====THIS FILE IS ARCHIVAL. See 'Diary' for newest entries
Mar-19-2008: Left for California
Mar-18-2008: Watching "From Dawn to Sunset (1937)" Archive.org/details/FromDawn1937
Mar-17-2008: Posted to http://listcultures.org/pipermail/p2presearch_listcultures.org/2008-March/000441.html
Subject:Product is better than Profit (was Re: Capital Club)
On Sat, Mar 8, 2008 at 4:20 PM, Kevin Carson
<free.market.anticapitalist at gmail.com> wrote:
> I think it's important to distinguish between entrepreneurial profit,
> and return on land and capital as such. The former is a good thing,
> because 1) it is the primary impetus in a market to move factors where
> they are most needed and to maxize the ratio of output to inputs;
Keeping price above cost appears to be the only motivator any more, but what about product? Aren't the use-value of the outputs of production important?
They are certainly important to the consumers, and consumers never expect to be paid profit, so why not have them be the owners? I'm not pretending these consumers would be a totally separate set of humans that lay around eating all day without ever working. I assume they will also need to work somewhere, in many cases they can operate some of those Means of Production that they rely upon for that which they consume, but we also want to incent the division of labor, so it will be common for the consumer of honey to own beehives without being the beekeeper himself - he can hire someone else to do that while he goes and shovels manuer to pay for that trading of labor. I'm not trying to take advantage of workers, I'm trying to stop the exploitation of the consumer while keeping in mind that EVERY WORKER IS A CONSUMER, but may not neccessarily have the skills needed to operate the sources he needs ownership in in order to have the control required for true freedom.
What if a group of consumers chose to invest for the purpose of product? Would that also "maxize the ration of outputs to inputs"? (does that phrase mean production would be efficient?)
> and 2) it is automatically self-eliminating.
If profit were eliminated, why would those workers continue? Wouldn't they close their doors and declare the business a failure?
If profit were eliminated while those that consume the product were the owners, there would only be celebration - as price would meet cost and competition would be perfected. That point occurs when each product consumer has sufficient ownership in the Land and Capital needed to insure their future needs. Each consumer is also workers SOMEWHERE, and in some cases even on that same Land and Capital, but ownership should be determined by those that PAY, not by those that happen to have the skills needed to operate those sources.
Why would you want an apple-picker to have partial ownership in a tree that he does not pay for? If he is paying for the tree with his labor, then he must be paying because he is a consumer - and in that case, yes, he needs ownership.
What if you owned an apple tree and were paying me (say with Federal Reserve Notes) to pick those apples? Would you want me to gain vote power over that tree? Would you want me to be able to influence how you treat that tree - such as spraying it with something you disapproved of? Why?
I need ownership in the sources of the things that I consume. If I happen to also eat apples, I should be investing in part of ANOTHER apple tree. If you are paying me to pick your apples by giving me apples, then I should be compensated for any amount I pay (any amount I labor) above the real costs of the apples you pay me with by your investing that extra amount (the profit you gathered) toward the purchase of more land, water rights, trees and tools that will eventually become my property (should vest to me). But that is only if I were an apple CONSUMER.
>
> The normal tendency in a free market would be for investors to move
> resources as quickly as possible into venues with the highest
> entrepreneurial returns,
Profit is not the only "entrepreneurial return". Product is the original and only valid return on investments.
> and for the rate of entrepreneurial profit to
> decline to zero as free market entry reduced price to production cost.
But if your investors are expecting a periodic payment of profit, and do not want product alone (because they are not consumers, or the amount of production far exceeds the amount they could personally consume), then they will declare the business a failure if price is reduced to production costs - for then profit will be zero!
> The problem is with forms of privilege that keep this natural process
> from occuring, and enable rentier classes to collect rents on the
> artificial scarcity of land and capital.
I agree this exacerbates the problem, but profit should never be treated as a reward to be won - it should be understood as a plea for growth from the consumer that paid it, and can 'balance' that economy by being invested in more productive sources for that very same consumer - to eventually become his real property. This drives price toward cost in a safe manner, since all owners (investors) would then only be expecting product as payment.
>
> When such privileges and such scarcities from artificial property
> rights are eliminated, entrepreneurial profit will be a positive
> incentive and will reduce the anti-social behaviors you object to.
>
> To take one small example, one of the biggest forms of government
> intervention is the subsidies that make transportation and energy
> artificially cheap, and make it artificially profitable to use them in
> large quantities--thus skewing the competitive advantage toward large,
> centralized firms operating over large market areas. If such
> subsidies were removed, and the costs of energy and transportation use
> were fully internalized in price, then those who were fastest and most
> efficient in reducing use of those factors would accrue
> entrepreneurial profits. And their entrepreneurial profits would
> signal competitors to adopt the same innovation, until those profits
> fell to zero and the efficiency gains were socialized in the form of
> lower prices for society at large.
If we want the lowest prices; if we really want price to meet cost and profit to hit zero, then we had better make sure the consumers are the investors and owners of the Means of Production, otherwise those that do happen to own them will declare the business a failure just as we are reaching our goal.
Product is better than profit because "use value" is more important than "exchange value".
Patrick
Mar-13-2008: Posted to http://listcultures.org/pipermail/p2presearch_listcultures.org/2008-March/000436.html
Subject: Paying Investors With Product Solves the Paradox of Profit in Perfect Competition
This begins part two in our study of elementary economics. I hope this will be a step toward resolving some of the still pending issues in the "Capital Club" thread. If that doesn't happen, I will go back and address them directly.
Part of the Wikipedia entry reads:
"According to the standard economical definition of efficiency (Pareto efficiency), perfect competition would lead to a completely efficient outcome. The analysis of perfectly competitive markets provides the foundation of the theory of supply and demand. Perfect competition is a market equilibrium in which all resources are allocated and used efficiently, and collective social welfare is maximized." -- http://en.wikipedia.org/wiki/Perfect_competition
Since perfecting competition would cause price to approach cost, a strange situation occurs where normal "For Profit" businesses - who measure their success by the amount they can keep price above cost - would all close their doors proclaiming failure.
A business must pay it's investors SOMETHING, otherwise, why would they invest? So, if the investors are expecting profit, then they require the business they invested in to be able to operate in an imperfect market. Profit is a measure of this imperfection.
But there is another thing that we could pay investors if those investors are in a certain set. If the investors are also CONSUMERS (some could incidentally be workers too) of the product being produced, then they would be satisfied with receiving product alone, and would never need the business to keep price above cost.
When the investors of production are the consumers of the output, the organization can withstand perfect competition because those that pre-paid will expect PRODUCT instead of profit.
In contrast, if the all investors are all WORKERS (some could incidentally be consumers too), and the market has perfect competition, then the workers would be paid the same wages as any worker that was not an owner, yet would have the risk of holding the debt of that incorporation.
If you say "Well, they would be consumers too, so would also be paid in product" then you are describing why consumers should be the owners of the Means Of Production and avoiding the issue of whether ownership should be limited to those that happen to have the skills to operate it.
If you say "Well, the workers could pay themselves a higher wage than non-owning workers" then you are talking about how profit would be 'hidden' in those wages since owners can arbitrarily make that division. But in that case, the organization would be less efficient than "consumer owned" - since, when many of the owners are not neccessarily workers, then wages and profit are cleanly and clearly separated. If a worker tried to collect too high of a wage for the quality of work he was supplying, then the collective owners would put that job up for reverse-bid (just as employers do today) until a worker with a better quality-to-wage ratio was found.
Mar-12-2008: Do we want prices high or low?
NYTimes.com/2008/03/09/business/worldbusiness/09crop.html?ref=business >>"For once, there’s great reason to be optimistic," Mr. Miller said.
IRINNews.org/Report.aspx?ReportId=77195 >>AFGHANISTAN: Food shortages cause grass eating, displacement
Mar-12-2008: Writing about competition.
Mar-12-2008: Tracking the Traitors
ChemTrails911.com
NewYorkSkyWatch.com
http://homepage.mac.com/carolepellatt/wed/PhotoAlbum266.html
http://homepage.mac.com/carolepellatt/sunday/PhotoAlbum264.html
http://homepage.mac.com/carolepellatt/peacepoem/PhotoAlbum271.html
http://homepage.mac.com/carolepellatt/THOUGHTSALOUD/PhotoAlbum288.html
http://homepage.mac.com/carolepellatt/Feb19/PhotoAlbum285.html
http://homepage.mac.com/carolepellatt/Feb7/PhotoAlbum278.html
http://homepage.mac.com/carolepellatt/feb13photo/PhotoAlbum282.html
Mar-12-2008:
Hey Joel,
To keep things clear in our minds, I find it useful to think of profit as the difference between the price a consumer pays for a product and the costs the owners paid for it's production.
So I usually replace the text "profit" with the phrase "price above cost" in my head while also remembering that Wages are calculated as one of those Costs.
> He says that profit is an instrument of
> expansion, and therefore good for civilization.
This sounds similar to what I understand about "growth" or true material "progress".
So let's rewrite that sentence as:
"Price above cost is an instrument of growth, and therefore good for civilization".
This statement is nearly identical to my contention:
"Profit is a plea for growth from the consumer that paid it.".
To clarify further we might rewrite that as
"Price above cost is paid when the consumer of a product does not yet have enough ownership in the Sources (Land and Capital) required for that production."
Now let us observe following:
Q: Is it possible to pay 0 (zero) profit?
A: When a product consumer owns the Sources of that product, price equals cost and profit has no meaning.
For example, say you own an apple tree (the source of apples). You might pay workers to buy the tree, install it, tend it, harvest the apples, store them, etc. and pay those Wages as a Cost of production - just as the owner of a regular Capitalist apple orchard might. So you have the same Costs as any other owner (though your small scale will probably make your costs slightly higher), but IF YOU ARE ALSO THE CONSUMER, then your price is exactly the same as those combined costs. You couldn't pay profit unless you were to pay it to yourself.
But notice: IF YOU SELL an apple, you would probably sell it at a price above cost, and would call that difference "profit". That is why it seems clear to me that "profit" should be treated as an investment from the consumer that paid it. The current owners should (and I know a way to move from "should" to "must", but will save that for another time) invest that tiny difference toward the purchase of more land, water rights, tools, trees, etc. And the ownership of those Sources should eventaully 'vest' to the consumer who paid it.
So why do so many non-owning consumers pay price above cost instead of just owning Sources so they can get "at cost" product?
There are many reasons:
1. It is just too damn much work to try to INDIVIDUALLY own the sources of everything you would ever need when you have to do it all by yourself (even if you hire out the work).
2. It is realistically impossible for every person to INDIVIDUALLY own the sources of all the products they each want. It would be terribly inefficient for each person on earth to own their own INDIVIDUAL milk dairy and all the machines to make butter, cheese, ice cream; and recursively the Sources of all of those things - such as alfalfa fields and the tools to plant, harvest, store it for the cattle and all the machines to make those machines, and all the machines to extract the ore (iron, aluminum, copper, etc.) and petrol (both fuel and lubrication) for the construction and operation of them, and the list is much longer than this.
There is a chance some people could do it in a very rudimentary way - without using any of the technology we have discovered, but most would not, and anyway, it is far, far more difficult than COLLECTIVE or JOINT ownership of these things. If we could figure out JOINT ownership, then we could use all the labor saving devices without suffering Usury (Usury in my mind is defined as the perpetuation of profit; and profit can only be perpetuated by insuring the consumer never gains the Source ownership that would give him "at cost" access to the things he needs).
3. JOINT ownership is very difficult because it means you have to negotiate with other people about how those Sources will be operated and cared for. But it is not impossible, in fact that is exactly the role Capitalist Corporations and Demockratic Governments already claim to be accomplishing - the management of shared reSources.
> It is
> not until an instrument becomes an institution that it
> becomes a problem. I think that profit has become
> institutionalized in our society.
Yes. While "price above cost" simply measures how far the consumers are from Source ownership, the 'institutionalization' of that - the idea that price must forever be kept above cost (what I call Usury)- is a dangerous thing because it motivates the current Source owners to seek scarcity for everyone else. I like to say "Terrorists hate freedom cuz it is bad for the market".
Profit for some requires poverty of others, for if everyone were to somehow gain "at cost" access to bread (for instance), then profit would fall to zero. But since Capitalist businesses define their success by their ability to keep price above cost, success for all would mean the destruction of the institutions currently supplying us with that product.
That is the very reason that our federal government pays farmers (often just movie actors and sports stars that have invested in agriculture) to NOT grow on land that is otherwise prime for farming.
The price of all grains is increasing quickly, but that is GOOD for those that want profit to continue (Usurists). As long as the consumer does not have ownership we are in a delicate, dangerous balancing act, but if we could ever start a business where one of the "Terms of Operation" included the destination of profit be an investment from the consumer that paid it, then price could meet cost in a natural and non-destructive manner. This would also eliminate employment from our goals and allow us to interpret work as a hurdle we want to eliminate on our road to leisure and abundance.
Mar-11-2008: Joel sent me this link http://www.archive.org/details.php?identifier=CarrollQuigley-TheEvolutionOfCivilizations-AnIntroductionTo
Title: The Evolution of Civilizations - An Introduction to Historical Analysis (1979)
Author: Carroll Quigley
>>In this perceptive look at the factors behind the rise and fall of civilizations, Professor Quigley seeks to establish the analytical tools necessary for understanding history. He examines the application of scientific method to the social sciences, then establishes his historical hypotheses. He poses a division of culture into six levels, from the more abstract to the more concreteâintellectual, religious, social, political, economic, and militaryâand he identifies seven stages of historical change for all civilizations: mixture, gestation, expansion, conflict, universal empire, decay, and invasion. Quigley tests these hypotheses by a detailed analysis of five major civilizations: the Mesopotamian, the Canaanite, the Minoan, the classical, and the Western.
Mar-08-2008: Why use the GNU GPL for all content?
First of all, there is no reason to use the GFDL or the any of the CC licenses when the GNU GPL does all that they need to accomplish and avoids the problems they cause. It is unfortunate that the FSF promotes such a mess.
Second of all, there are many reasons not to use them - primarily that they conflict with the extremely important and most used of all Free Content licenses - the GNU GPL.
You say "written content" is different from design, but I would say that line is fuzzy at best and completely absent if we push the concept to it's final extreme.
The "written content" here are concepts, ideas, plans that are the basis of design - whether it is for mechanical design, or (in my case) toward the design of an economic system of operation. There is no reason to separate them.
== GFDL ==
The explanations at http://www.gnu.org/licenses/gpl-faq.html#WhyNotGPLForManuals give no good reasons:
1. Why not be required to offer the Source (the TeX files for instance) to a manual? It would make it possible for an author that wanted to make an improved version to do so with ease. What a terrible idea that it is a burden to authors of non-executable text when the GNU GPL requires it for authors of executable text.
2. The idea of "the standard" version of a manual is just as valid for software because of Trademark. It is illegal to modify the Linux kernel and then distribute it as though it were "the standard" version using the name Linux. This argument has no basis.
3. The statment ''we permit changes in the text of a manual that covers its technical topic.'' is vacuous as well, since the GNU GPL obviously also allows modifications. A complete non-argument.
4. Provision for "invariant sections" for the purpose of piggybacking "political positions" is coercion. Why not allow software developers to require political messages be displayed? The reason is that it removes a user's freedom. The GNU GFDL is a terrible idea, and does not preserve User Freedom. I still don't understand how or why RMS decided to create it.
Here are some more explanations
''Why You Shouldn't Use the GNU FDL'' -- http://home.twcny.rr.com/nerode/neroden/fdl.html
''This document is being put together to attempt to address some concerns that members of the Debian legal team have about the GNU Free Documentation License. This document attempts to present the reasoning behind the conclusion that the GNU FDL is not regarded as a license that can easily satisfy the Debian Free Software Guidelines.'' -- http://people.debian.org/~srivasta/Position_Statement.xhtml
http://en.wikipedia.org/wiki/GNU_Free_Documentation_License#Criticism_of_the_GFDL
== CC-BY-SA ==
The 'by' part of CC-BY-SA requires attribution be attached to all copies. There is no need for this ego inflator. Furthermore, it is sometimes very difficult, and maybe even impossible to determine who the author was. At other times the text (whether considered design or not) may have many authors - in the case of Wikipedia the number could be in the thousands per document. This is an irresolvable tragedy that could have been avoided by sticking with a truly free license such as one of the GNU GPLs.
Mar-06-2008: Posted to P2PResearch@ListCultures.org
> "I hypothesize that the most effective means to efficient production is some
> organizational form where the consumer owns the means of production. A
> particular case of this is when the consumer is able to, effortlessly,
> produce the goods by oneself. In order to test whether this means of
> production is feasible, and optimal, we will build a personal fab lab,
> fueled by open source design, that is capable of producing 10 items of huge
> economic significance. To test the optimality, we will check the bottom
> line, in terms of the real costs of production."
Ok, here's my version:
"I hypothesize that any production is more efficient when the consumer
owns the means of that production.
A particular case of this is when the consumer is able to, with some
effort, produce the goods with the help of others, hopefully with
people located physically close by to reduce transportation and
communication costs.
In order to test whether this mode of production is feasible, and
optimal, we will buy a small farm and normal farm tools that is
capable of producing 100s of different spices, fruits and nuts of huge
tastyness. To test the optimality, we will check the bottom line, in
terms of the real costs of production, and compare those costs with
the price consumers usually pay.
Since consumer price is equal to owner costs when the consumers ARE
the owners, the savings for the investors in their grocery bill should
be approximately the summation of all reported profits for all
industry needed in the chain of production for any particular good
(such as pine-nuts from China)."
>
> This is phrased in the form of a real, testable, hypothesis.
>
> Something to this effect.
>
> This means, you have to define your terms. Such as what 'consumer ownership'
> means. In practice, that could take many forms, so you need to make clear
> what you are talking about.
Well, I was trying to concentrate on proving that consumers already
use individual ownership (and rarely joint ownership) to increase
efficiency, and the name of that difference is 'profit', but I can see
it is difficult for us to concentrate on that simple goal. I will try
again later, probably in another thread.
> >
> >
> > > This will help clarify and motivate your set
> > > of concepts, and provide a springboard for practical critique, relevant
> to
> > > the underpinnings of society. If what you are proposing cannot be
> tested,
> > > then for the purpose of my work, it would have limited use. Please
> expand on
> > > your motives and scope.
> > >
> > > Marcin
> > >
> >
> > My motive is to design some kind of scheduling algorithm - analogous
> > to what the kernel of a computer Operating System does - for the
> > cooperative sharing of physical resources, and to begin new businesses
>
> It seems you are building scarcity as a premise in your model.
Is the physical world not composed of scarce (finite) resources?
> If access is
> availlable to GENERATIVE goods, the scheduling argument is largely
> irrelevant, or at least irrelevant in the type of a community that I would
> like to build.
The genetics of apples have theoretically infinite potential, but are
constrained by Space, Time, Mass and Energy.
> For example, if you have a nursery, you don't have to worry
> about how many apple trees you will have access to.
I need precisely as many apple trees as I need the output of. Are you
pretending that one apple tree can feed the entire population of the
planet?
> If you have solar
> collectors at negligible cost, you can produce items that would otherwise be
> scarce. Etc. If you have sand, you can have semiconductors. Etc.
>
> The bottom line constraints are those of natural limits. That in itself is
> the bottom line of governance models.
I'm not completely sure what you are saying here unless I already
answered it above.
Try to keep the rug-doctor in mind. A single machine can be shared
among a finite number of people. As the number of consumers
attempting to utilize the machine increases, at some point it will be
impossible to fullfill those requests with a single machine. If the
collective owners have the time-sharing of that machine setup so that
anyone wanting to rent it are bidding against each other, then more
time slots will be filled. People that want to rent close to 'cost',
and are willing to lose some sleep will rent at 2am, while other
people will be willing to "fight it out" for a slot at 12 noon in a
bid war. As the deuling bidders raise their own price for that time
slot, they are *proving* that the current number of machines cannot
fill peak demand, and - since that "price above cost" will be invested
for the winning bidder toward buying ANOTHER machine, the 'system'
should be self-stablizing.
Thanks for the questions. I hope my answers are sensible.
Mar-06-2008: Posted to P2PResearch@ListCultures.org
Subject: Capital Club
Hello fellow researchers,
This post is a first step toward describing the very basics of economic activity - including such topics as ownership, production, profit, policy, governance, growth.
This material should be understandable by any audience, but concentrates on issues that are not so commonly discussed, so should be interesting to even the most hardened economist.
I hope you will help me shape this into a full description of how we have arrived at the dangerous centralization of power we now face at the global level.
Please give critical feedback with logical arguments.
This first part shows that individual consumer ownership is the most efficient arrangement when utilization/price is large enough, and that individual consumers already choose that path.
Part One: The Utilization-to-Price Ratio
Why do most people choose to buy an automobile instead of renting?
Why do most people choose to rent a rug-doctor instead of buying?
When a person can make use of (utilize) a machine to a sufficient degree, it is more efficient for them to OWN instead of RENT.
But wait, how could that be? The owner (whoever he is) must pay all costs either way. A rental agency must pay for the initial investment, upkeep/repair/maintenance/wear, insurance, protection/security, storage, taxes, and any wages to workers needed to do any of those thing. A private owner must pay those exact same costs, so how could it possibly be cheaper to own outright instead of rent?
The difference is called 'profit'. Profit is the difference between the costs an owner pays and the price a consumer is willing to pay. When the owner and consumer are the same person, there is no such thing as profit. That is the savings in ownership over rental.
But what about machines that are not "worth it" to own because that individual cannot sufficiently utilize them? It must be worth it for SOMEONE to own them, otherwise the rental agency wouldn't do so. The difference here is a matter of utilization.
How can a consumer increase utilization to the point of making ownership "worth it"? One way is to buy the machine with a group of other consumers. Organizing with your neighbors to buy a rug-doctor is cheaper if there are enough of you to keep that equipment busy, so why don't we (consumers) do this more often? Why do we leave that work of organizing up to a business that intends to charge us price above cost?
There is real work involved in the act of organization, but that cost (wages to management) must be paid either way. So what is keeping us (the consumers) from organizing and cooperatively owning machines, buildings, even land?
I think part of the problem is a long-standing belief that whoever possesses the skills to operate those machines should be the owners, but doesn't the above argument show that the consumers must be the owners for optimum efficiency?
I think another part of the problem is in figuring out how those resources should be shared among the owners. It is a difficult, sticky situation that most people would rather just avoid altogether because of the in-fighting they perceive would occur. It seems such a group could write some 'rules' about how to schedule access and how much each individual must compensate the others for any extra wear or exclusion they cause. I see such a contract, if 'properly' written, would be the only thing our society needs to begin down the road of peace and abundance, but will delay that discussion for now.
Cooperative consumer ownership is quite rare today, but there are a few cases where a group of friends wanting a private airplane make a "shared investment", and then rent the plane from the collective others whenever they want to use it. None of those people need the ability to fly themselves, they can just hire a pilot and pay that wage as a cost while still saving money by not paying profit.
Another example is shared ownership of a vacation house. The for-profit "Time Share" industry has grown around that desire, but I'm referring to the less common case when a private group of people buy a house that they share amongst themselves in whatever way they see fit.
Mar-05-2008: Reading UWCC.Wisc.edu/info/governance/baard.pdf I realize "User Own*" may not be the best term to settle on because 'User' is too likely to be misinterpreted as "User of the Sources" - in other words, some consider 'User' to be the 'Worker'!
"'USDA’s Cooperative Programs has surveyed principles over a century and a half period and developed a practical and solid set of principles statements. Contemporary cooperative principles are: 1. The User-Owner Principle: Those who own and finance the cooperative are those who use the cooperative. The User-Control Principle: Those who control the cooperative are those who use the cooperative. The User-Benefits Principle: The cooperative's sole purpose is to provide and distribute benefits to its users on the basis of their use.'"
Mar-05-2008: Reading "'Chapter One: A Critical Survey of Orthodox Views on Economy of Scale'" -- Members.Tripod.com/kevin_carson/sitebuildercontent/sitebuilderfiles/chapter1.pdf See the complete list here: http://mutualist.blogspot.com/2008/01/chapter-outline-of-organization-theory.html
Mar-04-2008: Email to Kevin Carson and Michel Bauwens (slightly edited)
Kevin and Michel,
Thanks for your time and consideration. It is very difficult to describe why the act of Working should not determine who owns the means of production, but I'm sure it will eventually be proven that Source Ownership based on Object Use is a far more efficient arrangement.
> No different from
> hiring a self-employed landscaper who owns his own equipment, but who
> tailors his jobs to your specs.
I wouldn't try to stop Workers from owning their own tools, but that scenario is less efficient for the Consumer because, if the Consumer were to get together with a bunch of neighbors to purchase those expensive lawn tools, then each Consumer could hire any qualified worker to operate them, and could even choose to do the work himself if he liked while avoiding the issue of profit altogether.
These Consumer/Owners must pay all the other costs that the Worker/Owners incur (such as wear on the equipment, rent on the storage shed, interest on loans, etc. and any Worker Wages), but they couldn't pay 'profit' - which can be defined as "price above cost" - for who would they pay it TO?
Profit is not clearly divided from Wages when the Workers are the Owners because the choice to label the income 'Wage' or 'Profit' is arbitrary. Profit is hidden in the fact that not all potential workers are allowed to reverse-bid for that employment. The Worker/Owners won't let just anyone rent the tools "at cost" - it usually isn't even an option to rent them at any cost.
For instance, imagine all qualified workers competing for that job brings the wage to $10/hr.
Now, if some Worker/Owners such as the self-employed landscaper you describe hire a non-owning worker at $10/hr, they would not lower their price for you, the Consumer - they would keep the Consumer Price the same and keep the difference as 'profit'. Even if they immediately made that new Worker a part-owner and paid him a portion of that profit, it would do the Consumer no good.
But if some Consumer/Owners hire a worker at $10/hr, they have immediate savings, since the only other costs they pay are the same as the Worker/Owners, and they cannot pay profit unless they are attempting to Consume more than they already Own, and in that case the profit is invested for them toward more means of production - so that profit tends toward zero.
Consumer Ownership helps Wages 'recover' for two reasons:
1. By insuring a Worker's ability to Consume their own needs "at cost", Workers can "hold out" when Owners do not offer enough pay.
2. By minimizing profit, Consumers will initially be willing to pay higher wages since the externality of profit is being eliminated from their price.
Consumer Ownership minimizes profit. Profit approaches zero as each Consumer gains sufficient Ownership in Physical Sources. But, since Consumers are dynamic, ownership is unlikely to be perfect except for very brief periods of time, so profit will tend toward zero as it is treated as an investment from the consumer who pays it.
Consumer Ownership simply outperforms Worker Ownership in terms of operational efficiency.
> I understand what you're calling for. I just disagree with the goal,
> in a considerable range of cases. Like Michel, I place a high degree
> of importance on workers' control of our working lives. It's one
> thing to attempt to meet a customer's expectations in producing a
> product to his specifications in filling his specific order. It's
> another thing entirely to go to work and take orders from a boss as
> you actually do your work.
Workers won't need to "take orders" unless they CHOOSE to work for someone else. I'm talking about insuring the Worker's ability to Consume so he can CHOOSE to work on his own projects if he likes, and only work for others for the high wages he will be able to "hold out" for.
> The worker's own consumption is his only reason for laboring. In a
> subsistence household, the worker works entirely under his own
> direction to meet his own consumption needs. As division of labor and
> social interdependence increases, workers use part of the labor
> product under their control to exchange with their equals, rather than
> consuming it directly; they meet their consumption needs by equal
> exchanges of labor.
Yes, I also want more division of labor. We need more exchange of LABOR so we can go out to eat for every meal. But we won't actually need to exchange PRODUCTS when the Consumers are the owners of the restaurant. We will exchange far more SERVICES then, but the exchange of GOODS will only occur when those goods are not already in the hands of the Consumer that needs them.
When a Consumer owns an apple tree, he is the owner of the fruit even before it is produced - so no exchange needs to take place unless there is another non-owning apple eater that wants to buy some of those goods. By treating any "price above cost" charged to that "Johnny come late" Consumer as an investment for that very same Consumer (buying more land, water rights, apple trees) that becomes that Consumers REAL PROPERTY - then that new Consumer also eventually (as his investments begin to produce) owns the ouput of that production without the need for exchange of goods.
The Consumer/Owner may have done the work himself, or he may have traded labor with someone else (say gathering his neighbor's eggs so that neighbor would pick his apples), but either way, he owns the product as a "side effect" of his ownership in the Physical Sources of that production.
> Just because consumption is the end of production, isn't a good reason
> for going to a job and working under a boss who represents the
> consumer. If so, that in itself is a good reason for producing as
> much of my own consumption needs as I possibly can in order to
> minimize the amount of my life I have to throw away working under a
> supervisor who doestn't represent me in any way.
I have such trouble describing this, but a Worker will have more ability to resist such employment, or to "hold out" for a much higher wage if he, AS A CONSUMER, has sufficient ownership in the means of production required for the goods he consumes.
Even if I haven't convinced you that it is 'better', are you convinced it is more 'efficient'?
Mar-04-2008: Reply to Oekonux (slightly edited)
On Tue, Mar 4, 2008 at 8:31 AM, Raoul <...> wrote:
> Copyleft is not at the end of peer production development but at the
> beginning. The end of that process will be the end of excluding property
> of all means of production, "triple free peer production".
I slightly disagree, but maybe only with wording.
For collectively owned material means of production (say a tractor), each of us will need the ability to at least temporarily *exclude* others (time sharing). I image the current User would pay rent to the collective others for the *exclusion* of others attempting to Use during that time, and for any extra 'wear' he inflicts.
> One of the most interesting aspects of Steven Weber's book, The Success
> of Open Source, is the importance he attaches to property in the new
> "maturing mode of production". He gives a good definition of the main
> change: "Property in open source is configured fundamentally around the
> right to distribute, not the right to exclude".
Distribution is one of the four "User Freedoms" which define Free Software. The entire list in abbreviated form is: Use(0), Modify(1), Copy(2), Share(3). The "right to distribute" is of course "Share(3)".
The GNU GPL 'repairs' the originally unassailed freedoms to Use(0) and Share(3) by *removing* the power of Copyright to artificially exclude others by fiat. If there were no such thing as Copyright, these freedoms would have defaulted to 'TRUE' because there would be nobody to stop you.
The output of software production is called "Object Code" (such as an executable). When that product is distributed, the new user's freedom to Modify(1), and Copy(2) it are hampered unless the virtual Means of Production (described as the "Source Code" and "Supporting Sources") are also made available to the User.
It is important that the User gain "at cost" access to these virtual Sources of Production even if that User does not have the skills to operate them (cannot be the worker), for then competition between all possible workers is maximized - causing Wages and Profit to be cleanly separated. Otherwise, if Users are disallowed "at cost" access to the Sources of Production, Workers can hold their Wages artificially high by disallowing full competition. This hidden form of profit subjugates the User, and is held in place just the same as the raw Capitalism we see today - by withholding "at cost" access to the Sources of Production.
So, to protect every potential User's freedom to Modify(1) and Copy(2) products, the GNU GPL *adds* a constraint - not on Use(0), but on Sharing(3). Somewhat paradoxically, this restriction actually *requires* Copyright for enforcement. I will try to show later, by analogy, that we could use property rights in a similar way for efficient Sharing of the material means of production.
The GNU GPL's condition of distribution - a kind of "Free (as in Freedom) Trade Agreement" can be summarized as: "If you Share the Objects of this production, you must also help the User gain "at cost" access to the Sources of that production.".
>>> But who could believe that a system based on
>>> private ownership [one should say *excluding* ownership]
>>> defended by coercion will accept to disappear - or to fade -
>>> without resistance.
>> Well, the most soft way can only be establishing an *including* process
>> based on commons. This is yet the way free software succeeds.
> The problem is how to put material means of production into the commons.
> For software and free-reproducible means of production that is
> relatively easier, which explains the success of free software. But
> things are different with material means of production.
So, it appears we need an inclusive process that insures the Users of products (or Objects) somehow gain "at cost" access to the material means of those products (I like to call them "Physical Sources" to remind us they are analogous to the "Source Code" of software).
The proposal I make is that we could start new businesses or organizations while applying a constraint on the trade of Objects (products) that says "Profit should be handled as an investment from the User that pays it."
Owners that enforce this constraint (maybe through a "Terms of Operation" for that facility, or some kind of contract) would cause new Object Users to incrementally gain "at cost" access to the Physical Sources of production. And, since the owners of the means are automaticaly the owners of the product, those users would also eventually have "at cost" apples when they are the collective but divisible owners of the land, water, trees and tools.
This obviously flys in the face of the traditional view that the Physical Sources should be owned by those that possess the skills to operate them (the Workers), but almost every small businesses is already "Worker Owned" anyway. If that was a solution, the only thing that need occur is to either keep businesses small (a common tactic that is certainly not revolutionary), or somehow require all owners in the business do 'some' work. It shouldn't take much thinking to realize, as the business grows, some of the 'workers', especially the originators of that business will claim to be working in posh, extremely overpaid positions.
All Workers are Consumers, and most Consumers are Workers. These are not different sets nearly as much as they are different activities. If the act of Consumption (Use) determined ownership, we wouldn't have the trouble of Worker exploitation, because that Worker AS CONSUMER would be a partial Owner in the Physical Sources required for products he Uses.
Protecting a Worker's ability to Consume eliminates "Wage Slavery" while simultaneously removing the bizarre notion that employment is a need in itself instead of a burden we would want to overcome. Other economic oddities such as considering extremely low prices (dumping) a problem also disappear. Abundance is good and scarcity is finally bad again when each User has sufficient ownership in the material means of production need to insure the products they command (Consumers can then command instead of 'demand', since they will be the Owners).
Mar-02-2008: HistoricalDocuments.com/NationalIndustrialRecoveryAct.htm >>The National Industrial Recovery Act (NIRA) was enacted by Congress in June 1933 and was one of the measures by which President Franklin D. Roosevelt sought to assist the nation's economic recovery during the Great Depression. The passage of NIRA ushered in a unique experiment in U.S. economic history the NIRA sanctioned, supported, and in some cases, enforced an alliance of industries. Antitrust laws were suspended, and companies were required to write industry-wide "codes of fair competition" that effectively fixed prices and wages, established production quotas, and imposed restrictions on entry of other companies into the alliances.
Mar-01-2008: Reading AmLit.com/twentyss/chap18.html >>The Purloined Letter - Edgar Allen Poe
Mar-01-2008: Reading ArielRubinstein.tau.ac.il/el.html >>Economics and Language
Mar-01-2008: Posted to Blog.P2PFoundation.net/book-of-the-week-hacking-capitalism-part-three-from-class-struggle-to-play-struggle/2008/02/29
A ‘desktop factory’ avoids the difficult issue of cooperative ownership of the physical means of production, but cannot be applied in all cases.
For instance, how will we ever own a network or a physical community meeting place? What about *real* factories and farms that we could otherwise use current (and even ancient) technology to compete against the Capitalists NOW through efficiency of scale if we could only figure out how to cooperatively own those physical sources of production?
Fancy, new, and in many cases still imaginary technology will eventually allow individual ownership of more of SOME types of physical means of production, but if we can solve the difficulty of fractional ownership, we could start TODAY with just Land, Water, Seeds and Sun.
Does anyone else see this as an issue worth considering, or am I just missing the work that others are already doing on it?
If it IS important to others, why do we keep trying to skirt the issue by dreaming of material fabricators and desktop construction?
Notice that useful fungus, plants and animals have always 'fabricated' the raw materials of the best food, drugs, cloth, soap. Many of these organisms are small enough to fit on a desktop and are solar powered. Even so, there is intense hunger in the world for a much different reason.
The reason for poverty is a systemic issue based on a misunderstanding of profit. Most of those that DO currently own the physical sources of production have the odd notion that keeping price above cost is a measure of their success instead of understanding it as a plea from the consumer in need of the product of those sources.
Capitalism is the practice of keeping Capital (the means of production) away from the consumer to insure price does not meet cost, for when the consumers of apples are the owners of the trees, they may hire others and pay them wages, but profit is zero because price and cost are the same.
The forces keeping consumers from Capital is not obvious. It is not that the current owners are 'bad', but that they measure their success based on keeping price above cost which requires that "their" consumers not have access to the means of production. The current owners are not directly stopping us from organizing cooperative ownership for ourselves, but the problem comes in that we just find it easier to just buy the products from these Capitalists while enduring the inefficiency of profit.
And when any group of consumers does finally get tired of being overcharged, they may start another business or organization that intends to do away with that problem, but it invariably either intends to also keep price above cost (is a for-profit corp) - which requires the consumers not become co-owners, or, even if it is a 'non-profit', it still does nothing to help the new consumer get a foothold in the organization.
Non-profits do not do the right thing either because they are owned and operated solely by their originators instead of that ownership (and therefore control) incrementally flowing to each new user as fractional and divisible ownership of the whole when those participants pay price above cost. Instead, the profit pads the wages of the "committee members" or is spent in ways they see fit without allowing the consuming minority to split/divide/fork the organization as they could if they had REAL and divisible ownership.
Older entries: diary-feb-2008