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The following books by Robert Paul Wolff are available on Amazon.com as e-books: KANT'S THEORY OF MENTAL ACTIVITY, THE AUTONOMY OF REASON, UNDERSTANDING MARX, UNDERSTANDING RAWLS, THE POVERTY OF LIBERALISM, A LIFE IN THE ACADEMY, MONEYBAGS MUST BE SO LUCKY, AN INTRODUCTION TO THE USE OF FORMAL METHODS IN POLITICAL PHILOSOPHY.
Now Available: Volumes I, II, III, and IV of the Collected Published and Unpublished Papers.

NOW AVAILABLE ON YOUTUBE: LECTURES ON KANT'S CRITIQUE OF PURE REASON. To view the lectures, go to YouTube and search for "Robert Paul Wolff Kant." There they will be.

NOW AVAILABLE ON YOUTUBE: LECTURES ON THE THOUGHT OF KARL MARX. To view the lectures, go to YouTube and search for Robert Paul Wolff Marx."





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Sunday, April 14, 2019

THE FUTURE OF SOCIALISM PART ONE


The Future of Socialism


An unpromising title, this, in the seventh year of the third millennium of the Common Era; rather like “Recent Developments in Ptolemaic Astronomy” or “Betamax – a Technology Whose Time Has Come.”  My grandfather’s dream, the faith of my younger days, has turned to ashes.  And yet, I remain persuaded that Karl Marx has something important to teach us about the world in which we live today.

In what follows, I propose to take as my text a famous passage from Marx’s Contribution to the Critique of Political Economy – a sort of preliminary sketch of Das Kapital – and see what it can tell us about the capitalism of our day.  I shall try to show you that Marx was fundamentally right about the direction in which capitalism would develop, but that because of his failure to anticipate three important features of the mature capitalist world, his optimism concerning the outcome of that development was misplaced.  Along the way, I shall take a fruitful detour through the arid desert of financial accounting theory.

Here is the famous passage, from the Preface of the Contribution, published in 1859:

No social order disappears before all of the productive forces for which there is room in it have been developed, and new, higher relations of production never appear before the material components of their existence have matured in the womb of the old society.
           
            Although Marx spoke generally about all social orders – by which he meant ancient slavery, medieval feudalism, modern capitalism, and the socialism he anticipated, it was principally the transition from feudalism to capitalism on which he focused his attention.  The development of latifundia in late Roman times, he thought, was a preparation for feudalism within the womb of the slave economy of the empire.  But when it came to the transition from feudalism to capitalism, his historiographical research, which was quite extensive for his day, persuaded him that all of the structural elements of a full-blown capitalist economy and society could be found in rudimentary form in the latter decades and centuries of the old feudal order:  exchange based on money rather than barter;  wage labor;  production for sale rather than consumption;  the transformation of money into investment capital;  the appearance of commodity production;  the dissolution of legal and customary constraints on production and exchange;  and so on.  In Marx’s view, the great political upheavals of seventeenth and eighteenth century Europe and the Americas were caused by the growing and eventually unsustainable contradiction between the economic power being acquired by the new entrepreneurial classes and the formal legal and political power still exercised by the landed aristocracy and its allies in the clergy.

            But Marx also believed that he was witnessing, in his own time, a new contradiction between the legal and political power of bourgeois capitalism, which by the mid-nineteenth century had taken a secure hold of both the marketplace and the state, and the emerging but still subordinate industrial working class.  It was, as Marx made clear in his 1848 tract, The Communist Manifesto, a world historical irony that every effort by capitalists to expand the scope and efficiency of their productive forces had the unintended consequence of promoting the unification and self-conscious awareness of their mortal enemy, the working class.  As later European Marxists would say, Capital was unintentionally but inexorably transforming labor from a class in itself into a class for itself.  The end result of this dynamic process, Marx believed, would be a clash as momentous as that which replaced feudalism with capitalism.  This time, it would be capitalism’s fate to be consigned to the dustbin of history and to be replaced by socialism.

            It followed immediately from the logic of Marx’s analysis that revolutionary change would be brought about, if at all, in the most advanced capitalist countries through the actions of the most advanced sector of the working class -- the skilled industrial workers in those industries that had achieved the most efficient, sophisticated forms of capitalist production.  Marx was not sentimental about the unskilled toiling masses, to whom he referred rather contemptuously as lumpenproletariat. 

            Marx never presented us with the same sort of detailed analysis of the transition from capitalism to socialism that he so brilliantly laid out in his historical account of the development of capitalism.  It is up to us, therefore, to try to imagine what such a transition might look like, taking as our guiding clue his remark about “the material conditions” maturing in “the womb” of the old order.  Since the capitalist firm is the central institution through which production and distribution is managed in capitalism, it is there, if anywhere, that he believed we should expect the “new, higher relations of production” to appear.  What can this possibly mean?
 
            In the early stage of capitalist development, the characteristic capitalist firm is a small, single-product manufacturing operation presided over rather closely by an entrepreneur who is both owner and principal manager.  Present day observers accustomed to the almost complete separation of legal ownership from effective control characteristic of the modern corporation may find this difficult to remember.  [For the implications of the transformation of the owner-operated firm into a limited liability joint stock corporation, one may still usefully consult the classic 1932 work by Adolph Berle and Gardiner Means, The Modern Corporation and Private Property.]

            A firm of the original sort, in the language of modern economic theory, is a price-taker at both ends. The entrepreneur purchases raw materials, labor, and other inputs in a competitive market at a price over which he [and it is, almost always, he] has no control.  The size of his purchases is vanishingly small in comparison with the market as a whole and consequently he must simply shop around for the best price, and pay what the market dictates.  The entrepreneur stands in a like relation to the price of his output, for when he returns to the market to sell what has been produced in his factory, he finds that his sales are negligible in relation to the market as a whole.  Thus, though he makes a profit sufficient to support a comfortable existence and also to permit further expansion of his enterprise, he is, and experiences himself to be, at the mercy of market forces beyond his control, and even, in the early stages of capitalist development, beyond his ken.

            Characteristically, the process by which inputs are transformed into output in our entrepreneur’s factory is simple and relatively direct, although there may be temporary intermediate products as the result of a first process of transformation, serving as the inputs into a subsequent process. Flax is spun into thread and woven into linen; iron ore and coke are transformed into steel; flour is baked into bread.

            The accounting procedures required to keep track of the production process, in value terms, although revolutionary in relation to the procedures of the pre-capitalist era, are by modern standards elementary and transparent.  Profits are simply the difference between the cost of inputs – wages and rent included – and the price at which the output is sold.  The rate of profit can be computed directly as the ratio of annual profit to the value of the capital invested in buildings, machinery, raw materials, and so forth.

            There is, to be sure, the first suggestion of a theoretical complexity in the necessity of assigning some fraction of the cost of the buildings and machinery – the “fixed capital” – to the cost of inputs of an annual period, but Marx, in common with all other classical economists, simply assumes that a machine yields up, each year, a portion of its purchase price equal to the fraction of its expected lifetime represented by one year. A power loom that can be expected to last five years, costing one thousand dollars new, can be thought of equally well as having cost the capitalist two hundred dollars in each year. Very shortly, we shall see that this elementary calculation is in fact quite problematical.

            At this earliest stage of capitalist development, nothing remotely resembling economic planning can be said to take place on any level but that of the individual firm.  Prices, wage levels, aggregate demand and supply, the economy-wide movement of capital, all are completely beyond control and are experienced by all as though they were forces of nature.  Within the firm, of course, there is increasingly careful calculation, as individual entrepreneurs, pressed by their competitors, examine every element of their operation in the effort to reduce costs and thus increase profits.  It is hardly surprising, under these circumstances, that owners resort to such petty subterfuges as tampering with the clocks in their factories so as to extract an extra few minutes of labor from their miserably paid workers.

            The state of affairs we have been describing may strike economic theorists as ideal – indeed, as Pareto-optimal!  But it can hardly be said to strike the entrepreneurs as in the least satisfactory.  To them, it is a condition of perpetual uncertainty and anxiety.  Even the most careful and rationally calculating of entrepreneurs is utterly at the mercy of market forces which he cannot control and can scarcely predict.  Though he may be in the grip of one or another of the self-serving rationalizations that celebrate the productivity and progressive thrust of the system as a whole, he will, as a prudent business man, be eternally on the alert for some way to diminish the degree of his servitude to the market.

            There are essentially two things our entrepreneur can do to achieve a more secure
relationship to the market forces, and whether by foresight or accident, he and his fellows pretty soon attempt both of them.  First, he can increase the scale of his operations, so as to cease to be a negligible factor either in the market in which he buys his inputs or in the market in which he sells his output.  Second, he can partially overcome his dependence upon markets by engaging in a bit of what economists call “vertical integration” – he can start to produce some of the inputs that previously he was forced to buy in the market. 

The first tactic is easily enough illustrated from the history of American capitalism.  When the Great Atlantic and Pacific Tea Company [or A&P] decided to expand beyond its original role as a supermarket grocery chain, and go into the business of making jelly under its Ann Page label, it turned to the grape-growing valleys of California for its principal input. The growers were relatively small producers who had, until then, sold their crop in a competitive market to large numbers of small producers. A&P launched its Ann Page line on so large a scale that it needed to buy up the crop yields of entire valleys for its jelly-making operation.  As a consequence, it became virtually the sole buyer for the output of large numbers of small growers.  It was able to guarantee purchase of a grower’s entire crop even before the growing season had begun, in return for which it acquired the power to dictate the price at which it would buy the crop.  In this way, it gained a significant measure of control over its input market, and this in turn allowed A&P to institute production and marketing plans based on an assured input at an assured price.

            A further extension of the entrepreneur’s conquest of market forces is exemplified by a practice of Sears & Roebuck.  Sears would not merely buy the entire output of its suppliers, thereby making them subservient to its dictates in a manner analogous to that of A&P.  Sears buyers would meet with representatives of the supplying companies and dictate the specifications of the goods it wished to purchase, along with the quantity it wanted.  The suppliers then produced to order, secure in their ability to sell their entire output.  Sears also dictated the price it would pay, thereby completely undermining the play of market forces. Under these circumstances, Sears executives could truly plan their seasonal line, not in the sense of merely predicting accurately the character, price, and availability of the goods they wished to sell, but in the full sense of deciding what they wanted and then commanding that it be produced.

            At this point, it should be noted, a new form of calculation enters into corporate planning.  Previously, a corporation like Sears would bargain as hard as it could to lower the price of its inputs.  Now, however, when it decided what price to specify for the total output it proposed to buy from a supplier, it had to balance its desire to obtain its input at the lowest possible price against its interest in keeping a reliable supplier in business.

            Analogous maneuvers can be undertaken by the firm at the other end of its interaction with the market.  As a firm grows larger, it less and less confronts a market for its output that is opaque and independent of its will. Increasingly, it becomes a price-maker rather than a price-taker in its output as well as its input market. Instead of short-term sales tactics, focused almost entirely on price competition, it begins to think strategically about total market share, adding product differentiation to price as a means of increasing, or merely securing, a stable market share on which it can predicate corporate planning.

            As the firm grows larger, it progressively diminishes its level of uncertainty, and reduces its dependence on the impersonal workings of the market. It is driven to achieve this independence by the same self-interest that motivates it in the more fully competitive market environment at an earlier stage of capitalism.  To whatever extent they are able, entrepreneurs or managers seek to substitute planning in the full sense indicated above for mere calculation of profitability.

            One of the inevitable consequences of this move from calculation to planning is a corresponding loss of simple clarity of goal.  When an entrepreneur is locked in cutthroat competition with other small producers, he has very little choice of feasible entrepreneurial goals. Short-term profitability is the condition of survival. Growth – for economies of scale, for technological innovation, and as a means of liberation from market forces – virtually is thrust upon him.  At this stage, there is no room for what eventually comes to be celebrated as “industrial statesmanship”.  A firm may flourish one season, and be driven to the wall the next.  Once the firm has reached a certain level of size and control over its input and output prices, however, the managers of the firm [for at this stage, it is likely that the individual entrepreneur has been replaced by salaried managers] must choose among a variety of corporate goals: short-term profit maximization, longer-term profit-maximization, enhancement of the firm’s stock market performance [which is, of course, not necessarily identical with profit maximization], managerial stability, attractiveness to potential take–over financiers, resistance to a financial take-over, and so forth. 

            There is no calculus that dictates how managers are to decide among these goals.  They are genuine alternatives, corresponding to different and incompatible managerial ambitions. In a fundamental sense, which I shall dwell on shortly, these choices are political rather than economic in character.  What distinguishes them from what are ordinarily considered political choices is not their logical structure, but simply the identity of the constituencies to whom the decision-makers are accountable in the making of the choices.


30 comments:

Anonymous said...

If I may, that characterisation of the firm as a small, single-product manufacturing operation is important. Such firms are price-takers at both ends, as you very correctly say.

That exactly, no more, no less, is how modern microeconomcs characterises such firms. In particular, modern microeconomic theory derives its welfare results using precisely that characterisation, without any reference whatsoever to limited liability joint stock corporations.

This, of course, may simply mean that microeconomists overlook something crucial. It may also mean those implications are irrelevant to the ends of microeconomic theory.

I understand that this may be outside the scope of your article, but it would be useful, before proceeding, to have some idea, however general, what the implications are of joint stock companies Berle and Gardiner found.

Robert Paul Wolff said...

Wait until you read the other two posts. If you still have questions after that, ask again and I will write an extended answer.

Anonymous said...

I like your approach for the modern mind: small dollops at a time. I'm as guilty as anyone of finding it had to read large swathes of text without a hard reason to apply myself.

I have several questions arising from this statement in your essay:

"Marx also believed that he was witnessing, in his own time, a new contradiction between the legal and political power of bourgeois capitalism"

I'm not aware if Marx addressed the issue of HOW AND WHY the feudal system would allow a new (and presumably antagonistic social superstructure) of capitalism to grow in the belly of the beast. Why didn't the lords and ladies of the landed aristocracy simply confiscate the budding entrepreneurial businesses much like the Communists did when they seized power?

"Capital was unintentionally but inexorably transforming labor from a class in itself into a class for itself"

What exactly is the evidence for this? I would argue that the struggle between radical unions like IWW and the AFL was between radical utopians and "workers in it for themselves". Clearly the AFL was eager to boost wages and shorten hours and make compromises to get there. The IWW saw them as sellouts and thought they had a quicker way to arrive at the promised land. But was leadership for the "class" or for "itself"? (AFL for big shot union bosses, IWW for leading to a quick "world revolution" that they got the glory to lead.) How does one identify what a whole class of people wants "in itself" versus "for itself"? We can make up abstract nouns for these "classes" of things, but do they represent "real things"?

I'm not trying to be antagonistic. I'm purely skeptical and would truly like to get beneathe what I see as rhetoric and down to the nuts and bolts of messy reality as I see it. The only axe I have to grind is against ideologues who wrap things up and put a pretty bow on them... only to discover that in the real world millions die for their dream.

Anonymous said...

More questions:

"It followed immediately from the logic of Marx’s analysis that revolutionary change would be brought about, if at all, in the most advanced capitalist countries through the actions of the most advanced sector of the working class -- the skilled industrial workers in those industries that had achieved the most efficient, sophisticated forms of capitalist production."

As a worker in the tech industry, I find this statement odd. The IBEW (International Brotherhood of Electrical Workers) tried to organize in my industry. They found their efforts to be an abysmal failure. My experience tells me that it was lower skilled workers (like those organized by the IWW and CIO) were the most avid to join a union to get some power to deal with stingy, demanding, and brutal employers. My experience was that the more educated the workforce, the less amenable to being "organized". It wasn't because they weren't "self conscious" as workers or didn't feel exploited. There is something more fundamental going on and I don't see Marx addressing that at all.

What would Marx have to say about Mafia-infiltrated unions. What about IBT (International Brotherhood of Teamsters) and the corruption in their leadership? From my perspective, as the "means of production" matured into capitalism and workers organized there soon followed a "maturing" of unions by corrupt leaders. That clearly doesn't fit into the glorious pathway to "socialism".

The most successful unions today are among government employees which have the most job protection. The least successful unions continue among those whose jobs are most marginal and who have the most rapacious capitalists running their business.

"he [the capitalist] is, and experiences himself to be, at the mercy of market forces beyond his control, and even, in the early stages of capitalist development, beyond his ken"

That doesn't match what I see over the past 200 years. If anything we are in a new Gilded Age where the elites are making even bigger profits. Wages have stagnated while productivity has gone up. I think (but don't really know enough) that Marx overlooked how government and capitalists rig the system to ensure that profits can be milked indefinitely. Look at copyright law. Disney has successfully extended copyright to keep Mickey Mouse "owned" despite the supposed sunset date of the copyright law.

As far as I can tell "market forces" have been evaded because the capitalists have bought the mechanism of government and write the laws they need to keep control over competition and keep profits up.

"Profits are simply the difference between the cost of inputs – wages and rent included – and the price at which the output is sold."

Not is you see "profits" as a complex process in which government plays a role in setting the "rules of competition" and can ensure that labour never gets a clear field to organize workers or have the legal means to keep their unions free of corruption.

Marx is right to a first degree of approximation, but the real world is much, much more complex.


Anonymous said...

More questions:

"It is hardly surprising, under these circumstances, that owners resort to such petty subterfuges as tampering with the clocks in their factories so as to extract an extra few minutes of labor from their miserably paid workers."

When you reduce capitalists to a "class" and assume it is an undifferentiated mass, you end up making statements like the above. But my understanding of history is that there are some good capitalists, some mediocre ones, and some vicious and greedy ones. I believe Robert Owen was an example of a capitalist who afforded his employees better housing and wages than the more skinflint capitalists of his day. I believe (but don't really have full knowledge) that Nick Hanauer is one of the "good" capitalists of today.

The problem I have with grand philosophizing or ideological generalization and this it lumps and groups and ignores the complexity of the real world. I know that details can bog you down. But on the other hand, grand generalizations can lead to fanatics who murder millions in the name of their ideology.

"First, he can increase the scale of his operations, so as to cease to be a negligible factor either in the market in which he buys his inputs or in the market in which he sells his output. Second, he can partially overcome his dependence upon markets by engaging in a bit of what economists call “vertical integration” – he can start to produce some of the inputs that previously he was forced to buy in the market."

Yes, but that ignores a third option, corrupt the government and bend it to your will to set laws that restrict labour while letting monopolists milk the consumer for bigger profits.

When FDR saved the capitalists from themselves, that had a good 40 year run. But the last 40 years have seen the capitalists use government to "deregulate" where needed while writing new laws to limit competition and the entry of new small firms by allowing deep moats of "patents" and "copyrights" and other legal restrictions.

Anonymous said...

More questions:

"As the firm grows larger, it progressively diminishes its level of uncertainty, and reduces its dependence on the impersonal workings of the market."

Yes, but another thrust of the 20th century was that as firms got larger the company officers developed an independence from the ownership. The stockholders were reduced to voting for the board while the company president worked to make himself both CEO and Board Chairman and then hand pick new board members which shareholders unknowingly agreed to. The collusion between sold-out board members and the company executives went deeper than the vast number of shareholders who were at arm's length reading only company statements could possibly fathom. This has led to vastly exaggerated executive salaries. In the 1960s executives made 30-to-1 pay compared to their workers. It is now 400-to-1 and worse.

In fact "the firm" has slipped out of control by its "owners".

...finally, I wholly agree with you when you say:

"There is no calculus that dictates how managers are to decide among these goals. They are genuine alternatives, corresponding to different and incompatible managerial ambitions. In a fundamental sense, which I shall dwell on shortly, these choices are political rather than economic in character."

I look forward to your analysis!

N. Nihilist said...

There is no calculus--that's the crucial point. By the way, since you mention shareholders, there is no rule that states that executives must act to maximize shareholder profit. The courts adhere to the business judgment rule, which gives executives wide latitude in business decisions. The courts have been reluctant to second guess executives. If the shareholders don't like the decisions, they can vote out the executives. One reason for organizing a firm is to protect workers from market forces so that they can specialize their labor. None of this amounts to a "yes but." The inherent ambiguity of accounting practices also acts to make management decisions more political than economic. There is nothing like a marketplace in the executive suite.

N. Nihilist said...

That the company officers developed an independence from the ownership is a problem of principal agent theory. In no way does this constitute an objection or a "yes but"--in the contrary, it strengthens the conclusion that there is no calculus that dictates how to decide among conflicting managerial ambitions. There are no price signals in the boardroom that announce which of the alternatives yields the greatest return on investment. And the inherent ambiguity of accounting practices add to this.

Robert Paul Wolff said...

Bravo, N. Nihilist. That is exactly right.

Anonymous said...

A couple of questions for Anonymous (April 14, 2019 at 6:42 PM). You wrote:

As a worker in the tech industry, I find this statement odd. The IBEW (International Brotherhood of Electrical Workers) tried to organize in my industry. They found their efforts to be an abysmal failure. My experience tells me that it was lower skilled workers (like those organized by the IWW and CIO) were the most avid to join a union to get some power to deal with stingy, demanding, and brutal employers. My experience was that the more educated the workforce, the less amenable to being "organized". It wasn't because
they weren't "self conscious" as workers or didn't feel exploited.


In your experience, then, why were more educated workers less amenable to being organised? I take it it wasn't because they did not feel exploited.

So you write, as well, that it wasn't because they weren't self conscious. What exactly do you mean by self conscious?

Yet Another Anonymous

Anonymous said...

A question to N. Nihilist (April 14, 2019 at 8:22 PM)


You wrote:
One reason for organizing a firm is to protect workers from market forces so that they can specialize their labor. None of this amounts to a "yes but."

That is not clear to me. Can you explain it?

I see Dr Wolff agreed with your comments, so if he wishes he can chime in as well.

Anonymous said...

It was Yet Another Anonymous who posted that question to N. Nihilist.

F Lengyel said...
This comment has been removed by the author.
N Nihilist said...

In reply to Yet Another Anonymous (April 20, 2019 @ 12:50 AM), the idea that corporations are organized to protect their employees from market forces so that they can specialize their labor to benefit the firm is borrowed from "The Benefits of Cooperation," by Joseph Heath (who is no socialist, as far as I can tell) https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1088-4963.2006.00073.x. An extended quote:

"Corporations, for instance, also produce significant benefits for their employees through internal diversification (e.g. making it less risky for workers to develop highly specialized skills).57 The suggestion is simply that the corporate organizational form permits individuals to achieve economies of scale that would be impossible (or prohibitively expensive) to organize through market contracting, and that this provides the primary explanation for its success."

Some insulation from the marketplace is already baked into the corporation. Here Heath makes explicit the mechanisms of cooperative benefit operating in this case.

Anonymous said...

Thanks for your reply, N Nihilist.

Capitalist firms and particularly corporations foster and indeed demand specialization from its workforce. That much is undeniable and on that I am satisfied Heath is absolutely right.

Indeed, that is old news. Adam Smith wrote about it already in the Wealth of Nations [*]. He called it "division of labour" and ellaborated his ideas in the famous pin factory example:

I have seen a small manufactory of this kind where ten men only were employed, and where some of them consequently performed two or three distinct operations. But though they were very poor, and therefore but indifferently accommodated with the necessary machinery, they could, when they exerted themselves, make among them about twelve pounds of pins in a day. ... But if they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day

Henry Ford was the first and foremost modern practitioner and populariser of those ideas. Here he is explaining it:

With one workman doing a complete job he could turn out from thirty-five to forty pieces in a nine-hour day, or about twenty minutes to an assembly. What he did alone was then spread into twenty-nine operations; that cut down the assembly time to thirteen minutes, ten seconds. ... In short, the result is this: by the aid of scientific study one man is now able to do somewhat more than what four did only a comparatively few years ago. ... The assembling of the motor, formerly done by one man, is now divided into eighty-four operations— those men do the work that three times their number formerly did. In a short time we tried out the plan on the chassis.[#]

The first men fasten four mud-guard brackets to the chassis frame; the motor arrives on the tenth operation and so on in detail. Some men do only one or two small operations, others do more. The man who places a part does not fasten it— the part may not be fully in place until after several operations later. The man who puts in a bolt does not put on the nut; the man who puts on the nut does not tighten it.[@]

Anonymous said...


What I find hard to believe (and I suspect it would have been difficult even to Smith) is that corporations do that to protect their employees from market forces, or that it has significant benefits for their employees.

For Smith, the reason capitalist firms enforce labour specialisation is that it makes labour more productive, which is precisely the point of his example (and that of Ford).

And I doubt significant benefits could come about even as unintended consequence of that. After all, it seems hard to believe a worker whose only job is to put in bolts is indispensable to a corporation.

Anonymous said...

Sorry, I forgot the footnotes.

[*] https://www.econlib.org/library/Smith/smWN.html?chapter_num=4#book-reader
[#] Henry Ford. My Life and Work (Kindle Locations 1013-1018).
[@] Henry Ford. My Life and Work (Kindle Locations 1031-1034).

Nice Nihilist said...

If there were no benefit to employees not to have to change jobs or any other benefit to employees they might as well become contractors. There is some trade off involved in return for some stability. Why is this no benefit to employees? There is a cost to the employer if an employee leaves, generally. Perhaps not for the least skilled workers in your example, but even then the cost of replacing a laborer is nonzero. That creates some incentive for employers to induce employees not to leave. All of these things can be true without the implication that the trade offs are never stacked in favor of the employer or that the private life of power is thereby nullified.

Anonymous said...

There is a cost to the employer if an employee leaves, generally. ... That creates some incentive for employers to induce employees not to leave.

Exactly the same argument was used to explain why slavery wasn't the atrocious system one believes: slaves were a valuable asset, therefore slaveowners had some incentive to treat them well.

----------

There are many ways an employer can induce employees to stay in the job.

Historically, company housing was one. You quit your job, and you are evicted from the place you live in. Employers used to pay their staff in tokens valid only in the company's store. A worker had no savings; indeed, he/she might have owed the store.

In modern times employers blacklist former staff, in particular rebellious staff. Even if you are a garden variety employee, it suffices with not issuing work references. No references, no new jobs.

Migrant workers are even more susceptible, particularly illegal or sponsored ones. You don't work for your sponsoring employer, and the employer rats you out with immigration authorities.

It just takes some imagination.

And let's keep in mind that we are talking about big employers. They have monopsony power in the labour market.

Yet Another Anonymous

Nice Nihilist said...

Why are your obvious remarks a refutation? That there is a cost to the slave holder if a slave leaves doesn't justify slavery. That there is a rational incentive does not imply anything about morality. Perhaps you think rationality implies morality. Some philosophers do. I don't.

Nice Nihilist said...

My paraphrase of Heath was a misquote: I wrote that "the idea that corporations are organized to protect their employees from market forces so that they can specialize their labor to benefit the firm..." which holds in your examples, where the freedom of employees is severely limited. Heath actually wrote that "Corporations, for instance, also produce significant benefits for their employees through internal diversification (e.g. making it less risky for workers to develop highly specialized skills)." You deny the possibility of any significant benefits to employees. I see that some benefits are possible (generous of me) but I don't exclude what Corey Robin calls "the private life of power"--something that you needed to insist that I lacked the imagination to include. I think it's the norm.

Nice Nihilist said...

Also, my misquote holds in any case. It seems that your position is that the corporation is organized to force employees to specialize their labor (for some benefit to the corporation), and offers to employees at best a max-min alternative to starvation or employment somewhere else under similar circumstances. I don't think that Heath's account excludes this possibility, but I think it's incomplete.

Anonymous said...

Why are your obvious remarks a refutation? That there is a cost to the slave holder if a slave leaves doesn't justify slavery. That there is a rational incentive does not imply anything about morality. Perhaps you think rationality implies morality. Some philosophers do. I don't.

Judging by your outburst, I must have hit a nerve. I suppose the best course of action left to me is to apologise. After all, you are a Philosopher.

Anyway.

That there is a cost to the slave holder if a slave leaves [????] doesn't justify slavery.

It may not justify slavery -- although defenders of slavery advance it as a defense of slavery !!!! -- but in your own answer the exact same argument seems to justify that Corporations, for instance, also produce significant benefits for their employees.

So, what gives? Why the exact same argument fails to justify one but succeeds in justifying the other? What on earth has morality to do with it?

No need to answer.

Anonymous said...

By the bye, my remarks may be obvious (I suppose, too, I have to thank the Philosopher for not labeling them false); what is not obvious at all is that you, Philosopher, accounted for them -- as obvious as they might be -- in your first comment, which I quote in its entirety, highlighting the relevant sentence:

There is no calculus--that's the crucial point. By the way, since you mention shareholders, there is no rule that states that executives must act to maximize shareholder profit. The courts adhere to the business judgment rule, which gives executives wide latitude in business decisions. The courts have been reluctant to second guess executives. If the shareholders don't like the decisions, they can vote out the executives. One reason for organizing a firm is to protect workers from market forces so that they can specialize their labor. None of this amounts to a "yes but." The inherent ambiguity of accounting practices also acts to make management decisions more political than economic. There is nothing like a marketplace in the executive suite.

Nice Nihilist said...

That there is a calculation that yields a utility one way or another is not a justification, as you suppose. The fact of calculating some utility says nothing about the ought that one should realize it. Did you read "The Benefits of Cooperation"? The mechanism in the case of corporations is economies of scale. Now you say that the same mechanism involved in corporate organization--economies of scale--were involved in other arrangements limiting the freedom of workers. So what? Blame economies of scale? That's a fatuous "argument."

Nice Nihilist said...

The assertion you highlight in boldface is offered as an explanation for corporate organization. It comes from Heath. It is not a justification and it is not an argument. Whether it was used in arguments with other premises and conclusions that we reject is irrelevant. You ask, "What gives?" What gives is that you think an enthymeme is an argument.

Willard said...

> slaves were a valuable asset, therefore slaveowners had some incentive to treat them well.

I doubt this claim could resist factual scrutinity, e.g.:

"Under slavery, there was also an extensive network of specialist “negro hospitals”. The grimmest of slavery’s institutions, these hospitals were often sites of risky medical research and were closely linked to “negro traders” anxious to patch up their “stock” for sale. Large numbers of individual doctors routinely advertised in southern newspapers that they would pay cash for black people suffering from chronic disease. The fate of these trafficked medical subjects, of course, assumed the very worst possibilities."

https://theconversation.com/how-black-slaves-were-routinely-sold-as-specimens-to-ambitious-white-doctors-43074

Three cheers for market efficiency.

Anonymous said...

"Exactly the same argument was used to explain why slavery wasn't the atrocious system one believes: slaves were a valuable asset, therefore slaveowners had some incentive to treat them well."

This not the same "argument." It's your irrelevant nonsense.

1. There is a cost to the employer if an employee leaves

2. There is an incentive for employers to induce employees not to leave

it does not follow (and it was not asserted that)

3. "Employment is not the atrocious system one believes."

That's an incomplete deduction. And the conclusion could be true or to be false depending on the "incentive" and a missing premise or two connecting incentives with atrocious or non-atrocious working conditions. Not even valid. Pretty desperate actually.

Willard said...

It might be time to move away slowly from that carcass, Mr. Nihilist.

While scratching my own itch, I stumbled upon this intriguing externality caused by a slaves economy:

> Analyzing land policy, labor, and legal history, Keri Leigh Merritt reveals what happens to excess workers when a capitalist system is predicated on slave labor. With the rising global demand for cotton - and thus, slaves - in the 1840s and 1850s, the need for white laborers in the American South was drastically reduced, creating a large underclass who were unemployed or underemployed. These poor whites could not compete - for jobs or living wages - with profitable slave labor. Though impoverished whites were never subjected to the daily violence and degrading humiliations of racial slavery, they did suffer tangible socio-economic consequences as a result of living in a slave society. Merritt examines how these 'masterless' men and women threatened the existing Southern hierarchy and ultimately helped push Southern slaveholders toward secession and civil war.

That's the blurb from a book called *Masterless Men* by Keri Leigh Merrit.

The United Nations guestimates that there are still 27 million slaves.

Danny said...

'Marx is right to a first degree of approximation, but the real world is much, much more complex.'

I greatly admire the part about the real world being complex, but I think of Marx as being rather abstract and informally stated, at the best of times. Shall we say that he's in good company. But, nevertheles..