[p2p-research] Product is better than Profit (was Re: Capital Club)

[Patrick Anderson]

On Sat, Mar 8, 2008 at 4:20 PM, Kevin Carson
<free.market.anticapitalist at gmail.com> wrote:
>  I think it's important to distinguish between entrepreneurial profit,
>  and return on land and capital as such.  The former is a good thing,
>  because 1) it is the primary impetus in a market to move factors where
>  they are most needed and to maxize the ratio of output to inputs;

Keeping price above cost appears to be the only motivator any more,
but what about product?  Aren't the use-value of the outputs of
production important?

They are certainly important to the consumers, and consumers never
expect to be paid profit, so why not have them be the owners?  I'm not
pretending these consumers would be a totally separate set of humans
that lay around eating all day without ever working.  I assume they
will also need to work somewhere, in many cases they can operate some
of those Means of Production that they rely upon for that which they
consume, but we also want to incent the division of labor, so it will
be common for the consumer to honey to own beehives without being the
beekeeper himself - he can hire someone else to do that while he goes
and shovels manuer to pay for that trading of labor.  I'm not trying
to take advantage of workers, I'm trying to stop the exploitation of
the consumer while keeping in mind that EVERY WORKER IS A CONSUMER,
but may not neccessarily have the skills needed to operate the sources
he needs ownership in in order to have the control required for true
freedom.

What if a group of consumers chose to invest for the purpose of
product?  Would that also "maxize the ration of outputs to inputs"?
(does that phrase mean production would be efficient?)

>  and 2) it is automatically self-eliminating.

If profit were eliminated, why would those workers continue?  Wouldn't
they close their doors and declare the business a failure?

If profit were eliminated while those that consume the product were
the owners, there would only be celebration - as price would meet cost
and competition would be perfected.  That point occurs when each
product consumer has sufficient ownership in the Land and Capital
needed to insure their future needs.  Each consumer is also workers
SOMEWHERE, and in some cases even on that same Land and Capital, but
ownership should be determined by those that PAY, not by those that
happen to have the skills needed to operate those sources.

Why would you want an apple-picker to have partial ownership in a tree
that he does not pay for?  If he is paying for the tree with his
labor, then he must be paying because he is a consumer - and in that
case, yes, he needs ownership.

What if you owned an apple tree and were paying me (say with Federal
Reserve Notes) to pick those apples?  Would you want me to gain vote
power over that tree?  Would you want me to be able to influence how
you treat that tree - such as spraying it with something you
disapproved of?  Why?

I need ownership in the sources of the things that I consume.  If I
happen to also eat apples, I should be investing in part of ANOTHER
apple tree.  If you are paying me to pick your apples by giving me
apples, then I should be compensated for any amount I pay (any amount
I labor) above the real costs of the apples you pay me with by your
investing that extra amount (the profit you gathered) toward the
purchase of more land, water rights, trees and tools that will
eventually become my property (should vest to me).  But that is only
if I were an apple CONSUMER.

>
>  The normal tendency in a free market would be for investors to move
>  resources as quickly as possible into venues with the highest
>  entrepreneurial returns,

Profit is not the only "entrepreneurial return".  Product is the
original and only valid return on investments.

>  and for the rate of entrepreneurial profit to
>  decline to zero as free market entry reduced price to production cost.

But if your investors are expecting a periodic payment of profit, and
do not want product alone (because they are not consumers, or the
amount of production far exceeds the amount they could personally
consume), then they will declare the business a failure if price is
reduced to production costs - for then profit will be zero!

>   The problem is with forms of privilege that keep this natural process
>  from occuring, and enable rentier classes to collect rents on the
>  artificial scarcity of land and capital.

I agree this exacerbates the problem, but profit should never be
treated as a reward to be won - it should be understood as a plea for
growth from the consumer that paid it, and can 'balance' that economy
by being invested in more productive sources for that very same
consumer - to eventually become his real property.  This drives price
toward cost in a safe manner, since all owners (investors) would then
only be expecting product as payment.

>
>  When such privileges and such scarcities from artificial property
>  rights are eliminated, entrepreneurial profit will be a positive
>  incentive and will reduce the anti-social behaviors you object to.
>
>  To take one small example, one of the biggest forms of government
>  intervention is the subsidies that make transportation and energy
>  artificially cheap, and make it artificially profitable to use them in
>  large quantities--thus skewing the competitive advantage toward large,
>  centralized firms operating over large market areas.  If such
>  subsidies were removed, and the costs of energy and transportation use
>  were fully internalized in price, then those who were fastest and most
>  efficient in reducing use of those factors would accrue
>  entrepreneurial profits.  And their entrepreneurial profits would
>  signal competitors to adopt the same innovation, until those profits
>  fell to zero and the efficiency gains were socialized in the form of
>  lower prices for society at large.

If we want the lowest prices; if we really want price to meet cost and
profit to hit zero, then we had better make sure the consumers are the
investors and owners of the Means of Production, otherwise those that
do happen to own them will declare the business a failure just as we
are reaching our goal.

Product is better than profit because "use value" is more important
than "exchange value".

Patrick