Socialism, Anarchism, Communism, the Future of Online Leftism

[Liffguard]

2 hours ago, OldGimletEye said:

But not everything is just a matter of perspective or politics, unless you want to argue that the Reagan tax cuts drove the recovery in the 1980s, instead of monetary policy, which the evidence seems to favor, or that Hayek made a good call in the early 1930s when he was calling for deflation.

 

18 minutes ago, Rippounet said:

Anyway. Everything I've read about economics, and I mean everything, from Adam Smith to Thomas Piketty, has convinced me that economics is really just politics under another name.
Yes, it's possible to objectively describe some economic mechanisms, but ultimately, no mechanism is inherently "natural." So even if some economic works are objective (kinda "scientific") they don't really say whether a mechanism is desirable or not.
The desirability of a given mechanism is a political question. One that orthodox economists pretend doesn't exist, and yet the one we have to ask ourselves if we want our civilization to survive.

 

Yes, this is the response I was trying to come up with and failing. By saying that economics is inherently moral (in the sense of pertaining to moral judgements, rather than good), or political, that isn't to say that we can't evaluate the objective truth of particular claims, or the objective outcomes of particular policies. Merely that the outcomes of those policies come about through the interaction of policy with larger political / social structures that are themselves ideologically created. Economics is a description of human behaviour under particular social and political circumstances, not natural science, and hence always has a moral element.

[Rippounet]

29 minutes ago, OldGimletEye said:

In certain applications, a partial equilibrium model is an okay approximation. Understanding how money works its way through the economy isn't one of them. The reason is that the supply curve for money isn't independent, usually often, from the demand curve. In certain states of the economy, if  supply of money increases the demand curve will likely will shift up and to the right. So you just can't say, in all situations, that increasing the money supply will increase the price level.

But, obviously there are capacity constraints. There is at any point in time a certain amount of labor and capital. Once you hit those constraints, then increasing the money supply will increase inflation.

Ouch, that's a lot of jargon.

Anyway, if I get your point right, my answer is actually quite simple. Assuming we choose a more left-wing system (any kind of left, really), the money supply would barely change.
For starters, any kind of left-wing government would tax the rich and especially capital, at the same time as it would create money to fund the transition.
You can even specifically target the capital coming from the most polluting industries.
As a matter of fact, there should be a way to transition with relatively little money creation. So you would get some inflation I guess, but nothing crippling.

And, more importantly in your eyes I suppose, once the transition is done, you can revert back to a more market-based economy if you want to.

29 minutes ago, OldGimletEye said:

Maybe Hayek was right during the 1930s. And so was Mises. And maybe Stephen Moore's ideas are just as good as anybody else's. Though, I'm not inclined to think so.

Hayek is someone I'm trying to read and understand. I think he makes a lot of sense but makes some key mistakes here and there that invalidate much of his -otherwise decent- work. One of my goals, some time in the next few months, is to identify these mistakes.

[OldGimletEye]

6 minutes ago, Rippounet said:

Ouch, that's a lot of jargon.

I apologize for the jargon. I was trying to explain, in some detail, how to think about money using a typical demand and supply curve. Also, conservative sorts of people typically assume that if the supply curve shifts (increasing money supply), the demand curve will necessarily stay put, and that is where we get "inflation is just around the corner" every time the central bank uses aggressive monetary policy. But, things aren't so simple as they believe, since the curves aren't independent like they are in the usual demand and supply analysis you find in basic econ books. 

9 minutes ago, Rippounet said:

Anyway, if I get your point right, my answer is actually quite simple. Assuming we transition to a more left-wing system (any kind of left, really), the money supply would barely change.

And how do you control people's demand for money? It can shift rapidly in many cases. Somebody forgets to sacrifice a goat and then people get nervous and start hoarding money causing aggregate demand to fall. And you want to keep the supply of money constant? What do you think the Great Depression was about? The Great Recession?

13 minutes ago, Rippounet said:

Hayek is someone I'm trying to read and understand. I think he makes a lot of sense but makes some key mistakes here and there that invalidate much of his -otherwise decent- work. One of my goals, some time in the next few months, is to identify these mistakes.

Hayek got a lot wrong. His advocacy for deflation in the early 1930s was wrong. And I don't believe in Austrian Business Cycle Theory. And I don't buy much from Road To Serfdom. But, he did have a few interesting ideas, like how prices transmit information in the economy and he had some interesting ideas about intemporal equilibrium.

[Rippounet]

4 minutes ago, OldGimletEye said:

And how do you control people's demand for money?

I think that demands entirely on what you mean by "people."

43 minutes ago, OldGimletEye said:

What do you think the Great Depression was about? The Great Recession?

Financial markets creating bubbles.

[OldGimletEye]

40 minutes ago, Rippounet said:

I think that demands entirely on what you mean by "people."

The kind that walk around on two legs and have two eyes, generally speaking. 

40 minutes ago, Rippounet said:

Financial markets creating bubbles.

In the case of the Great Recession very true. In the case of the Great Depression, somewhat true, but not entirely.

But, fact of the matter is if you let any kind of de-centralized system exist, there are going to be times when people's price expectations are defeated. Their future plans don't pan out. If actual prices aren't too far off from people's price expectations, then not a big deal most of the time. But, in some cases where they diverge greatly, or people's expectations turn sour, then people will likely start hoarding money. Of course as they hoard money, and stop spending, that spending is somebody else's income. If prices aren't perfectly flexible or if there is missing markets, then it starts to be a problem. And in the real world, prices aren't completely flexible or there are missing markets. So keeping the money supply constant in these situations is not a good idea. 

[Rippounet]

2 hours ago, OldGimletEye said:

But, in some cases where they diverge greatly, or people expectation's turn sour, then people will likely start hoarding money. Of course as they hoard money, and stop spending, that spending is somebody else's income. If prices aren't perfectly flexible or if there is missing markets, then starts to be a problem. And in the real world, prices aren't completely flexible or there are missing markets. So keeping the money supply constant in these situations is not a good idea. 

'k, but originally I was just explaining how the transition can be largely funded by taxation, thus limiting monetary creation and inflation, not trying to enounce an economic dogma.

Edit: Ah, I see, it's a misunderstanding. When I said that the money supply wouldn't change in a more left-wing system, I meant compared to now. I didn't mean that it would be fixed.

To me it all boils down to trust. Ultimately, the value of money reflects the trust people put in a given socio-economic system. It's actually one of the reasons why I insist on democracy so much: it's not just that democracy is better than the alternatives, I also believe it can protect the economic system from the wild variations you see in capitalism.

If you want me to confess to a weakness of a communist system, then the big one is the valuation of labor, i.e. how much people get paid for their work. It's a given to me that markets are profoundly irrational, and that people end up not earning proportionally to the importance of their work for society; the current crisis has, I believe, underlined the fact. But if we accept that humans are irrational, that we end up valuing diamonds more than water, how then can we set the value of everything? One can hope that in the very long-run education and technology will help, but there is no evident short-term answer I can think of. We are in trouble precisely because we haven't given enough value to our environment, but the question of what we value and how seems to be the mother of all our problems.

[OldGimletEye]

55 minutes ago, Rippounet said:

'k, but originally I was just explaining how the transition can be largely funded by taxation, thus limiting monetary creation and inflation, not trying to enounce an economic dogma.

Perhaps you're trying to prove a point about the subtlety of economic mechanisms, but I'm afraid to me it all boils down to trust. Ultimately, the value of money reflects the trust people put in a given socio-economic system. It's actually one of the reasons why I insist on democracy so much: it's not just that democracy is better than the alternatives, I also believe it can protect the economic system from the wild variations you see in capitalism.

If you want me to confess to a weakness of a communist system, then the big one is the valuation of labor, i.e. how much people get paid for their work. It's a given to me that markets are profoundly irrational, and that people end up not earning proportionally to the importance of their work for society; the current crisis has, I believe, underlined the fact. But if we accept that humans are irrational, that we end up valuing diamonds more than water, how then can we set the value of everything? One can hope that in the very long-run education and technology will help, but there is no evident short-term answer I can think of. We are in trouble precisely because we haven't given enough value to our environment, but the question of what we value and how seems to be the mother of all our problems.

In the United States, for instance, we are probably going to have make spend a lot of money to fight climate change. The final tab will probably run into the trillions, possible well over say 10 trillion dollars. You're going to have a difficult time raising all that money through taxation. So borrow the money. And there probably is no good reason to put all the burden on current generations. And even if there was, that would probably be hard to sell politically.

You're right that the value of money largely depends on trust. So long as people know that money will continue to have value, they will hold it. But, if inflation expectations become unstable they will dump it.

Also people aren't necessarily irrational if they value diamonds over water, not necessarily in the sense your talking about it. If they have access to lots of water the marginal utility they get from it will be low, whereas if diamonds are scarce the marginal utility of holding them will be high. Now if you want to give water to people that don't have it and tax people that can afford diamonds to pay for it, I really don't have an objection to that, as surely we both know water is more essential to one's survival than are diamonds. But, if you're looking to build a system where you tell people they can't have a Coke, because water is better for them, "objectively speaking" good luck with getting the political support for that. I'd concern myself with more important stuff, like important environmental issues, than whether its "rational" for somebody to prefer a Spam sandwich over a Ham sandwich or why they prefer going to the ballet instead of the opera or why they prefer  to watch a soccer game over baseball.

Also, when we talk about "rationality" in markets, what we often mean is people's abilities to achieve the items they want to consume given their budget constraints and their future price expectations. We don't often get into why people like what they like. It's true, that in the real world, people aren't computers and don't optimize problems using mathematical optimization methods. In addition, their guesses about what the future may bring are sometimes very wrong. That said, people aren't completely stupid either. They do learn over time, at least with respect to achieving their goals, and have some sense about how to bring them. Economics does recognize people aren't perfect rational calculators and is the reason we have concepts like bounded rationality and work in behavorial economics.

With respect to labor markets. Its like diamonds and water. In an objective sense, a plumber, teacher, or nurse is probably more valuable, than say a famous pop star. Get rid of pop stars and garbagemen and I bet in month you'll likely miss the garbage guy more. But their wages have to due with relative scarcity. Now there are a whole of caveats to this. One is there are lot of informational problems in labor markets, which means that things like minimum wage (within reason) aren't likely to cause many problems. Nor are unions necessarily a problem (and I support them whether we're talking about a capitalist or communist system). Also, in reality the pop star, who makes millions, can likely be taxed at a high rate, which won't stop them producing music. It's not likely to be the case they will go get a job at Star Bucks or whatever because they pay a too high marginal rate. But, again, you can question the "rationality" of the people who like the pop's stars music and buy their records, but I think politically that won't work out too well.

 

[Rippounet]

6 minutes ago, OldGimletEye said:

But, if you're looking to build a system where you tell people they can't have a Coke, because water is better for them, "objectively speaking" good luck with getting the political support for that.

But, again, you can question the "rationality" of the people who like the pop's stars music and buy their records, but I think politically that won't work out too well.

Dude, I dunno if you've noticed, but you do exaggerate and distort everything I say, and at this point it pretty much shoots down the conversation. Between misunderstandings (see above), strawmen, and jargon, I just can't keep up. I'll always welcome reading recommendations though.

[OldGimletEye]

31 minutes ago, Rippounet said:

Dude, I dunno if you've noticed, but you do exaggerate and distort everything I say, and at this point it pretty much shoots down the conversation. Between misunderstandings (see above), strawmen, and jargon, I just can't keep up. I'll always welcome reading recommendations though.

1. I'm sorry if I use to much jargon. I will try use more plain language.

2. Also, I want to make the point, that if somebody lacks something that most of us would consider "essential", like healthcare or food, I'd prefer to give that person money or the services, rather than trying to set prices for everything according what we consider it to be the rational price. There are exceptions to this like limiting the cost of drug prices, but that is because since they are covered by patents, they are monopolies and theory suggest that setting lower prices on monopoly goods can actually boost output and welfare. Another exception is minimum wage. And of course the price of carbon will eventually have to be set at infinity, so its not used. Sorry if I came off like an ass.

3. I get what your saying about the environment. We do need to do something about it.

[Rippounet]

14 minutes ago, OldGimletEye said:

2. Also, I want to make the point, that if somebody lacks something that most of us would consider "essential", like healthcare or food, I'd prefer to give that person money or the services, rather than trying to set prices for everything according what we consider it to be the rational price.

I think anyone defending communism would define the rational price for essential services to be the cost of production.

I don't think I'll blame anyone for being a bit tense these days.

[OldGimletEye]

A paper for market socialism:

https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.6.3.101

The authors address the incentive for firm managers. One thing I will say is well, it couldn't possibly worse than is now. Lots of corporate boards fail to do their jobs and the current system of stock options granted to senior managers hasn't worked too well.

Workers on the board, probably would have a bigger incentive to makes sure management is doing its job, than some dipshit who gets paid 100,000 for a couple of days and then spends most of his time with his thumb up his ass. 

This is probably the least biggest concern with a market socialist system.

[Alarich II]

12 hours ago, Rippounet said:

I think anyone defending communism would define the rational price for essential services to be the cost of production.

The problem is always finding out the cost of production: Assuming there is a high proportion of labour costs going into the the essential services, the cost of production will depend on labour price; take for example a nurse - if all nurses get higher salaries, ceteris paribus the cost of production will rise, and if said nurse will need medical treatment, she will have to pay more; and so she needs a higher salary to maintain her otherwise unchanged income. And it's at that point where it's probably better to have a direct provision of the (subsidised) service by the state rather than spinning this further and further.

9 hours ago, OldGimletEye said:

Workers on the board, probably would have a bigger incentive to makes sure management is doing its job, than some dipshit who gets paid 100,000 for a couple of days and then spends most of his time with his thumb up his ass. 

This is probably the least biggest concern with a market socialist system.

The problem here is the underlying assumption that the workers on the board will stay workers. But they are now part of the board of directors and it's a full time job and they get paid for that, and suddenly the world looks... different than from a factory floor. And then you get things like VW bribing labour representatives (and not only does VW have a shared supervisory board but also the state holds a controlling interest in VW);

So workers on the board as owners is probably better than none in theory, but wether those companies actually take better decisions with regards to environmental issue, management salaries, stakeholder rights, I don't know. It would be interesting to see a study on that.

I mean, last thing I've heard is that the CEO of Volkswagen ears only half of the CEO of General Motors (10 Million EUR vs. 21 Million USD), but OTOH that's about double that of the CEO of the PSA Group and they don't have a workers representation on their supervisory board. This is all anecdotal, but car manufacturing is probably one of those things where it's actually easier to compare companies and their structures, because they all produce more or less the same product.

[Rippounet]

6 minutes ago, Alarich II said:

The problem is always finding out the cost of production: Assuming there is a high proportion of labour costs going into the the essential services, the cost of production will depend on labour price

Yes, as I said earlier, this is the key weakness of communism.
There may be a way... But I would need a lot more research before even mentioning it.

[OldGimletEye]

26 minutes ago, Alarich II said:

The problem here is the underlying assumption that the workers on the board will stay workers. But they are now part of the board of directors and it's a full time job and they get paid for that, and suddenly the world looks... different than from a factory floor. And then you get things like VW bribing labour representatives (and not only does VW have a shared supervisory board but also the state holds a controlling interest in VW);

So workers on the board as owners is probably better than none in theory, but wether those companies actually take better decisions with regards to environmental issue, management salaries, stakeholder rights, I don't know. It would be interesting to see a study on that.

I mean, last thing I've heard is that the CEO of Volkswagen ears only half of the CEO of General Motors (10 Million EUR vs. 21 Million USD), but OTOH that's about double that of the CEO of the PSA Group and they don't have a workers representation on their supervisory board. This is all anecdotal, but car manufacturing is probably one of those things where it's actually easier to compare companies and their structures, because they all produce more or less the same product.

I don't know much about corporate boards in Germany, but in the United States, they have become a mess. They don't do a great job monitoring the CEO, as the CEO tends to dominate them. Worse, the boards are often comprised of other CEOs who have every incentive to make sure other CEOs get paid sky high salaries. And then the whole idea of paying CEOs stock options has turned out not too work very well, leading to potential dubious practices such as using debt to re-purchase stock.

Putting workers representatives on American corporate boards couldn't possibly make the situation worse. And I think there are some studies that have found some positive effects from co-determination.

[Hereward]

I think you may be underestimating the difficulties of a switch to a worker-participation model, even if we ignore the pitfalls in a largely successful system, as raised by Alarich.

The UK tried for decades to replicate the German system but the problem was not only amongst resistant owners and managers. The all powerful unions also rejected the idea out of hand, wanting no truck with doing the bosses’ dirty work for them, as they saw it. Their job was to oppose change and extract as much money as possible in the here and now. Which no doubt explains why Germany still has a manufacturing economy and we don’t.

Put another way, a society has to have, or develop, the kind of communitarian ethos and level of social trust that allows such a system to work effectively. It never happened in the UK and I can only imagine how much more difficult it would be in an even more individualistic and mutually antagonistic society such as the US.

[OldGimletEye]

1 hour ago, Hereward said:

I think you may be underestimating the difficulties of a switch to a worker-participation model, even if we ignore the pitfalls in a largely successful system, as raised by Alarich.

The UK tried for decades to replicate the German system but the problem was not only amongst resistant owners and managers. The all powerful unions also rejected the idea out of hand, wanting no truck with doing the bosses’ dirty work for them, as they saw it. Their job was to oppose change and extract as much money as possible in the here and now. Which no doubt explains why Germany still has a manufacturing economy and we don’t.

Put another way, a society has to have, or develop, the kind of communitarian ethos and level of social trust that allows such a system to work effectively. It never happened in the UK and I can only imagine how much more difficult it would be in an even more individualistic and mutually antagonistic society such as the US.

I take it as given that owners and managers won't like it. And I really don't care what they want, in so far as we are taking about putting labor representatives on corporate boards. That is like saying, pharma companies won't like it if we set prices for drugs. But, whether it is good policy has nothing to do with whether they like it or not. The main relevant variable is how much monopoly power these companies have.

In so far as unions go, I'd ask them to reconsider. Sure they have an interest in getting higher wages for workers. But, they also, often have an interest in the firm succeeding. 

Also, in many ways, corporate boards are a mess, at least in the US.Maybe it doesn't work. But, I really don't see much of a downside.

Also, the whole idea, in my view, has little to do with everyone being all buddy buddy. In fact, the problem with US corporate boards is everyone being "friends", so the bargaining process ends up skewed. In fact, it takes into account conflicts of interest, that is largely the point.

[Larry of the Lawn]

 

 

[OldGimletEye]

For anyone interested, an article about Yugoslavia:

https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.5.4.187

I think the biggest takeaway is designing something that can replicate capital markets.

[Centrist Simon Steele]

On 10/31/2020 at 6:11 AM, Ser Scot A Ellison said:

I’ve said above that I like employee owned businesses (or Co-ops) but they are still limiting ownership to those who work for the business.  Do you object to that sort of structure as a base unit for a “socialist” economy because it does not allow for general ownership of everything?

In my veiw multiple competing “collectives” makes sense.  It allows for efficiencies of scale and competition to winnow out unworkable systems, products and services.

I don't have much of a stance on it, to be honest. I think those who are anti-state have some good reasons, but their alternative seems unworkable. 

[maarsen]

Iain Banks wrote an interesting novel about employee owned and managed firms. His Culture novels are also interesting but the novel The Business shows how such a firm could be established and be successful.