About Freicoin

An Anarchist Case Against Markets

I originally posted this to DebateAnarchism but thought it would be good for discussion here as well
This post was inspired by a debate I had on this sub with a Market Anarchist, which stopped advancing beyond a certain point due to several impasses that we could never get beyond. It became frustrating for both of us after a while because we kept talking past each other.
I wanted to make this post in an effort to clearly explain the following: 1) What I mean when I say that I am "against markets", 2) Why I am against markets, 3) What mechanisms I think can serve as effective replacements for markets, and 4) Responses to common criticisms.
(Disclaimer: I am only pointing out problems with markets pertinent to the target audience of this sub that supports them - Market Anarchists. There is no need to make criticisms of market features that Market Anarchists do not endorse in the first place. This post is not intended to be a general or all-inclusive criticism of markets, because Market Anarchists are anti-capitalists anyway.)
"Against Markets"
I don't seek to "ban" markets in an anarchist social context (obviously, because I'm an Anarchist), but I seek to make them obsolete. This is what I mean when I say that I am "against markets".
The Problems with Markets (as they pertain to Market Anarchism) (in no particular order)
The authors investigate how worker-owned and capitalist enterprises differ with respect to wages, employment, and capital in Italy, the market economy with the greatest incidence of worker-owned and worker-managed firms. Estimates calculated using a matched employer-worker panel data set for the years 1982–94 largely corroborate the implications of orthodox behavioral models of the two types of enterprise. Co-ops had 14% lower wages than capitalist enterprises, on average; more volatile wages; and less volatile employment. Given the quality of the data set analyzed, the authors argue, these results can be regarded as having broad generality
(Note: Regarding the point about "less volatile employment" in favor of coops...this study was done comparing between capitalist firms and worker coops. The wages were largely reflective of wages for union members because the wages in capitalist firms regardless of whether the workers were union members or not were based on regional collective bargaining by the unions. However, (unlike with the wages) the job security is not reflective of job security for union members. While we can see that union wages are higher than income for workers working in cooperatives, we cannot make a meaningful comparison based on this study between union job security and coop job security.)
If you want an efficient market system for coordinating production and distribution, you need a flexible labor market. Unfortunately, a more flexible ("freer") labor market leads to reduced labor share of income even under worker ownership (Self-Exploitation). On the other hand, workers forming cartels (monopolizing/oligopolizing access the labor in their field) that restrict labor markets is the only way to halt the trend of decreasing labor share of income - this is essentially what the function of labor unions is. So you need labor cartels to prevent Labor self-Exploitation (in the Marxist sense), while these labor cartels will themselves either be impossible to enforce in the absence of authority (because of the equivalent of Scabs) OR even if they can be enforced without authority they will undermine the efficiency of the markets in your society (because cartels screw up the function of prices in a market).
Alternatives
Based on what is written below regarding ECP and HKP, there is no longer a reason (with regard to rational economic calculation or information) to think that decentralized planning and gift economy dynamics would be unable to entirely replace the role of markets.
Answers to Common Criticisms/Objections
I've been told this recently in an argument with a Market Anarchist. However, he never was able to explain specifically how and why these differences would manifest and on what basis one could claim that it would alter my calculus and conclusions above.
In that case you've massively restricted the potential scale and scope in which markets can have a role in the functioning of your economy. I suppose that's fine, but in that case I would ask the question: Why retain them at all? Why not seek to replace them entirely?
To put it simply, ECP just says that you need a mechanism that allows you to compare multiple possible allocation pathways for resources in order to know which allocation pathway is the most efficient use of resources. And HKP basically says that those who do a particular kind of activity in the economy learn the information relevant to that activity as they perform it. Furthermore, this information is disparate and best able to be extracted by lots of people individually doing particular activities that they focus on.
There's nothing inherent about a large firm that prevents this from happening more so than an aggregate of small firms playing the same role in aggregate as the large firm does by itself. Large firms that are run bottom-up and allow their members autonomy (as was the case of with each of the collectives/syndicates in Catalonia, in contrast to large firms in capitalism) can discover and disseminate this information at least as well as an aggregate of small firms playing the same role as the large firm by itself. As support for my claim, I reference The Anarchist Collectives by Sam Dolgoff - a book that contains multiple empirical examples showing that collectivization of multiple separate firms (which had been engaging in exchange transactions with one another to form a supply chain prior to the Anarchist revolution in Spain) into singular firms of operation from start to finish across the entire supply chain, actually improved productivity, innovation within the production process, and distribution of end products. This actually addresses both HKP and ECP. As per Hume's Razor, we can therefore conclude that a reduction in the scope, role, and presence of intermediary exchange transactions/prices between steps in the supply chain neither results in reduced ability to acquire & disseminate information nor results in reduced economic efficiency. Furthermore (as per Hume's Razor), we can conclude that it is not the scope, role, or presence of prices/exchange transactions that enable either rational economic calculation or the acquisition & dissemination of knowledge. This is because (as per Hume's Razor) if it were true that prices/markets are necessary or superior to all other methods for efficient information discovery & dissemination as well as for rational economic calculation, it would not have been the case that we could have seen improvements in productivity, innovation, and distribution of end products in the aforementioned examples after substantially reducing (via collectivization/integration of various intermediary and competing firms) the role, scope, and presence of prices/markets within the economy.
The alternative explanation (one that is more credible after the application of Hume's Razor and keeping the aforementioned empirical examples in mind) is that optimally efficient information discovery & dissemination as well as rational economic calculation, are both possible in a non-market framework when individuals have autonomy and can freely associate/dissociate with others in the pursuit of their goals.
What's written above should be sufficient to address this objection as well. If it is not the scope, role, and presence of prices/exchange transactions that enable either rational economic calculation or the acquisition & dissemination of knowledge...then there is no basis upon which to argue there will necessarily be (from an information or rational economic calculation standpoint) more bureaucracy in aggregate in a society that has replaced markets, than there would be in a society that retains them.
However, there remains the objection that bureaucracy would exist to a larger extent due to the lack of competitive pressures against inefficiency. My response is to point out that empirical evidence from revolutionary Anarchist societies indicate strongly to the contrary. The role and presence of competition was greatly reduced while there was a simultaneous improvement in efficiency. As per Hume's Razor, we can therefore reject the notion that it is competition specifically that inherently prevents bureaucratic buildup in individual firms. It seems, from these empirical examples, that the best way to prevent bureaucracy is not through market competition between several small firms but through Anarchist praxis involving a lack of hierarchy and authority within large firms (recall that I often use the term "firm" to refer to collectives, syndicates, etc. for the purposes of this post), such that there is no ossified system of rank within the large firm. The absence of an ossified system of rank within firms is the true key to preventing the accumulation of bureaucracy within firms.
Note the three types of efficiency in the linked video - Allocative Efficiency, Productive Efficiency, and Dynamic Efficiency.
The evidence from Anarchist Spain during the Spanish Civil War (which I discussed above) indicates that Productive Efficiency and Allocative Efficiency was improved in various industries and communities where Anarchist collectivization took place. This trend only reversed and ended as the State undermined the Anarchists through various measures, such as cutting them off of currency that was needed to acquire resources from outside the Anarchist-controlled regions, using that leverage over currency to take over control of various industries away from the Anarchists, etc... Thus far, the market anarchists I have discussed this issue with have agreed on this point.
Where I have faced disagreement from market anarchists is on the issue of Dynamic Efficiency aka "Innovative Efficiency". Those whom I have discussed this with argue that markets optimize dynamic efficiency better than any other alternative.
My response is as follows... Evidence indeed does not support the commonly held view that (within a market economy) larger firms have greater dynamic efficiency. However, it does show that investment into R&D (especially by small firms) in market settings is substantially impacted by whether or not there are Intellectual Property Rights.
For me, this raises a natural question: In an Anarchist social context where there are no intellectual property rights, would a framework of cooperation/collectivization into larger firms be more dynamically efficient than competition between smaller firms? Let's look at the following...
(1) Evidence shows that, in general, Intellectual Property Rights have a substantial net negative impact on innovative efficiency:
To summarize, although only tentative conclusions can be drawn given the small number of empirical studies, the body of available empirical evidence suggests that patents may substantively hinder both subsequent scientific research and subsequent product development. Across a relatively heterogeneous set of technologies within the life sciences, and examining various forms of intellectual property rights, the available empirical evidence suggests that property rights hinder cumulative innovation—with declines on the order of 30 percent. Clearly much more work is needed in order to examine the extent to which these patterns generalize to other technologies and other forms of intellectual property, but the best available evidence suggests that mechanisms that reward innovation in a way that places the technologies in the public domain—such as patent buyouts—may have substantial benefits in terms of encouraging cumulative innovation, at least in some contexts.
(2) Evidence shows that firms - in the context of a market economy - invest less in R&D without the presence of Intellectual Property Rights of some form.
So to summarize, IP generally has a substantial net negative impact on dynamic efficiency but in the context of a market economy IP is necessary to incentivize firms to invest adequately into R&D.
Based on this we can argue that in an Anarchist social context, a non-market framework (involving decentralized planning and gift economy dynamics) of cooperation/collectivization into larger firms is likely to be more dynamically efficient than a market framework of competition between multiple smaller firms. This means that replacing markets with cooperative/collectivized dynamics will likely improve dynamic efficiency - the opposite of what the market anarchists I have discussed this issue with claim.
I have had a discussion with a market anarchist who argued that certain kinds of tasks will not be adequately completed without monetary incentive - particularly tasks that are unpleasant or those which people do not enjoy.
However, this ignores the historical and contemporary evidence of Anarchists accomplishing these tasks without monetary incentive - see below:
https://theanarchistlibrary.org/library/peter-gelderloos-anarchy-works#toc53
https://theanarchistlibrary.org/library/sam-dolgoff-editor-the-anarchist-collectives#toc57
https://theanarchistlibrary.org/library/peter-gelderloos-anarchy-works#toc24
(A) First, here is the simplified logic behind why I find Marx's Law of Value Compelling as compared to Subjective Value Theory:
(i) The function of markets is to optimize supply and demand so that resources are allocated efficiently. An efficient allocation of resources enables future reproduction and growth of an economy. When the market suddenly undoes the very allocation of supply to fulfill demand that it had previously built up such that the economy subsequently shrinks, the previous build up can be thought of as a market failure. Hence the process by which prices plummet (along with all the subsequent effects) until the market can reorient to start growing the economy again, can be accurately called "correction". Given that prices can be incorrect such that they require "correction", price and value cannot be the same thing.
(ii) A bubble bursts in the economy when previously inflated prices are corrected. (Note that "correction" is not my own term, but a term frequently used to describe such phenomena in economics.)
(iii) The only way to make sense of this is that prices originally (prior to the bubble bursting) deviated from values too much.
(iv) If it is the case that prices can deviate too much from values while prices are derived from the interplay of various actors' marginal utilities, value cannot be subjective. There must be an objective substance of value around which prices can deviate (to an extent).
(v) Therefore, STV is invalid as a theory of value.
(vi) Having accepted this logic, it follows that we require an objective theory of value as opposed to a subjective theory of value. Now the question becomes: What should this objective theory of value be?
(vii) An objective theory of value must express value as being comprised of some definable substance(s).
(viii) Given that we have established value as something objective rather than subjective, it must be possible for commodities to be exchanged in such a way that there is equal Value on both sides of an exchange.
(ix) In order for things to have equal value, the substance of value must be some characteristic that all commodities share but also separates them from non-commodities.
(x) The only such characteristic is that they can all be produced by simple/"unskilled" human labor.
(xi) Therefore, expressing the value of a commodity must be done in units of simple/"unskilled" human labor.
(B) Furthermore, it has come to my attention that some market anarchists find Marx's Law of Value uncompelling as a result of the Transformation Problem. My response is to look into TSSI, which has made it clear that the Transformation Problem is a non-issue.
The reason this is important is that if you agree with Marx's Law of Value, then you necessarily would find worker cooperatives and market socialism of any variety (including market anarchism) highly problematic due to Self-Exploitation.
submitted by PerfectSociety to CapitalismVSocialism [link] [comments]

An Anarchist Case Against Markets

This post was inspired by a debate I had on this sub with a Market Anarchist, which stopped advancing beyond a certain point due to several impasses that we could never get beyond. It became frustrating for both of us after a while because we kept talking past each other.
I wanted to make this post in an effort to clearly explain the following: 1) What I mean when I say that I am "against markets", 2) Why I am against markets, 3) What mechanisms I think can serve as effective replacements for markets, and 4) Responses to common criticisms.
(Disclaimer: I am only pointing out problems with markets pertinent to the target audience of this sub that supports them - Market Anarchists. There is no need to make criticisms of market features that Market Anarchists do not endorse in the first place. This post is not intended to be a general or all-inclusive criticism of markets, because Market Anarchists are anti-capitalists anyway.)
"Against Markets"
I don't seek to "ban" markets in an anarchist social context (obviously, because I'm an Anarchist), but I seek to make them obsolete. This is what I mean when I say that I am "against markets".
The Problems with Markets (as they pertain to Market Anarchism) (in no particular order)
The authors investigate how worker-owned and capitalist enterprises differ with respect to wages, employment, and capital in Italy, the market economy with the greatest incidence of worker-owned and worker-managed firms. Estimates calculated using a matched employer-worker panel data set for the years 1982–94 largely corroborate the implications of orthodox behavioral models of the two types of enterprise. Co-ops had 14% lower wages than capitalist enterprises, on average; more volatile wages; and less volatile employment. Given the quality of the data set analyzed, the authors argue, these results can be regarded as having broad generality
(Note: Regarding the point about "less volatile employment" in favor of coops...this study was done comparing between capitalist firms and worker coops. The wages were largely reflective of wages for union members because the wages in capitalist firms regardless of whether the workers were union members or not were based on regional collective bargaining by the unions. However, (unlike with the wages) the job security is not reflective of job security for union members. While we can see that union wages are higher than income for workers working in cooperatives, we cannot make a meaningful comparison based on this study between union job security and coop job security.)
If you want an efficient market system for coordinating production and distribution, you need a flexible labor market. Unfortunately, a more flexible ("freer") labor market leads to reduced labor share of income even under worker ownership (Self-Exploitation). On the other hand, workers forming cartels (monopolizing/oligopolizing access the labor in their field) that restrict labor markets is the only way to halt the trend of decreasing labor share of income - this is essentially what the function of labor unions is. So you need labor cartels to prevent Labor self-Exploitation (in the Marxist sense), while these labor cartels will themselves either be impossible to enforce in the absence of authority (because of the equivalent of Scabs) OR even if they can be enforced without authority they will undermine the efficiency of the markets in your society (because cartels screw up the function of prices in a market).
Alternatives
Based on what is written below regarding ECP and HKP, there is no longer a reason (with regard to rational economic calculation or information) to think that decentralized planning and gift economy dynamics would be unable to entirely replace the role of markets.
Answers to Common Criticisms/Objections
I've been told this recently in an argument with a Market Anarchist. However, he never was able to explain specifically how and why these differences would manifest and on what basis one could claim that it would alter my calculus and conclusions above.
In that case you've massively restricted the potential scale and scope in which markets can have a role in the functioning of your economy. I suppose that's fine, but in that case I would ask the question: Why retain them at all? Why not seek to replace them entirely?
To put it simply, ECP just says that you need a mechanism that allows you to compare multiple possible allocation pathways for resources in order to know which allocation pathway is the most efficient use of resources. And HKP basically says that those who do a particular kind of activity in the economy learn the information relevant to that activity as they perform it. Furthermore, this information is disparate and best able to be extracted by lots of people individually doing particular activities that they focus on.
There's nothing inherent about a large firm that prevents this from happening more so than an aggregate of small firms playing the same role in aggregate as the large firm does by itself. Large firms that are run bottom-up and allow their members autonomy (as was the case of with each of the collectives/syndicates in Catalonia, in contrast to large firms in capitalism) can discover and disseminate this information at least as well as an aggregate of small firms playing the same role as the large firm by itself. As support for my claim, I reference The Anarchist Collectives by Sam Dolgoff - a book that contains multiple empirical examples showing that collectivization of multiple separate firms (which had been engaging in exchange transactions with one another to form a supply chain prior to the Anarchist revolution in Spain) into singular firms of operation from start to finish across the entire supply chain, actually improved productivity, innovation within the production process, and distribution of end products. This actually addresses both HKP and ECP. As per Hume's Razor, we can therefore conclude that a reduction in the scope, role, and presence of intermediary exchange transactions/prices between steps in the supply chain neither results in reduced ability to acquire & disseminate information nor results in reduced economic efficiency. Furthermore (as per Hume's Razor), we can conclude that it is not the scope, role, or presence of prices/exchange transactions that enable either rational economic calculation or the acquisition & dissemination of knowledge. This is because (as per Hume's Razor) if it were true that prices/markets are necessary or superior to all other methods for efficient information discovery & dissemination as well as for rational economic calculation, it would not have been the case that we could have seen improvements in productivity, innovation, and distribution of end products in the aforementioned examples after substantially reducing (via collectivization/integration of various intermediary and competing firms) the role, scope, and presence of prices/markets within the economy.
The alternative explanation (one that is more credible after the application of Hume's Razor and keeping the aforementioned empirical examples in mind) is that optimally efficient information discovery & dissemination as well as rational economic calculation, are both possible in a non-market framework when individuals have autonomy and can freely associate/dissociate with others in the pursuit of their goals.
What's written above should be sufficient to address this objection as well. If it is not the scope, role, and presence of prices/exchange transactions that enable either rational economic calculation or the acquisition & dissemination of knowledge...then there is no basis upon which to argue there will necessarily be (from an information or rational economic calculation standpoint) more bureaucracy in aggregate in a society that has replaced markets, than there would be in a society that retains them.
However, there remains the objection that bureaucracy would exist to a larger extent due to the lack of competitive pressures against inefficiency. My response is to point out that empirical evidence from revolutionary Anarchist societies indicate strongly to the contrary. The role and presence of competition was greatly reduced while there was a simultaneous improvement in efficiency. As per Hume's Razor, we can therefore reject the notion that it is competition specifically that inherently prevents bureaucratic buildup in individual firms. It seems, from these empirical examples, that the best way to prevent bureaucracy is not through market competition between several small firms but through Anarchist praxis involving a lack of hierarchy and authority within large firms (recall that I often use the term "firm" to refer to collectives, syndicates, etc. for the purposes of this post), such that there is no ossified system of rank within the large firm. The absence of an ossified system of rank within firms is the true key to preventing the accumulation of bureaucracy within firms.
Note the three types of efficiency in the linked video - Allocative Efficiency, Productive Efficiency, and Dynamic Efficiency.
The evidence from Anarchist Spain during the Spanish Civil War (which I discussed above) indicates that Productive Efficiency and Allocative Efficiency was improved in various industries and communities where Anarchist collectivization took place. This trend only reversed and ended as the State undermined the Anarchists through various measures, such as cutting them off of currency that was needed to acquire resources from outside the Anarchist-controlled regions, using that leverage over currency to take over control of various industries away from the Anarchists, etc... Thus far, the market anarchists I have discussed this issue with have agreed on this point.
Where I have faced disagreement from market anarchists is on the issue of Dynamic Efficiency aka "Innovative Efficiency". Those whom I have discussed this with argue that markets optimize dynamic efficiency better than any other alternative.
My response is as follows... Evidence indeed does not support the commonly held view that (within a market economy) larger firms have greater dynamic efficiency. However, it does show that investment into R&D (especially by small firms) in market settings is substantially impacted by whether or not there are Intellectual Property Rights.
For me, this raises a natural question: In an Anarchist social context where there are no intellectual property rights, would a framework of cooperation/collectivization into larger firms be more dynamically efficient than competition between smaller firms? Let's look at the following...
(1) Evidence shows that, in general, Intellectual Property Rights have a substantial net negative impact on innovative efficiency:
To summarize, although only tentative conclusions can be drawn given the small number of empirical studies, the body of available empirical evidence suggests that patents may substantively hinder both subsequent scientific research and subsequent product development. Across a relatively heterogeneous set of technologies within the life sciences, and examining various forms of intellectual property rights, the available empirical evidence suggests that property rights hinder cumulative innovation—with declines on the order of 30 percent. Clearly much more work is needed in order to examine the extent to which these patterns generalize to other technologies and other forms of intellectual property, but the best available evidence suggests that mechanisms that reward innovation in a way that places the technologies in the public domain—such as patent buyouts—may have substantial benefits in terms of encouraging cumulative innovation, at least in some contexts.
(2) Evidence shows that firms - in the context of a market economy - invest less in R&D without the presence of Intellectual Property Rights of some form.
So to summarize, IP generally has a substantial net negative impact on dynamic efficiency but in the context of a market economy IP is necessary to incentivize firms to invest adequately into R&D.
Based on this we can argue that in an Anarchist social context, a non-market framework (involving decentralized planning and gift economy dynamics) of cooperation/collectivization into larger firms is likely to be more dynamically efficient than a market framework of competition between multiple smaller firms. This means that replacing markets with cooperative/collectivized dynamics will likely improve dynamic efficiency - the opposite of what the market anarchists I have discussed this issue with claim.
I have had a discussion with a market anarchist who argued that certain kinds of tasks will not be adequately completed without monetary incentive - particularly tasks that are unpleasant or those which people do not enjoy.
However, this ignores the historical and contemporary evidence of Anarchists accomplishing these tasks without monetary incentive - see below:
https://theanarchistlibrary.org/library/peter-gelderloos-anarchy-works#toc53
https://theanarchistlibrary.org/library/sam-dolgoff-editor-the-anarchist-collectives#toc57
https://theanarchistlibrary.org/library/peter-gelderloos-anarchy-works#toc24
(A) First, here is the simplified logic behind why I find Marx's Law of Value Compelling as compared to Subjective Value Theory:
(i) The function of markets is to optimize supply and demand so that resources are allocated efficiently. An efficient allocation of resources enables future reproduction and growth of an economy. When the market suddenly undoes the very allocation of supply to fulfill demand that it had previously built up such that the economy subsequently shrinks, the previous build up can be thought of as a market failure. Hence the process by which prices plummet (along with all the subsequent effects) until the market can reorient to start growing the economy again, can be accurately called "correction". Given that prices can be incorrect such that they require "correction", price and value cannot be the same thing.
(ii) A bubble bursts in the economy when previously inflated prices are corrected. (Note that "correction" is not my own term, but a term frequently used to describe such phenomena in economics.)
(iii) The only way to make sense of this is that prices originally (prior to the bubble bursting) deviated from values too much.
(iv) If it is the case that prices can deviate too much from values while prices are derived from the interplay of various actors' marginal utilities, value cannot be subjective. There must be an objective substance of value around which prices can deviate (to an extent).
(v) Therefore, STV is invalid as a theory of value.
(vi) Having accepted this logic, it follows that we require an objective theory of value as opposed to a subjective theory of value. Now the question becomes: What should this objective theory of value be?
(vii) An objective theory of value must express value as being comprised of some definable substance(s).
(viii) Given that we have established value as something objective rather than subjective, it must be possible for commodities to be exchanged in such a way that there is equal Value on both sides of an exchange.
(ix) In order for things to have equal value, the substance of value must be some characteristic that all commodities share but also separates them from non-commodities.
(x) The only such characteristic is that they can all be produced by simple/"unskilled" human labor.
(xi) Therefore, expressing the value of a commodity must be done in units of simple/"unskilled" human labor.
(B) Furthermore, it has come to my attention that some market anarchists find Marx's Law of Value uncompelling as a result of the Transformation Problem. My response is to look into TSSI, which has made it clear that the Transformation Problem is a non-issue.
The reason this is important is that if you agree with Marx's Law of Value, then you necessarily would find worker cooperatives and market socialism of any variety (including market anarchism) highly problematic due to Self-Exploitation.
submitted by PerfectSociety to DebateAnarchism [link] [comments]

An Anarchist Case Against Markets

I originally posted this to DebateAnarchism but thought it would be good for discussion here as well
This post was inspired by a debate I had on this sub with a Market Anarchist, which stopped advancing beyond a certain point due to several impasses that we could never get beyond. It became frustrating for both of us after a while because we kept talking past each other.
I wanted to make this post in an effort to clearly explain the following: 1) What I mean when I say that I am "against markets", 2) Why I am against markets, 3) What mechanisms I think can serve as effective replacements for markets, and 4) Responses to common criticisms.
(Disclaimer: I am only pointing out problems with markets pertinent to the target audience of this sub that supports them - Market Anarchists. There is no need to make criticisms of market features that Market Anarchists do not endorse in the first place. This post is not intended to be a general or all-inclusive criticism of markets, because Market Anarchists are anti-capitalists anyway.)
"Against Markets"
I don't seek to "ban" markets in an anarchist social context (obviously, because I'm an Anarchist), but I seek to make them obsolete. This is what I mean when I say that I am "against markets".
The Problems with Markets (as they pertain to Market Anarchism) (in no particular order)
The authors investigate how worker-owned and capitalist enterprises differ with respect to wages, employment, and capital in Italy, the market economy with the greatest incidence of worker-owned and worker-managed firms. Estimates calculated using a matched employer-worker panel data set for the years 1982–94 largely corroborate the implications of orthodox behavioral models of the two types of enterprise. Co-ops had 14% lower wages than capitalist enterprises, on average; more volatile wages; and less volatile employment. Given the quality of the data set analyzed, the authors argue, these results can be regarded as having broad generality
(Note: Regarding the point about "less volatile employment" in favor of coops...this study was done comparing between capitalist firms and worker coops. The wages were largely reflective of wages for union members because the wages in capitalist firms regardless of whether the workers were union members or not were based on regional collective bargaining by the unions. However, (unlike with the wages) the job security is not reflective of job security for union members. While we can see that union wages are higher than income for workers working in cooperatives, we cannot make a meaningful comparison based on this study between union job security and coop job security.)
If you want an efficient market system for coordinating production and distribution, you need a flexible labor market. Unfortunately, a more flexible ("freer") labor market leads to reduced labor share of income even under worker ownership (Self-Exploitation). On the other hand, workers forming cartels (monopolizing/oligopolizing access the labor in their field) that restrict labor markets is the only way to halt the trend of decreasing labor share of income - this is essentially what the function of labor unions is. So you need labor cartels to prevent Labor self-Exploitation (in the Marxist sense), while these labor cartels will themselves either be impossible to enforce in the absence of authority (because of the equivalent of Scabs) OR even if they can be enforced without authority they will undermine the efficiency of the markets in your society (because cartels screw up the function of prices in a market).
Alternatives
Based on what is written below regarding ECP and HKP, there is no longer a reason (with regard to rational economic calculation or information) to think that decentralized planning and gift economy dynamics would be unable to entirely replace the role of markets.
Answers to Common Criticisms/Objections
I've been told this recently in an argument with a Market Anarchist. However, he never was able to explain specifically how and why these differences would manifest and on what basis one could claim that it would alter my calculus and conclusions above.
In that case you've massively restricted the potential scale and scope in which markets can have a role in the functioning of your economy. I suppose that's fine, but in that case I would ask the question: Why retain them at all? Why not seek to replace them entirely?
To put it simply, ECP just says that you need a mechanism that allows you to compare multiple possible allocation pathways for resources in order to know which allocation pathway is the most efficient use of resources. And HKP basically says that those who do a particular kind of activity in the economy learn the information relevant to that activity as they perform it. Furthermore, this information is disparate and best able to be extracted by lots of people individually doing particular activities that they focus on.
There's nothing inherent about a large firm that prevents this from happening more so than an aggregate of small firms playing the same role in aggregate as the large firm does by itself. Large firms that are run bottom-up and allow their members autonomy (as was the case of with each of the collectives/syndicates in Catalonia, in contrast to large firms in capitalism) can discover and disseminate this information at least as well as an aggregate of small firms playing the same role as the large firm by itself. As support for my claim, I reference The Anarchist Collectives by Sam Dolgoff - a book that contains multiple empirical examples showing that collectivization of multiple separate firms (which had been engaging in exchange transactions with one another to form a supply chain prior to the Anarchist revolution in Spain) into singular firms of operation from start to finish across the entire supply chain, actually improved productivity, innovation within the production process, and distribution of end products. This actually addresses both HKP and ECP. As per Hume's Razor, we can therefore conclude that a reduction in the scope, role, and presence of intermediary exchange transactions/prices between steps in the supply chain neither results in reduced ability to acquire & disseminate information nor results in reduced economic efficiency. Furthermore (as per Hume's Razor), we can conclude that it is not the scope, role, or presence of prices/exchange transactions that enable either rational economic calculation or the acquisition & dissemination of knowledge. This is because (as per Hume's Razor) if it were true that prices/markets are necessary or superior to all other methods for efficient information discovery & dissemination as well as for rational economic calculation, it would not have been the case that we could have seen improvements in productivity, innovation, and distribution of end products in the aforementioned examples after substantially reducing (via collectivization/integration of various intermediary and competing firms) the role, scope, and presence of prices/markets within the economy.
The alternative explanation (one that is more credible after the application of Hume's Razor and keeping the aforementioned empirical examples in mind) is that optimally efficient information discovery & dissemination as well as rational economic calculation, are both possible in a non-market framework when individuals have autonomy and can freely associate/dissociate with others in the pursuit of their goals.
What's written above should be sufficient to address this objection as well. If it is not the scope, role, and presence of prices/exchange transactions that enable either rational economic calculation or the acquisition & dissemination of knowledge...then there is no basis upon which to argue there will necessarily be (from an information or rational economic calculation standpoint) more bureaucracy in aggregate in a society that has replaced markets, than there would be in a society that retains them.
However, there remains the objection that bureaucracy would exist to a larger extent due to the lack of competitive pressures against inefficiency. My response is to point out that empirical evidence from revolutionary Anarchist societies indicate strongly to the contrary. The role and presence of competition was greatly reduced while there was a simultaneous improvement in efficiency. As per Hume's Razor, we can therefore reject the notion that it is competition specifically that inherently prevents bureaucratic buildup in individual firms. It seems, from these empirical examples, that the best way to prevent bureaucracy is not through market competition between several small firms but through Anarchist praxis involving a lack of hierarchy and authority within large firms (recall that I often use the term "firm" to refer to collectives, syndicates, etc. for the purposes of this post), such that there is no ossified system of rank within the large firm. The absence of an ossified system of rank within firms is the true key to preventing the accumulation of bureaucracy within firms.
Note the three types of efficiency in the linked video - Allocative Efficiency, Productive Efficiency, and Dynamic Efficiency.
The evidence from Anarchist Spain during the Spanish Civil War (which I discussed above) indicates that Productive Efficiency and Allocative Efficiency was improved in various industries and communities where Anarchist collectivization took place. This trend only reversed and ended as the State undermined the Anarchists through various measures, such as cutting them off of currency that was needed to acquire resources from outside the Anarchist-controlled regions, using that leverage over currency to take over control of various industries away from the Anarchists, etc... Thus far, the market anarchists I have discussed this issue with have agreed on this point.
Where I have faced disagreement from market anarchists is on the issue of Dynamic Efficiency aka "Innovative Efficiency". Those whom I have discussed this with argue that markets optimize dynamic efficiency better than any other alternative.
My response is as follows... Evidence indeed does not support the commonly held view that (within a market economy) larger firms have greater dynamic efficiency. However, it does show that investment into R&D (especially by small firms) in market settings is substantially impacted by whether or not there are Intellectual Property Rights.
For me, this raises a natural question: In an Anarchist social context where there are no intellectual property rights, would a framework of cooperation/collectivization into larger firms be more dynamically efficient than competition between smaller firms? Let's look at the following...
(1) Evidence shows that, in general, Intellectual Property Rights have a substantial net negative impact on innovative efficiency:
To summarize, although only tentative conclusions can be drawn given the small number of empirical studies, the body of available empirical evidence suggests that patents may substantively hinder both subsequent scientific research and subsequent product development. Across a relatively heterogeneous set of technologies within the life sciences, and examining various forms of intellectual property rights, the available empirical evidence suggests that property rights hinder cumulative innovation—with declines on the order of 30 percent. Clearly much more work is needed in order to examine the extent to which these patterns generalize to other technologies and other forms of intellectual property, but the best available evidence suggests that mechanisms that reward innovation in a way that places the technologies in the public domain—such as patent buyouts—may have substantial benefits in terms of encouraging cumulative innovation, at least in some contexts.
(2) Evidence shows that firms - in the context of a market economy - invest less in R&D without the presence of Intellectual Property Rights of some form.
So to summarize, IP generally has a substantial net negative impact on dynamic efficiency but in the context of a market economy IP is necessary to incentivize firms to invest adequately into R&D.
Based on this we can argue that in an Anarchist social context, a non-market framework (involving decentralized planning and gift economy dynamics) of cooperation/collectivization into larger firms is likely to be more dynamically efficient than a market framework of competition between multiple smaller firms. This means that replacing markets with cooperative/collectivized dynamics will likely improve dynamic efficiency - the opposite of what the market anarchists I have discussed this issue with claim.
I have had a discussion with a market anarchist who argued that certain kinds of tasks will not be adequately completed without monetary incentive - particularly tasks that are unpleasant or those which people do not enjoy.
However, this ignores the historical and contemporary evidence of Anarchists accomplishing these tasks without monetary incentive - see below:
https://theanarchistlibrary.org/library/peter-gelderloos-anarchy-works#toc53
https://theanarchistlibrary.org/library/sam-dolgoff-editor-the-anarchist-collectives#toc57
https://theanarchistlibrary.org/library/peter-gelderloos-anarchy-works#toc24
(A) First, here is the simplified logic behind why I find Marx's Law of Value Compelling as compared to Subjective Value Theory:
(i) The function of markets is to optimize supply and demand so that resources are allocated efficiently. An efficient allocation of resources enables future reproduction and growth of an economy. When the market suddenly undoes the very allocation of supply to fulfill demand that it had previously built up such that the economy subsequently shrinks, the previous build up can be thought of as a market failure. Hence the process by which prices plummet (along with all the subsequent effects) until the market can reorient to start growing the economy again, can be accurately called "correction". Given that prices can be incorrect such that they require "correction", price and value cannot be the same thing.
(ii) A bubble bursts in the economy when previously inflated prices are corrected. (Note that "correction" is not my own term, but a term frequently used to describe such phenomena in economics.)
(iii) The only way to make sense of this is that prices originally (prior to the bubble bursting) deviated from values too much.
(iv) If it is the case that prices can deviate too much from values while prices are derived from the interplay of various actors' marginal utilities, value cannot be subjective. There must be an objective substance of value around which prices can deviate (to an extent).
(v) Therefore, STV is invalid as a theory of value.
(vi) Having accepted this logic, it follows that we require an objective theory of value as opposed to a subjective theory of value. Now the question becomes: What should this objective theory of value be?
(vii) An objective theory of value must express value as being comprised of some definable substance(s).
(viii) Given that we have established value as something objective rather than subjective, it must be possible for commodities to be exchanged in such a way that there is equal Value on both sides of an exchange.
(ix) In order for things to have equal value, the substance of value must be some characteristic that all commodities share but also separates them from non-commodities.
(x) The only such characteristic is that they can all be produced by simple/"unskilled" human labor.
(xi) Therefore, expressing the value of a commodity must be done in units of simple/"unskilled" human labor.
(B) Furthermore, it has come to my attention that some market anarchists find Marx's Law of Value uncompelling as a result of the Transformation Problem. My response is to look into TSSI, which has made it clear that the Transformation Problem is a non-issue.
The reason this is important is that if you agree with Marx's Law of Value, then you necessarily would find worker cooperatives and market socialism of any variety (including market anarchism) highly problematic due to Self-Exploitation.
submitted by PerfectSociety to debatepoliticalphil [link] [comments]

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