property of the “petty artisan and of the small peasant”, saying, “There is no need to abolish that; the development of industry has to a great extent already destroyed it and is still destroying it daily.” Marx is saying there is no need to abolish the camera of the photographer or the laptop of the freelance writer. So he means only the large-scale productive property, i.e. the factories, great machinery, and other types of great capital that requires a social body to utilize it. The consumable property goes by the name of “personal property” while the large-scale productive property goes by the name “private property”.

This division saves the left from the accusation that communism or socialism removes your right to use your tooth-brush exclusively. In other words, you have to share your tooth-brush with other people. This argument is devised to reduce socialism to absurdity. If you wouldn’t want to share your toothbrush, you couldn’t even share food-stuffs or water or air, at least not as you eat, drink, and breathe it. So it does make a compelling argument against which socialism must resolve. The division of property into personal and private is the traditional solution. However, the division of property introduces its own problems. The most important of these and the only one I will treat here is the indistinguishability of personal from private property. 

We can see the crack in precisely where Marx claimed there is no need to take away the private property of the individual proprietor. Here Marx is admitting that the tools of the individual crafter should belong to the individual crafter; their productive powers are thus not sufficient reason to socialize them. The common understanding is that it is then only those tools that require social operation which must be socialized–I am ignoring here a similar argument that certain types of property of, e.g. land, must be socialized irrespective of how it is used for the simple reason that Marx did not make this argument. The problem with the argument that only social operations must be socialized is that even socially operated machinery is individually exclusive as it is used. To make this concrete imagine an assembly line of ten persons. Each person has a specific spot on the line and performs their unique task. Each spot on the assembly line then may legitimately be conceived of as the exclusive property of the individual proprietor.

While such a conception is dangerous because each individual proprietor, save the first and the last, would be faced with a monopoly on either side of themselves, that is a single provider of the materials they need to do their work and a single consumer of their finished product (viz. the unconsumable, partially-worked commodity). It is more harmonious to conceive of them as all part of a single entity, each cooperating rather than competing. Still, even under the auspice of cooperation, each has an exclusive need to be able to use their part of the whole. The right to exclude others from their part is no different for the workers on the assembly line than it is for the individual proprietor whom Marx exonerated from the abolition of private property. We have only two ways of resolving this inconsistency: either abolish all private property, including the photographer’s camera and the writer’s laptop or do away with the distinction between personal property and private property altogether. As we agreed above that the former is absurd, we are left only with the latter.

What does this mean? It means that we cannot, as Marx commands, abolish private property. This means that capital and capitalist can’t simply be dispensed with. This is not a vindication of capitalism, as those on the right would like to assert. While getting rid of capitalists is not an option, what is left open to us is the modification of what can and cannot be done with private property. That is precisely what the rights of property owners entails them to do. The rights of private property ownership have their limitations, even the most right-wing libertarian will agree. For example, your “right” to own a gun and your “right” to do with your private property as you please, cannot be combined to justify any homicide you may like to commit. 

What lies behind the left’s condemnation of private property is the capitalist’s claim of a right to the surplus-value of a worker’s labor. This claim is justified, according to the apologists of capitalism, by the “ownership” of the means of production. Ownership then it is implied, entails the right to allow others to use said means to produce products for less than the value those products fetch at market. The chief problem the left has with private property then is that it can be used as a means for the exploitation of other people’s labor. Marx details of the process in the first volume of Capital. But even there, private property does not so much create the exploitation as it is simply the vehicle for it. Property relations are social relations, not between human beings and things, but between human beings and other human beings. This is what makes economics political in the first place. 

Given this, our question becomes: can the capitalist really justify the right from ownership? To answer this question we will need to examine what justifies private ownership in the first place. I’ll start with John Locke’s justification of private property. In brief, Locke argued that the private consumption of the material world was vital to every individual. We cannot consume in common, even if we produce that way. This makes private property necessary in order to be enjoyed. The question for Locke then became, how is it that I come to exclude the whole of humanity in order to enjoy this or that particular thing? Or more concretely, by what right do I pluck an apple from the common tree so that I may eat it and by eating it, exclude all others from its enjoyment? When did it become mine alone to enjoy? We all agree that after digestion, it is exclusively mine, but when did it first become so? He traces back the right to my act of plucking the apple. With this labor expenditure, I have the right to that apple. So, generalizing from this, it is my labor that makes things mine. Locke would go on to lay the foundations of the first labor theory of value, but it is his labor theory of property that concerns us. This theory is the basis of private property rights upon which capitalism is founded.

Unfortunately for the bourgeoisie and Marx alike, the private property right established by Locke is not one based solely upon labor. Labor identifies which particular things are justified, but it does so under the pretense that we are going to use them. Locke himself said that one cannot claim a thing, merely to deprive others of its enjoyment. Ultimately then, it is the need to eat, in conjunction with the labor of plucking that justifies my claim to the apple and so the right to exclude the rest of humanity from the apple’s enjoyment.

Marx misses this. Elaborating in Capital that the value of commodities comes entirely from the labor required to produce them. We may deduce from this that the justification for using commodities according to Marx would come entirely from having labored to acquire a thing, either by producing it or trading “dead labor” for it. Use, the consumption element of commodities, plays little to no role in Marx, who argued that either goods and services have a use-value or they do not, there are no quantifiable degrees of use-value. Equally, there would be no reasoning for use in owning, only labor. For Marx ownership is derived merely from labor and trade.

But no one asserts this claim more than the bourgeoisie. The capitalist claim of ownership is justified entirely by the idea of labor exchanged for a good. That Marx and capitalism agree so completely on this subject is the greatest tragedic irony of the post-enlightenment history. Locke, as I said, founded the labor theory of property and of value on the unquestionable human need to consume individually. Labor alone is therefore insufficient to justify ownership of anything, and correspondingly, it is insufficient to justify the total value of anything. We lack the consumptive side, the input of use-value. This is where Marx made his most fatal error. He said that “use” could not be counted in the final estimation of value. He assumed more than argued that “use” has no quantifiable value because it is a quality, i.e. things either have a use-value or they do not. This is wrong.

Use-value, it turns out, is quantifiable, and what is more, it is quantifiable in units of labor. I have made the argument for use-values quantifiability before, see The Genius and Folly of Karl Marx, Part Two. What is confusing for us is that the labor-units for use-value are inverted from units of labor in exchange. They act like negative numbers to positive ones, so that use-value functions more like “labor saved” while an exchange-value represents “labor expended”. For example, to make a hammer, it might take X amount of total (socially-necessary) labor to produce and bring the hammer to market, this–according to Marx–would be the hammer’s value, assuming there was someone out there with a use for a hammer. However, this is just the minimum that the hammer’s manufacturer would want to sell it for, it does not represent the value of the hammer to the user. The final value is how much labor it saves its consumer over the amount of labor that consumer would have to shell out for it. A hammer’s cost then is subjectively determined by the consumer, not by the producer, and it is never objectively derived as Marx hoped to prove.

But all is not lost for Marx, because both use-value and exchange-value are determined as units of labor. In other words, labor remains the sole source of value for everything in exchange, just as Marx said. Private property becomes justifiable in the twin aspects of labor: labor-spent and labor-saved. I ignore here a metaphysical discussion of labor-saved, except to say that Marx himself saw labor-saved as the “value of capital”. It was the private aspect of capital that Marx and the left railed against. The “means of production” of which most capital consists is problematic only when in private hands.

This, however, is where libertarian socialism breaks with Marxism. It is not the private nature of the ownership of the “means of production” that is the problem. The problem is the fact that capitalists are not and never were the rightful owners of them. Capitalism is contradictory because it violates the justification for private property ownership established by Locke. Capitalists maintain their claim to rightful ownership through the justification of expenditure of labor, but since they have neither the desire nor a possibility of using the “means of production” exclusively their claim of ownership over them is wholly unjustified. It is, in fact, the workers and ONLY the workers who can meet both necessary conditions for ownership. First, they do have an exclusive need of the materials in question, and second, they (through the extraction of surplus-labor) have paid for them. This argument holds true for other forms of “rent”, for example, the tenant who uses the house has the priority claim to ownership of the house if they pay rent.

What is exploitative about capitalism is that the rightful owners of the means of production are not the “legal owners” according to the political structures drafted by capitalists. The inherent villainy of private property is a Marxist red herring, no pun intended. The upshot of this concept of private property is that we have a clear path and reason for removing capitalism’s exploitative element. It will require workers to become the rightful owners of the enterprises in which they work, as is suggested by Dr. Richard Wolff. But it goes beyond just that, it will require the abolition of the form of rent everywhere in society, except where the rentee is the public. It will also require a guarantee of income, but for reasons that are not expressly clear here. But that is all. We needn’t abandon private property nor do we need outlandish distinctions, (e.g. private property vs. personal property or labor vs. “socially necessary” labor) that prove only necessary to bolster the failings in Marx’s theory. The solution is more simple and more elegant, ownership of property is the right of the people who need it, who use it, and who paid for it; and not the state, the community, the government, or investors.

 

Marx, Markets, & the Major League

by Charles M Rupert, posted in Political Economy, Politics

For Bob Weick

Economics is hard. Political economy is even harder. In order to structure and justly award and distribute material goods in a society, we must have at least some idea of the nature and determination of value. No theory thus far has managed to get it all right. Arguably, no theory thus far has gotten enough of it right to understand political economy. Today the division between theories usually breaks into two camps: the classical economists and the Marxian. On the neoclassical side, we find brilliant economists like Alfred Marshall, who discover fantastic formulas like the law of supply and demand, but who are dismally ignorant of whatever it is exactly that supply and demand consist of. On the Marxian side, we have Karl Marx himself, who paints economic vistas into the broad landscape of human society, but who–along with his followers–fails to satisfactorily provide us with a pragmatic economic model for the conduct of individual life.

The division between theories leaves a crack in academic economics a mile wide. The big questions upon which all economic knowledge rests seems to have slipped through that crack: Should we have private property? Is money a boon to or a flaw in a just economy? What is the source of poverty? Trying to understand economics today is like trying the solve the word jumble in the daily newspaper, only it’s written in a lost language, with innumerable symbols that no one, not even the experts, really knows what they mean. At the bottom of this well of confusion is the simple fact that after more than three hundred years of economic theory, we still don’t know how material things come to be valued in human societies. The Marxians will say it’s labor, just the labor that goes into production, nothing more, nothing less; but when you try out that theory, it falls flat. The classical economists have a theory that doesn’t fall flat. It does have predictive power, but it consists of units of measure that are mysterious and ineffable.

1024px-Economic-surpluses.svg

Our situation is a little like being lost in the wilderness: we keep trekking, despite not being sure where we are going and without bothering to really ask why. And our leaders in this trek, the economists, are the least sure of us all. This would be bad enough, but to make matters worse, value theory, that is economic value theory, the search for a what gives material things the prices they command, has all but been abandoned by both camps; Marxians because they think they have it and neoclassical economists because they think they don’t need it. Sometime in the 20th century, capitalist businesses realized they don’t really need to know where value comes from to turn a profit, and in fact, it might be dangerous for business to find out. Thus, they prefer their economic explanations to be functional but not terribly explanatory. It’s the economic equivalent of going to a doctor to treat the symptoms: “Doc, my whole left side hurts.  I don’t want to know why and I certainly don’t want to have to do anything differently, but can yeh gimme something for the pain?” Economics departments the world over dole out drugs like corner boys around a west Baltimore high-rise. To be fair, they can’t really do any more than that, it would be beyond the scope of their science. Economics, you see, is a political function and just as there is a world of difference between politics and political science, so is there between political economy and economics. Where the former questions the nature of human relations through material things and worries about things like justice and group cohesion; the latter is the comforting realm of science, merely observing how nomological systems operate and reporting the patterns that are useful.

The first thing we’ll need to understand is that politics is primary and economics is derivative. Marx, according to his partner Friedrich Engels, over-emphasized the economic component of his theory because economics were the intellectual fad of his day. Marx then presents the material necessities of human society shaped their ideologies, including their politics. It was the available means of production that determined if a society was to be primitively communist, feudal, capitalist, socialist, or communist; and those dominate economic relations would determine if that society would have a monarchical, oligarchic, aristocratic, or democratic government. Things only moved from the material to the ideal for Marx, who was reversing Hegel on this point. However, ideas shape what we desire, and its that which truly determines our needs, and our needs which determine our labors. Ideas shape materials, and materials, in turn, reshape our ideas. The pattern is cyclical. For example, we have yet to develop mass production techniques for the “artificial appendix” as we have for the horseless carriage.

“AH HAH!” the orthodox Marxists triumphantly shout, “You’ve misunderstood Marx! A thing without use-value has no value at all, accord to him. So, of course, the ‘artificial appendix’ being useless, would have been a waste of labor, because it wasn’t socially necessary! That is why we never build one.” But Marx’s belabored theory of socially-necessary labor is precisely the problem. It’s a long walk he had to create because he had to discount the role of use in determining price.

Marx’s error–to put it playfully–was the assumption that there is no use for use-value in determining price. A commodity either has a use or it does not, according to Marx. Use-value then functions as an economic data bit; it’s either 0 or 1 and nothing in-between. It has no quantifiable distinctions. On this bold assumption, Marx launched the armada of his economic theory, which held some striking conclusions: 1) consumers don’t matter one tiny bit in the creation of value (outside of determining whether labor is socially necessary labor or not), 2) production, specifically the labor units of production, is the only input of value, 3) labor, measured in units of time, can be counted objectively and so the value of everything should be able to be calculated objectively, 4) markets are unnecessary for determining value, 5) money, as a lubricant of exchange, is only necessary if markets are necessary, so given four it’s also unnecessary, and 6) without the need for markets, money, or consumers, we could eliminate private property as vestigial organ of economics, an invention of the bourgeoisie, which we are now free to evolve beyond. As anyone who has read Capital Volume I will attest, Marx does nothing small.

But if Marx was wrong and use-value is quantifiable then all six of his conclusion given above are suspect. And sadly, the quantifiability of use was staring Marx right in the face; he even said it himself: the value of capital to the capitalist is its ability to reduce the need for labor. He just didn’t take the next step and realize then the use of all commodities is their reduction of the labor of the consumer in the tasks they employ them for. Marx didn’t see this, because he couldn’t see it. It would make his theory subject, a subjectively determined value, which in his mind would threaten his theory of surplus-value and thus the idea that laborers were being exploited by capitalists. It’s a very forgivable mistake.

Nevertheless, if every commodity, even food, can be reduced to a sort of “labor-savings” or negative labor it can be quantified just like labor can, and what is more, the units will exchange with labor in exactly the way a negative integer, exchanges with a positive one. Thus we can weigh labor-savings against the labor required to produce a commodity and determine a subjective value, but the result of this equation is still necessarily a labor theory of value. Marx cleverly pointed out that in order for things exchange for one another some common substance must be present in both. For example, for seafood to exchange for say taxi services, something must be a common denominator of both. And Marx rightly deduced that this common substance was human labor. He just didn’t understand that the labor savings of the commodity play a role in quantifying its value. The implication of this undoes a good deal of Marx’s later economic theory, so that: 1) consumers are in fact necessary to determine value, 2) markets are thus required, 3) so then is money. But the one theory of Marx’s that is not undone; rather, is actually confirmed by this insight, is that labor and only labor is the source of value of things. And the implications for that… well, let’s just say that employers, landlords, investors, lenders, or in a word, the bourgeoisie, will not be happy.

49175683_10157787324702289_6628121680126410752_o

This is the beginning of a brave, new socialism, but before we get to that, we should make sure that Marx was actually wrong about the role of use-value. To do that, we’re going to reconsider use-value from a purely materialist standpoint. For his theory, Marx’s needed to solve the “use paradox”, that is the problem of understanding why water, which is so useful, is so cheap, whereas a diamond, which is so useless, is so expensive. Marx did so by eliminating it. But this masterstroke blinded him to what his own method of inquiry, regarding material necessities, should have laid plain. Use-value is a fancy name for simply being able to consume a commodity, that is, actually use it; and here’s the kicker, we can’t consume any material commodities communally.

Non-material commodities, like the music that streams over the radio, can be shared by consumers within earshot simultaneously; we can all sit around and listen and no one loses out on enjoying the music just because I am listening to it. The radio device itself, on the other hand, is a material thing, and can only be set to one station at a time. But who gets to decide where it’s set? The owner, of course. This is what we mean by “owner”, whoever gets to determine where the radio is set. Unlike music, it cannot be simultaneously enjoyed. Individual owners are necessary to determine the use of any material thing, from your toothbrush to the means of production. So, at the same time, individual owners determine use-values.

This suggests that ownership is a necessity of use and so, contra Marx, private property turns out to be necessary. Let’s call this the consumer theory of private property. When it comes to material goods, private property is an essential fact of human existence because those goods cannot be consumed without an exclusive right to them. While it’s true that Marx overlooked this, he was right that use plays no role in determining the productive labor that goes into a commodity. The error was to think that consumers play little to no part in determining a commodity’s full value. Productive labor confronts consumers as a burden, a cost which decrease the labor-saving value of the commodity to them. That’s why we would all rather pay less for the same good if we can. If producer A can get a commodity for you for $10 and producer B for $12, then we will buy it from A. Let’s say that we think this commodity will provide us $X labor-savings. Then the actual value of the commodity to us is either X – 10 or X – 12; X being constant, and -10 being higher than -12, producer A’s commodity is more valuable. Producer A’s commodity is literally worth more to us. 

Compare this to Marx’s theory that suggests that the amount of labor time that went into each producers commodity would determine its actual value. In this case, producer A and B should be charging the same amount. The fact that they are not is evidence that something shady is going on. But that is not necessarily the case. Perhaps the metal used in the manufacture is hard to extract for producer B than for producer A. Thus it took more labor for producer B to bring his product to market than producer A. The question then becomes, can Marx’s concept of socially necessary labor time save it. Yes, it can. But it is a costly intervention. By determining that producer B has wasted some labor time by extracting less attainable ore, Marx has spun his entire system around. He has reversed the order of price determination and now is using the relative market prices as fixed, in order to prove that some labor was socially unnecessary. This is a serious problem because using Marx’s system we never would have been able to get those market prices in the first place, so how could we rely on them to tell us when labor was socially necessary or just a waste of time? 

So, we cannot share the things we consume, at least not as we consume them, and we need private property. If we need private property we need all the trappings that come with them: markets, money, trade laws, etc.. This has resounding implications for the remainder of Marx’s theory, but at the same time it certainly doesn’t justify capitalism. Marx’s intuition that capitalism is highly exploitative, unfair, and unjust is still intact. What has changed are the reasons why those things are true. The trouble with capitalism is that it also fails to recognize the role of use in property, but from another side, another angle. If you are reading this as a classical economist, I imagine that last line strikes you as something very odd. Isn’t use inessential to determining price? Well, no, and that’s why your profession has struggled to understand anything for the last two hundred years. Price, for the consumer, is how much labor you would have to expend to acquire a property right in a commodity, its value is the amount of labor that commodity saves over and above that cost. No one buys anything that costs them more than it’s worth or is worth to them individually at least.

Baseball

So you might be thinking, “okay, but really who cares!?! How is the role of use, not some economic pinhead on which a thousand angels dance?” Well, including use shows that while the Austrian school might have the math right, it’s the socialists and the Marxists who have the moral right. They’re both right, just about different aspects of economics. And that means we can finally understand where injustice enters in our system of economics. We can synthesize the labor theory of value with the subjective theory of value and arrive at a subjective labor theory of value. Doing so is certainly anathema to Marx’s theory, but it is not a vindication of capitalism because it firmly establishes the role of use in justifying ownership over a particular piece of property. This is to say, that in order to claim we “own” something, we must demonstrate our exclusive need to use it, not merely the labor we expended or traded to acquire it. This delegitimizes many of the so-called “uses” of private property that socialists condemn as a matter of course: namely rent, interest, and profit, all three of which can be shown to be anything but exclusive. Without these three, capitalism loses its exploitative element. This is certainly a step in the right direction and what I have elsewhere argued is the essential step in transforming capitalism into socialism. However, it not the last step. This libertarian socialism will still face other problems inherent in any private property and trade based system. 

To see this problem we need to go back to the idea that political economy is a subsection of politics. You might say that if politics is the study of human relations in groups, then economics is the study of human relations through material things. Politics surrounds economics on all sides and channels it. Even the quasi-sacred law of supply and demand is really only relevant inside a community, it does nothing to describe the economic decisions of Robinson Crusoe, alone on his little island. This is best understood through an extended analogy, so let’s introduce one.

Major League Baseball can be imagined as a microcosm of our political economy. There is a league that oversees the rules, just like a government that oversees the laws. There are teams and players, just like there are businesses and laborers. There are club owners just like there are investors. There are competition and cooperation. There are incentives and disincentives. The whole thing seems sometimes chaotic and sometimes orderly and well understood. MLB differs from the political economy mostly in impact and relevance. Far fewer people suffer extreme poverty at the hands of a misguided club owner than at the hands of a misguided Federal Reserve Board. But the most important difference is that every now and again, MLB resets everyone back to zero. That’s important! That’s really, really important! In baseball, unlike the real economy, you can’t just keep riding on your laurels indefinitely, games and seasons eventually end, and you have to start all over from the beginning again.

But why? Why does professional baseball reset at the end of a “season”? They could just take a break and then pick back up right where they left off. Why don’t they just keep chalking up victories and defeats? Well, mostly because that’s boring to watch. But it’s boring because the cooperative elements of the sport are essentially ruining the competitive elements. It doesn’t matter if the league decides to just declare the Yankees the winners of every game they show up at (like a totalitarian regime) or if they just allow them to start every game with a merit run for every world series they’ve previously won (like a capitalist regime); the end result is boring. And it’s boring because it’s unfair. We want victory or defeat to be the exclusive outcome of the efforts (dare I say labor) of the players on the field, not some privilege for previous labor. Each game and each season requires the teams to start as equals in order to ensure that it is this effort that leads to achievement, this is what it means to be fair.

It’s the same with economics. Competition between businesses is supposed to lead us to the best products, the best production methods, and the best law and regulation. This is what we mean by a just economy. But competition has to be fair in order to provide these results. So, we want a political economy were the profits and losses are a result of the efforts of the laborers, not the merits held-over from some bygone era. Imagine two restaurant owners in the same area. Producer A starts their business with a loan and producer B with a grant from family. Even if producer A offers better fare and earns more patronage, they may still lose to producer B who has lower-overhead. This is not a natural law of economics but is a choice at the political or “league” level. The choice is between two goods: one is protecting competition which tests out differing methods allowing us to determine the superiority of one or the other, while the other is allowing people to benefit directly from their efforts. The two goods at some point come into conflict. This is the problem of capitalism: it ceases to progress and be a good for society the more it allows individuals to benefit from their efforts and it ceases to be a benefit to individuals the more it insists on competition. We can see it’s different from the problem with state socialism which solves the problem with an ax, eliminating both the individual benefit and competition. Such a solution is accompanied by different, and arguably worse problems, which is beyond our scope here.

Capitalism, then, is like the league that allows teams to horde up runs for use in other games. We allow businesses to save profits by reducing wages to less than the full market value of their products, either voluntarily or exploitatively. But this “forced savings” is not necessarily a problem; what is a problem is that the beneficiaries of those savings are not the people doing the saving. The horde of runs is not for the players benefit, but for the club owners. Eliminating profit, making all business would merge the class of club owners with that of player, thus making those who save, those who benefit from the savings. However, what that solution does not do is protect society from the ill-effects of private monopoly. For that, we need something else, specifically something that will counter-balance the self-interested tendency to dominate a market by growth. One solution accompanies the loss of rent, interest, and profit, which is the great reduction to the interest to make income beyond a certain finite amount. This is the real result of putting use-value back in economics. But what we really require is something like the league equalizing the teams after every season.

We need a “league” that will maintain a healthy competition between “teams” and fair play amongst the “players” without micro-managing the games either, the way Keynesian economics do. The league cannot maintain competition through laissez-faire practices, so the league must set rules that foster competition, then and only then can we step back and let the umpires enforce the rules. The goal of any political economy then, is to set the right rules to maintain a healthy competition between businesses and fair and equitable treatment of all participants while allowing as much individual benefits from effort as possible.

The occasional forced economic redistribution that brings everyone back to some kind of equality before setting them loose again to follow their self-interest would do this, but I have nothing so ham-fisted as a yearly revolution in mind. Instead, I suggest we think about the other type of cooperation in baseball, that between teammates. Teammates work together in competition with other teams who are all cooperating together in the league for the good of the sport. Understood this way, competition is really just a different kind of cooperation or cooperation at a higher level as Hegel might say. In this case, even competition with winners and losers still benefits everyone in the long run. This Rawlsian, pro-capitalist line, has long been used to justify capitalism, I’m well aware. But without the exploitative element, we discussed above removed, we can actually be sincere about it. Competition can be benevolent, it just has to be fair in order to be so. Players in baseball, show up and do their best only because they believe the game isn’t rigged. If they knew they were being cheated, they would just stay home and there would be no game for anyone. The whole system then relies on everyone involved in it believing that it is fair and if I may be so bold as to say if everyone believes something is fair it is fair.

The solution then is a guaranteed income, preferably one that is pegged to some general economic indicator, e.g. providing a quarter of the per capita distribution of the GDP to everyone who doesn’t make more through labor. This simple solution allows for the social benefits of competitive experimentation in production while still allowing the benefits of large-scale productive activities that result from self-interested reinvestment in the enterprise. Not to mention countless other social benefits elaborated by better authors than myself, see a list of them here. I have argued other reasons why such a system of compelled taxation to finance a guaranteed income is necessary, but this one alone would be sufficient.

In sum then, I tried to lay out the basic economic theory that undergirds a theory of libertarian socialism. This theory calls for the abolition of rent, interest, and profit and the provision of a guaranteed income to every citizen. These two changes convert capitalism into stable libertarian socialism by maintaining the trade-based private property system of capitalism but removing its ability to be exploitative individually or socially. There is no doubt in my mind that other problems with libertarian socialism will appear if it is established and the hegemonic economic order. However, I cannot anticipate these and thus I have no solutions to offer. I leave that to other thinkers.

Socialism, What’s the Difference?

by Charles M Rupert, posted in Political Economy, Politics

Noam Chomsky, Bernie Sanders, and Vladimir Lenin walk into a bar. The bartender says, “What’ll it be?” Lenin immediately climbs up on a stool and loudly proclaims, “We, the intellectual vanguard of the people, shall seize the means of production in the name of the people!” Bernie Sanders gently replies, “No, my dear Lenin. It is the freely elected government of the people who must seize them.” To which, Noam Chomsky quickly retorts, “Not at all, it’s the individual people themselves, who must seize them.” The bartender picks up the phone, “Officer, I got a trio of thieves at my place. Come arrest ’em.”

In the eyes of the doctrinaire capitalist, all sorts of socialism are the same, they are all theft. Internally, there is a good deal of division. The media has what I’ll call the short-division understanding of political economy. Remember learning short-division? Where five divided by four was one, remainder one. It’s like that, but with economics. This elementary-school version of political economy has capitalism on one end of a short spectrum and socialism/communism at the other. Essentially, it boils decades of diverse economic and political theory into capitalism and others. Obliterated are the intricate nuance and subtle variety that separates even pro-capitalist thought into over a dozen distinct theories. There are a few, ill-defined buzzwords that get carelessly banded around the information superhighway like drunks on the freeway. Terms like “neoliberal”, “neoclassical”, and “democratic socialism” take on a loose association with a political side like “neoclassical” = right-wing and “democratic socialism” = left-wing, or falls helplessly in between them confusing most people who hear them like “neoliberal” and “libertarian” and “libtard”. Are those that left-wing or right or good or bad? How should I feel about them? The point here is that the names don’t matter, but the theoretical positions do. So I want to take the next five minutes of your life and give you the gift of understanding the difference between “libertarian socialism”, “democratic socialism”, and Soviet-style communism.

Soviet Russia is indisputably the icon of socialism the world over. It’s not the original socialist theory and you’d probably be surprised to learn that it is a dubious successor to Marx’s theory. The Bolsheviks claimed descendancy from Marx and Engels, but Leninism grossly over-emphasizes economics, twisting Marxism into something ideologically self-defeating in order to make it negotiable under the labyrinthine socio-political climate of Czarist Russia. Leninism agrees with Marx that the bourgeoisie illicitly own the means of production and that it would only be through revolution that they can be used for the betterment of all rather than for the eternal enrichment of a few. And that’s where the important similarities stop because Lenin had to invent a practical scheme to bring about what Marx said would occur naturally. There is little dispute that the first Russian revolution, the February revolution was a spontaneous occurrence, revolting from tyrannical Czarist and oppressive aristocratic rule. The October revolution was not so spontaneous, in fact, it wasn’t a revolution at all; it was a coup d’etat. The freely elected government of Russia was seized by the Bolshevik party and democratic rule was supplanted for autocratic rule of the communist party. This, according to Lenin, was necessary because the people, having labored so long under the false-consciousness of bourgeoisie propaganda–what today would be called “fake-news”–could not be trusted to follow their real interests. His evidence for this was the fact that his party failed to win a majority in the general election. Lenin determined that socialism would need to be guided from above, structured by a cabal of intellectual elites who were not deceived by false consciousness. This vanguard would centrally-plan and command the economy for the people without any input from those people.

It seems obvious, now, when I put it this way, that Lenin traded economic freedom for political enslavement. He would enslave the people to free the people and then, maybe, someday, when they proved themselves ready, return them their freedom. It didn’t work out that way, obviously. We needn’t trouble ourselves with why not, because the next alternative cannot work the same way at all on principle. Democratic socialism is an alternative to the Soviet-style communism in that it believes it is the people who ought to decide on what uses the means of production are put to. In this version, the state still controls the means of production, but the state is necessarily a democratically controlled one. Myriad questions ensue, such as at what level will they be determined: nationally, communally, etc.? Or will the particulars be determined the people directly or through representatives or the appointees of representatives? Or how will the workers be paid, by the state on a fixed scale, by production rates, or by contract negotiation? How will prices be set or will products be doled out on some scheme? But these questions don’t really affect us here. The point is that democratic socialism hopes to overcome the difficulties of Soviet-style communism by bringing in the voice of the people, that is allowing them to weigh in on how socially controlled economic mechanisms are run.

Is such a system possible? Of course, it is. Take central planning, one could “centrally plan” an economy democratically by taking orders from every individual and making products to correspond with the orders. Technically-speaking that’s not a market, it’s a centrally planned economy with a single producer. Would it be efficient? Hmmm, that depends on what you mean by “efficient”. Would we overproduce, no, it would never produce anything for which there was not already an order (at least not in theory)? But it would be terribly inefficient having to wait for your order to be made and difficult to anticipate your needs well in advance. Plus, fairly limiting how much each consumer could order at a time. Still, it could all be worked out. The real question is, “is it more desirable?” I’m not so sure. Such a market would be like letting Amazon take over everything and then nationalizing Amazon. Monopolies are unquestionably efficient but they are also condensers of power. By reducing options to one, they eliminate choice to everyone except the one who decides on what to produce. Maybe we could all decide, but how? It’s unfeasible to think we’re all going to vote every time there is a decision at “National Amazon” and even if we did, how should we count the votes? Majority rules hardly seems fair. The logistical encumbrances quickly swamp the advantages the democratic socialist system provides.

A point should be made here about the so-called Nordic socialist countries. To be clear, they’re not really socialist at all. These countries share a strong devotion to welfare-state policies. We might add a fourth type of socialism in here, “welfare-state socialism” but this would be more confusing than illuminating. Capitalism, as I have argued elsewhere, should be defined by the legal determination that the owners of an enterprise or an estate be the owners of the capital in that enterprise or estate. These countries economic systems fit this description and therefore are best classified as capitalist. They simply use these myriad social programs to buttress capitalism and hedge in its worst tendencies the way the United States used to under Keynesian economic policies from the nineteen forties to the nineteen seventies. The best term for these countries then would be “welfare-state capitalist” and not socialist at all. It has been a rhetorical deception of laissez-faire theorists to classify such systems as “socialist”.  

Returning to our main discourse, we’re not stuck choosing between democratic socialism and unfettered capitalism; we might choose libertarian socialism. This oxymoronic sounding theory is unlike the others in that it disagrees that market mechanisms and private property in the hands of the bourgeoisie are the root cause of the problems with capitalism. Libertarian socialism holds that the problem of capitalism has to do with the organization of private property and not the existence of it. In this case, we can imagine a principled order that allows for private property, market exchanges, and most of the other staples of capitalism, but removes the exploitative rules regarding rent, interest, and capitalist profit as contradictory with private property ownership itself. With these exploitative elements eliminated, many attributes of capitalism change form, e.g. the overwhelming and incessant need to accumulate more wealth. This desire is capped by the concept that you cannot make money from money without rent, interest, and profit, so there is a finite amount of labor you’re willing to do beyond what you need to meet your needs. The desire to come to dominate all other businesses, the desire for monopoly, the desire for ruthless business practices, all have their teeth pulled. Included also is a guaranteed income which is required to prevent anyone in a society from forcing anyone else into a life of servitude in order to attain one of unearned leisure; in order to remove the one, the other must be dispensed with as well.

Libertarian socialism differs from other forms of socialism in that it emphasizes the freedom of individuals to make individual choices. It differs from libertarianism by arguing that societies have rights and privileges that individuals do not. The basis of this argument rests on the needs of groups to foster a sense of unity, without which there can only be lawlessness. The preservation of unity is a responsibility of societies which cannot be reduced to the individual members who make them up. This disagrees with libertarianism which assumes that all rights and responsibilities of groups can and do reduce to individual rights and responsibilities. There is a thing called society from which we are each individuated. Another way to imagine it is that the rules cannot be set with any particular individual or association in mind and be just, in the same way, that a baseball league cannot create rules favoring any particular club, either explicitly or implicitly without those rules being unfair. Libertarianism, which is a close cousin to anarchism, asserts that such a league would be unnecessary except as guarantor of the rules the clubs themselves agreed to. There is the possibility of fairness here, as long as we can assume that each club was equally well off when the bargain was struck, which is a pretty remote possibility. Libertarianism is simply unlikely to turn out to be fair.

Libertarian socialism offers us our greatest chance at a sustainable, just, and fair economic system. It is the most likely to produce the massive economic requirements of our modern large-scale societies and do so in a manner that is sustainable and harmonious with our natural environment and is at the same time compatible with human dignity and our political sense of fair play or justice. Libertarian socialism is the most feasible economic system, requires the least amount of change from capitalism, and could be produced without a bloody revolution. It is quite simply our last, best hope for a better world.

Socialism & Communism, What’s the Difference?

by Charles M Rupert, posted in Political Economy, Politics

In lay terms, Socialism and Communism are virtually interchangeable. A few people sometimes reserve communism as a reference to Soviet, Chinese, or Cuban-style economic policy, characteristically defined by a top-down power-structure, central economic planning, and a tiny cabal of party elites that plot the Revolution from a smoky, wood-paneled, underground conference room. Socialism, for these people, is whatever the Scandinavians are doing. In this post, I’d like to untie these terms from each other and–perhaps necessarily–from capitalism.

Academics do this by looking at the history of the socialist theory. They trace the course of theory as it develops nearly concurrent to capitalist economic theory in the last days of feudalism. This is a thorough way of distinguishing these broad and esoteric words, although it is a rather useless way since it is both objective and neutral and doesn’t position us–the would-be truth-seekers–in any place from which we might moralize and judge the competing theories. If you would like a thorough and unbiased history of the development of socialism and communism, I’d recommend Socialism: A Very Short Introduction by Michael Newman. Otherwise, you have a few years of study ahead of you before you can begin to untangle the mess that is political economic theory. I elect to skip all that and instead base these fundamental definitions of respective theories by identifying their essence.

Now, I probably lost the post-modernists right there, but I maintain that essence can be distilled or more accurately implanted into concepts–even grand ones–through the same method we use for everything else: reasoning. I will simply argue for an essential quality of capitalism against socialism and communism against socialism. In this case, we’ll leave socialism more or less alone, letting it be defined negatively by the essences of the theories that surround it.

To start us off then, I have argued elsewhere that the essential quality of capitalism is the set of private property rights that give the nominal owners of property claim to the products of the same. This is a fancy way of saying if you own a hammer, a nail, and two pieces of wood, it doesn’t matter who drives the nail to fix the wood together, you still own the final product. This is as true for landlords as it is for business owners. It doesn’t matter if all the money to pay for a mortgage and the maintenance of a real estate property come from the renters who live there, the landlord is still the owner. It’s not private property per se that is the essential quality of capitalism, or markets, or freedom, or anything else. It is only this legal preference regarding property that is “owned” by one person or persons while “used” by another person or persons. Essentially capitalism is about renting property. The property owner rents the item to another to use for money, just as it is done in a sale, except they retain the ownership of the item being sold. The landlord rents the house to the tenant; the capitalist rents the means of production to the proletariat; the investor rents the use of money to the entrepreneur; the lender rents the use of money to the lendee; etc., this is essential capitalism.

Against capitalism, we can lay both communism and socialism. Both reject the essential part–renting–of capitalism. However, communism goes much, much further than socialism. Communism too has an essential element and that is the abolition of private property itself. Essentially communism is an economic system founded on common property. Common property is that which everyone–or perhaps more accurately, no one–owns. Common property is confusing precisely because it is common. The main problem humans have had to deal with in material relations is the problem of common property. The world is given to humankind in common, it did not come all neatly divided up and no one has something more than a mere nominal claim to any private ownership. So, it would be easy to conclude that this natural state is the best, and communism does just that.

There is only one problem with communism: we consume individually. I can’t both eat an apple and continue to share it with everyone else. At some point the apple becomes indistinguishable from my body, it is me, and if I am to have autonomy at all over my life, the apple must be said to be mine at some point. Private property then seems to be a material fact of nature, and communism an impossibility. But that is probably going too far. An apple is not like an idea. We can share an idea commonly without making it private, that is to say, I can consume an idea entirely without the need to exclude the rest of humanity from its enjoyment, everyone else can consume it as well.

Communism then is essentially an attempt to balance private needs against social provision, and while it is possible, the same way spinning a billion plates on sticks is possible, it is impractical. I’m not saying communism is undesirable, in fact, should the technology eventually develop in which each individual is the sole producer of each and all of their wants and desires, the only common production being for common goods, such as ideas, then communism might very well prove to be the best economic system since this situation would technologically eliminate the need for trade. But we’re not there yet. We need trade and not planning. I don’t know about you, but I can barely plan for my own wants and needs, which change and evolve constantly. If I can barely do it for myself, I don’t have a snowball’s chance in hell of doing it for you, and even less for doing for thousands or millions. The best way to spin a billion plates on sticks at the same time is to have billions of individuals each spin their own.

Now my communist comrades are no doubt objecting that I have conflated private property with personal property. The difference they say is lying in what use the property is put to. There is a grave difference between the “means of production” and your toothbrush as the saying goes. I completely disagree. All property is usable. All property must be consumed individually. (Even fifty men pulling a rope, the space for each hand cannot be shared.) All property is labor-saving. All property is of this one kind. What my comrades mean to say, is that the essential quality of capitalism I mentioned earlier is not socially necessary or desirable. What they really mean is that capitalism is exploitation, and they are right. I have argued this several times elsewhere and so I won’t go into it here. But the point is that communism must ban the private ownership of the toothbrush as well as the means of production. In a world without trade, this is not really a problem, because no one else would need your toothbrush for other reasons. But in a world of trade, someone else is coveting your toothbrush and so common ownership of it would be a recipe for disaster.

Against these two we may now set socialism, which allows for private ownership but does not allow for rent. Albeit, this is a libertarian socialist conception of socialism. I will deal with intestine arguments about socialism elsewhere.