Anarchy as a Philosophy and The Feasibility of Its Functionality

[xx001]

There are several problems with this concept of "exploitation".

Of course employee x is free to seek out a better job elsewhere if he feels he is being shorted by his current boss. Though you do admit that nothing ethically questionable is going on here.

But on to the accusation you make that it is unfair for the employee to earn less($10) than the sale price of the good he worked on($20).

You would assert, I assume, that it would be fair if the employee earned $20 in wages. You also suggest that the factory owner isn't contributing here. There are several reasons why this is not the case but the main reason has to do with the theory of value you are applying. Here, you are using the labor theory of value assign value to the good. The labor theory of value was the main problem with much of Marx's theory and is no longer accepted as valid by economists. About the same time Marx was working on Das Kapital, the marginal utility theory of value was formalized and has since been accepted as one of the most fundamental principles of economics. Value is not objectively determined by the amount of labor required to produce a good, but, rather subjectively determined by how much additional utility it would provide to the consumer. Accepting this theory dramatically changes the way we view the factory owner.

Accepting this, we see that it does not matter how much work and resources was put into producing a good. What matters is how much a person values it subjectively. The factory owner can invest a tremendous amount of resources, use all of his equipment, and employ all of his workers for years to produce a single item, but if it does not benefit anyone, it is worthless. This also bring up the issue in our original scenario regarding the value the consumer put on the good. The consumer obviously valued receiving the good more than she valued keeping her twenty dollars. Perhaps she would have payed $200 for it. Should this increase the fair wages for employee x tenfold? Of course not. If the worker was working on a single part of a larger good, say assembling a few small parts to go on a large machine, his work by itself is worth nothing to the customer. Also, at the time that the worker finishes the good, the factory owner does not know how much he will be able to sell it for in the future. Perhaps he may not be able to sell it at all! But this surely wouldn't mean that the employee "exploited" his boss by earning more in wages than the product could sell for. This brings up one of the important roles of the capitalist that explains why he is making a valuable contribution to the production process.

This important role is that the capitalist assumes the risk involved with running a business. He must predict the prices and availability of the required resources and what his customers value in order to chose what goods to make. He cannot be certain if the market will treat his product favorably. Customers may be willing to pay quite a lot for it, but they may also be unwilling to pay the price that the capitalist expected. Perhaps a competitor may come in and begin producing a superior product or figure out how to make a similar one for much lower cost. Perhaps a shortge in raw goods will drive up his input costs, or a disruption in the labor markets will leave him with an insufficient workforce to continue as planned, or his bank will fail, disrupting his line of credit. All of these variables introduce risk to the factory owner that his workers do not take on. They only need to provide their labor, not worry about the ebbs and flow of an entire industry.

Obviously the capitalist, like his title suggests, provides the capital that makes the production process possible. He provides inputs at a lower order stage of production, whether these be raw materials, or semi-processed goods. He also provides equipment and ensures that it is in working condition. He trains workers, provides and maintains the facilities, and pays for the operating costs of the factory. Most importantly, he organizes the entire operation, managing finances, keeping orders in and out balance, hiring and firing workers, making key business deals, and setting the general direction of the company. Without these inputs, the worker would be left to produce goods on his own, potentially reducing his productivity and worth by several orders of magnitude. Some proponents of the labor theory argued that all of these things required labor to produce and that that labor is simply a component of the whole value. However, the benefits of a capital good almost always far exceed the inputs required to produce it, and how could the product of a factory be worth more than the factory itself?


Thus, we can see that the labor of the worker determines neither the value nor the price of the good he works on and that the capitalist plays a critical role in the process of production. Because of this, there is nothing unfair about the hypothetical situation I proposed. The idea that the employer exploits his employees doesn't hold up.

 

[ebola?]

You would assert, I assume, that it would be fair if the employee earned $10 in wages.

My short answer to this is, "not really," as the critique of exploitation is a more general critique of the fairness of wage-labor as such.

The labor theory of value was the main problem with much of Marx's theory and is no longer accepted as valid by economists.

I don't think that Marx created an effective predictive theory of price, but I don't think it was ever Marx's intent to do so. Instead, Marx was trying to show that from an abstract schematic of the capitalist-worker relation, one can demonstrate a tendency toward exploitation, even given that only 'fair' exchanges occur between hypothetical participants in this economic model. While intervening factors will shape prices to reflect primarily extrinsic conditions, this central tendency will persist.

So Marx's theory of value is primarily an ethical and demonstrative tool, lacking some key facets that we'd usually expect from a theory of value.

Accepting this theory dramatically changes the way we view the factory owner.

I reject the marginal utility theory of value on a number of grounds. At best, it is myopic and at times tautological in scope. At its worst, it is simply invalid, its belief requiring a break from empirically clear conditions.

Should this increase the fair wages for employee x tenfold?

I think that you misunderstand a key portion of Marx's critique: he is a proponent of an economic system that doesn't use wage labor at all; he isn't simply pushing for fairer wages, and thus this type of deliberation over what "fair wages" should be is really inapplicable to his argument.

But this surely wouldn't mean that the employee "exploited" his boss by earning more in wages than the product could sell for.

Marx's argument applies to the central tendency of what will happen in prototypical capitalist conditions in the long-term. It doesn't make sense to try to apply his argument to such particular dynamics in the short-term.

This important role is that the capitalist assumes the risk involved with running a business.

The capitalist undertakes such risk beginning from a context of class-disparities that facilitates the free-market in reproducing such disparities. In general, people either begin from a position of laying claim to enough wealth to enable them to take such a 'risk' in the first place, or they are compelled to become wage-laborers due to a lack of wealth. Thus, I can't generally conceive of such 'risk-taking' as contributing to the value of collaborative labor.

Obviously the capitalist, like his title suggests, provides the capital that makes the production process possible.

My prior argument applies even moreso to the validity of the capitalist's claim to 'contribute' capital to the working process.

Most importantly, he organizes the entire operation, managing finances, keeping orders in and out balance, hiring and firing workers, making key business deals, and setting the general direction of the company.

I never argued that the capitalist doesn't contribute anything to the laboring process. Rather, on what grounds can the capitalist lay claim to such a high proportion of the fruits of this process?

ebola

 

[xx001]

You would assert, I assume, that it would be fair if the employee earned $10 in wages.

My short answer to this is, "not really," as the critique of exploitation is a more general critique of the fairness of wage-labor as such.

Oops, I meant to say "$20" here, not "$10". Fixed

 

[xx001]

I don't think that Marx created an effective predictive theory of price, but I don't think it was ever Marx's intent to do so.

Theory of price != theory of value. The labor theory of value is a theory of objective value so it makes some sense to talk of value in terms of price. However, the marginal utility theory is a theory of subjective value. For subjective value, theory of price is something completely different than theory of value.

even given that only 'fair' exchanges occur between hypothetical participants in this economic model.

What do you mean here?

I reject the marginal utility theory of value on a number of grounds. At best, it is myopic and at times tautological in scope. At its worst, it is simply invalid, its belief requiring a break from empirically clear conditions.

Do you mind offering some actual criticisms then? Even if you reject the marginal utility theory, do you at least accept that a proper theory must be of subjective value?

I think that you misunderstand a key portion of Marx's critique: he is a proponent of an economic system that doesn't use wage labor at all; he isn't simply pushing for fairer wages, and thus this type of deliberation over what "fair wages" should be is really inapplicable to his argument.

I understand that Marx advocated the abolition of wage labor but my criticism is not about the system he preferred to wage labor. I am responding to his critique of the wage labor system. Perhaps the issue here is not having a precise definition of "fair". Because value is subjective, any trade that is made voluntarily is "fair". If someone uses force, it is not trade at all and the exchange is not fair. If the employer forced his employees to work, this would be completely different, but that is not the case. Is there another word you might use that would be more clear and descriptive than "fair".

Marx's argument applies to the central tendency of what will happen in prototypical capitalist conditions in the long-term. It doesn't make sense to try to apply his argument to such particular dynamics in the short-term.

My response makes no difference in regards to long term or short term. I simply talk about things happening in the the future vs the present. As far the "prototypical capitalist" system, many assumptions are made about what "capitalism" actually means. I am concerned that we are using different definitions of capitalism. Given that voluntarism == capitalism, there is nothing preventing people from setting up an internal communist society and for workers to democratically run a process of production, and thus not have wage labor. Unfortunately, they will find that the system has some serious drawbacks in terms of productivity because it is impossible to effectively allocate resources in an economy without a price system. They will, to some extent, need to rely on price signals from the rest of the economy.

The capitalist undertakes such risk beginning from a context of class-disparities that facilitates the free-market in reproducing such disparities. In general, people either begin from a position of laying claim to enough wealth to enable them to take such a 'risk' in the first place, or they are compelled to become wage-laborers due to a lack of wealth. Thus, I can't generally conceive of such 'risk-taking' as contributing to the value of collaborative labor.

Do you deny that being the owner of a business is inherently more risky than being a wage laborer? The worker is guaranteed his agreed upon compensation regardless of how much money the owner makes or loses. The fact that the owner is, in fact, the owner of the capital does not eliminate the risk. It is precisely because he is the owner that he has the luxury of taking the risk in the first place. It appears that you acknowledge this but draw the wrong conclusions from it. If your claim that the lack of risk is because, at a given time, some people have the advantage of owning enough valuable capital to employ others, this is simply inequality of material wealth. It in no way means that the owner is not taking a risk with his money.

Also, it's not like wage earners cannot become employers. They must first save their money before they can make such an investment, but this is nothing unique to capitalism or any other system. It is just a fact that wealth must first be saved in some way.

I never argued that the capitalist doesn't contribute anything to the laboring process. Rather, on what grounds can the capitalist lay claim to such a high proportion of the fruits of this process?

He lays claim to his share by the fact that it is his contract with the employees. He pays them a steady salary, and, in return, they dedicate their labor to improving the things which he owns. This claim has absolutely nothing to do with the value of the goods or labor in question nor with how labor-intensive or capital-intensive the operation is.

 

[ebola?]

Theory of price != theory of value. The labor theory of value is a theory of objective value so it makes some sense to talk of value in terms of price.

This is not true to Marx's intent, particularly if you pay close attention to the caveats that Marx notes in explaining the theory in Capital vol. 1. The LTV is "objective" insofar as it draws attention to how objective class-conditions shape the allocation of the fruits of labor. I don't think that Marx would accept the very distinction between objective and subjective valuation, though, as his social ontology strives to undermine this very distinction.

However, the marginal utility theory is a theory of subjective value. For subjective value, theory of price is something completely different than theory of value.

Fair enough, though actual, empirical economic subjects other than rationally calculating capitalists don't subjectively undertake valuation in the way described by the theory.

What do you mean here [that exploitation can occur under conditions of 'fair' exchange]?

Marx argues that even if all commodities are traded for precisely the quantity of labor necessary for their reproduction, the capitalist is still able to profit from the exploitation of workers within the process of production.

Do you mind offering some actual criticisms then? Even if you reject the marginal utility theory, do you at least accept that a proper theory must be of subjective value?

Sure. My primary criticisms are as follows:

1. People, particularly consumers, simply don't make decisions in terms of rational calculation of marginal utility derived by taking a particular action. Rather, people tend to work on gut-instinct and heuristics. This undermines the construction of the demand curve for consumer goods. The exceptions to this trend are capitalists who discipline themselves into behaving like purely rational actors.
2. The marginal utility theory of value does not provide a causal account of the generation of pricing that does not refer to prices as determinants of behavior, and is in this way tautological. In particular, capitalists will make purchasing and production decisions in terms of what is economically expedient, but these decisions are shaped by the cost of inputs to production.

In short, we need an account for how capital is valued in the first place for this model to have any explanatory power.
3. That empirical economies almost never conform to perfect competition is problematic. Market outcomes tend to reflect primarily social relations of power between different economic actors, not any sort of aggregation of individual preferences.

Because value is subjective, any trade that is made voluntarily is "fair". If someone uses force, it is not trade at all and the exchange is not fair.

I consider this view myopic, as hierarchical use of force is necessary to maintain the initial, disparate allocation of wealth that individuals are born into. Because market transactions tend to reinforce these initial conditions of disparity, there are many "free" interactions that can't really be considered "fair" per se.

Given that voluntarism == capitalism, there is nothing preventing people from setting up an internal communist society and for workers to democratically run a process of production, and thus not have wage labor.

Yeah, this is not the definition of capitalism that I use...at all. I define capitalism as a socio-economic system where individuals are divided into classes of worker and capitalist, where the former is compelled to sell his capacity to labor to the latter. I would call the latter example you give "market socialism".

Unfortunately, they will find that the system has some serious drawbacks in terms of productivity because it is impossible to effectively allocate resources in an economy without a price system. They will, to some extent, need to rely on price signals from the rest of the economy.

Maybe. I don't think that price-signals in the current economic order are particularly efficient, so perhaps it is time to experiment with other methods of distribution. However, I do advocate market-socialist experiments in transition toward anarchism. Because we are so used to conditioning social relations in terms of market relations, use of markets might be necessary in transition away from capitalism.

If your claim that the lack of risk is because, at a given time, some people have the advantage of owning enough valuable capital to employ others, this is simply inequality of material wealth. It in no way means that the owner is not taking a risk with his money.

I don't see how my conclusions are incorrect. In economic participation, the worker risks starvation in cases where he is unsuccessful in selling his capacity to labor to capitalists. The capitalist, in investing and/or operating a firm, risks losing his fortune and thus entering the same situation that workers find themselves in.

Also, it's not like wage earners cannot become employers.

I would argue that class-mobility is minimal in prototypically capitalist systems. Workers are paid near subsistence, thus precluding the ability to save enough to allow for them to found their own firms; effective oligopolization of the means of production by capitalists presents barriers to class-mobility.

He lays claim to his share by the fact that it is his contract with the employees.

And I would argue that such contracts are drawn under duress, and in this way open the door to exploitation.

ebola

 

[L2R]

To L2R, I'm not entirely sure what you mean by us being "poisoned by the society". We are certainly influenced by capitalism, individualism, and nationalism, though I would only suggest that the latter of the three is a harmful influence. I would like to know what you really mean by "capitalism" and "individualism". People often make the mistake of assuming that capitalism is simply whatever the system the Western world, specifically, the USA currently has. Hong Kong and Singapore are the closest thing the world has to actual capitalism at present. America has corporatism, the economic tendency of fascism, and Europe has a form of state-socialism. Neither are anything close to a free market. As far as needing generations of therapy, this is mostly true, though I don't think it has to do much with the influence of culture as much as inherent flaws in human psychology, and it need not apply simply to government. Religion, race, gender are additional topics to consider here.

apologies for the late reply. i was referring to the forces behind the competitive impulses which drive out social compassion as a major motivating force. it is difficult to foresee any non-hierarchic and collective co-op when we can't really trust each other.

we can't even trust our own families, hence the prevalence of enforceable legal instruments like marriages and wills.

 

[pinkpapaver]

anarchy as a way of life. anarchy that doesn't need a name,

aan old colleague made an effb comment that said "Thacher was an icon for women and the British think about it"

my response being "i don't do icons. she wouldn't have been so hated were she a man and she did have some men helping her. same old story. divide and rule.

the response being "don't agree with you we need rule."

shocking thought, that is how people (intelligent) people believe that we need rule. I could go on.

 

[rickolasnice]

We do need a spokesperson.. but they should be conveying ideas and laws based on referendums..

The people should decide what the people get.