Tag: Private Property

The Political Architecture of Democratic Libertarian Socialism, Part 2

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

In the first part of this series, I developed the idea that a democratic libertarian socialist political architecture would be necessarily voluntary, deliberative, consist of political units of fewer than one hundred individuals, and would require representatives to scale up. At the end of part 1, I listed some potential problems with this scaling process. I break these problems into two main types: the jurisdiction problem and the representation problem. In this second part of the series, I will address these two problems.

The Jurisdiction Problem

The question of jurisdiction centers on the freedom of individuals to conduct their lives as they see fit. If all individuals have the right to live as they like and any two individuals disagree, by what process can a decision between them be made? This being a democratic libertarian socialist state, as opposed to an anarchist one, the right to retain private property is still a viable option for settling disputes, as long as the conditions of use and labor that justify exclusion are met. Private property then successfully solves the problem and given the two conditions of use and guaranteed income we avoid exploitation through it. The decision goes to the owner on principle, in fact, that is what it means to be an owner, you get to decide how and when a thing is used.

The problem persists in joint property and in public property, however. We must ask how people set rules about, for example, littering on a public street, without violating the rights of the individuals who did not explicitly agree not to litter on that street? Voluntary society seems highly susceptible to collapse into petty sovereignties. A principle of jurisdiction could solve this problem, but this must include some amount of tyranny. It is my hope that we can devise a jurisdictional principle that would mitigate the tyrannical effect to the greatest extent possible so that people would voluntarily agree to subject themselves to the rule of others out of respect for the autonomy of those others and so preserve their own autonomy in their own sphere.

Jurisdiction, as it is generally construed, concerns what relationships count as politically relevant enough that people have the right to create rules in their sphere of action with the effect of restricting the freedoms of those who enter it. At base, we need to know what makes an association of people a body politic empowered to self-govern. Is a relationship between enemies politically relevant? What about business partners? Or geographically distant close friends? The answer is that they all could be, but none necessarily are. Such categories of identity and relationships are too subjective to be useful here and should be replaced with spheres of action. As the individual must be in touch with their own interests they must be in touch with the interests of those who make up their basic democratic unit as well. Their decisions will impact that unit more than any other units. Therefore, those who have the greatest chance for proximal interaction have the greatest concern with each other’s behaviors. Alternative forms of interaction are all less effective. Interactions through media, for example, are always shaped by the media itself and thus constitute a less direct, less effective, and so less politically relevant form of relationship. Political relationships need to be local enough to present direct physical interaction, but not necessarily externally defined. A geographic feature, such as a river or a mountain range, might well divide one political area from another, but this should be because the feature genuinely affects the locality of the individuals who inhabit the body. The building of a bridge or a tunnel could effectively change the political jurisdiction. So, while it may be possible for a community to straddle opposite sides of the globe, it’s very, very unlikely; and even if it is the case, it is more unlikely still that so greatly separated peoples should remain a small scale political unity for long.

Whether a person inhabits a place or is merely visiting is an important question. Those who set down roots seem entitled to a say in that sphere of action, precisely because it is theirs, but those who are just there for a weekend, don’t. Caution must be exercised at this point in any government claiming to be a voluntary association, as a rule affects all (persons), not just those who decided upon it (citizens). If the citizens of a given area enact a biased rule that favors themselves over minorities and non-citizens, this is the worst tyranny and is easily accomplished despite a principle of equality before the law. This tyranny is simply unacceptable and must be mitigated in the name of a just society. James Madison dealt with this problem of faction by allowing larger spheres of action to supersede lower ones. We see this in the United States when the constitution makes lower laws void. A city cannot, for example, enact slavery statues because it is illegal at a larger sphere of action. Madison’s solution, however, suffers the major drawback that each sphere is governed by representatives and it becomes all too easy for wealthy and powerful factions to capture the higher spheres for themselves. Something that Madison thought would be highly improbable.

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Although locality makes up an important part of the basis for determining jurisdiction, it is also not limited to a specific externally marked domain. Political boundaries at the scale of the community are nearly fluid and correspond neatly to the areas directly inhabited by their members. This is the most voluntary form of government. It is at the municipal level that the need for defined jurisdiction covering spaces not privately owned enters the political architecture. These public and quasi-public spaces cover areas frequented by the members of several communities but not necessarily wholly bound inside their combined private property. In other words, the laws of a community apply only to the members of the community themselves, they have no jurisdiction beyond the community members and their property. The community is purely voluntary and as close to completely anarchist (at least for adults) as possible. Municipalities, on the other hand, govern several communities at once. The bounds of the municipality must somehow designate which communities are a part of the municipality for terms of voting and where the laws set down by these collective communities are applied. This is the first scale at which laws must be written down and publicly posted and where the law applies beyond the citizens of the jurisdiction. The municipality is the smallest unit of government and law and most likely sphere for tyranny. It is also the most flexible, allowing for the greatest diversity of relationships and laws, biases, and individuality. As with Madison, every scale above the municipality works similarly and each one’s laws would bind the ones below it so that a county that forbids a thing binds all municipalities in that county to forbid it as well.

Here is precisely were democratic libertarian socialist values clash with anarchist ones. For this is where voluntary agreement first begins to drift off. To see this, let’s ask the question: must all who enter a municipality be bound by the laws of the municipality, whether or not they are members of it? Let us say that the members of a municipality unanimously decide to forbid the spitting of chewing gum on the sidewalk. Let us further say that you are a visitor to this municipality who did not and would not have the opportunity to vote on this particular issue. Must you follow the rules of the municipality and not spit your gum on the sidewalk despite having never agreed to this rule? This example highlights a clash of values in libertarianism itself. Does one group, when imposing its rules on its sphere of action, have the right to impose those rules on non-members of the group in their territory? Libertarianism places a value on the voluntary agreement to rules in order to be legitimate but at the same time allows people the freedom to set their own rules. The solution to this apparent paradox is recognizing that all visitors have agreed to the rules establishing how laws get passed in each place and that inherent in that agreement is the agreement to respect the laws set down by others in their own jurisdictions. In other words, like Madison’s solution, there is an agreement at a higher scale which supersedes the lower disagreement. The problem with this solution, as with Madison’s, is that of capture which allows political tyranny. 

To prevent capture, I offer a two-part solution. First, individuals must have both a jurisdiction of their own and at the same time alternatives jurisdictions to enter should they wholly disagree with the rules they are subject to. If one is a visitor, one is free to simply not visit. However, for citizens, relocation offers less of a solution. As a citizen, one has a voice in a given jurisdiction, and could simply try to prevent laws. One might not always be able to escape the biases of a group through the vote though, and if one resides in the area, getting up and leaving, while an option, is not always economically advantageous or feasible. Fleeing a jurisdiction is easily accomplished at the community scale where it most likely would not even involve a move. But higher scales bring increasingly greater difficulties to this method of preserving one’s liberty.

This is the reason we need a second part to this solution: higher percentages of popular support must be required to establish a law at larger scales. Rather than force people to relocate to communities that are ideologically homogeneous, we could instead raise the bar for passing laws in correlation with the scale of the jurisdiction it would affect. The goal would be to equally allow groups to create laws governing conduct in their spheres of action and at the same time protect dissent. As stated above, a biased community rule is easily escapable by simply changing communities if you so strongly disagree. A higher order law, however, is more difficult and so should require greater assent to pass. And so on, with each scale up requiring more affirmation. The ability of the large jurisdictions to supersede the lower ones would still have the desired effect as Madison envisioned. However, the ability to capture the larger spheres of action would become increasingly difficult, since the percentage required to secure a decision would change in inverse proportion to the scale of its effect. 

Practically, we might imagine that at the smallest level, the community, a simple majority is all that is required to pass a rule. At the highest level, universally, we might require something extreme, like the assent of 95% of the population, to pass this entirely inescapable legislation. The scales between would be higher or lower accordingly. A municipality could require only 55% of its population to affirm a law before it passes, whereas a county may require 60%, a territory 65%, a district 70%, a nation 75%, and hemisphere of the globe 80%. This architecture will result in the majority of laws existing at the smallest scales of government and thus applying only to a few people; at the bottom, only those who voted for them. Only overwhelmingly agreed upon laws would exist at the greatest scales. This is the best that can be done for dissident without allowing minority dictatorship over the majority population.

This solution, however, presents a further challenge. What happens to a person who dissents from the social order? What happens to the minority vote? And while we’re at it, how does one become a community member? These questions are all related to the idea of who counts, which I’ll deal with later, but for right now, let me focus on what recourse persons have in a system they disagree with. The problem is more concrete if we take any social norm that is rather one-sided as an example. Genocide might be an easy one.  What would happen if you lived in a community who condoned genocide even though you reject it? Well, first you could leave the community. All individuals are political beings, and so all individuals must belong to a community. But you are free to choose your community to some extent. If you choose to leave a community, it would be necessary for you to be accepted by another. However, it can never be acceptable for a community to eject one of its members. Members may leave voluntarily or die, but they must not be removed. The ability to leave allows members who do not wish to live under certain laws the freedom to take refuge elsewhere. At the municipal level and above, this may involve physical relocation. The costs of which will have to be weighed against the strength of the individual’s beliefs. But we can very quickly see that the greater the scale, the more implausible this “freedom” becomes, and it is indubitably the case that without the actual opportunity for leaving no freedom exists.

It seems clear that any democratic libertarian socialist political architecture must be directly democratic at some point. The above assumes a directly democratic legislature, although not a directly democratic executive or judicial government. Dissent is healthy and should not be immediately suppressed, but at the same time, a large majority has a right to live how they choose and not under the anarchist tyranny of the minority veto. This compromise between our respective interests seems to offer us the best of these mutually exclusive positions.

Before we move on, I want to say a word on what a community can do to discipline its members for non-compliance. There will always be those who are disruptive and whose disruptions are either apolitical or simply criminal. For example, one may remain in a community and break the law merely to do so. Given that other avenues for dissent are available this member of the community is simply breaking the rules to break the rules. This is no less tyranny than usurping a political system to disenfranchising others or seizing power. The obvious manner for stopping such activity is to expressly forbid it by law and treat offenders in the customary manner, whatever form that takes. But if the behavior does not quite constitute a violation of the law, for example, something both disrespectful and disruptive but still within the bounds of political speech, the community must take care not to ostracize the member(s). However, they do not have to listen. A de facto excommunication may be acceptable whereas de jure excommunication is not. As long as the member is still allowed to speak and still allowed to vote and have their vote counted, a community is free to ignore them.

The Representation Problem

I want to return now to the issue of representation. In the first part of this series, I showed how the mere inclusion of representatives endangers the entire political architecture of democracy making it a de facto oligarchy or monarchy. What we need to prevent this is to devise an architecture that would not allow unauthorized power to slide into the representative’s hands. The first thing we have to do is understand exactly what the role of representatives is in a truly democratic government. So, let’s begin by recalling that the need for representatives doesn’t enter the picture until the scale of the municipality. As I said, communities are basic democratic units, anarchist in nature, and so do not require an internal representative. Thus, we only need representation to organized political bodies beyond our communities, viz. municipalities, counties, territories, districts, nations and universal. Representatives then are charged with carrying out the community’s bidding in its relations to other communities and relating the desires of other communities to the represented community.

We still face the problem of where the community may not be able to determine their own “bidding” explicitly or charge in a direct and personal manner their representative with the task of carrying it out. At the same time, the “representative” may just carry out their own bidding in the name of the community they represent. Ensuring the link between the will of the group and its representative is our task. To do this will require more–not less–political architecture. It would be instructive to revisit the separation of powers theory, represented by the branches of government, viz. the legislative, the executive, and the judicial. I argued above that it is the communities themselves, as the basic units of democracy, that should legislate directly. Let me add here that the communities should act as legislators at all scales of politics. This is important for representation because it takes away the power of the representative to volunteer their constituency’s voice or sell their vote without consent.

This locus of the legislative action in the community is essential to democracy. Legislative power cannot be delegated without changing the political architecture from democracy to something else. The representative’s role in wielding legislative power should be limited to functionary duties, e.g. preparing language, conducting votes, entering decisions, codifying laws, etc. Perhaps representatives may decide which laws to vote on and at what time, but such legislative authority should mark the utmost extreme end of their power to influence legislation. This is all that can be done to satisfy Edmund Burke’s admonition that representatives exercise their individual conscience rather than mindlessly following the uninformed opinions of their constituents. It is the legislative branch of government that belongs to the people and must remain directly with the people if the polity is to be considered democratic. 

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Edmund Burke

However, this is not true of executive and judicial power. These important roles can be delegated with particular structuring, so that a small minority may perform the function of governing, but do so without ruling. The role of representatives in government should then be largely limited to overseeing executive and judicial functions, such as the hiring and firing of administrators and judges and making of policy respecting the administration of law, but never, under any circumstances, the enactment or repeal of law itself.

Another duty of representatives is maintaining the flow of information. It is perhaps the most vital role of representatives to act as the eyes and ears of a community so that it may confront the issues of the day from an informed position. Obviously, information may come from other sources, but representatives, as they act in higher and higher scales, have access to the most direct information available. In other words, it is not just the role of the representative to serve as the voice of the represented, but as the voice of the government to the represented, empowering them with the information they need to make good decisions. They are an important pivot point between a community and all the greater scales of politics. The worst representatives will hide information from their constituents in an attempt to manipulate the situation how they think it ought to be handled. Trustworthiness will, therefore, be the most vital characteristic to consider in the election of a community’s representative. To guard against manipulation, a democratic architecture should require that all government activities be public.

How should representatives be selected at each scale? There are various schools of thought on this, but I favor election at the smallest scales. Each community should elect, with a simple majority vote, it’s representative to a municipal council. Each municipal councilor should elect, at the determination of the community they represent, their representatives to the county council. Beyond the county level, it’s hard to know who to trust. All candidates desire power as no one runs for offices who do not. However, a solution is available if we simply remove elections at this point. The territorial council and beyond could all be appointed by the drawing of lots from the pool of current county councilors in good standing.

Why introduce a chance here? Precisely because it checks overwhelming political ambition. We can still ensure that we are getting good people into office by additionally requiring that only those who have been elected to a county council more than one time are eligible for higher offices. We can also restrict the term of office to a single six-year period; along with the prohibition on being selected for more than one term at any particular appointed scale. Those representatives who are elected should be reelected frequently, say every two years, but could, of course, serve many terms up to some reasonable limit; say, a maximum of six terms. This will assure us that even if some rather bad apples get into positions of power, they needn’t be suffered indefinitely. Additionally, a list of impeachable offenses should be made into law that would allow the recall of anyone who abused their position. And any representative, even an appointed one should be recallable by their represented lower scale. Appointments would have a voluntary component, no one would be forced to serve and may resign at any time. And the vacancies could easily be filled by another round of elections or selections.

In its most abstract terms, the representatives of the communities serve as their surrogate in the daily administration of self-government.

In part three, I will attempt to flesh out the bare bones of this political architecture by exploring some of the more pragmatic considerations democratic libertarian socialism must confront.

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.

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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.

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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.

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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 & 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.