The risk of workers

Remember in the past when I wrote how the idea that capitalists deserve profits because they’re taking on the “Risk”, is nonsense? Well,in another installment of ‘Why “Anarcho”-Capitalist apologia is always bullshit”, here’s the Google developers for the Stadia game studio being laid off, a year into their contract.

This is one of the biggest and most well known IT companies in the world, hiring people for something that typically takes 3-5 years. Imagine for a bit how “safe” the bet they were making was when deciding whether to take this job. Some people had to relocate state, if not countries to take this job. Which means massive expenses and huge opening for disaster if they are left without job.

But this risk the workers take, is not actually compensated like the capitalist’s is. It’s reversed!

The developers who put their neck on the line for this job, are not going to see the full profit of their work or have any decision-making rights. Instead, if it were successful, Google owners were going to skim a very good portion of the income as profit and the workers were going to get a portion of what their work achieved. Now that it’s unsuccessful, Google owners lost a bit of money (effective chump change for rich people) while the workers face a very real prospect of economic devastation during a global pandemic and a massive downturn in the economy.

You tell me who is taking the higher risk here. The owners, or the workers?

The interesting times begin

For Humans, Coronavirus by itself might not be as bad as other diseases like the black plague, but for the global capitalist system it might just end up being terminal.

It started by slowing down the productive capacity of the largest owner of means of production, China. It then progressed to disrupting the routine functions of wage-slavery in densely populated city centers. Soon it’s going to cause immense pain due as the landlords demand their parasitic rewards from people who have not earned any money for a month and have no safety net to fall back onto.

All these effects, are like vital organs in a human patient starting to fail. This, along with some other unexpected “inflammations” (such as the Oil trade war), and the people observing and taking bets on the patient’s recovery start to panic.

Which has now caused an unprecedented stock market crash. Faster than even the Great Depression crash of 1929 where we replicated the same percentile loss in less time. And it’s nowhere near the bottom yet, as the Coronavirus has not even fully taken hold of the US yet.

The cancer of the propaganda channel of Fox News and pretty much the rest of the Murdoch empire has weakened our global immune system enough in the past 3 decades that it managed to create the orange malignant tumor known as Trump, who proceeded to accelerate the dismantling of capitalism’s immune system even further. And now, the first real shock has already sent the global system into cascading failure.

The few million deaths due to healthcare systems becoming overwhelmed during Coronavirus are going not going to be nearly as disruptive as the repercussions of a stalled capitalist system supported by central banks which have no more measures to jump start it anymore and bad acting world leaders.

The situation forming right now will probably end up being the biggest Capitalist crisis the world has ever experienced.

Quote of the Day: Crooked system

George Monbiot gives us two humorous quotes about the avaricious rich.

Quoth George Monbiot

Executive flight is the corporate world’s only effective form of self-regulation: those who are too selfish to pay what they owe to society send themselves into voluntary exile. It’s an act of self-sacrifice for which we should all be grateful. It’s hard on the Swiss, but there’s a kind of mortal justice here too: if you sustain a crooked system of banking secrecy and tax avoidance, you end up with a country full of crooks and tax avoiders.

And for a 2-hit combo:

International attempts to close down tax havens remain half-hearted. But if by some miracle these measures were to succeed, one haven – let’s say St Helena – should be kept open. It should be furnished only with rudimentary homes. All who chose to could live there in peace. Every penny they possessed would remain safe from the taxman, as long as they never set foot in another land. They could sit in their cells and count their money for the rest of their lives. Parties of schoolchildren would be brought to the island to goggle at these hermits, and learn some lessons about the follies of wealth.

On a related note, we need more humor in the anti-capitalist movement.

How come the Christian and Capitalist ideologies fit together?

How can a religion which promotes meekness and absistence from wealth manage to combine so well with the most wealth-seeking and sociopathic ideology?

The US conservative mix is an interesting combination of ideologies, from one hand bringing the Christian fundamentalist aspects of Protestantism or Catholicism with their values of meekness, “turn the other cheek”, “love thy neighbour” to rest with the pro-Capitalist ethics of dog-eat-dog competition, “grow or die”, “profits above all”. To say the least, to imagine a pro-capitalist christian is quite a long way away from the story of a Jesus throwing the moneychangers out of the Temple, or to combine the “there-is-no-such-thing-as-free-meal” concepts with a Jesus feeding everyone for free.

However the truth is that there are also significant similarities between the two ideologies when one takes the contemporary version of Christianity as is dominant in the USA, which has chosen particular aspects of the Christian dogma to promote and others to marginalize as is common with the Great Book of Multiple Choice: The Holy Bible. In this instance far more weight is given to the concepts of the Protestant work ethic, Catholic blind respect for authority, self-blame, judgement and fear, while the ideals of  selfless love, communalism, anti-metchantilism, anti-greed etc have been quite purposefully hidden from view to all but the most inquisitive minds (i.e. to those who are not content to have the bible interpreted for them by their local clergy.)

When taken in this light, “Christianisty” becomes suddenly a perfect match with the right-wing ideologies which spread the myths that Capitalism rewards the hard-working and most capable, that only the best rise to the top (and therefore the “just hierarchy” this implies) and the general idea that the poor and downtrodden have only themselves to blame. In fact, the basic combining point of those two ideologies would be this simple concept:

The Poor and downtrodden have only themselves to blame.

This kind of mentality is profoundly popular amongst pro-capitalist, right-“libertarians” and assorted propertarians and very often my discussions with them will devolve to the point where I’m trying to explain how wealth is primarily accumulated via some combination of luck (or ancestry, of birth, of health, of location, of time etc) rather than personal hard work. And this is treated a the gravest of heresies. I urge you to try it one time with some defender of Capitalism and see how they react.

When you point out that there’s plently of hard-working people who remain poor, the counter argument is that some few people did grow rich (at this point names like Bill Gates and Steve Jobs are commonly mentioned). This does not counter the fact that the majority of hard-working people don’t “make it” but it does serve as a useful distraction. When you point out that a rich guy born in the US has infinitely more opportunities to “make it” than a poor, black guy born in Congo, they may point that better ones manage to immigrate. Again, a red herring.

Propaganda and a priori justifications of propertarian free markets are not much different. More often than not, the simplistic examples used involve one “entrepreneurial” individual who is more able, smarter, more frugal, wiser, or simply more hard-working from the rest and therefore manages to create, accumulate or invent something that others will wish to rent from him. This implies of course that the reasons the rest of people stayed in their current social position is because they are lazy or stupid. The silliness of course is when those fantastical examples are juxtaposed in current reality as an attempt to prove that the poor have only themselves to blame. No attempt at empirical research to discover the reasons is made. As is common in economics, reality is assumed to fit the theoretical models.

Similarly, the USA breed of fundamentalist Christian is quick to assume that their current life is totally justified by their work ethic and their piety in front of their god. All good luck is interpreted as holy blessing for their good deeds and faith while all trouble can easily be attributed to insufficient following of their interpretations of the Great Book of Mutliple Choice Bible. Under this prism, it’s not difficult to see how religious nutters can attain any measure of success.

This mindframe then allows the believer to not only ignore the visible effects of poverty without helping and with a clear conscience (“It’s their own fault for being too promiscuous/sinful/unfaithful”) but to also rationalize the existence of wealthy Christians (“They wouldn’t have been rewarded with wealth had they not been good Christians“) to Christian claims such as the ones which claim that the rich will not get in Heaven. This is what, to me at least, seems to feed the extreme judgementalism and schadenfreude that fundamentalists display.

Given such a strong connecting point, it’s not surprising at all that US conservatives are a unstable mix of  Pro-Capitalist and Christian Fundamentalists and how criticisms on their intolerance or inhumanity in the face of suffering does not seem to affect them when the way the view the world fundamentally differs from the reality. It’s no wonder that some of the more radical elements of both parties, resemble each other so much in action. It’s no wonder that the two ideologies most unwittingly supporting the ruling elite have found common ground to work at it together.

Of course, as is the case for all things which depart from the facts, reality has a particular way of slapping one back in very unpleasant ways. Once this happens, once the true nature of the capitalist system starts to make itself known to those two camps and the answers provided by their apologists of choice (Priests or Economists, pick your poison) don’t fulfill, then is the time that friction starts to occur. The lifetime hard-working christian who suddenly finds himself at or past the edge of bankruptcy because of a serious illness is quite likely to start challenging the notions that the Capitalist system or God rewards the hard-working. He will seek answers for his predicament and when those fail to fulfill as they are bound to do, perhaps they’ll start thinking things over. The eager entepreneur who finds his startup attempts squashed like a bug by large companies and corporations and ends up in the position of a minimum-wage-slave despite his credential might end up challenging ideas of working free markets and how the brighter rise to the top, once he has to experience the true face of scientific management.

As unfortunate as it is that there’s not a lot of room to convert people who simply don’t have the correct experiences in their life (good luck convincing a successful entrepreneur that his success is due to luck and privilege and that capitalism doesn’t work) the good thing is that the periodic collapses of the capitalist system often make large bulks of people start challenging their previously held beliefs. We can then only hope we have good enough arguments to push them in the right direction and start the snowball effect of their awakening from Religious and Capitalist myths.

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Why is it so hard for Economists to make a substantial critique of the LTV?

Brad DeLong takes a swipe at the Marxian Labour Theory of Value and falls hopelessly off target and wrong to boot.

From a drawing of André Castaigne. The starvin...
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Or: Brad DeLong tries and fails to refute the (Marxian) LTV.

I won’t go into the details on why Brad didn’t attempt to argue against the LTV but rather against the moral basis of Marx’s theory of exploitation as Kapitalism101 already skewered that particular misunderstanding. What I would like to do is to point out why even then example chosen, in all it’s rigged splendor is misguided in providing us even with clear moral insights into the ethics of capitalist production.

First, lets start deconstructing the example put forth. One might wonder why we should be doing that of course and the reason is that there is a fine line between rigged examples and unrealistic examples which are so goddamn popular within economic circles. It’s quite important to expose the unrealistic expectations and ignored inconsistencies which make up so much of such scenarios so as to point out why they can’t be used to describe reality in any meaningful sense.

In fact, I’m going to digress towards a small rant on this particular subject as it annoys the hell out of me when I see it. Dear Economists please stop doing that! Stop imagining scenarios, perfect, clear cut scenarios, with no ambiguity at all, which can fit into perfect mathematical models and then try to describe reality from those conclusions! It is not reality. It has nothing to do with reality. It’s as absurd as a physicist trying to explain reality by positing a scenario starting with “Imagine a man flying by flapping his arms”. You can’t model reality in your heads and then use those fantastical examples to describe the real world. As such, your examples have as much accuracy to the reality of economics as Democritus Atomic Theory has to the reality of chemistry. It sounds alike and seem on the surface to approximate reality, but is nevertheless quite wrong.

Marx, for all his errors at least started the right scientific way by looking at how the capitalist mode of production worked and then writing a theory to describe it. You know, like a proper scientific theory. That doesn’t necessarily mean that his initial theory was perfect any more than Darwin’s initial theory of evolution was perfect. It was nevertheless based on empiricism rather scholasticism. /rant

So from the get-go, Brad’s example starts on the unrealistic foot.

Now suppose that ten of these families starve themselves for a decade–living on little more than half-rations–to raise the cash to buy farm machinery, irrigation systems, fruit trees, et cetera from the cities.

Which automatically means that A) Those farms were not subsistence and they were producing already more than they could consume as nobody can keep on starving for 10 years and B) There is already a working industrial production which provided them with the research and capital to buy. Under what circumstances this was bought it is not said as that production might be based on exploitation as well. But lets for the sake of the example assume that people starving for 10 years instead put their labour in researching and building all that capital and see where it leads us.

As a result of their sacrifice, saving, and investment, thereafter their farms require four times as much labor each year to operate, but also produce crops worth eight times as much because of the capital investment.

Now we see that all those abstained consumption of those families was used to create capital which can only be used by more than their current manpower. This is weird to put it mildly as one would expect them to simply improve their own processes rather than build capital requiring more manpower. It points in fact to the idea that those starving families had a plan to hire other workers or to put it shortly, to rent out their capital rather then selling it or using it themselves. Keep this in mind as we proceed.

They then hire thirty additional families’ worth of workers, leaving the remaining ninety original farmsteads to be worked by sixty families.

And this is the sticking point for me. What Brad casually assumes would happen easily and without much fuss is, in fact quite complex, when one looks at things realistically and with an anthropological perspective. Why would 30 families of workers agree to be hired as wage-workers?

This may not sound as much of an issue for someone who takes the current world as given and the current human mentality of passively accepting wage-labour but it is quite important to analyze. Lets take the things we know. Those 30 families currently can produce enough food to fill their current needs and then some extra to sell and buy luxuries (otherwise, those entrepreneurs wouldn’t be able to “starve” themselves). Those 10 families that “starved” themselves for 10 years on half-rations, we can assume that they consumed only half as much of their product right? So if they produced 3000 pounds of wheat per year, this means that they saved 1500 per year. So 10 x 10 x 1500 = 150.000 pounds of wheat, or 75 tons, in order to buy/build the capital right? Right.

At this point one might ask, why didn’t those families pool their resources together and buy capital that is small enough that they can work themselves? Lets assume that the smallest unit of capital they could buy was this, requiring a minimum of 40 families. Again this raises questions on why this is the minimum unit of capital and this is not a neutral question. Kevin Carson would have a lot to say about the purpose of capitalist technology and which interest it represents.

So we have unit of capital which was bought by 10 families who can’t currently use it. At this point, one starts to question their sanity. It’s like a blind man buying a truck. “Why did you just do that?”, one expects everyone else to ask. “You just starved for 10 years in order to buy something you can’t use? What’s the point”. At which point those brilliant entrepreneurs say “Ah but my plan is to hire you guys to work in it and give you a share of the profits while I keep something for myself for all our starvation.” At which point general laughter occurs. For you see, there’s no reason for anyone to accept such a plan. And I’m going to explain why:

  1. The Entrepreneurs are now left with something they cannot use. They are at a severe bargaining disadvantage to everyone else, having wasted 5 years of money’s worth on machinery which will degrade if not used and maintained. As such, they are now at a pressure to use it. It is not in anyone else’s interests to hire themselves out as wage workers when they can instead buy the capital at the far lower second-hand price.
  2. It is not explained what the bargain is for everyone else to hire themselves out as wage-workers. It is assumed that the extra money (an increase of 1500 pounds of wheat-per-year, per family) would be enough to make them take this job. But this is counteracted by the loss of freedom. Whereas those 30 families had control over their own work hours, they will now lose it and will have to work under a boss. This may not sound as much but looking at historical examples of where such scenarios played out, we can see that almost nobody (and I use “almost” only because I can’t speak with absolute certainty, not because I’m aware of any counter-examples) during the migration from farming/artisan production to industrial production, chose to leave their own self-controlled work in favour of factory wage-work. Quite the opposite in fact. People preferred to spill blood rather than choose this.

It is therefore highly unlikely that those 10 families with the capital would find anyone to hire as wage-worker when people had the alternatives to either keep working self-employed which was both traditional (and we know how hard that is to change) and trouble-less, or to buy the capital second-hand or new buy banding 40 families together and amassing the same amount of capital in “2.5” years by starving or 3.3 years by “tightening the belt”. Then, they would both get the increased production AND keep their freedom AND keep all the profits at equal shares.

So in the end, the only way that Brad’s scenario could play out would be for one or more of these reasons

  • The 30 other families are stupid: This is the only way they would not realize that the “entepreneurs” have put themselves at a disadvantage and they can now buy the decaying capital at bargain price.
  • The 30 other families are terminally lazy: They’re not willing to abstain from even one pound of their current lifestyle, even if it means 50% increase in wealth 4-5 years down the line.
  • The 30 other families are made up of submissives: Only those would enjoy all loss of freedom during work hours that they enjoyed until now.
  • There is something else in play which took the previous means of subsistence from those 30 families, leaving them with no other option than hiring themselves out to those 10 entrepreneurs as wage-workers.

Brad, and most mainstream economists and economic examples such as the above, quite strongly imply that the poor and working class are lazy, while the truth is that historically (even continuing to this day) it’s the last option that has happened. Those 10 families bought the capital and then put their friends in the state to enclose on all the property of the 30 other families so that they have ample wage worker who “volunteer” to hire their labour out.

This example thus is no different. It simply posits a reality and assumes away all those embarrassing natural reactions humans would have. No, let’s just assume that 30 families agreed to hire their labour out with not a lot of fuss. It’s the voluntaryist fallacy all over again where the argument assumes a scenario where a bad situation is accepted voluntary from one party and then wonders where all the moral condemnation comes from.

Let me exemplify this by taking Brads example and using slavery rather than wage-slavery.

Lets take the same scenario with the 10 families starving and whatnot to build/buy capital that can only be worked by 40 families. Now lets assume that those 10 families  take 30 of the other families as voluntary slaves in the new plantations to work them for 4800 pounds of wheat per year instead (an increase of 300 over wage-work). As voluntary slaves it means that they get to live and work whenever their masters tell them and get beaten if they do not follow orders. According to Brad’s logic, there’s nothing wrong with that is there? After all, they slaves now get more money than before and everyone is better off. Aren’t they?

What? You object to the assumption that people would just like that voluntarily sell themselves into slavery for more money given other alternatives? If so then you understand why I object to the assumption that people would voluntarily sell themselves into wage-slavery for more money, given other alternatives.

This is the flaw in Brad’s scenario. This is the flaw in all economic scenario. They are unrealistic and suffer from hoards of inconsistencies. They only work as long as we play along with the author and avoid thinking too much about what they’re really implying. It can justify wage-slavery. It can justify slavery. It can justify goddamn Cannibalism if we really want it to. As long as we’re assuming, we might as well assume anything voluntary we want.

I can take my above example with wage-work and make it worse for the slaves. I can make it better for the slaves as well. Since it’s a rigged example I can do whatever the hell I want! I can make a scenario where someone would be offered 10 times more money if they accepted to be a slave. I can make a scenario where someone accepted to be a slave for a meager 1% increase. It’s my assumptions and I can do what I want. And this is precisely what Brad is doing. He’s simply built a scenario where it looks like an improvement for the wage-workers and assumed nobody would be willing to look close enough to challenge wage-work itself. It bases itself on people already having a mentality which accepts wage-work and thus going along with it without too much fuss or thought.

As soon as someone asks “Why did those people accept to be hired as wage-workers?” his whole scenario tumbles down like a house of cards.

As for his “critique” of Marx’s theory of exploitation, it could be just as well surmised in one sentence: “It’s voluntary so it’s not exploitation. Therefore the LTV is false.” And it’s as convincing as that.

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Oh hey look! More "Anarcho"-Capitalists defending the facilitation of sexual harassment on the grounds of liberty.

Prominent “Anarcho”-Capitalist Stephen Kinsella weights in on Blocks faux-pas on sexual harassment and exemplifies all that’s wrong with this ideology.

I posted a while back explaining why the AnCap dismissals of Block’s support for sexual harassment where misguided and inconsistent with their own principles and why the question was not really about the act of aggression but how a capitalist system makes the act itself possible. Now, someone else is basically making the same argument as me only…he comes from the opposite side. I’ve just noticed that Stephen Kinsella left a comment on Brad Spangler’s blog making a similar case in support of such facilitiation…on the grounds of liberty of course.

In sum: no one is entitled to a job; employment is at-will: you can quit any time, or be fired any time. So you are not entitled to a job offer, so a conditional one does not violate your rights: I offer you a job IF you will consent to my lechery, fondling, whatever. The candidate can accept or turn it down. Note that this is true even AFTER they start work for you, usually–since employment is at-will. So you can just fire her one second, and re-offer the job, with strings, the next second. Etc.

So basically Kinsella is claiming that Block was absolutely in the right in his original case against sexual harassment laws. Maybe he considers that Block should have phrased it a bit differently to avoid drawing attention to the conclusions.

Really, this whole mindframe is the disease of right-libetarianism and the reason why I find it so difficult to take them seriously. If one can find nothing wrong with their espoused principles even when they theoretically lead to situations of people doing what they cleary do not wish to do or situations clearly appaling, then they’re well and gone in their fetishism of “voluntarism” and contracts.

The willfull ignorance of the social context in which such consent might be given is also stunning. “Nobody deserves work” says Kinsella. No, some people apparently just deserve to starve if they won’t accept sexual harassment or 16-hour workdays. It’s their fault for being born unprivileged and if they don’t like it they should just hole up in a corner and die. Compare that with Emma Goldman’s legendary quote to see the vast ideological difference between anarchism and “Anarcho”-Capitalism. The bankrupcty of putting rights to private property over rights to life.

“Ask for work. If they do not give you work, ask for bread. If they do not give you work or bread, then take bread.” — Emma Goldman (Anarchism and Other Essays)

But of course, this is nothing new. “Volunteering” to sexual harassment is exactly possible for the reason why people would “volunteer” to wage-slavery or “volunteer” to child labour. This is all a normal continuation of the same principles that see the hierarchical control of boss over worker and landlord over rentor as an expression of “freedom”. Consenting to be pinched is just that extra thing women might have to accept after they have consented to put aside their liberty during working hours. But hey, it’s all worth it for that cuchy office job isn’t it?

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Do workers exploit the capitalists?

A Misoid attempts once more to counter the theory of exploitation, this time using nothing more than equivocations and lack of historical knowledge.

This image of :en:George Reisman is taken from...
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In today’s Hits & Mises episode I’m going to tackle George Reisman’s attempt to refute the exploitation theory. I was recently linked to it by yet another Misoid on reddit who is trigger-happy in linking to, which seems to be an annoyingly common occurrence in the Anarchist subreddit. This time I am not going to tackle it all at once since this is a huge piece using various tactics to counter the theory of exploitation. Rather I’m going to pick apart it’s distinguishable core arguments one by one until there’s nothing left.

The main thrust of the attack in this case is the argument that in a pre-capitalist society or artisans and farmers, rather than all income being wages, all income was profit and by the introduction of the capitalist mode of production, it wasn’t that the parasite class of the capitalist and landlord started taking a part of the income as profit, but rather that the artisans naturally evolved to capitalists and then gracefully allowed some proletarians (i.e. people with nothing else to sell but their labour) to use their surplus land and capital to survive while they paid them a “fair wage” since they were doing them a favour in the first place. In short, the worker is exploiting the capitalist now since they are getting a wage out of the capitalists profit (which would exist at the same level apparently without the worker’s labour).

Smith and Marx are wrong. Wages are not the primary form of income in production. Profits are. In order for wages to exist in production, it is first necessary that there be capitalists. The emergence of capitalists does not bring into existence the phenomenon of profit. Profit exists prior to their emergence. The emergence of capitalists brings into existence the phenomena of wages and money costs of production.

Accordingly, the profits which exist in a capitalist society are not a deduction from what was originally wages. On the contrary, the wages and the other money costs are a deduction from sales receipts—from what was originally all profit. The effect of capitalism is to create wages and to reduce profits relative to sales receipts. The more economically capitalistic the economy—the more the buying in order to sell relative to the sales receipts, the higher are wages and the lower are profits relative to sales receipts.

I have been unfortunate enough to have had to argue against this position in the past with one particularly obnoxious opponent so this is not a new perspective for me, although it’s nice to finally know where that person got his argumentation points from as this seemed a novel refutation at the time. In short the flaws in this argument are two. One is definitional while the other is historical.

The Definitional Flaw

We see George starting down this path from this quote

This becomes apparent, as soon as we define our terms along classical lines:”Profit” is the excess of receipts from the sale of products over the money costs of producing them—over, it must be repeated, the money costs of producing them.

A “capitalist” is one who buys in order subsequently to sell for a profit.

“Wages” are money paid in exchange for the performance of labor—not for the products of labor, but for the performance of labor itself.

It seems that he is using some fairly interesting definitions here, definitions which in fact have nothing to do with the way such terms were used by socialists. The reason why this change occurred is because it allows the very tricky equivocation fallacy required for one to make within his historical flaw.

So why is this definitional flaw important? First lets take the definition of wages: I do not know if Marx did indeed use the term “wage” to talk about the income of pre-capitalist production but in any case what he was really talking was a mode of production where all the income goes to the person who did the labour. Whether that was in excess or less than the money costs of production is irrelevant. What is important is that those who do the labour get to keep all the income from the trade of the results of this labour, i.e. the commodities produced.

The money costs that an artisan or farmer has to produce any commodity are irrelevant as it’s impossible to define them as this includes the whole cost of living of said worker. Does your cost of feeding yourself count as “money costs?” The cost of feeding your family? Buying new tools? Taking vacation? Buying new luxuries? Which of these is or is not a “money cost of production?” Nothing but feeding and buying tools? But obviously a worker without leisure would not be productive. Is everything a “money cost?” But then it’s ridiculous to talk about “profits” as the way the income is used is indistinguishable from a normal wage.

And that is the problem. The intellectual twist required to make the definitional swap of “wages” to “profits” does not stand up rationally. We call an artisan’s income “wages” because it is in fact indistinguishable from wages functionally. It is income which is directly the result of the sale of one’s labour power. The labour power to create the commodities or perform a service. Profit on the other hand is generally used in a different sense, as the non-labour income which one receives on for owning the capital.  It’s the tribute the owner receives on account of owning.

Even using Reisman’s definition of “wages” above, we still see that it supports the idea of pre-capitalist artisans and farmers are receiving wages, not profit. Why? Because if wage are the money paid in exchange for the performance of labour, then we need to ask what the performance of labour is in a pre-capitalist society. It’s obvious then that the performance of labour is nothing less than the products of labour. The commodities one produces is a direct result of the performance of their labour.

The conceptual mistake that Reisman is doing here then is not so much that he simply mixes his definition dishonestly in order to make an equivocation later on, but that he falsely considers that there is a split between the performance of labour and the products of capital, the combined result of which is the commodities. Thus he assumes that an artisan has some wages that are the result of the performance of his labour and he also has the “wages of capital”, the profit which he also gets to retain since he owns the capital as well. However discovering how much is the performance of the artisan’s labour and how much is the performance of the capital is apparently not important and ignored. The truth is that this is a nonsensical split and is ignored because trying to define it would lead one to figure out the actual role of capital within production.

Furthermore the definition of Capitalist as “one who buys in order subsequently to sell for a profit” is especially wrong as this is the definition of a Merchant. Not a capitalist. This definition has to do with distribution, not with production, as it is by the latter by which one earns the title “Capitalist” or not. In fact this conflation of Merchantilism with Capitalism is quite common among the Misoids for some reason, which I assume is their perverse need to prove Capitalism as a natural human system which has existed for us since the dawn of civilization or something.

The Historical Flaw

This part is what especially gets to my tits for its absolute ahistorical assertions. The idea that capitalism is the natural continuation of peaceful evolution of human societies which “naturally” led to the result of some artisans and farmers owning more land than most while also oh-so-randomly property-less proletarians just happened to be around on the verge of starvation and eager to sell their labour as wage-workers while the artisans, now turned capitalists, graciously agreed to sacrifice part of what was all profit before in order to accommodate their fellow human beings.

It’s as if capital and land was happily working itself, producing all those commodities for the pre-capitalist to sell until that scummy proletarian came about and abused the warm feelings of the capitalist in order to get part of the profit. Or something. I don’t know, this whole rewriting of history is so vile in its crass white-is-black thing that it gets me aggressive just reading it. Seriously.

Reisman seems all to eager to manufacture a history which points to a natural evolution of capitalism that he manages to miss the point that actual reality was nothing of the sort, nor could it. He simply bases it on the equivocation he can make once he calls all pre-capitalist income “‘profit”, from which to claim that it’s not the worker being exploited by the capitalist since wages existed first, it’s just the other way around since “profit” existed first. It’s moronically simple.

First of all, the state of affairs where some people just happened to own all the land and capital while others had nothing to sell, didn’t just come around naturally, nor could it ever as humans by default tended to communal ownerships based on mutual aid. As such, it would have been impossible for some to end up owning more than they can use while others had nothing to sell but their labour. Even in a non-communal setting there would be no way for someone to enclose on more land than he could manage himself without a state to accept this claim and enforce it. There would be no way for someone to purchase a factory and then find willing wage-slaves to work in the inhuman conditions within as there would always be available land around for them to work on as self-managed free workers.

This is in fact why it required extensive state violence for capitalism to take hold. Not only had the farmers to be kicked out of their land and be prohibited from moving to other areas by force of law, not only did economic theft in the form of mandatory poll taxes had to be enforced, but the communal land to be enclosed by the great landlords so as not to allow any other options but to becomes wage-slaves.

In short, the world was engineered in order to facilitate capitalism, to facilitate exploitation.

The funny thing is that I’ve had before an AnCap argue that it doesn’t matter that things did not happen this way. It does not matter that it required extensive violence to achieve the system of production dominant today. It matters that logically it would be possible to achieve it even if no violence was used which simply goes against all we know of human pre-capitalist societies and trends. Much like the free market nonsense, it does not matter if it’s unrealistic; as long as we can imagine it happening in our heads, it’s enough.

Reisman’s fantasies are nothing more than that. Unrealistic fantasies of artisans turning capitalist and willing proletarians happily selling their labour-power for a piece of bread. It is spitting in the face of human history in order to make the Capitalist a progressive hero helping society to advance.

Thus, capitalists do not impoverish wage earners, but make it possible for people to be wage earners. For they are responsible not for the phenomenon of profits, but for the phenomenon of wages. They are responsible for the very existence of wages in the production of products for sale. Without capitalists, the only way in which one could survive would be by means of producing and selling one’s own products, namely, as a profit earner. But to produce and sell one’s own products, one would have to own one’s own land, and produce or have inherited one’s own tools and materials. Relatively few people could survive in this way. The existence of capitalists makes it possible for people to live by selling their labor rather than attempting to sell the products of their labor. Thus, between wage earners and capitalists there is in fact the closest possible harmony of interests, for capitalists create wages and the ability of people to survive and prosper as wage earners. And if wage earners want a larger relative share for wages and a smaller relative share for profits, they should want a higher economic degree of capitalism—they should want more and bigger capitalists.

Quotes like this really make me want to punch someone in the face and further solidify why I want nothing at all to do with “Anarcho”-Capitalists and their disgusting apologetics.

Next part of the refutation takes the approach of profit being the reward of capital intellect which I’ve countered already in the past so that’s two bases demolished already. Once I can grind my teeth enough to read through the rest of the nonsense I’ll continue with anything left.

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The Kudos economy and some criticism.

A market anarchist proposes a system which might bridge the gap between a market-based economy and the problems that disparity of wealth creates. Here’s my LibCom citicism.

Kudos Burgerville
Image by daftgirly via Flickr

William Gillis writes an interesting post about the differences between Capitalist and Communistic ownership rights and gives a different perspective of how market theorists misunderstand the criticisms Anarcho-communists are directing at Private Property. It’s a bit thick to parse but I think it’s worth a read especially on how he takes the distinction between property and possession to a different dimension and the 2 pointed critiques of Private Property.

Of course there are some parts I have to disagree, for one:

Obviously however, just because such differing economic approaches might make better software for a fraction of the energy Microsoft spends doesn’t mean that it can do things like move goods between locations to satisfy demand efficiently or signal all the costs of one consumption versus another. Without the capacity to assign value to spatial/physical relationships (as with the realm of actors and objects) one can’t concretely mediate between those relationships

This particular part is, I believe, making the mistake merging two different concepts of a capitalist economy. Production and distribution. William accepts that socialized production seems to be much more efficient than the capitalist mode of production but he then proceeds to criticize the former for not achieving efficient distribution. But this is something unrelated to the productive process so I assume he’s attempting to criticize an explicitly Communist (or moneyless) way of distribution (as opposed to collectivist or syndicalist which might still retain money).

The problem is here again some of the assumptions of free market theory. The assumption that free markets satisfy demands and the assumption that the price mechanism passes along the correct signals. Unfortunately none of these assumptions are right as  the markets can only satisfy effective demand and the signals ignore externalized costs and don’t provide enough information. By not basing transactions on prices, but simply on pure supply & demand (as would be the case in a communist society) both of these issues are avoided for demand is based on people’s needs and the productive process and democratic control of it ensure that the supply is analogous to the costs.

The second criticism I have is directed towards this sentence

Anti-capitalists often disingenuously blur the distinction between wealth and coercive power — wealth and/or disequilibria in wealth do not inherently have to grant any capacity for social control — but it’s certainly true that direct pursuits of power and wealth share the same form.

I don’t think it’s disingenuous at all as anti-capitalists are criticizing actually existing capitalism and not theoretical market constructs with wildly different parameters on production and money. In actually existing capitalism as well as in any market based system where money is arbitrary (ie not tied to labour-hours or something as solid) and private property the dominant form of property, the accumulation of wealth is very much a measure of coercive power as it directly limits the options of those who do not get to have any. But no anti-capitalists will consider that wealth is power when in a system which has been specifically setup so as to ensure that wealth is not power. The only problem is that all conceptions of a propertarian economy have not managed to avoid this problem.

Which brings us to the interesting part of Williams conception of a market economy. It looks like something taken out of the Algebraist to tell the truth and I can’t but worry that it’s as much of a fictional concept. You see the idea looks workable, in a theoretically constructed society around the concept of a reputation market, and I do think that if we did get such a system then I (or most communists I assume) really wouldn’t have any issue with it. Nevertheless my main criticism would again lead to ask: How do we get there?

If a labour-time-tied money system is already a difficult concept to grasp and put into practice or even move towards a situation where it can be put into practice, an even more extravagant concept based on reputation just strikes me as half-way impossible. I would be far more interested to see a viable process by which such a system might become a reality until which point, I cannot consider the actual criticisms made by William against anti-capitalists to hold much water, as they were based on comparing them to a utopian construct. Unfortunately I believe such a practice ends up diverging attention from practical issues and solutions (ie criticism of capitalism and ways to fix things) and gives some ammo for market theorists who would twist and grasp any concept in order to prove that “Free Market (Capitalism) works!”

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Quote of the Day: Criticism of Capitalism

A redditor points out a classic fallacy people make against anti-capitalists.

Quoth davex0rz

If someone criticizes capitalism and is rich, they’re accused of being “hypocritical” in some way, “limousine socialists,” elitists, etc.

If someone criticizes capitalism and is not rich, they’re accused of simply being envious, justifying their personal failure, resentful, etc.

It’s very convenient that, no matter who you are, you’re automatically discredited by who you are. That way, we never have to address anyone’s ideas.

Accurate. It is sad that most people are so eager to jump to ad hominem attacks rather than address the issues. Of course such tactics are not restricted only against anti-capitalists so every party should beware of falling into this easy fallacy.

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